##### Table of Contents



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

Key InformationRisk factors

97-99Item 4.

Information on the CompanyOperating and Financial Review

18-89Note 37  Subsidiary, undertakings
    joint ventures and associates

179Definitions and glossary of terms

194-196Item 5.

Operating and Financial Review and ProspectsOperating and Financial Review

18-89Research and development

100Adoption of new accounting standards

124-125Item 6.

Directors, Senior Management and EmployeesBoard of Directors

16-17Directors Remuneration Report

102-112Note 5  Pensions and other
    post-retirement benefits

136-137Note 31  Actuarial information on
    pensions and other
    post-retirement
    benefits

162-164Corporate Governance

90-99Employees

101Operating Costs 3(b) Number of Employees

133Note 25  Share Capital

153-154Item 7.

Major Shareholders and Related Party TransactionsNote 30  Related Party Transactions

161Item 8.

Financial InformationAccounting policies

116-123Adoption of new accounting standards

124-125Consolidated balance sheet

127Consolidated income statement

126Consolidated statement of recognised income and
    expense

128Consolidated cash flow statement

129Notes to the consolidated financial
    statements  analysis of items in the primary
    statements

130-157Notes to the financial statements 
    supplementary information

158-186Legal and related matters

23Shareholder returns

30Item 11.

Quantitative and Qualitative Disclosures about Market RiskTreasury policy

80Commodity contracts

83-84Note 32  Supplementary information on
    the derivative financials instruments

165Note 33  Financial risk

166-170Note 34  Commodity risk

171-172Item 16G

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

96




---



##### Table of Contents



PageItem 18.

Financial StatementsAccounting policies

116-123Adoption of new accounting standards

124-125Consolidated income statement

126Consolidated balance sheet

127Consolidated cash flow statement

129Consolidated statement of recognised income and
    expense

128Notes to the consolidated financial
    statements  analysis of items in the primary
    statements

130-157Notes to the financial statements 
    supplementary information

158-186




---



##### Table of Contents



EXTRACT
    FORM OF THE ANNUAL REPORT AND ACCOUNTS 2008/2009
  PageBusiness OverviewBoard of Directors


16Operating and Financial ReviewPrincipal operations


18Organisation and structure


19External market and regulatory environment


20Current and future developments


22External relationships


24Business drivers


25Vision, strategy and objectives


26Performance summary


28Key performance indicators


28Achievements and other performance measures


29Performance against our objectives


30Risks and opportunities


40Financial performance


41Transmission


48Gas Distribution


57Electricity Distribution &
    Generation


66Non-regulated businesses and other


74Discontinued operations


78Financial position and financial management


79Accounting policies


87Corporate GovernanceCorporate Governance


90Directors ReportsDirectors report


100Directors remuneration report


102Financial StatementsContents of financial statements


113Statement of Directors responsibilities


114Independent Auditors report


115Accounting policies


116Adoption of new accounting standards


124Consolidated income statement


126Consolidated balance sheet


127Consolidated statement of recognized income and
    expense


128Consolidated cash flow statement


129Notes to the consolidated financial
    statements analysis of items in the primary statements


130Notes to the consolidated financial
    statements  supplementary information


158Company financial statements under UK GAAP


187Company accounting policies


187Company balance sheet


189Notes to the Company financial statements


190Shareholder InformationDefinitions and glossary of terms


194Summary consolidated financial information


197Shareholder information


198




---



##### Table of Contents



Board of Directors
 
  Sir John Parker, Chairman
 Appointed October 2002, Age 67, N (ch)
  Steve Holliday, Chief Executive
 Appointed March 2001, Age 52, E (ch), F
  Bob Catell, Deputy Chairman
 Appointed September 2007, Age 72, R&R
 Steve Lucas, Finance Director
 Appointed October 2002, Age 55, E, F
  Nick Winser, Executive Director
 Appointed April 2003, Age 48, E
  Mark Fairbairn, Executive Director
 Appointed January 2007, Age 50, E
  Tom King, Executive Director
 Appointed August 2007, Age 47, E
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Ken Harvey, Non-executive Director and Senior Independent Director
 Appointed October 2002, Age 68, N, R, R&R
  Linda Adamany, Non-executive Director
 Appointed November 2006, Age 57, A, R&R
  Philip Aiken, Non-executive Director
 Appointed 15 May 2008, Age 60, A, R&R
  John Allan, Non-executive Director
 Appointed May 2005, Age 60, F, R (ch)
  Stephen Pettit, Non-executive Director
 Appointed October 2002, Age 57, F, R, R&R (ch)
 Maria Richter, Non-executive Director
 Appointed October 2002, Age 54, A, F (ch), N
  George Rose, Non-executive Director
 Appointed October 2002, Age 57, A (ch), N, R
  Helen Mahy, Company Secretary & General Counsel
 Appointed October 2002, Age 48, E
  Committee membership
 A  E  F  N  R  R&R  (ch)
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### 



Operating and Financial Review
 
 
 
  Contents to the Operating
and Financial Review
 18
    
    Principal operations19
    
    Organisation and structure20
    
    External market and
regulatory environment22
    
    Current and future developments24
    
    External relationships25
    
    Business drivers26
    
    Vision, strategy and objectives28
    
    Performance summary30
    
    Performance against
our objectives40
    
    Risks and opportunities41
    
    Financial performance48
    
    Transmission57
    
    Gas Distribution66
    
    Electricity Distribution
& Generation74
    
    Non-regulated businesses
and other78
    
    Discontinued operations79
    
    Financial position and
financial management87
    
    Accounting policies
 Principal operations
 
    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, the electricity interconnector with France and storage
facilities for LNG. Operator of the electricity transmission networks
in Scotland.
 US
    
    The transmission of electricity in the northeastern US as owner of
high voltage electricity transmission networks in upstate New York and
in New England.
 UK
    
    The distribution of gas in England 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.
 
    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.
 UK
 US
 
   
 
  National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Organisation and structure
 
 Organisation
   Board of DirectorsExecutive CommitteeChief Executive Steve HollidayFinance and shared services Steve LucasTransmissionNick Winser
Gas DistributionMark FairbairnElectricity Distribution  & GenerationTom King
Non-regulated businesses* and other (including corporate functions and information services)
 *
    Responsibility for each of our non-regulated businesses is allocated to the Executive Directors based on the nature of each business
   Business and geographic analysis
  
 Business analysis 2008/09
 Geographical analysis 2008/09
  
 
 
   History
   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 Corp.2005
    
    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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



External market and regulatory environment
 
 Markets in which we operate
   Energy delivery in the UK
 Energy delivery in the northeastern US
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Other areas in which we operate
  Regulation
     UK
   US
 *
    Based on settlement filed, awaiting approval
    System operator price control reviews for electricity and gas are not illustrated and
are in effect until 31 March 2010
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Current and future developments
 
 External market developments
 Market structure and ownership
   Energy market developments
      
 Illustration of the nine zones put forward by The Crown Estate for potential offshore wind projects
in round three
 Regulatory developments
 UK and European regulatory developments
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



US regulatory developments
    Price controls, rate plans and other agreements
 UK price controls
  US rate plans
 Other agreements
      Legal and related matters
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



External relationships
 
 Investor relations
 
     Customers, regulators and governments
 Suppliers
 
      Community involvement
 
  §
    
    to improve employee engagement in Company community activities;
 §
    
    to maintain and improve our supply of talent by promoting science, technology, engineering, and
maths subject take up and achievement in schools;
 §
    
    to use volunteering to develop employee skills; and
 §
    
    to strengthen our corporate reputation.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Business drivers
 
 Business drivers
  
 Price controls and rate plans
    
 Multi-year contracts
   
 Safety, reliability and efficiency
   
 Customer service
  
 Capital investment
    
 Other investment
   
 Inflation and deflation
  Relationships and responsibility
 
  
 Weather and volumes
  
 Seasonality
   
 Exchange rates
  
 Commodity and other pass-through costs
    
 Interest rates
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Vision, strategy and objectives
 
  Our vision is the long term
aspiration for National Grid  what we want to be in the future.
    

VisionWe, at National Grid, will be the foremost international electricity and gas company, delivering
unparalleled safety, reliability and efficiency, vital to the well-being 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.Our strategy and objectives
are a medium term step in the journey towards the vision  what we are doing over the next few years.
    

Strategy and Company objectivesWe 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.§   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 regionsResponsibilityOur 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 a lawful
and ethical manner.The vision, strategy and Company
objectives flow down into every
employees annual performance
objectives  what we are doing
now and how we ensure we achieve
our strategy and vision.
    
    Line of sight(IMAGE)
    
    Our strategy and Company objectives provide the basis for the
annual priorities for each line of business and global function.
These annual priorities form the basis of the objectives for
the Executive Directors and flow down the organisation into
the individual objectives for every manager and employee.
Consequently the actions required to deliver the strategy are
allocated and aligned with employee responsibilities.
Our aim is that every employee is able to trace their
objectives through to the Companys objectives, strategy and vision.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Strategy and Company 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
  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
regions
  Performance indicators
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Performance summary:
  Key performance indicators
 
 Target andObjective
    
    KPI
    
    Description and performance
    
    
    
    
    
    
    
    
    
    
    
    page referenceDelivering superior     
financial 
performance
    
    Adjusted EPS 
    
    Adjusted earnings divided by the weighted average number
of shares (pence)(IMAGE)
    
    
    
    
    
    
    
    To increaseSee page 30Total shareholder return
    
    Growth in share price assuming dividends are reinvested (% cumulative
three year growth)(IMAGE)
    
    
    
    
    
    
    
    To increaseSee page 30Driving
improvements in our
safety, customer
and operational
performance
    
    Employee lost time injury frequency rate *
    
    Injuries resulting in employees taking time off work (per 100,000 hours
worked)(IMAGE)
    
    
    
    
    
    
    
    ZeroSee page 31Delivering strong,
sustainable
regulatory and
long-term contracts
with good returns
    
    Group return on equity^
    
    Adjusted earnings with certain regulatory based adjustments divided by
equity (%  three year
average)(IMAGE)
    
    
    
    
    
    
    
    To increaseSee pages 32 and 33Modernising and
extending our
transmission and
distribution 
networks
    
    Network reliability
    
    
    
    Performance
    
    Measure
    
    Target04/05
    
    05/06
    
    06/07
    
    07/08
    
    08/09Electricity transmission  UK
    
    99.99998
    
    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
    
    99.999
    
    99.9999
    
    %
    
    99.999Electricity transmission  US
    
    385
    
    348
    
    259
    
    437
    
    266
    
    MWh losses
    
    <303Electricity distribution  US
    
    120
    
    141
    
    121
    
    110
    
    114
    
    Mins of outage
    
    <110-120See pages 53, 62 and 70 for additional details on network reliabilityBecoming more
efficient through
transforming our
operating model
    

Controllable
cost 
    
    Regulated controllable operating costs (£m  comparatives stated on a constant currency basis and
inflated to current performance year)(IMAGE)
    
    
    
    
    
    
    
    To decreaseSee page 35Building trust,
transparency and an
inclusive and
engaged workforce
    
    Employee engagement index
    
    Employee engagement index calculated using responses to our employee survey (%)
        (IMAGE)
    
    
    
    
    
    
    
    To increaseSee page 35Positively shaping 
the energy and
climate change
agenda
    
    Greenhouse gas emissions #*
    
    Reduction in greenhouse gas emissions against baseline (%  cumulative reduction)
      (IMAGE)
    
    
    
    
    
    
    
    80% reductionby 205045% reductionby 2020See pages 37 and 38
 
 
    Adjusted earnings per share excludes exceptional items, remeasurements and stranded cost
recoveries
    2007/08 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 data restated as if KeySpan acquisition had occurred at the beginning of the year,
previously published figure excluding KeySpan was 0.24 for employee lost time injury frequency
rate and 38% for greenhouse gas emissions^
    2007/08 results include KeySpan operations on a pro forma financial performance basis assuming the acquisition occurred on 1 April 2007~
    2006/07 and 2007/08 results include KeySpan operations on a pro forma financial performance basis assuming the acquisition occurred at the beginning of the fiscal year#
    2008/09 result not currently available. Result will be published on our website www.nationalgrid.com in July 2009
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Performance summary:
  Achievements and other performance measures
 
 Delivering superior financial performance
    
    
    
    
    
    See pages 41 to 47Adjusted operating profit
    
    Interest cover
    
    Cash generated by(£m)
    
    Long-term target: range 3.0-3.5
    
    continuing operations (£m)(IMAGE)
    
    (IMAGE)
    
    (IMAGE)Driving improvements in our safety, customer and operational performance
    See pages 31 and 32Injuries to the public *(number)
Target: zero
    
    § Electricity Distribution & Generation ranked in lower quartile for customer satisfaction in
J.D. Power and Associates survey in the US(IMAGE)
    

§ Employee sickness absence rate was 3.06% in 2008/09, an increase from 2.46% in 2007/08Modernising and extending our transmission and distribution networks
    See page 33Total capital expenditure
    

§ Phase II of Grain LNG commissioned in December 2008(£m)
    

§ Commencement of the New England East-West Solution (NEEWS) transmission project in the US(IMAGE)Becoming more efficient through transforming our operating model
    
    
    
    See pages 34 and 35
 §

    Synergy savings of $74 million achieved in the year representing a run rate of $129 million at 31 March 2009§

    Phase II implementation of common ERP operating platform across UK businesses§

    Continuing restructuring plans in the US including consolidation of premises. Our new Reservoir
Woods office in Waltham,
Massachusetts is due for completion in spring 2009§

    Transformation of operations within the lines of business focused on projects that maximise tangible returns in the near term
 Building trust, transparency and an inclusive and engaged workforce
    See pages 35 and 36Proportion of female 
employees(%)
    
    Proportion of ethnic minority
employees(%)
    
    § 91.8% response rate in our employee survey
(2007/08: 86.4%)(IMAGE)
    
    (IMAGE)
    
    § 73% (2007/08: 62%) of employees said that
they would recommend National Grid as a place to
work§ We launched our global inclusion charter that
explains what employees can expect from the
Company, as well as what National Grid expects
from employeesDeveloping our talent, leadership skills and capabilities
    
    
    
    See pages 36 and 37
 §
    Recruited a total of 272 advanced apprentices, foundation engineers and graduates in the UK§

    Launched workforce planning as a methodology to identify and proactively address the gaps both in people
and skills necessary to deliver our strategy§

    Launched two new management development programmes
 Positively shaping the energy and climate change agenda
    
    
    
    
    
    See pages 37 to 39Significant direct environmental 
incidents * (number) Target: zero
    
    
    
    § Steve Holliday member of the RPI-X@20
advisory panel looking at regulation and future
energy challenges in the UK(IMAGE)
    
    
    
    § 80% of employees working to certified ISO
14001 systems
 
 
    Adjusted operating profit excludes exceptional items, remeasurements and stranded cost
recoveries
    2007/08 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 excludes KeySpan operations
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Performance against our objectives
 
 Delivering superior financial performance
 Shareholder returns
 
 
 
 Total shareholder return
  Total shareholder return
  
 
    Earnings
 
 
 
 
 Adjusted earnings per share
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



50.9p
    
    6%
    
    £597m
    
    17%Adjusted earnings per share
    
    Increase in adjusted
    
    Returned to shareholders through
    
    Reduction in employee lostearnings per share
    
    the share repurchase programme
    
    time injury frequency rate
 
 Driving improvements in our safety, customer and operational performance
  Safety
 
 
 
   Employee safety
 Employee lost time injury frequency rate
 Per 100,000 hours worked
    
    Target: zero
 
 
 
 2007/08 data restated as if KeySpan acquisition had occurred at beginning of year. Previously
published figure, excluding KeySpan, was 0.24.  Employee health
 
 Employee sickness absence rate
 %
    
    Target: zero
 
 
 
 Data prior to 2008/09 excludes KeySpan.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Performance against our objectives
  
 Contractor safety
  Public safety
 
 Injuries to members of the publicNumber
    
    Target: zero
 
 
    Gas safety
  Customer service
 Delivering strong, sustainable regulatory and long-term contracts with good regulatory returns
   Regulatory returns
 
  
 
  Returns on our investments
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



3.06%
    
    10.8%
    
    £3.2bn
    
    £3.4bnEmployee sickness absence rate
    
    Three year average return on equity
    
    Total capital expenditure
in 2008/09
    
    Planned total annual capital
expenditure for 2009/10
 Modernising and extending our transmission and distribution networks
   Reliability
 Capital investment
 
  
 
    
 Total capital expenditure£m
 
 
 
  Expanding our capabilities and identifying new financeable opportunities to grow
  New businesses
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Performance against our objectives
  
 Acquisitions
     Exit non-core businesses
 
  
 
 Disposals
    Becoming more efficient through transforming our operating model and increasingly aligning our processes
 Operating model
 
  
 
   §
    
    a significantly improved customer experience;§
    
    a high performance culture;§
    
    structural changes in the way we operate;§
    
    long-term labour agreements that enable us to deliver improved operational performance and rewarding work for our employees;§
    
    rationalised locations from which we operate;§
    
    refreshed system operation technology;§
    
    improved productivity and efficiency; and§
    
    advanced decision support tools and analytic capabilities.
 Activities during the year
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£2,387m
    
    $200m
    
    $129m
    
    91.8%2008/09 regulated controllable 
operating costs
    
    Total target synergy savings from
KeySpan acquisition
    
    Run rate cost savings from KeySpan
acquisition achieved by 31 March 2009
    
    Response rate to 2008 employee
engagement survey
 Efficiency
 
  
 
 Regulated controllable operating costs
  
 Regulated controllable operating costs£m
 Synergy savings from KeySpan acquisition
    Building trust, transparency and an inclusive and engaged workforce
  Engagement and performance
 
  
 
  Employee engagement
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Performance against our objectives
  
 Performance management
  Inclusion and diversity
 Inclusion and diversity%
 
 
    Developing our talent, leadership skills and capabilities
  Talent and skills
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



22.6%
    
    13.2%
    
    45% by 2020
    
    Carbon budgetsPercentage of female
employees
    
    Percentage of ethnic
minority employees
    
    Our intermediate greenhouse gas
emissions reduction target
    
    Being implemented across the Company
during 2009/10
 Positively shaping the energy and climate change agenda with our external stakeholders in both
regions
   Positively shaping the agenda
 Climate change
 
  
 
     2
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Performance against our objectives
  
 Greenhouse gas emissions (Scope 1 and 2)% reduction against baseline
    
    Target: 80%
 
 
  Protecting the environment
 Significant environmental incidentsDirect
    
    Target: zero
 
  
 Significant environmental incidentsThird party/weather
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



80%
    
    316
    
    63%
    
    PlatinumPercentage of employees working to 

ISO 14001
    
    Number of sites where environmental
work stages were completed
    
    Reduction in significant
environmental incidents
    
    Our BITC corporate responsibility index
status for the 7th consecutive year
 Responsibility
 
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Risks and opportunities
  
  Risks and opportunities
  
  Financial performance
  
 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
regions
  
 Responsibility
 
 Risk management
   Risk factors
  §
    
    changes in laws or regulations;§
    
    breaches of environmental or health and safety law or regulations;§
    
    network failure or inability to carry out critical non-network operations;§
    
    achievement of business performance objectives, including regulatory targets and delivering
anticipated cost and efficiency savings;§
    
    business development activity, including acquisitions and disposals;§
    
    regulatory treatment of commodity costs passed through to consumers;§
    
    reputation damage from disruptions to supply, even if outside our control;§
    
    fluctuations in exchange rates, interest rates and commodity prices and their impact on
borrowings, derivatives and commodity contracts;§
    
    restrictions in borrowings, changes in credit ratings, volatility and disruption of global
financial markets, reduced liquidity and access to funding opportunities;§
    
    periods of deflation;§
    
    future funding requirements of our pension schemes;§
    
    changes in accounting standards or in tax rates;§
    
    consumers, suppliers or other counterparties failing to perform their obligations; and§
    
    impact of seasonal or weather-related fluctuations.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial performance
  
 Financial discipline
 
  
 
    Profit, cash flow and dividends
 
  
 
  Dividends in respect of the financial year
 Dividends per sharepence
 
 
 
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Dividends
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    penceInterim
    
    
    12.64
    
    
    
    11.70
    
    
    
    10.90
    
    
    
    10.20
    
    
    
    8.50Final
    
    
    23.00
    
    
    
    21.30
    
    
    
    17.80
    
    
    
    15.90
    
    
    
    15.20Total
    
    
    35.64
    
    
    
    33.00
    
    
    
    28.70
    
    
    
    26.10
    
    
    
    23.70
 Dividends per ADS
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Interim
    
    
    0.95
    
    
    
    1.21
    
    
    
    1.03
    
    
    
    0.88
    
    
    
    0.79Final
    
    
    1.74
    
    
    
    2.05
    
    
    
    1.76
    
    
    
    1.51
    
    
    
    1.38Total
    
    
    2.69
    
    
    
    3.26
    
    
    
    2.79
    
    
    
    2.39
    
    
    
    2.17
      Continuing and discontinued operations
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial performance
  
 Measurement of financial performance and use of adjusted profit measures
 Exchange rates
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£1,253m
    
    50.9p
    
    6%
    
    37.4pAdjusted profit from 
continuing operations
    
    Adjusted earnings per share
    
    Increase in adjusted earnings
per share
    
    Earnings per share
 Profit for the year from continuing operations
    
 Adjusted earnings per share
 
 
 
 
 Earnings per share
 
 
 
  Years ended 31 March2009
    
    2008
    
    2007Continuing operations
    
    £m
    
    £m
    
    £mAdjusted operating profit
    
    
    2,915
    
    
    
    2,595
    
    
    
    2,031Net finance costs excluding
exceptional items and
remeasurements
    
    
    (1,150
    )
    
    
    (770
    )
    
    
    (547
    )Share of post-tax results of joint ventures
    
    
    5
    
    
    
    4
    
    
    
    2Adjusted profit before taxation
    
    
    1,770
    
    
    
    1,829
    
    
    
    1,486Taxation excluding tax on
exceptional items, remeasurements
and stranded cost recoveries
    
    
    (517
    )
    
    
    (579
    )
    
    
    (442
    )Adjusted profit from 
continuing operations
    
    
    1,253
    
    
    
    1,250
    
    
    
    1,044pence
    
    pence
    
    penceAdjusted earnings per share 
from continuing operations
    
    
    50.9
    
    
    
    47.8
    
    
    
    38.3
 Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    £m
    
    
    £m
    
    
    £mOperating profit
    
    
    2,623
    
    
    
    2,964
    
    
    
    2,513Net finance costs
    
    
    (1,234
    )
    
    
    (786
    )
    
    
    (764
    )Share of post-tax results of
joint ventures
    
    
    5
    
    
    
    4
    
    
    
    2Profit before taxation
    
    
    1,394
    
    
    
    2,182
    
    
    
    1,751Taxation
    
    
    (472
    )
    
    
    (607
    )
    
    
    (441
    )Profit from continuing operations
    
    
    922
    
    
    
    1,575
    
    
    
    1,310pence
    
    pence
    
    penceEarnings per share from
continuing operations
    
    
    37.4
    
    
    
    60.3
    
    
    
    48.1
   Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    pence
    
    
    pence
    
    
    penceAdjusted earnings per share
    
    
    50.9
    
    
    
    47.8
    
    
    
    38.3Exceptional items
    
    
    (10.1
    )
    
    
    (0.1
    )
    
    
    (1.5
    )Commodity cost remeasurements
    
    
    (10.8
    )
    
    
    5.1
    
    
    
    1.3Derivative financial instrument
remeasurements
    
    
    (3.0
    )
    
    
    (1.3
    )
    
    
    0.6Stranded cost recoveries
    
    
    10.4
    
    
    
    8.8
    
    
    
    9.4Earnings per share 
continuing operations
    
    
    37.4
    
    
    
    60.3
    
    
    
    48.1
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial performance
  
 Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted operating profit
    
    
    2,915
    
    
    
    2,595
    
    
    
    2,031Exceptional items
    
    
    (275
    )
    
    
    (242
    )
    
    
    (22
    )Commodity contract remeasurements
    
    
    (443
    )
    
    
    232
    
    
    
    81Stranded cost recoveries
    
    
    426
    
    
    
    379
    
    
    
    423Operating profit
    
    
    2,623
    
    
    
    2,964
    
    
    
    2,513
   Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted profit before taxation
    
    
    1,770
    
    
    
    1,829
    
    
    
    1,486Exceptional items
    
    
    (275
    )
    
    
    (242
    )
    
    
    (67
    )Commodity contract remeasurements
    
    
    (445
    )
    
    
    223
    
    
    
    62Derivative financial instrument
remeasurements
    
    
    (82
    )
    
    
    (7
    )
    
    
    (153
    )Stranded cost recoveries
    
    
    426
    
    
    
    379
    
    
    
    423Profit before taxation
    
    
    1,394
    
    
    
    2,182
    
    
    
    1,751
   Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    £m
    
    
    £m
    
    
    £mAdjusted earnings
    
    
    1,250
    
    
    
    1,247
    
    
    
    1,042Exceptional items
    
    
    (247
    )
    
    
    (2
    )
    
    
    (41
    )Commodity contract remeasurements
    
    
    (266
    )
    
    
    133
    
    
    
    37Derivative financial instrument
remeasurements
    
    
    (74
    )
    
    
    (35
    )
    
    
    16Stranded cost recoveries
    
    
    256
    
    
    
    229
    
    
    
    254Earnings
    
    
    919
    
    
    
    1,572
    
    
    
    1,308
  Discontinued operations
 Net profit and total earnings per share for the year
  .
 Adjusted operating profit and operating profit
 
 Adjusted operating profit
 
 
 
 
 Operating profit
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£15.6bn
    
    £2,915m
    
    12%
    
    £2,623mRevenue
    
    Adjusted operating profit
    
    Increase in adjusted
    
    Operating profitoperating profit
 Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    £m
    
    
    £m
    
    
    £mTransmission UK
    
    
    3,487
    
    
    
    2,956
    
    
    
    2,816Transmission US
    
    
    420
    
    
    
    299
    
    
    
    270Gas Distribution UK
    
    
    1,466
    
    
    
    1,383
    
    
    
    1,193Gas Distribution US
    
    
    4,786
    
    
    
    2,845
    
    
    
    638Electricity Distribution & Generation US
    
    
    4,972
    
    
    
    3,508
    
    
    
    3,430Other activities
    
    
    719
    
    
    
    642
    
    
    
    567Total segmental revenues
    
    
    15,850
    
    
    
    11,633
    
    
    
    8,914Less: sales between business segments
    
    
    (226
    )
    
    
    (210
    )
    
    
    (219
    )Total
    
    
    15,624
    
    
    
    11,423
    
    
    
    8,695
  Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    £m
    
    
    £m
    
    
    £mTransmission UK
    
    
    1,126
    
    
    
    1,021
    
    
    
    946Transmission US
    
    
    175
    
    
    
    128
    
    
    
    108Gas Distribution UK
    
    
    672
    
    
    
    595
    
    
    
    409Gas Distribution US
    
    
    612
    
    
    
    392
    
    
    
    71Electricity Distribution & Generation US
    
    
    265
    
    
    
    330
    
    
    
    364Other activities
    
    
    65
    
    
    
    129
    
    
    
    133Adjusted operating profit
    
    
    2,915
    
    
    
    2,595
    
    
    
    2,031
  Years ended 31 March2009
    
    
    2008
    
    
    2007Continuing operations
    
    £m
    
    
    £m
    
    
    £mTransmission UK
    
    
    1,063
    
    
    
    1,013
    
    
    
    936Transmission US
    
    
    173
    
    
    
    122
    
    
    
    107Gas Distribution UK
    
    
    629
    
    
    
    574
    
    
    
    412Gas Distribution US
    
    
    226
    
    
    
    487
    
    
    
    67Electricity Distribution & Generation US
    
    
    531
    
    
    
    696
    
    
    
    859Other activities
    
    
    1
    
    
    
    72
    
    
    
    132Operating profit
    
    
    2,623
    
    
    
    2,964
    
    
    
    2,513
 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
    
    
    1,947
    
    
    
    (1,687
    )
    
    
    2602007/08 constant currency results
    
    
    13,063
    
    
    
    (10,208
    )
    
    
    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
    
    
    15
    
    
    
    (79
    )
    
    
    (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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial performance
  
 Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profitContinuing operations
    
    £m
    
    
    £m
    
    
    £m2006/07 results
    
    
    8,778
    
    
    
    (6,265
    )
    
    
    2,513Add back exceptional items andremeasurements
    
    
    
    
    
    
    (59
    )
    
    
    (59
    )Deduct stranded cost recoveries
    
    
    (426
    )
    
    
    3
    
    
    
    (423
    )2006/07 adjusted results
    
    
    8,352
    
    
    
    (6,321
    )
    
    
    2,031Exchange movements
    
    
    (193
    )
    
    
    167
    
    
    
    (26
    )2006/07 constant currency results
    
    
    8,159
    
    
    
    (6,154
    )
    
    
    2,005Transmission UK
    
    
    134
    
    
    
    (59
    )
    
    
    75Transmission US
    
    
    42
    
    
    
    (17
    )
    
    
    25Gas Distribution UK
    
    
    192
    
    
    
    (6
    )
    
    
    186Gas Distribution US
    
    
    2,239
    
    
    
    (1,915
    )
    
    
    324Electricity Distribution & Generation US
    
    
    272
    
    
    
    (288
    )
    
    
    (16
    )Other activities
    
    
    71
    
    
    
    (75
    )
    
    
    (4
    )Sales between businesses
    
    
    7
    
    
    
    (7
    )
    
    
    2007/08 adjusted results
    
    
    11,116
    
    
    
    (8,521
    )
    
    
    2,595Exceptional items and remeasurements
    
    
    
    
    
    
    (10
    )
    
    
    (10
    )Stranded cost recoveries
    
    
    382
    
    
    
    (3
    )
    
    
    3792007/08 results
    
    
    11,498
    
    
    
    (8,534
    )
    
    
    2,964
 Net finance costs
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



29.2%
    
    9%
    
    £3.6bn
    
    £1.6bnEffective tax rate before exceptionals, 
remeasurements and stranded cost 
recoveries
    
    Increase in cash generated from
continuing operations
    
    Cash inflow from
continuing operations
    
    Net cash inflow
from borrowings
 Exceptional finance costs and remeasurements
   Taxation
    Cash flows
 
 Operating cash flows
 
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Transmission
 
  This year we have delivered more than £1.4 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 and the decline of UK gas production from the North Sea.
 Key Facts
 §
    
    Over 20,900 kilometres of electrical overhead lines§
    
    Over 800 kilometres of electrical underground cable§
    
    296 TWh of electricity transmitted in the UK§
    
    Over 7,600 kilometres of gas pipeline§
    
    1,158 TWh of gas throughput
 Adjusted operating profit
    
    Capital investment£1,301m
    
    £1,441m2007/08: £1,149m
    
    2007/08: £1,711mEmployees
    
    UK energy transmitted3,874
    
    1,454 TWh2007/08: 3,678
    
    2007/08: 1,437 TWh
 About Transmission
   Principal operations
 Transmission UK
  
 Electricity transmission owner
  
 Gas transmission owner
  
 Electricity system operator
   
 Gas system operator
  
 French interconnector
  
 LNG storage
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



337
    
    99.9999%
    
    26
    
    100%UK electricity substations
    
    UK electrical system reliability
    
    UK gas compressor stations
    
    UK gas system reliability
 
  
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Transmission
 
 
 Transmission US
  Electricity transmission owner
 
 
 
 Canadian interconnector
 
    
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



524
    
    98.8%
    
    5.05%
    
    £10.8bnUS electricity substations
    
    US electricity system availability
    

UK price control allowed vanilla
    
    Estimated UK regulatoryreturn for electricity and gas
    
    asset value
 
  Regulation
 Transmission UK
 6
    Transmission US
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Transmission
  
 Current and future developments
  Security of supply and climate change
  Other UK developments
 US regulatory developments
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



50%
    
    17%
    
    4.7%
    
    6.9%Reduction in Transmission UK
    
    Reduction in Transmission
    
    Transmission UK electricity
    
    Transmission UK gasemployee lost time injury
    
    US employee lost time injury
    
    operational 2008/09 vanilla
    
    operational 2008/09frequency rate
    
    frequency rate
    
    rate of return
    
    vanilla rate of return
 
 Performance against our objectives
  Driving improvements in our safety, customer and operational performance
 Safety
 
 
 
     Customer service
 
 
 
  Delivering strong, sustainable regulatory and 
long-term contracts with good returns
 Returns on investment
 Modernising and extending our transmission networks
   Reliability
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Transmission
  
 Years ended 31 MarchMeasure
    
    2009

    
    2008

    
    2007UK 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 < 303 MWh
    
    266 MWh
    
    437 MWh
    
    259 MWhUK average annual availability for
electricity transmission network
    
    
    94.64
    %
    
    
    95.09
    %
    
    
    95.02
    %UK electricity system availability
at winter peak demand
    
    
    97.7
    %
    
    
    98.0
    %
    
    
    98.2
    %UK gas compressor fleet performance
 mean time between failures
    
    405 hrs
    
    259 hrs
    
    430 hrsUS annual network availability
    
    
    98.8
    %
    
    
    98.6
    %
    
    
    98.1
    %
  Capital investment
 
 
 
 UK investment
 US investment
     Becoming more efficient through transforming our operating model and increasingly aligning
our processes
 Key areas of focus
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£1,126m
    
    £175m
    
    £1,259m
    
    £182mTransmission UK adjusted
    
    Transmission US adjusted
    
    Transmission UK
    
    Transmission USoperating profit up 10%
    
    operating profit up 5%
    
    capital expenditure
    
    capital expenditure
 
 Efficiency
 
 
 
   Financial performance
 Profit
 
 
 
  Financial results  Transmission UK
  Years ended 31 March2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRevenue and other operating income
    
    
    3,517
    
    
    
    2,956
    
    
    
    2,822Operating costs excluding
exceptional items
    
    
    (2,391
    )
    
    
    (1,935
    )
    
    
    (1,876
    )Adjusted operating profit
    
    
    1,126
    
    
    
    1,021
    
    
    
    946Exceptional items
    
    
    (63
    )
    
    
    (8
    )
    
    
    (10
    )Operating profit
    
    
    1,063
    
    
    
    1,013
    
    
    
    936
 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
 2007/08 compared with 2006/07
  Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2006/07 results
    
    
    2,822
    
    
    
    (1,886
    )
    
    
    936Add back exceptional items
    
    
    
    
    
    
    10
    
    
    
    102006/07 adjusted results
    
    
    2,822
    
    
    
    (1,876
    )
    
    
    946Allowed revenues
    
    
    176
    
    
    
    
    
    
    
    176Timing on recoveries
    
    
    10
    
    
    
    
    
    
    
    10Lower French interconnectorand LNG storage auctions
    
    
    (62
    )
    
    
    
    
    
    
    (62
    )Depreciation and amortisation
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )Other
    
    
    10
    
    
    
    (39
    )
    
    
    (29
    )2007/08 adjusted results
    
    
    2,956
    
    
    
    (1,935
    )
    
    
    1,021Exceptional items
    
    
    
    
    
    
    (8
    )
    
    
    (8
    )2007/08 results
    
    
    2,956
    
    
    
    (1,943
    )
    
    
    1,013
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Transmission
 
 Financial results  Transmission US
  Years ended 31 March2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRevenue
    
    
    420
    
    
    
    299
    
    
    
    270Operating costs excluding
exceptional items
    
    
    (245
    )
    
    
    (171
    )
    
    
    (162
    )Adjusted operating profit
    
    
    175
    
    
    
    128
    
    
    
    108Exceptional items
    
    
    (2
    )
    
    
    (6
    )
    
    
    (1
    )Operating profit
    
    
    173
    
    
    
    122
    
    
    
    107
 2008/09 compared with 2007/08
  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 of recoveries
    
    
    4
    
    
    
    
    
    
    
    4Other
    
    
    1
    
    
    
    (22
    )
    
    
    (21
    )2008/09 adjusted results
    
    
    420
    
    
    
    (245
    )
    
    
    175Exceptional items
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )2008/09 results
    
    
    420
    
    
    
    (247
    )
    
    
    173
 2007/08 compared with 2006/07
  Operating
    
    
    OperatingRevenue
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2006/07 results
    
    
    270
    
    
    
    (163
    )
    
    
    107Add back exceptional items
    
    
    
    
    
    
    1
    
    
    
    12006/07 adjusted results
    
    
    270
    
    
    
    (162
    )
    
    
    108Exchange movements
    
    
    (13
    )
    
    
    8
    
    
    
    (5
    )2006/07 constant currency results
    
    
    257
    
    
    
    (154
    )
    
    
    103Allowed revenues
    
    
    27
    
    
    
    
    
    
    
    27Timing on recoveries
    
    
    15
    
    
    
    
    
    
    
    15Other
    
    
    
    
    
    
    (17
    )
    
    
    (17
    )2007/08 adjusted results
    
    
    299
    
    
    
    (171
    )
    
    
    128Exceptional items
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )2007/08 results
    
    
    299
    
    
    
    (177
    )
    
    
    122
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Gas Distribution
 
 We continue to share best practice ideas between the UK and US to improve our operating model
and make it more consistent.
 In the UK, we are one year into the new price control period, which will bring considerable
challenge and opportunity over the remaining four years as we look to become more efficient and
effective.
 Once again, we have achieved our objective to replace metallic main with plastic this year,
totalling over 1,900 kilometres in the UK, and reduced the amount of cast iron and unprotected
steel mains by 398 kilometres in the US, improving the safety and reliability of our networks.
 Key Facts
 §
    
    Around 190,000 kilometres of gas pipe§
    
    Delivery of 317 and 205 TWh of gas to over 10.8 and 3.5 million consumers in the UK and
US respectively
 Adjusted operating profit
    
    Capital investment£1,284m
    
    £1,019m2007/08: £987m
    
    2007/08: £702mEmployees
    
    Gas delivered9,534
    
    522 TWh2007/08: 9,136
    
    2007/08: 455 TWh
 About Gas Distribution
   Principal operations
 Gas Distribution UK
   (0800 111 999)
 Gas Distribution US
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Gas Distribution
 
 
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Over 1,900km
    
    £6.6bn
    
    $8.1bn
    
    14.3mMetallic gas main replaced
    
    Estimated UK regulatory
    
    Estimated US rate base
    
    Gas consumers servedwithin the UK
    
    asset value
    
    (based on latest filings)
    
    in the UK and the US
 
 Regulation
 Gas Distribution UK
 Gas Distribution US
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Gas Distribution
 
 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% up 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
    
    
    10.4
    %
    
    
    49/51
    
    
    None
 *
    Based on settlement filed, awaiting approval  Current and future developments
  Rhode Island gas rate plan filing
 Upstate New York gas rate plan filing
  New Hampshire gas rate plan filing
  Performance against our objectives
  Driving improvements in our safety, customer and operational performance
 Safety
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



5.8%
    
    Safety
    
    3 rate filings
    
    £25mVanilla rate of return achieved
    
    Exceeded our UK and US
    
    Three new gas rate plan filings
    
    Investment in active pressurein the UK
    
    targets to attend gas escapes
    
    being progressed in the US
    
    management systems to reduceour impact on climate change
 
 Customer service
 Delivering strong, sustainable regulatory and long-term contracts with good returns
 Returns on investment
 
 
 
   AllowedAsset base*

    Return on equity*
    
    
    returnRegulatory entity
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    currentKEDNY
    
    $
    2,294m
    
    
    $
    2,239m
    
    
    
    11.9
    %
    
    
    14.9
    %
    
    
    9.8
    %KEDLI
    
    $
    1,795m
    
    
    $
    1,715m
    
    
    
    11.1
    %
    
    
    10.4
    %
    
    
    9.8
    %Mass. Gas
    
    $
    2,425m
    
    
    $
    2,137m
    
    
    
    8.3
    %
    
    
    9.2
    %
    
    
    10.6
    %Energy North
    
    
    $191m
    
    
    
    $173m
    
    
    
    4.4
    %
    
    
    4.9
    %
    
    
    10.4
    %Narragansett
    
    
    $337m
    
    
    
    $341m
    
    
    
    7.6
    %
    
    
    3.2
    %
    
    
    10.5
    %Niagara Mo. Gas**
    
    $
    1,067m
    
    
    $
    1,084m
    
    
    
    4.8
    %
    
    
    5.9
    %
    
    
    10.2
    %
 *
    Based on regulatory returns for the 12 months ended either 31 October or 31 December**
    Based on settlements filed, awaiting approval
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Gas Distribution
 
 Modernising and extending our distribution networks
 Reliability
 
 
 
      Capital investment
 US capital investment
    Becoming more efficient through transforming our operating model and increasingly aligning
our processes
 Key areas of focus
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£1,466m
    
    £4,786m
    
    £598m
    
    £421mGas Distribution UK revenue
    
    Gas Distribution US revenue
    
    Gas Distribution UK
capital expenditure
    
    Gas Distribution US
capital expenditure
 
 Efficiency
 
 
 
   Financial performance
 Profit
 
 
 
  Financial results  Gas Distribution UK
  Years ended 31 March2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRevenue
    
    
    1,466
    
    
    
    1,383
    
    
    
    1,193Other operating income
    
    
    2
    
    
    
    8
    
    
    
    6Operating costs excluding
exceptional items
    
    
    (796
    )
    
    
    (796
    )
    
    
    (790
    )Adjusted operating profit
    
    
    672
    
    
    
    595
    
    
    
    409Exceptional items
    
    
    (43
    )
    
    
    (21
    )
    
    
    3Operating profit
    
    
    629
    
    
    
    574
    
    
    
    412
 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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Gas Distribution
 
 2007/08 compared with 2006/07
  Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2006/07 results
    
    
    1,199
    
    
    
    (787
    )
    
    
    412Add back exceptional items
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )2006/07 adjusted results
    
    
    1,199
    
    
    
    (790
    )
    
    
    409Allowed revenues
    
    
    165
    
    
    
    
    
    
    
    165Timing on recoveries
    
    
    59
    
    
    
    
    
    
    
    59Depreciation and amortisation
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )Pass-through costs
    
    
    
    
    
    
    (18
    )
    
    
    (18
    )Other revenue and costs
    
    
    (32
    )
    
    
    23
    
    
    
    (9
    )2007/08 adjusted results
    
    
    1,391
    
    
    
    (796
    )
    
    
    595Exceptional items
    
    
    
    
    
    
    (21
    )
    
    
    (21
    )2007/08 results
    
    
    1,391
    
    
    
    (817
    )
    
    
    574
 Financial results  Gas Distribution US
  Years ended 31 March2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRevenue
    
    
    4,786
    
    
    
    2,845
    
    
    
    638Operating costs excluding exceptional
items and remeasurements
    
    
    (4,174
    )
    
    
    (2,453
    )
    
    
    (567
    )Adjusted operating profit
    
    
    612
    
    
    
    392
    
    
    
    71Exceptional items and remeasurements
    
    
    (386
    )
    
    
    95
    
    
    
    (4
    )Operating profit
    
    
    226
    
    
    
    487
    
    
    
    67
 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
    )
    
    
    6Rate increases
    
    
    32
    
    
    
    
    
    
    
    32Weather and volumes
    
    
    22
    
    
    
    
    
    
    
    22Timing on recoveries
    
    
    (6
    )
    
    
    52
    
    
    
    46Merchant function charge
    
    
    38
    
    
    
    
    
    
    
    38Energy efficiency programme
    
    
    19
    
    
    
    (12
    )
    
    
    7Pass-through costs
    
    
    69
    
    
    
    (69
    )
    
    
    Bad 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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£672m
    
    £612m
    
    13%
    
    20%Gas Distribution UK adjusted
    
    Gas Distribution US adjusted
    
    Gas Distribution UK increase
    
    Gas Distribution US increaseoperating profit
    
    operating profit
    
    in adjusted operating profit
    
    in adjusted operating profit at
constant currency
 
 2007/08 compared with 2006/07
  Operating
    
    
    OperatingRevenue
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2006/07 results
    
    
    638
    
    
    
    (571
    )
    
    
    67Add back exceptional items
    
    
    
    
    
    
    4
    
    
    
    42006/07 adjusted results
    
    
    638
    
    
    
    (567
    )
    
    
    71Exchange movements
    
    
    (32
    )
    
    
    29
    
    
    
    (3
    )2006/07 constant currency results
    
    
    606
    
    
    
    (538
    )
    
    
    68KeySpan contribution
    
    
    2,181
    
    
    
    (1,832
    )
    
    
    349Rhode Island gas operations
    
    
    61
    
    
    
    (74
    )
    
    
    (13
    )Bad debt expense
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Pension and benefit costs
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Other
    
    
    (3
    )
    
    
    (3
    )
    
    
    (6
    )2007/08 adjusted results
    
    
    2,845
    
    
    
    (2,453
    )
    
    
    392Exceptional items
    
    
    
    
    
    
    (46
    )
    
    
    (46
    )Remeasurements
    
    
    
    
    
    
    141
    
    
    
    1412007/08 results
    
    
    2,845
    
    
    
    (2,358
    )
    
    
    487
 
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Electricity Distribution & Generation
 
  Our customers are at the heart of everything we do. We continue to invest in our distribution
and generation systems creating sustained improvements in our system reliability.
 We are focused on building a branded customer experience that demonstrates our commitment to our
customers and educates them on the environmental impact they have. We believe that increased energy
efficiency and deployment of smart technologies are the best ways to help our customers control
their energy costs while addressing the effects of climate change.
 We are seeking regulatory agreements that decouple our revenue from customer energy usage. With
decoupling, we can enable increased energy efficiency for our customers without reducing our
revenue stream.
 Key Facts
 §
    
    Over 116,700 kilometres of circuit§
    
    3.4 million customers§
    
    65 TWh of electricity delivered§
    
    670 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
 Adjusted operating profit
    
    Capital investment£265m
    
    £355m2007/08: £330m
    
    2007/08: £257mEmployees
    
    Energy saved through energy
efficiency measures7,950
    
    275 GWh2007/08: 7,955
    
    2007/08: 266 GWh
 About Electricity Distribution & Generation
   Principal operations
 Electricity Distribution
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



4.1 GW
    
    38 TWh
    
    £426m
    
    670Generation facilities on Long Island
    
    Annual electricity procurement
    
    Stranded cost recoveries
    
    Substations
 
 Generation
   Stranded cost recoveries
 Energy procurement
 
    
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Electricity Distribution & Generation
  
 Regulation
      Equity

    
    Equity to
    
    
    SharingRate plan
    
    return

    
    debt ratio
    
    
    arrangementsUpstate New York
    
    
    10.6
    %
    
    
    47/53
    
    

100% to 11.75%,50% to 14%,25% to 16%,10% above 16%Massachusetts
    
    
    *
    
    
    
    *
    
    
    Not specifiedRhode Island
    
    
    10.5
    %
    
    
    50/50
    
    
    50% from10.5-11.5%,25% above 11.5%New Hampshire
    
    
    9.67
    %
    
    
    50/50
    
    
    50% above 11%
 *
    Massachusetts returns are based on the average of a peer group of utilities until 31
December 2009
 Current and future developments
  Environment
 2
 LIPA Power Supply Agreement (PSA) rate adjustment
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



37% reduction
    
    $71m
    
    114 minutes
    
    Rate filingsIn lost time injury frequency rate
    
    Investment in energy
efficiency programmes
    
    SAIDI network reliability
    
    New rate filings for 

New York and LIPA
  
  Upstate New York capital expenditure rate filing
   Massachusetts and Rhode Island rate plans
  Performance against our objectives
  Driving improvements in our safety, customer and operational performance
 Safety
 
 
 
  §
    
    integration of a safety observations programme focused on fostering open communications
and promoting safe behaviours.A new online system was developed to support the programme;§
    
    a new safety performance committee structure was established to drive safety
initiatives and promote communication;§
    
    implementation of the soft tissue injury prevention programme continued to improve our
approach to preventing soft tissue or musculoskeletal injuries, which make up 60% of injuries;§
    
    an attendance management programme was initiated to increase supervisors focus on
non occupational absence reduction; and
 §
    
    as part of our trusted to work responsibly strategy, we continue to address the
golden rules of safety that involve the most critical areas of safety and set clear expectations
of the workforce.
  Customer service
 
 
 
   §
    
    communications and price;§
    
    corporate citizenship;§
    
    billing, payment and collections;§
    
    gas and electricity quality, reliability and safety;§
    
    customer field services; and§
    
    customer operations.
  §
    
    outage communications and estimated time of restoration accuracy;§
    
    customer education, relevance, and frequency of communications associated with forestry
related work; and§
    
    customer facing skills to ensure customers feel valued.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Electricity Distribution & Generation
 
 Delivering strong, sustainable regulatory and long-term contracts with good returns
 Returns on investment
 
 
 
  AllowedAsset base*
    
    
    Return on equity*
    
    
    returnRegulatory entity
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    currentNiagara Mohawk(Electric)
    
    $
    4,609m
    
    
    $
    4,882m
    
    
    
    6.7
    %
    
    
    9.1
    %
    
    
    10.6
    %Massachusetts(Electric)
    
    $
    1,495m
    
    
    $
    1,373m
    
    
    
    7.0
    %
    
    
    9.5
    %
    
    
    11.0
    %Narragansett Electric(Dist Only)
    
    
    $564m
    
    
    
    $543m
    
    
    
    2.3
    %
    
    
    6.8
    %
    
    
    10.5
    %Long IslandGeneration
    
    
    $574m
    
    
    
    $621m
    
    
    
    7.1
    %
    
    
    9.5
    %
    
    
    9.5
    %
 *
    Based on regulatory returns for the 12 months ended either 31 October or 31 December
 1 January 2010,
 31 December 2011
  Modernising and extending our networks
 Reliability
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



7.0%
    
    6.7%
    
    $750m
    
    $7.2bn2008 regulatory return on equity
    
    2008 regulatory return on equity
    
    Planned capital spend on
    
    Estimated rate basefor Massachusetts Electric
    
    for Niagara Mohawk (Electric)
    
    infrastructure in 2009/10
    
    (based on latest filings)
 
 §
    
    feeder hardening  upgrading our worst performing overhead electricity circuits by
replacing aged and deteriorated components and protecting against lightning strikes and animal
contacts; and§
    
    inspection and maintenance  increasing our preventative maintenance and repair
activities to find potential faults before they occur to improve reliability and public safety.
    Capital investment
 Becoming more efficient through transforming our operating model and increasingly aligning
our processes
 Key areas of focus
 
 
 
     §
    
    manage the assets  integrated planning and efficient capital allocation;§
    
    customer management  single point of contact for the customer while ensuring
end-to-end coordination for all processes that affect the customer;§
    
    contracting strategies  effective management of all contracts and arrangements;§
    
    deliver the work  optimise work coordination to maximise crew efficiency while
increasing productive time;§
    
    design  centralised to drive productivity and standards focused on core design and
field support activities; and§
    
    operate the network  consolidation of control centres while ensuring standardisation
across all regions.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Electricity Distribution & Generation
 
 §
    
    customer focused culture  building clear focus and a customer first culture through
clear accountability and aligned goals and metrics across our business areas;§
    
    customer experience initiatives  improving processes that directly impact customer
satisfaction such as billing, collections, contact centre performance, self service options, outage
communications and field service;§
    
    sustainable products and services  delivery of targeted energy efficiency programmes
and other energy management solutions that help customers manage their energy use; and§
    
    building our brand  through marketing and integrated communications that reinforce
our commitment to the environment and the communities we serve.
 Efficiency
 
 
 
   §
    
    additions  by prioritising and optimising our investment programmes in both
distribution and generation;§
    
    materials  by optimising both use and stock levels;§
    
    procurement  through longer term visibility of equipment needs and optimal balance
between workload and resources; and§
    
    generation  optimising generation plant performance.
 Financial performance
 Profit
 
 
 
     Years ended 31 March2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRevenue excluding stranded cost
recoveries
    
    
    4,537
    
    
    
    3,126
    
    
    
    3,004Operating costs excluding exceptional
items and remeasurements
    
    
    (4,272
    )
    
    
    (2,796
    )
    
    
    (2,640
    )Adjusted operating profit
    
    
    265
    
    
    
    330
    
    
    
    364Exceptional items
    
    
    (51
    )
    
    
    (104
    )
    
    
    (9
    )Remeasurements
    
    
    (109
    )
    
    
    91
    
    
    
    81Stranded cost recoveries
    
    
    426
    
    
    
    379
    
    
    
    423Operating profit
    
    
    531
    
    
    
    696
    
    
    
    859
   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 atconstant 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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Reservoir Woods
    
    £265m
    
    £4,537mNew England LEED certified office
    
    Adjusted operating profit
    
    Revenue
 
 
 Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2006/07 results
    
    
    3,430
    
    
    
    (2,571
    )
    
    
    859Add back exceptional items
    
    
    
    
    
    
    9
    
    
    
    9Add back remeasurements
    
    
    
    
    
    
    (81
    )
    
    
    (81
    )Add back stranded cost recoveries
    
    
    (426
    )
    
    
    3
    
    
    
    (423
    )2006/07 adjusted results
    
    
    3,004
    
    
    
    (2,640
    )
    
    
    364Exchange movements
    
    
    (150
    )
    
    
    132
    
    
    
    (18
    )2006/07 adjusted results atconstant currency
    
    
    2,854
    
    
    
    (2,508
    )
    
    
    346Purchased electricity
    
    
    (47
    )
    
    
    20
    
    
    
    (27
    )Volumes, including weather
    
    
    17
    
    
    
    
    
    
    
    17Depreciation and amortisation
    
    
    
    
    
    
    (7
    )
    
    
    (7
    )Reliability enhancement
    
    
    
    
    
    
    (13
    )
    
    
    (13
    )Bad debts
    
    
    
    
    
    
    (17
    )
    
    
    (17
    )Storms
    
    
    
    
    
    
    33
    
    
    
    33KeySpan acquisition
    
    
    293
    
    
    
    (268
    )
    
    
    25Other
    
    
    9
    
    
    
    (36
    )
    
    
    (27
    )2007/08 adjusted results
    
    
    3,126
    
    
    
    (2,796
    )
    
    
    330Exceptional items
    
    
    
    
    
    
    (104
    )
    
    
    (104
    )Remeasurements
    
    
    
    
    
    
    91
    
    
    
    91Stranded cost recoveries
    
    
    382
    
    
    
    (3
    )
    
    
    3792007/08 results
    
    
    3,508
    
    
    
    (2,812
    )
    
    
    696
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Non-regulated businesses and other
 
  This year has seen further expansion activity at our liquefied natural gas (LNG) importation
terminal on the Isle of Grain. Through the commissioning of phase II, the site now has annual
import capacity of 9.9 million tonnes. We are continuing to invest in Grain LNG and by 2010, 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, approximately 645,000 new meters were installed by OnStream, our competitive
metering business, comprising approximately 375,000 gas and 270,000 electricity meters.
 We are undergoing a programme of land remediation at many of our brownfield sites, including legacy
gas sites.
  Key Facts
 
    
    Metering and meter reading services for around 20 million meters in the UK
    
    Property portfolio of over 800 sites comprising buildings and land of around 1,600 hectares
    
    Phase III Grain LNG completion anticipated in 2010
  Adjusted operating profit
    
    Capital investment£65m
    
    £427m2007/08: £129m
    
    2007/08: £383mEmployees
    
    LNG imported to the UKthrough Isle of Grain (tonnes)3,597*
    
    1,229,0002007/08: 3,155
    
    2007/08: 590,000
 About our non-regulated businesses
   Principal operations
 
 Metering
  
 Grain LNG
  
 UK Property
  
 BritNed
  
 US non-regulated businesses
 
  
 xoserve
  
 Fulcrum
  
 Blue-NG
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£300m
    
    Grain LNG
    
    Blue-NG
    
    £427mPlanned investment in 
Grain LNG phase III
    
    Largest ever delivery of LNG to
the UK was imported at Grain
in November 2008
    
    New technology: one of the most
efficient renewable energy sources
in the world
    
    Total capital investment in
non-regulated businesses
and other activities
  
  Corporate activities and shared services function
  
 Millennium pipeline
 
 Business drivers
  
 Multi-year contractual arrangements
    
 Competition
  
 Capital investment
  
 Efficiency
 
 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
 Safety, reliability and customer service
 
 
 
    Modernising and extending our networks
 Capital investment
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Non-regulated businesses and other
  
  
 Becoming more efficient through transforming our operating model and increasingly aligning our
processes
 Key areas of focus
 
 
 
    Financial performance
  Years ended 31 March2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRevenue
    
    
    719
    
    
    
    642
    
    
    
    567Other operating income
    
    
    31
    
    
    
    67
    
    
    
    71Operating costs excluding
exceptional items
    
    
    (685
    )
    
    
    (580
    )
    
    
    (505
    )Adjusted operating profit
    
    
    65
    
    
    
    129
    
    
    
    133Exceptional items
    
    
    (64
    )
    
    
    (57
    )
    
    
    (1
    )Operating profit
    
    
    1
    
    
    
    72
    
    
    
    132
 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
    
    
    26
    
    
    
    (26
    )
    
    
    2007/08 constant currency results
    
    
    735
    
    
    
    (606
    )
    
    
    129Metering
    
    
    7
    
    
    
    22
    
    
    
    29Property
    
    
    (49
    )
    
    
    (43
    )
    
    
    (92
    )Grain LNG
    
    
    33
    
    
    
    (24
    )
    
    
    9US non-regulated businesses
    
    
    42
    
    
    
    (44
    )
    
    
    (2
    )Other activities
    
    
    (18
    )
    
    
    10
    
    
    
    (8
    )2008/09 adjusted results
    
    
    750
    
    
    
    (685
    )
    
    
    65Exceptional items
    
    
    
    
    
    
    (64
    )
    
    
    (64
    )2008/09 results
    
    
    750
    
    
    
    (749
    )
    
    
    1
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£133m
    
    £92m
    
    £21m
    
    £65mMetering adjusted operating profit
    
    Decrease in UK Property
adjusted operating profit
    
    Grain LNG adjusted operating profit
    
    Total adjusted operating profit
for our non-regulated businesses
and other activities
  
  
 2007/08 compared with 2006/07
  Revenueand otheroperating
    
    
    Operating
    
    
    Operatingincome
    
    
    costs
    
    
    profit£m
    
    
    £m
    
    
    £m2006/07 results
    
    
    638
    
    
    
    (506
    )
    
    
    132Add back exceptional items
    
    
    
    
    
    
    1
    
    
    
    12006/07 adjusted results
    
    
    638
    
    
    
    (505
    )
    
    
    133Metering
    
    
    14
    
    
    
    (13
    )
    
    
    1Property
    
    
    
    
    
    
    7
    
    
    
    7Grain LNG
    
    
    3
    
    
    
    
    
    
    
    3Advantica
    
    
    (37
    )
    
    
    34
    
    
    
    (3
    )US non-regulated businesses
    
    
    49
    
    
    
    (51
    )
    
    
    (2
    )Fulcrum and other activities
    
    
    42
    
    
    
    (52
    )
    
    
    (10
    )2007/08 adjusted results
    
    
    709
    
    
    
    (580
    )
    
    
    129Exceptional items
    
    
    
    
    
    
    (57
    )
    
    
    (57
    )2007/08 results
    
    
    709
    
    
    
    (637
    )
    
    
    72
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Discontinued operations
  
 Ravenswood
    
    $2.9bn
    
    Non-core businesses soldSold
    
    Ravenswood sale
proceeds
    
    Programme of planned disposals of our material
non-core businesses is complete
  About discontinued operations
 Principal operations
   Ravenswood
  KeySpan Communications and KeySpan
engineering companies
 Performance against our objectives
 Becoming more efficient through transforming our operating model and increasingly aligning
processes
  Financial performance
  Years ended 31 March2009
    
    
    2008
    
    
    2007Discontinued operations
    
    £m
    
    
    £m
    
    
    £mRevenue
    
    
    97
    
    
    
    201
    
    
    
    383Operating costs excluding exceptional
items and remeasurements
    
    
    (84
    )
    
    
    (166
    )
    
    
    (266
    )Adjusted operating profit
    
    
    13
    
    
    
    35
    
    
    
    117Exceptional items and remeasurements
    
    
    
    
    
    
    
    
    
    
    (55
    )Operating profit
    
    
    13
    
    
    
    35
    
    
    
    62Net finance income before
remeasurements
    
    
    
    
    
    
    
    
    
    
    (2
    )Remeasurement finance income
    
    
    
    
    
    
    8
    
    
    
    37Profit before tax
    
    
    13
    
    
    
    43
    
    
    
    97Taxation
    
    
    (4
    )
    
    
    (7
    )
    
    
    (11
    )Profit after tax
    
    
    9
    
    
    
    36
    
    
    
    86Gains on disposal of operations
    
    
    27
    
    
    
    1,586
    
    
    
    Taxation on gains
    
    
    (11
    )
    
    
    (4
    )
    
    
    Total profit for the year
    
    
    25
    
    
    
    1,618
    
    
    
    86
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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
    
    
    29,915
    
    
    
    
    
    
    
    29,915Goodwill and non-current investments
    
    
    5,752
    
    
    
    
    
    
    
    5,752Current assets and liabilities
    
    
    3,228
    
    
    
    (3,466
    )
    
    
    (238
    )Other non-current assets and liabilities
    
    
    106
    
    
    
    (3,543
    )
    
    
    (3,437
    )Post-retirement obligations
    
    
    269
    
    
    
    (3,080
    )
    
    
    (2,811
    )Deferred tax
    
    
    137
    
    
    
    (2,661
    )
    
    
    (2,524
    )Total before net debt
    
    
    39,407
    
    
    
    (12,750
    )
    
    
    26,657Net debt
    
    
    5,060
    
    
    
    (27,733
    )
    
    
    (22,673
    )Total as at 31 March 2009
    
    
    44,467
    
    
    
    (40,483
    )
    
    
    3,984Total as at 31 March 2008
    
    
    37,771
    
    
    
    (32,397
    )
    
    
    5,374
  Net debt
  
 Net debt at 31 March
 Maturity of borrowings at 31 March 2009
 
 
 
  
 Maturity of net debt at 31 March 2009
 
 
 
 Capital structure
 
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial position and financial management
  
 2009
    
    
    2008RAV gearing
    
    %
    
    
    %Regulated transmission and distribution businesses
within National Grid Gas plc
    
    
    60
    
    
    
    55National Grid Electricity Transmission plc
    
    
    58
    
    
    
    52
   Liquidity and treasury management
  Treasury policy
     Current condition of the financial markets
 Cash flow and cash flow forecasting
      Funding and liquidity management
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



£44.5bn
    
    £4.0bn
    
    £22.7bn
    
    3.1xTotal assets
    
    Net assets
    
    Net debt
    
    Interest cover
  
 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
    
    
    £743 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
    
    
    9.3 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
    
    
    6.1 billionissuedNational Grid USAUS commercial paper programme
    
    $2.0 billion
    
    
    UnutilisedEuro medium-term note programme
    
    4.0 billion
    
    
    0.1 billionissuedKeySpan CorporationUS commercial paper programme
    
    $1.5 billion
    
    
    Unutilised
    Facility
    
    AmountNational Grid plcShort-term committed facilities
    
    $850 millionNational Grid Gas plcLong-term committed facilities
    
    £755 millionNational Grid Electricity Transmission plcLong-term committed facilities
    
    £425 millionNational Grids US subsidiariesCommitted facilities
    
    $1,730 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 ElectricityTransmission 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
    
    
    
    
    
    
    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    Use of derivative financial instruments
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial position and financial management
  
 Refinancing risk management
   Interest rate risk management
      
 Interest rate profile pre-derivatives at 31 March 2009
 Interest rate profile post-derivatives at 31 March 2009
 
 
 
  Foreign exchange risk management
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



50 years
    
    58%
    
    60%
    
    £4.9bnLongest maturity of
our borrowings
    
    RAV gearing of NGET plc
    
    RAV gearing of the regulated
transmission and distribution
businesses within NGG plc
    
    New debt issuances
  
  Currency profile at 31 March 2009
 
 
 
 Counterparty risk management
    Valuation and sensitivity analysis
 2008/09
    
    
    2007/08Other
    
    
    
    
    
    
    OtherIncome
    
    
    equity
    
    
    Income
    
    
    equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves£m
    
    
    £m
    
    
    £m
    
    
    £mUK retail price index ±0.50%
    
    
    17
    
    
    
    
    
    
    
    16
    
    
    
    UK interest rates ±0.50%
    
    
    67
    
    
    
    77
    
    
    
    46
    
    
    
    57US interest rates ±0.50%
    
    
    63
    
    
    
    13
    
    
    
    31
    
    
    
    7US dollar exchange rate ±10%
    
    
    55
    
    
    
    880
    
    
    
    38
    
    
    
    590
  Commodity contracts
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial position and financial management
  
 Energy purchase contracts
  Commodity purchase contracts accounted for as derivative contracts
 Derivative financial instruments linked to
commodity prices
      Sensitivity analysis
  2008/09
    
    
    2007/08Other
    
    
    
    
    
    
    OtherIncome
    
    
    equity
    
    
    Income
    
    
    equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves£m
    
    
    £m
    
    
    £m
    
    
    £m10% increase in
commodity prices
    
    
    56
    
    
    
    (1
    )
    
    
    25
    
    
    
    (1
    )10% decrease in
commodity prices
    
    
    (72
    )
    
    
    1
    
    
    
    (22
    )
    
    
    1
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Baa1/BBB+
    
    A3/A-/A
    
    A3/BBB+
    
    Baa1/A-/A-Moodys/S&P and Fitch senior
unsecured credit ratings for
National Grid plc
    
    Moodys/S&P/Fitch senior
unsecured credit ratings for
NGG plc and NGET plc
    
    Moodys/S&P senior
unsecured credit ratings
for National Grid USA
    
    Moodys/S&P/Fitch senior
unsecured credit ratings for
KeySpan Corporation
  
 Commitments and contingencies
  2009
    
    
    2008£m
    
    
    £mFuture capital expenditure contracted 

but not provided for
    
    
    1,493
    
    
    
    1,097Total operating lease commitments
    
    
    946
    
    
    
    737Power commitments
    
    
    3,645
    
    
    
    2,061Other
commitments, contingencies 
and guarantees
    
    
    1,666
    
    
    
    1,387
    Contractual obligations at 31 March 2009
    Less than
    
    
    1-3
    
    
    3-5
    
    
    More than1 year
    
    
    years
    
    
    years
    
    
    5 years
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mFinancial liabilitiesBorrowings
    
    
    2,839
    
    
    
    4,406
    
    
    
    3,777
    
    
    
    15,279
    
    
    
    26,301Interest paymentson borrowings
    
    
    1,031
    
    
    
    1,885
    
    
    
    1,578
    
    
    
    7,878
    
    
    
    12,372Finance lease liabilities
    
    
    46
    
    
    
    110
    
    
    
    38
    
    
    
    124
    
    
    
    318Other non-interestbearing liabilities
    
    
    2,303
    
    
    
    396
    
    
    
    
    
    
    
    
    
    
    
    2,699Derivatives payments
    
    
    598
    
    
    
    2,477
    
    
    
    975
    
    
    
    1,179
    
    
    
    5,229Derivatives receipts
    
    
    (1,057
    )
    
    
    (2,795
    )
    
    
    (490
    )
    
    
    (1,184
    )
    
    
    (5,526
    )Commodity contracts
    
    
    601
    
    
    
    486
    
    
    
    87
    
    
    
    127
    
    
    
    1,301Other contractual
obligationsCapital commitments
    
    
    1,167
    
    
    
    287
    
    
    
    33
    
    
    
    6
    
    
    
    1,493Operating leases
    
    
    82
    
    
    
    152
    
    
    
    163
    
    
    
    549
    
    
    
    946Energy commitments
    
    
    990
    
    
    
    1,436
    
    
    
    791
    
    
    
    428
    
    
    
    3,645Total at 31 March 2009
    
    
    8,600
    
    
    
    8,840
    
    
    
    6,952
    
    
    
    24,386
    
    
    
    48,778
 Off balance sheet arrangements
  Details of material litigation as at 31 March 2009
  Metering competition investigation
  Gas Distribution mains replacement investigation
  KeySpan Department of Justice investigation
  Related party transactions
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Financial position and financial management
  
 Retirement arrangements
     Net pension and other post-retirement obligations
  UK
    
    
    US
    
    
    TotalNet plan asset/(liability)
    
    £m
    
    
    £m
    
    
    £mAs at 1 April 2008
    
    
    415
    
    
    
    (1,315
    )
    
    
    (900
    )Exchange movements
    
    
    
    
    
    
    (549
    )
    
    
    (549
    )Pension service cost
    
    
    (64
    )
    
    
    (104
    )
    
    
    (168
    )Expected return less interest
    
    
    25
    
    
    
    (39
    )
    
    
    (14
    )Curtailments, settlements and other
    
    
    (13
    )
    
    
    (41
    )
    
    
    (54
    )Actuarial gains/(losses)

 on plan assets
    
    
    (2,477
    )
    
    
    (1,475
    )
    
    
    (3,952
    ) on plan liabilities
    
    
    1,472
    
    
    
    462
    
    
    
    1,934Employer contributions
    
    
    488
    
    
    
    404
    
    
    
    892As at 31 March 2009
    
    
    (154
    )
    
    
    (2,657
    )
    
    
    (2,811
    )Plan assets
    
    
    12,185
    
    
    
    3,334
    
    
    
    15,519Plan liabilities
    
    
    (12,339
    )
    
    
    (5,991
    )
    
    
    (18,330
    )Net plan liability
    
    
    (154
    )
    
    
    (2,657
    )
    
    
    (2,811
    )
 
 Movement in net pension and other post-retirement obligations
 Actuarial position
   Contributions
  §
    
    National Grid UK Pension Scheme: the
Company made deficit contributions of £295 million during 2008/09 and £59 million in April 2009
along with payments made in the previous year to ensure that the deficit reported at the 2007
valuation is paid in full; and§
    
    National Grid Electricity Supply Pension Scheme: the Company
made deficit contributions of £90 million during 2008/09 and £90 million in April 2009. The
remaining deficit contributions will be payable monthly from April 2012 to March 2017.
   Plan assets
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Accounting policies
  
 Basis of accounting
   Choices permitted under IFRS
   
 Transition date
  
 Business combinations
  
 Financial instruments
  
 Carrying value of assets at transition
  
 Share-based payments
  
 Cumulative translation differences
 
  
 Presentation formats
   
 Pensions
 Joint ventures
  
 Capitalised interest
  
 Capital contributions
  
 Timing of goodwill impairment reviews
  
 Financial instruments
  
 Individual accounts
 
 Segmental reporting
    Critical accounting policies
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Accounting policies
  
 Estimated economic lives of property, plant and equipment
   
 Carrying value of assets and potential for impairments
    
 Revenue
   
 Assets and liabilities carried at fair value
 Hedge accounting
  
 Pensions and other post-retirement obligations
   
 Businesses held for sale
     
 Exceptional items, remeasurements and stranded
cost recoveries
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Provisions
    
 Tax estimates
  
 Energy commitments
 
  
 Asset useful lives
  
 Revenue accruals
  
 Assets carried at fair value
  
 Hedge accounting
 Pensions and other post-retirement obligations
  
 Provisions
 
 Accounting developments
 Accounting standards and interpretations adopted
in 2008/09
  
 Amendments to standards
  New interpretations
 
  Accounting developments
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Corporate Governance
   
 Chairmans foreword
     Sir John Parker
  Governance framework
 Name
    
    Attendance*ChairmanSir John Parker
    
    10 of 10Chief ExecutiveSteve Holliday
    
    10 of 10Executive DirectorsBob Catell (Deputy Chairman)
    
    10 of 10Steve Lucas
    
    10 of 10Nick Winser
    
    10 of 10Tom King
    
    10 of 10Mark Fairbairn
    
    10 of 10Edward Astle (to 30 April 2008)
    
    1 of 1Non-executive DirectorsKen Harvey (Senior Independent Director)
    
    10 of 10Linda Adamany
    
    10 of 10John Allan
    
    8 of 10Stephen Pettit
    
    10 of 10Maria Richter
    
    10 of 10George Rose
    
    7 of 10Philip Aiken
    
    8 of 8
 *
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Non-executive Director independence
  Roles of the Chairman, Chief Executive and Senior Independent Director
 Director development
   §
    
    informing them at each Board meeting of the latest training courses which may be of interest;§
    
    attendance at key site visits;§
    
    informing Directors of legal and corporate governance updates and best practice; and§
    
    management presentations.
  §
    
    internal and external mentoring;§
    
    attendance at external courses and business schools; and§
    
    experience of other boardrooms through non-executive appointments.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Corporate Governance
 
 Performance evaluation
     §
    
    to review the agendas to include, for example, inclusion and diversity
issues and strategic business trends analysis;§
    
    to consider further development of the use of
video conferencing for Committee meetings; and§
    
    to provide a brief overview (including career
history) of each presenter to the Board.
  §
    
    receipt of
Board and Committee papers normally five business days in advance of the meeting in order to enable
more opportunity for discussions with Executive Directors prior to the meeting;§
    
    arranging for
potential successors to the Executive Directors to receive sufficient visibility by the Board; and§
    
    holding an additional meeting annually for Non-executive Directors chaired by the Senior
Independent Director with the Chairman and Chief Executive to attend by invitation.
 The Board and its Committees
  §
    
    corporate governance;§
    
    strategy, finance 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; and§
    
    reports from the Company Secretary & General Counsel including an update on the
governance of the Company and its businesses, and any legal or new risk issues that the Board ought
to be aware of.
    Audit Committee
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Name
    
    Attendance*George Rose (chairman)
    
    6 of 6Linda Adamany
    
    6 of 6John Allan
    
    1 of 1Maria Richter
    
    5 of 5Philip Aiken
    
    4 of 5
 *
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director   In respect of auditors:-
 §
    
    the level and constitution of external audit and non-audit fees;§
    
    the independence and
objectivity of the external auditors;§
    
    an evaluation of the external audit process globally
including the expertise of the audit firm;§
    
    monitoring and reviewing the effectiveness of
internal audit activities including discussions with the head of internal audit without management
present; and§
    
    reviewing Financial Reporting Council Guidance on Audit Committees.
 In respect of internal controls and risk management:-
 §
    
    reviewing the effectiveness of the Companys financial reporting, internal controls and
compliance with applicable legal requirements;§
    
    monitoring risk and compliance management
procedures across the Company and reviewing specific risks (details of such risks can be found on
pages 97 to 99);§
    
    receiving reports from the business separation compliance officer, as required
under National Grid Gas plcs gas transporter licences; and§
    
    receiving reports and technical
updates including from the director of tax and treasury.
 In respect of financial matters:-
 §
    
    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§
    
    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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Corporate Governance
 
 Name
    
    Attendance*Steve Holliday (chairman)
    
    11 of 11Bob Catell
    
    11 of 11Mark Fairbairn
    
    10 of 11Steve Lucas
    
    11 of 11Tom King
    
    11 of 11Nick Winser
    
    11 of 11Edward Astle (to 30 April 2008)
    
    1 of 1Helen Mahy, Company Secretary & General Counsel
    
    11 of 11
 *
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director  §
    
    the
financial, operational and safety performance of the Company and its businesses;§
    
    strategic
business development and implementation including updates on the integration of the KeySpan
businesses;§
    
    approving capital and operational expenditure under the specific authorities
delegated to it by the Board;§
    
    global outsourcing;§
    
    global human resource leadership; and§
    
    global IS strategic issues.
  Finance Committee
   Name
    
    Attendance*Maria Richter (chairman)
    
    4 of 4Steve Holliday
    
    3 of 4Steve Lucas
    
    4 of 4Stephen Pettit
    
    4 of 4John Allan
    
    2 of 4
 *
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director  §
    
    long-term funding
requirements including consideration of matters affecting the Company arising out of the global
economic downturn;§
    
    setting and reviewing
treasury management guidelines and policy in light of market conditions;§
    
    taxation issues for
the Company;§
    
    treasury performance updates;§
    
    insurance updates; and§
    
    pensions updates.
 Nominations Committee
   Name
    
    Attendance*Sir John Parker (chairman)
    
    5 of 5Ken Harvey
    
    5 of 5Maria Richter
    
    5 of 5George Rose
    
    3 of 5
 *
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director   §
    
    the size of the Board, its
structure and composition;§
    
    changes to the composition of Board Committees;§
    
    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)
    
    4 of 6Ken Harvey
    
    6 of 6Stephen Pettit
    
    6 of 6George Rose
    
    3 of 6
 *
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Risk & Responsibility Committee
    Name
    
    Attendance*Stephen Pettit (chairman)
    
    4 of 4Linda Adamany
    
    4 of 4Philip Aiken
    
    3 of 4Ken Harvey
    
    3 of 4Bob Catell
    
    4 of 4
 *
    Attendance is expressed as number of meetings attended out of number possible or applicable for
the individual Director   §
    
    considered the current and projected environmental impact of the Company, including climate
change;§
    
    considered specific identified future risks and plans for minimising such risks;§
    
    reviewed safety, health and environment audit plans and the outcome of such audits;§
    
    reviewed
serious incident reports;§
    
    reviewed reports on business conduct issues;§
    
    reviewed progress in
embedding a process safety culture; and§
    
    considered reports and updates from external advisors.
 Disclosure Committee
 Shareholders
     Change of control provisions
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Corporate Governance
  
  Corporate governance practices: differences from New York Stock Exchange (NYSE) listing standards
  n
    
    different tests of independence for Board members are applied under the Combined Code and Section 303A;n
    
    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;n
    
    while the Company reports compliance with the Combined Code in each Annual Report and Accounts, there is no requirement to adopt and disclose separate corporate governance guidelines; andn
    
    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
 n
    
    the receipt of a Letter of Assurance from the Chief Executive, which consolidates key matters of interest raised through the year-end assurance process;n
    
    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 Committee meetings; andn
    
    assurances in relation to the Certifications required to be given under the US Sarbanes-Oxley Act, required as a result of the Companys New York Stock Exchange listing.
 Internal control  information assurance
  Internal control over financial reporting  
Sarbanes-Oxley
  Risk management
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Compliance management
 Risk factors
  Changes in law or regulation could have an adverse effect on our results of operations.
  Breaches of, or changes in, environmental 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.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Corporate Governance
  
  Network failure, the inability to carry out critical non-network operations and damage to
infrastructure may have significant 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.
  Business development activity, including acquisitions and disposals, may be based on incorrect
assumptions or conclusions; significant liabilities may be overlooked or there may be other
unanticipated or unintended effects.
 Changes to the regulatory treatment of commodity costs may have an adverse effect on the results of
operations.
  Our reputation may be harmed if consumers of energy suffer a disruption to their supply.
  Fluctuations in exchange rates (in particular in the US dollar exchange rate), interest rates and
commodity price indices could have a significant impact on our results of operations.
   Our financial position may be adversely affected by a number of factors including restrictions in
borrowing and debt arrangements, changes to credit ratings and adverse changes and volatility in
the global credit markets.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Our results of operations could be affected by deflation.
  Future funding requirements of our pension schemes could adversely affect our results of
operations.
  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, or
arrangements we have may be terminated, which could harm our results of operations.
 Our operating results may fluctuate on a seasonal and quarterly basis.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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
  Change of control provisions
  Future developments
   Research and development
  Share capital
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



17 43
    Employees
    Policy and practice on payment of creditors
  Audit information
 Articles of Association
  Material interests in shares
  % of voting rightsLegal and General Investment Management Ltd
    
    
    5.46Fidelity
    
    
    3.06
  Annual General Meeting
   Helen Mahy
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Directors Remuneration Report
  
  John Allan
 Remuneration Committee
        n
    
    Deloitte LLP, independent remuneration advisors. It also provides taxation and financial advice
to the Company;n
    
    Alithos Limited, provision of Total Shareholder Return calculations for the Performance Share
Plan and Executive Share Option Plan;n
    
    Linklaters LLP, advice relating to Directors service contracts as well as providing other legal
advice to the Company; andn
    
    Mercer Human Resource Consulting Limited, advice relating to pension taxation legislation. It
also provides general advice with respect to human resource issues across the Company.
 Remuneration policy
  n
    
    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;n
    
    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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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;n
    
    for higher levels of performance, rewards should be substantial but not excessive; andn
    
    incentive plans, performance measures and targets should be stretching and aligned as
closely as possible with shareholders interests.
  Executive Directors remuneration
  n
    
    salary;n
    
    Annual Performance Plan including the Deferred Share Plan;n
    
    long-term incentive, the Performance Share Plan;n
    
    all-employee share plans;n
    
    pension contributions; andn
    
    non-cash benefits.
 Salary
  Annual Performance Plan including the Deferred Share Plan (DSP)
 Level of performance achieved in 2008/09as determined by the Remuneration CommitteeFinancial measures
    
    Company targets
    
    Divisional targetsAdjusted EPS
    
    Between target
and stretchConsolidated cash flow
    
    StretchReturn on equity
    
Between target 

and stretchOperating profit
    
    
    
    Varied performance
 (i) (ii) (iii)Line of business 

returns targets
    
    
    
    Varied performance (iv) (v) (vi)
 (i)
    
    Electricity Distribution & Generation between threshold and target.(ii)
    
    Gas Distribution between target and stretch.(iii)
    
    Transmission at stretch.(iv)
    
    Electricity Distribution & Generation below threshold.(v)
    
    Gas Distribution between target and stretch.(vi)
    
    Transmission between target and stretch.
   Long-term incentive  Performance Share Plan (PSP)
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Directors Remuneration Report
  
  
 Recruitment Promise  Special Retention Award (SRA)
  Executive Directors remuneration package
  
 Executive Directors remuneration package
  
 
 
  All-employee share plans
 n
    
    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.n
    
    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.n
    
    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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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$15,500 for those under the age of 50 and US$20,500
for those over 50 for calendar year 2008 and US$16,500 and US$22,000 respectively for 2009; and/or
up to 15% of salary (post-tax) up to applicable limits (US$230,000 for calendar year 2008 and
US$245,000 for 2009). 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.n
    
    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
   Share ownership guidelines
  Share dilution through the operation of share-based incentive plans
  Executive Directors service contracts
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Directors Remuneration Report
  
  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 monthsEdward Astle (i)
    
    27 July 2007
    
    
    12 monthsBob Catell (ii)
    
    26 October 2007
    
    
    12 months
 
 (i)

    Edward Astle left the Board on 30 April 2008.(ii)

    Bob Catell ceased being an Executive Director on 31 March 2009. His employment agreement was
terminated and replaced with a Non-executive Director contract for services and he will retire from
the Board at the conclusion of the Companys AGM on 27 July 2009. External appointments and retention of fees
  Company
    
    
    Retained fees (£)Executive DirectorsSteve Holliday
    
    Marks and Spencer Group plc
    
    
    
    67,000Steve Lucas
    
    Compass Group PLC
    
    
    
    82,500Nick Winser (i)
    
    Kier Group plc
    
    
    
    3,400Bob Catell (ii)
    
    Keyera Energy Management Ltd (a),Sovereign Bancorp Inc Advisory
    
    
    
    56,374Board (b) and JP Morgan Chase IncMetropolitan Advisory Board (c)
 
 (i)

    Reflects retained fees for the period 1 March 2009 to 31 March 2009 only.(ii)

    The retained fees comprise the following: (a) £10,890, (b) £42,235 and (c) £3,249. The
exchange rate used for (a) is Canadian$1.9058:£1 and US$1.539:£1 for (b) 
and (c). Non-executive Directors remuneration
 Non-executive Directors letters of appointment
  Date of letter
    
    
    Date ofof appointment
    (i)
    
    next electionNon-executive DirectorsSir John Parker
    
    11 May 2009
    
    
    2009 AGMKen Harvey
    
    4 November 2004
    
    
    2009 AGMLinda Adamany
    
    20 October 2006
    
    
    2010 AGMPhilip Aiken (ii)
    
    14 May 2008
    
    
    2011 AGMJohn Allan
    
    27 April 2005
    
    
    2011 AGMStephen Pettit
    
    22 November 2004
    
    
    2009 AGMMaria Richter
    
    25 June 2007
    
    
    2010 AGMGeorge Rose
    
    5 June 2003
    
    
    2009 AGM
 
 (i)

    Date of original appointment or most recent Non-executive role.(ii)

    Philip Aiken joined the Board on 15 May 2008. Performance graph
     National Grid plc
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Remuneration outcomes during the year ended 31 March 2009
  1. Directors emoluments
  Year ended31 MarchTable 1A
    
    Year ended 31 March 2009
    
    
    2008AnnualPerformance
    
    
    Benefits
    
    
    BenefitsPlan
    
    
    in kind(ii)
    
    
    in kind(ii)
    
    
    OtherSalary(i)
    
    
    (bonus)
    
    
    (cash)
    
    
    (non-cash)
    
    
    emoluments
    
    
    Total
    
    
    Total£000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000sExecutive DirectorsSteve Holliday
    
    
    917
    
    
    
    1,265
    
    
    
    12
    
    
    
    12
    
    
    
    
    
    
    
    2,206
    
    
    
    2,062Steve Lucas (iii)
    
    
    516
    
    
    
    709
    
    
    
    6
    
    
    
    28
    
    
    
    
    
    
    
    1,259
    
    
    
    1,183Nick Winser
    
    
    459
    
    
    
    620
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    1,096
    
    
    
    963Mark Fairbairn (iii)
    
    
    458
    
    
    
    598
    
    
    
    8
    
    
    
    25
    
    
    
    
    
    
    
    1,089
    
    
    
    1,010Tom King (iv)
    
    
    677
    
    
    
    704
    
    
    
    5
    
    
    
    10
    
    
    
    
    
    
    
    1,396
    
    
    
    1,149Edward Astle (v)
    
    
    37
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    440
    
    
    
    478
    
    
    
    1,070Bob Catell (iv) (vi)
    
    
    825
    
    
    
    1,090
    
    
    
    6
    
    
    
    28
    
    
    
    
    
    
    
    1,949
    
    
    
    818Total
    
    
    3,889
    
    
    
    4,986
    
    
    
    38
    
    
    
    120
    
    
    
    440
    
    
    
    9,473
    
    
    
    8,255
 
 (i)
    The Executive Directors decided voluntarily to forego salary increases in 2009. It is
anticipated their salaries will next be reviewed in 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, use of a driver when required; and for this year a
fuel card buyout.(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 £5,522 and Mark Fairbairn £786.(iv)
    For US-based Executive Directors, the exchange rate averaged over the year 1 April 2008 to 31
March 2009 to convert US dollars to UK pounds sterling is US$1.539:£1.(v)
    Edward Astle left
National Grid on 30 April 2008. He received a contractual entitlement of one years additional
salary, part of which was payable in 6 monthly instalments and was subject to mitigation had he
taken employment during the period.(vi)
    Bob Catell ceased being an Executive Director on 31 March 2009. His employment agreement was
terminated and replaced with a Non-executive Director contract for services and he will retire from
the Board at the conclusion of the Companys AGM on 27 July 2009. He did not, nor will he, receive
any termination payments. Year ended31 MarchTable 1B
    
    Year ended 31 March 2009
    
    
    2008OtherFees
    
    
    emoluments
    
    
    Total
    
    
    Total£000s
    
    
    £000s
    
    
    £000s
    
    
    £000sNon-executive DirectorsSir John Parker (i)
    
    
    542
    
    
    
    62
    
    
    
    604
    
    
    
    559Ken Harvey
    
    
    83
    
    
    
    
    
    
    
    83
    
    
    
    79Linda Adamany
    
    
    75
    
    
    
    
    
    
    
    75
    
    
    
    77Philip Aiken (ii)
    
    
    59
    
    
    
    
    
    
    
    59
    
    
    
    n/aJohn Allan
    
    
    76
    
    
    
    
    
    
    
    76
    
    
    
    71Stephen Pettit
    
    
    84
    
    
    
    
    
    
    
    84
    
    
    
    79Maria Richter
    
    
    92
    
    
    
    
    
    
    
    92
    
    
    
    92George Rose
    
    
    84
    
    
    
    
    
    
    
    84
    
    
    
    82Total
    
    
    1,095
    
    
    
    62
    
    
    
    1,157
    
    
    
    1,039
 
 (i)
    Sir John Parkers other emoluments comprise a fully expensed car, private medical insurance and
life assurance.(ii)
    Philip Aiken joined the Board on 15 May 2008.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Directors Remuneration Report
  
  2. Directors pensions
  Transfer valueof increase inAdditional
    
    
    accrued benefitAdditional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    benefit earned in
    
    
    in the year endedPersonal
    
    
    benefit earned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase in
    
    
    the year ended
    
    
    31 March 2009contributions
    
    
    during year
    
    
    Accrued
    
    
    
    
    
    
    
    
    
    
    transfer
    
    
    31 March 2009
    
    
    (excludingmade to the
    
    
    ended
    
    
    entitlement as at
    
    
    Transfer value of accrued
    
    
    value less
    
    
    (excluding
    
    
    inflationscheme
    
    
    31 March 2009
    
    
    31 March 2009
    
    
    benefits as at 31 March (i)
    
    
    Directors
    
    
    inflation)
    
    
    & Directorsduring the year
    
    
    pension
    
    
    pension
    
    
    2009
    
    
    2008
    
    
    contributions (ii)
    
    
    pension
    
    
    contributions)Table 2
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000s
    
    
    £000sSteve Holliday (iii)
    
    
    18
    
    
    
    49
    
    
    
    280
    
    
    
    4,740
    
    
    
    4,730
    
    
    
    (8
    )
    
    
    37
    
    
    
    591Steve Lucas
    
    
    31
    
    
    
    25
    
    
    
    250
    
    
    
    4,877
    
    
    
    3,680
    
    
    
    1,165
    
    
    
    17
    
    
    
    293Nick Winser (iv)
    
    
    28
    
    
    
    16
    
    
    
    186
    
    
    
    2,802
    
    
    
    3,237
    
    
    
    (463
    )
    
    
    7
    
    
    
    76Mark Fairbairn (v)
    
    
    28
    
    
    
    26
    
    
    
    186
    
    
    
    3,084
    
    
    
    3,340
    
    
    
    (284
    )
    
    
    18
    
    
    
    249Tom King (vi)
    
    
    
    
    
    
    49
    
    
    
    126
    
    
    
    442
    
    
    
    207
    
    
    
    235
    
    
    
    49
    
    
    
    174Edward Astle (vii)
    
    
    19
    
    
    
    16
    
    
    
    112
    
    
    
    2,939
    
    
    
    1,997
    
    
    
    924
    
    
    
    15
    
    
    
    385Bob Catell (vi) (viii)
    
    
    
    
    
    
    256
    
    
    
    1,754
    
    
    
    20,431
    
    
    
    12,774
    
    
    
    7,657
    
    
    
    256
    
    
    
    2,812
 
 (i)

    The transfer values shown at 31 March 2008 and 2009 respectively represent the value of each
Executive Directors accrued benefits based on total service compared to the relevant date. The
transfer values for the UK Executive Directors at 31 March 2008 have been calculated in accordance
with guidance note GN11; transfer values for the UK Executive Directors at 31 March 2009 have
been calculated in line with new transfer value bases agreed with the UK Pension Scheme Trustees.
The transfer values for the US Executive Directors have been calculated using discount rates based
on high quality US corporate bonds and associated yields at the relevant dates.(ii)

    Figures for the increase in transfer value less Directors contributions include the impact of
changes during the year to the UK transfer value bases for UK Directors and exchange rate movements
for US Directors. The figures excluding these impacts were Steve Holliday £625,000, Steve Lucas
£464,000, Nick Winser £62,000, Mark Fairbairn £233,000, Tom King £114,000, Edward Astle £1,166,000
and Bob Catell £2,052,000.(iii)

    In addition to the pension above, there is an accrued lump sum entitlement of £107,000 as at
31 March 2009. The increase to the accumulated lump sum including inflation was £7,000 and
excluding inflation was £3,000 in the year to 31 March 2009. 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 £258,000 as at 31 March 2009. The increase to the accumulated lump sum including
inflation was £8,000 and excluding inflation was nil in the year to 31 March 2009. 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 £278,000 as at 31
March 2009. The increase to the accumulated lump sum including inflation was £23,000 and excluding
inflation was £11,000 in the year to 31 March 2009. The transfer value information above includes
the value of the lump sum.(vi)

    The exchange rate as at 31 March 2009 was US$1.4368:£1 and as at 31
March 2008 was US$1.98:£1.(vii)

    It was agreed that £344,754, representing the value of 49,032 shares which Edward Astle would
otherwise have received in respect of his PSP awards (see Table 4 on page 111), instead be
transferred into his pension fund. This is equivalent to one additional year of pension credit and
is included above. Edward received an immediate unreduced pension on cessation of employment under
the standard redundancy terms of the Trust Deed and Rules of the Pension Scheme.(viii)

    Bob Catell retired as an Executive Director on 31 March 2009 and was eligible to draw
immediate pension benefits. In addition to the pension quoted above, through participation in the
Thrift Plan in the US, the Company made contributions worth £4,948 to a defined contribution
arrangement.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



3. Directors interests in share options
  Options heldOptions
    
    
    
    
    
    
    Options
    
    
    at 31 Marchexercised or
    
    
    Market price
    
    
    granted
    
    
    2009 or,
    
    
    Exercise priceOptions held at
    
    
    lapsed during
    
    
    at exercise
    
    
    during
    
    
    if earlier, on
    
    
    per share
    
    
    Normal exerciseTable 3
    
    1 April 2008
    
    
    the year
    
    
    (pence)
    
    
    the year
    
    
    retirement 
    
    
    (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 20149,983
    (i)
    
    
    9,983
    
    
    
    663
    
    
    
    
    
    
    
    
    
    
    nil
    
    
    June 2008 to June 2015Sharesave
    
    
    4,692
    
    
    
    4,692
    
    
    
    660.5
    
    
    
    
    
    
    
    
    
    
    
    350
    
    
    Mar 2008 to Aug 20082,564
    
    
    
    2,564
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    655
    
    
    Apr 2013 to Sep 2013
    
    
    
    
    
    
    
    
    
    
    
    3,432
    
    
    
    3,432
    
    
    
    488
    
    
    Apr 2014 to Sep 2014Total
    
    
    127,882
    
    
    
    17,239
    
    
    
    
    
    
    
    3,432
    
    
    
    114,075Steve LucasESOP
    
    
    54,404
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,404
    
    
    
    434.25
    
    
    Dec 2005 to Dec 2012Share Match
    
    14,778
    (ii)
    
    
    14,778
    
    
    
    663
    
    
    
    
    
    
    
    
    
    
    nil
    
    
    June 2008 to June 2015Sharesave
    
    
    1,693
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,693
    
    
    
    558
    
    
    Apr 2010 to Sep 2010Total
    
    
    70,875
    
    
    
    14,778
    
    
    
    
    
    
    
    
    
    
    
    56,097Nick WinserESOP
    
    
    19,755
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,755
    
    
    
    531.5
    
    
    June 2003 to June 2010Share Match
    
    11,581
    (iii)
    
    
    11,581
    
    
    
    663
    
    
    
    
    
    
    
    
    
    
    nil
    
    
    June 2008 to June 2015Total
    
    
    31,336
    
    
    
    11,581
    
    
    
    
    
    
    
    
    
    
    
    19,755Mark FairbairnESOP
    
    
    2,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,180
    
    
    
    435.75
    
    
    July 2002 to July 200933,489
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,489
    
    
    
    531.5
    
    
    June 2003 to June 201031,152
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,152
    
    
    
    481.5
    
    
    June 2005 to June 2012Share Match
    
    2,134
    (iv)
    
    
    2,134
    
    
    
    663
    
    
    
    
    
    
    
    
    
    
    nil
    
    
    June 2008 to June 2015Sharesave
    
    
    862
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    862
    
    
    
    383
    
    
    Apr 2010 to Sep 20101,760
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,760
    
    
    
    558
    
    
    Apr 2012 to Sep 2012512
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    512
    
    
    
    655
    
    
    Apr 2013 to Sep 2013Total
    
    
    72,089
    
    
    
    2,134
    
    
    
    
    
    
    
    
    
    
    
    69,955Edward AstleESOP (v)
    
    
    67,497
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,497
    
    
    
    481.5
    
    
    May 2008 to Apr 2009Share Match (v)
    
    
    6,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,553
    
    
    100 in total
    
    
    May 2008 to Oct 200813,812
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,812
    
    
    100 in total
    
    
    May 2008 to Oct 200815,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,716
    
    
    nil
    
    
    May 2008 to Oct 200814,637
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,637
    
    
    nil
    
    
    May 2008 to Oct 2008Total
    
    
    118,215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118,215
    
 
 (i)
    Steve Holliday exercised a Share Match award over 9,983 shares. The market price at the date of
exercise was 663p. He received £9,739 in respect of a cash payment in lieu of dividends. He also
exercised, on its five year maturity, a Sharesave option over 4,692 shares with an option price of
350p. In addition, he cancelled an existing Sharesave contract over 2,564 shares with an option
price of 655p in order to commence a Sharesave contract over 3,432 shares with an option price of
488p.(ii)
    Steve Lucas exercised a Share Match award over 14,778 shares. The market price at the date of
exercise was 663p. He also received £17,761 in respect of a cash payment in lieu of dividends.(iii)
    Nick Winser exercised a Share Match award over 11,581 shares. The market price at the date of
exercise was 663p. He also received £14,078 in respect of a cash payment in lieu of dividends.(iv)
    Mark Fairbairn exercised a Share Match award over 2,134 shares. The market price at the date
of exercise was 663p. He also received £3,050 in respect of a cash payment in lieu of dividends.(v)
    On leaving, Edward Astle was permitted 12 months from his termination date in which to exercise
his ESOP awards and 6 months for his Share Match awards.This aligns with normal practice for such leavers under the plan rules.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Directors Remuneration Report
  
  3. Directors interests in share options continued
       Allegheny Energy, Inc.
    
    Energy East Corporation
    
    NSTAR
    
    Scottish Power plcBG Group plc
    
    FPL Group, Inc.
    
    Powergen plc
    
    The Southern Company, Inc.British Energy plc
    
    GPU, Inc.
    
    Progress Energy, Inc.
    
    TXU, CorpCentral & South West Corporation
    
    Innogy Holdings plc
    
    Public Service Enterprise
    
    United Utilities plcConsolidated Edison, Inc.
    
    International Power plc
    
    Group, Inc.
    
    Xcel Energy, Inc.Duke Energy Corporation
    
    Niagara Mohawk Holdings, Inc.
    
    Scottish & Southern Energy plc
 4. Directors interests in the PSP, DSP and SRA
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



4. Directors interests in the PSP, DSP and SRA
 PSP, DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conditionaland SRA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    awards atconditional
    
    
    Awards
    
    
    Awards
    
    
    
    
    
    
    Market price
    
    
    
    
    
    
    31 March 2009Type of
    
    
    awards at
    
    
    lapsed
    
    
    vested
    
    
    Awards granted
    
    
    at award
    
    
    or, if earlier, onTable 4
    
    award
    
    
    1 April 2008
    
    
    during year
    
    
    in year
    
    
    during year
    
    
    (pence except#)
    
    
    Date of award
    
    
    retirement
    
    
    Release dateSteve Holliday
    
    PSP
    
    
    
    100,801
    (i)
    
    
    
    
    
    
    100,801
    
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    100,801
    
    
    June 2009PSP
    
    
    
    126,788
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    126,788
    
    
    June 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 2012DSP
    
    
    
    36,389
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    36,389
    
    
    June 2009DSP
    
    
    
    42,435
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    42,435
    
    
    June 2010DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,307
    
    
    
    697.48
    
    
    June 2008
    
    
    
    85,307
    
    
    June 2011Total
    
    
    
    
    
    
    522,877
    
    
    
    
    
    
    
    100,801
    
    
    
    362,254
    
    
    
    
    
    
    
    
    
    
    
    885,131Steve Lucas
    
    PSP
    
    
    
    99,615
    (i)
    
    
    
    
    
    
    99,615
    
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    99,615
    
    
    June 2009PSP
    
    
    
    101,430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    101,430
    
    
    June 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 2012DSP
    
    
    
    34,882
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    34,882
    
    
    June 2009DSP
    
    
    
    29,276
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    29,276
    
    
    June 2010DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,263
    
    
    
    697.48
    
    
    June 2008
    
    
    
    47,263
    
    
    June 2011Total
    
    
    
    
    
    
    397,258
    
    
    
    
    
    
    
    99,615
    
    
    
    204,449
    
    
    
    
    
    
    
    
    
    
    
    601,707Nick Winser
    
    PSP
    
    
    
    91,314
    (i)
    
    
    
    
    
    
    91,314
    
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    91,314
    
    
    June 2009PSP
    
    
    
    88,751
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    88,751
    
    
    June 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 2012DSP
    
    
    
    31,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    31,316
    
    
    June 2009DSP
    
    
    
    25,596
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    25,596
    
    
    June 2010DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,008
    
    
    
    697.48
    
    
    June 2008
    
    
    
    36,008
    
    
    June 2011Total
    
    
    
    
    
    
    353,605
    
    
    
    
    
    
    
    91,314
    
    
    
    174,421
    
    
    
    
    
    
    
    
    
    
    
    528,026Mark Fairbairn
    
    PSP
    
    
    
    40,225
    (i)
    
    
    
    
    
    
    40,225
    
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    40,225
    
    
    June 2009PSP
    
    
    
    40,572
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    40,572
    
    
    June 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 2012DSP
    
    
    
    10,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    10,800
    
    
    June 2009DSP
    
    
    
    13,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    13,867
    
    
    June 2010DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,646
    
    
    
    697.48
    
    
    June 2008
    
    
    
    40,646
    
    
    June 2011Total
    
    
    
    
    
    
    210,416
    
    
    
    
    
    
    
    40,225
    
    
    
    178,970
    
    
    
    
    
    
    
    
    
    
    
    389,386Tom King
    
    PSP
    
    
    ADSs 24,006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
     
    $83.3121
    #
    
    Nov 2007
    
    
    ADSs 24,006
    
    
    Nov 2011PSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ADSs 32,099
    (ii)
    
     
    $65.4211
    #
    
    June 2008
    
    
    ADSs 32,099
    
    
    June 2012SRA
    
    
    ADSs 35,487
    
    
    
    
    
    
    
    ADSs 11,829
    (iii)
    
    
    
    
    
     
    $84.5360
    #
    
    Nov 2007
    
    
    ADSs 23,658
    
    
    Nov 2008to Nov 2010DSP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ADSs 4,843
    (ii)
    
     
    $68.1174
    #
    
    June 2008
    
    
    ADSs 4,843
    
    
    June 2011Total ADSs
    
    
    
    
    
    ADSs 59,493
    
    
    
    
    
    
    ADSs 11,829
    
    
    ADSs 36,942
    
    
    
    
    
    
    
    
    
    
    ADSs 84,606Edward Astle
    
    PSP
    
    
    
    94,872
    (iv)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    527.03
    
    
    June 2005
    
    
    
    94,872
    
    
    April 2008PSP
    
    
    
    88,751
    (iv)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591.5382
    
    
    June 2006
    
    
    
    88,751
    
    
    April 2008PSP
    
    
    
    74,249
    (iv)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740.75
    
    
    June 2007
    
    
    
    74,249
    
    
    April 2008PSP
    
    
    
    41,198
    (iv)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800.9919
    
    
    Nov 2007
    
    
    
    41,198
    
    
    April 2008DSP
    
    
    
    28,769
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    583.96
    
    
    June 2006
    
    
    
    28,769
    
    
    April 2008DSP
    
    
    
    27,927
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    726.87
    
    
    June 2007
    
    
    
    27,927
    
    
    April 2008Total
    
    
    
    
    
    
    355,766
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    355,766
    Bob Catell
    
    PSP
    
    
    
    ADSs 17,084
    (v)
    
    
    
    
    
    
    
    
    
    
    
    
    
     
    $83.3121
    #
    
    Nov 2007
    
    
    ADSs 17,084
    
    
    Nov 2011PSP
    
    
    
    
    (v)
    
    
    
    
    
    
    
    
    
    ADSs 39,146
    (ii)
    
     
    $65.4211
    #
    
    June 2008
    
    
    ADSs 39,146
    
    
    June 2012DSP
    
    
    
    
    (v)
    
    
    
    
    
    
    
    
    
    ADSs 7,225
    (ii)
    
     
    $68.1174
    #
    
    June 2008
    
    
    ADSs 7,225
    
    
    June 2011Total
    
    
    
    
    
    ADSs 17,084
    
    
    
    
    
    
    
    
    
    
    ADSs 46,371
    
    
    
    
    
    
    
    
    
    
    ADSs 63,455
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Directors Remuneration Report
  
  (i)
    The 2005 PSP award vested in full in June 2008 but the shares under this award are subject to a
retention period in order that shares may only be transferred to participants on or after the
fourth anniversary of the date of grant. The Remuneration Committee determined cash equivalent
dividend payments would be made to participants whilst the shares were in the retention period,
therefore, Steve Holliday received £23,856 in August 2008 and £14,157 in February 2009; Steve Lucas
£23,576 and £13,990; Nick Winser £21,611 and £12,825 and Mark Fairbairn £9,520 and £5,649
respectively.(ii)
    Awards were made over ADSs and each ADS represents five ordinary shares.(iii)
    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 parts over three years, the first vesting
for which was November 2008 for 11,829 ADSs. The ADS price on vesting for the first tranche was
US$47.4920.(iv)
    Shortly after leaving, Edward Astle received 207,905 PSP shares that vested as a result of the
performance criteria having been met and taking into account his contribution and in particular the
sale of National Grid Wireless being significantly in excess of market expectations. As outlined in
Table 2 on page 108, it was also agreed that instead of Edward receiving a further 49,032 PSP
shares an equivalent monetary value (using a share price of 705p) would be transferred into his
pension fund. All remaining PSP shares shown in the table on page 111 lapsed.(v)
    As Bob Catell ceased being an Executive Director on 31 March 2009, his PSP award will be
transferred to him from this date subject to performance criteria and following time pro ration.
His DSP award will also be transferred to him. This treatment aligns with normal practice for such
leavers under the plan rules. 5. Directors beneficial interests
 17 43
 Options/awards over
    
    
    Options/awards overOrdinary shares at
    
    
    Ordinary shares at
    
    
    ordinary shares at
    
    
    ordinary shares at31 March 2009
    
    
    1 April 2008
    
    
    31 March 2009
    
    
    1 April 2008or, if earlier, on
    
    
    or, if later, on
    
    
    or, if earlier, on
    
    
    or, if later, onTable 5
    
    retirement
    (i)
    
    appointment
    *
    
    retirement
    
    
    appointment
    *Sir John Parker
    
    
    81,337
    
    
    
    77,115
    
    
    
    
    
    
    
    Steve Holliday (ii) (iii)
    
    
    39,285
    
    
    
    28,488
    
    
    
    999,206
    
    
    
    650,759Steve Lucas (ii) (iv)
    
    
    88,192
    
    
    
    79,438
    
    
    
    657,804
    
    
    
    468,133Nick Winser (ii)
    
    
    83,518
    
    
    
    69,937
    
    
    
    547,781
    
    
    
    384,941Mark Fairbairn (ii) (iii)
    
    
    48,305
    
    
    
    28,584
    
    
    
    459,341
    
    
    
    282,505Tom King
    
    
    59,145
    
    
    
    
    
    
    
    423,030
    
    
    
    297,465Edward Astle
    
    
    28,428
    
    
    
    28,428
    
    
    
    473,981
    
    
    
    473,981Bob Catell
    
    
    40,000
    
    
    
    15,000
    
    
    
    317,275
    
    
    
    85,420Ken Harvey
    
    
    3,740
    
    
    
    3,740
    
    
    
    
    
    
    
    Linda Adamany
    
    
    2,000
    
    
    
    2,000
    
    
    
    
    
    
    
    Philip Aiken
    
    
    2,000
    
    
    
    
    *
    
    
    
    
    
    
    
    *John Allan
    
    
    2,000
    
    
    
    2,000
    
    
    
    
    
    
    
    Stephen Pettit
    
    
    2,632
    
    
    
    2,632
    
    
    
    
    
    
    
    Maria Richter
    
    
    5,255
    
    
    
    3,255
    
    
    
    
    
    
    
    George Rose
    
    
    4,852
    
    
    
    4,852
    
    
    
    
    
    
    
    
 
 (i)
    There has been no other change in the beneficial interests of the Directors in ordinary shares
between 1 April 2009 and 13 May 2009, except in respect of routine monthly purchases under the SIP
(see note (iii) below).(ii)
    Each of the Executive Directors, with the exception of Bob Catell and 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 264,878 and 160,696 ordinary shares in
the aforementioned trusts respectively, as at 31 March 2009 (with the latter holding 6,294 ADSs in
addition).(iii)
    Beneficial interest includes shares purchased under the monthly operation of the SIP in the
year to 31 March 2009. In April and May 2009 a further 45 shares were purchased on behalf of Steve
Holliday and a further 91 shares were purchased on behalf of Mark Fairbairn thereby increasing
their beneficial interests.(iv)
    Steve Lucas was for Companies Act purposes deemed to be a potential beneficiary in 4,057
ordinary shares held by Lattice Group Trustees Limited as trustee of the Lattice Group Employee
Share Ownership Trust as at 31 March 2009. 6. National Grid share price range
   Helen Mahy
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### 



Contents of financial statements
  
 Directors statement and independent
Auditors report114
    
    Statement of Directors responsibilities115
    
    Independent Auditors report to the Members of National Grid plcConsolidated financial statements under IFRSBasis of preparation116
    
    Accounting policies124
    
    Adoption of new accounting standardsPrimary statements126
    
    Consolidated income statement127
    
    Consolidated balance sheet128
    
    Consolidated statement of recognised income and expense129
    
    Consolidated cash flow statementNotes to the consolidated financial statements  analysis of items in the primary statements130
    
    Note 1   
    
    Segmental analysis132
    
    Note 2   
    
    Other operating income132
    
    Note 3   
    
    Operating costs135
    
    Note 4   
    
    Exceptional items, remeasurements and stranded cost recoveries136
    
    Note 5   
    
    Pensions and other post-retirement benefits138
    
    Note 6   
    
    Finance income and costs139
    
    Note 7   
    
    Taxation141
    
    Note 8   
    
    Discontinued operations141
    
    Note 9   
    
    Dividends142
    
    Note 10 
    
    Earnings per share143
    
    Note 11 
    
    Goodwill144
    
    Note 12 
    
    Other intangible assets145
    
    Note 13 
    
    Property, plant and equipment146
    
    Note 14 
    
    Other non-current assets146
    
    Note 15 
    
    Financial and other investments147
    
    Note 16 
    
    Deferred tax assets and liabilities148
    
    Note 17 
    
    Derivative financial instruments149
    
    Note 18 
    
    Inventories and current intangible assets149
    
    Note 19 
    
    Trade and other receivables150
    
    Note 20 
    
    Cash and cash equivalents150
    
    Note 21 
    
    Borrowings151
    
    Note 22 
    
    Trade and other payables151
    
    Note 23 
    
    Other non-current liabilities152
    
    Note 24 
    
    Provisions153
    
    Note 25 
    
    Share capital155
    
    Note 26 
    
    Reconciliation of movements in total equity156
    
    Note 27 
    
    Consolidated cash flow statement
 Notes to the consolidated financial statements  supplementary information158
    
    Note28 
    
    Acquisitions159
    
    Note29 
    
    Commitments and contingencies161
    
    Note30 
    
    Related party transactions162
    
    Note31 
    
    Actuarial information on pensions and other post-retirement benefits165
    
    Note32 
    
    Supplementary information on derivative financial instruments166
    
    Note33 
    
    Financial risk171
    
    Note34 
    
    Commodity risk173
    
    Note35 
    
    Bonds and facilities175
    
    Note36 
    
    Share options and reward plans179
    
    Note37 
    
    Subsidiary undertakings, joint ventures and associates180
    
    Note38 
    
    National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosuresCompany financial statements under UK GAAPBasis of preparation187
    
    Company accounting policiesPrimary statement189
    
    Company balance sheetNotes to the Company financial statements190
    
    Note1   
    
    Adoption of new accounting standards190
    
    Note2   
    
    Fixed asset investments191
    
    Note3   
    
    Debtors191
    
    Note4   
    
    Creditors (amounts falling due within one year)191
    
    Note5   
    
    Derivative financial instruments192
    
    Note6   
    
    Current asset investments192
    
    Note7   
    
    Borrowings192
    
    Note8   
    
    Called up share capital193
    
    Note9   
    
    Reserves193
    
    Note10 
    
    Reconciliation of movements in shareholders funds193
    
    Note11 
    
    Commitments and contingencies193
    
    Note12 
    
    Directors and employees
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Statement of Directors responsibilities
  
  §
    
    select suitable accounting policies and then apply them consistently;§
    
    make judgements and estimates that are reasonable and prudent;§
    
    state that the consolidated financial statements comply with IFRS as adopted by the European
Union and with regard to the Company financial statements that applicable UK Accounting Standards
have been followed, subject to any material departures disclosed and explained in the financial
statements; and§
    
    prepare the consolidated financial statements and Company financial statements on a going concern
basis unless it is inappropriate to presume that the Company, on a consolidated and individual
basis, will continue in business, in which case there should be supporting assumptions or
qualifications as necessary.
 §
    
    the consolidated financial statements and the Company financial statements, which have been
prepared in accordance with IFRSs as adopted by the European Union and UK GAAP respectively, give a
true and fair view of the assets, liabilities, financial position and profit of the Company on a
consolidated and individual basis; and§
    
    the Annual Report includes a fair review of the development and performance of the business and
the position of the Company on a consolidated and individual basis, together with a description of
the principal risks and uncertainties that it faces.
  Helen Mahy
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Independent Auditors report to the
Members of National Grid plc
 
  Respective responsibilities of Directors and auditors
 Basis of audit opinion
   Opinion
  §
    
    the consolidated financial statements give a true and fair view, in accordance with IFRSs as
adopted by the European Union, of the state of the groups affairs as at 31 March 2009 and of its
profit and cash flows for the year then ended;§
    
    the consolidated financial statements have been properly prepared in accordance with the
Companies Act 1985 and Article 4 of the IAS Regulation;§
    
    the Company financial statements give a true and fair view, in accordance with United Kingdom
Generally Accepted Accounting Practice, of the state of the Companys affairs as at 31 March 2009;§
    
    the Company financial statements and the part of the Directors Remuneration Report to be audited
have been properly prepared in accordance with the Companies Act 1985; and§
    
    the information given in the Directors Report is consistent with the financial statements.
 PricewaterhouseCoopers LLP
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Accounting policies
   
  A. Basis of preparation of consolidated financial statements under IFRS
 B. Basis of consolidation
       C. Foreign currencies
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



D. Goodwill
     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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Accounting
policies
  
  G. Impairment of assets
     H. Taxation
 Current tax
  Deferred tax and investment tax credits
 I. Discontinued operations, assets and businesses held for sale
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



J. Inventories
  K. Decommissioning and environmental costs
    L. Revenue
 M. Segmental information
  N. Pensions and other post-retirement benefits
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Accounting
policies
  
  O. Leases
    P. Financial instruments
 
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Q. Commodity contracts
     R. Hedge accounting
 S. Share-based payments
   T. Business performance and exceptional items,
remeasurements and stranded cost recoveries
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Accounting
policies
  
  U. Other operating income
 V. Emission allowances
   W. Cash and cash equivalents
  X. Other equity reserves
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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 4 and 10.§
    
    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 29.
  §
    
    Impairment of goodwill  accounting policy D and note 11.§
    
    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 5.§
    
    Valuation of financial instruments and derivatives  notes 17 and 32.§
    
    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.§
    
    Fair values of acquired assets and liabilities  note 28.
 
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Adoption of new accounting standards
  
  New IFRS accounting standards and interpretations adopted in 2008/09
  IFRIC 12 on service concession 
arrangements
    
    Applies to contractual arrangements whereby a private sector operator participates in
the development, financing, operation and maintenance of infrastructure for public sector
services, for example, under private finance initiative (PFI) contracts.

IFRIC 14 on defined benefit assets
and minimum funding requirements
    
    Considers the limit on the measurement of a defined benefit asset to the present value
of economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan plus unrecognised gains and losses, as set out in IAS 19
Employee Benefits. The interpretation considers when refunds or reductions in future
contributions should be considered available, particularly when a minimum funding
requirement exists.Amendments to IAS 39 Financial
Instruments: Recognition and
measurement and IFRS 7 Financial
Instruments: Disclosures on
reclassification of financial assets
    
    Permits reclassification of financial assets in certain circumstances.
 New IFRS accounting standards and interpretations not yet adopted
  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. IFRS 8 achieves convergence with the US accounting
standard, SFAS 131 Disclosures about Segments of an Enterprise and Related Information
with minor differences. IFRS 8 has been adopted by the Company with effect from
1 April 2009.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. IAS 23 revised
has been adopted by the Company with effect from 1 April 2009.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.
IFRIC 13 has been adopted by the Company with effect from 1 April 2009.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. IAS 1 revised
has been adopted by the Company with effect from 1 April 2009.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 will be adopted by the Company on 1 April 2010,
subject to endorsement by the European Union.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 will be adopted by the Company on 1 April 2010, subject to
endorsement by the European Union.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. The amendment to IFRS 2 has been adopted by the Company with effect from
1 April 2009.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



New IFRS accounting standards and interpretations not yet adopted
 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. The amendments to IAS 32 and IAS 1
have been adopted by the Company with effect from 1 April 2009.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. The
amendments to IFRS 1 and IAS 27 have been adopted by the Company with effect from
1 April 2009.Improvements to IFRS 2008
    
    Contains amendments to various existing standards. The amendments are effective, in
most cases, from 1 January 2009, or otherwise for annual periods beginning on or after
1 July 2009.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 15 will be adopted by the Company with effect from 1 April
2009, subject to endorsement by the European Union.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 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. IFRIC 16 will be adopted by the
Company with effect from 1 April 2009, subject to endorsement by the European Union.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 will be adopted by the Company with
effect from 1 April 2010, subject to endorsement by the European Union.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. The amendment
is effective under IFRS but has not yet been endorsed by the European Union and has
therefore not been adopted by the Company. Adoption of the amendment would not
have any impact on consolidated results or assets and liabilities.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 will be adopted by the Company with effect from
1 April 2010, subject to endorsement by the European Union.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 will be adopted by the Company with effect from 1 April 2010,
subject to endorsement by the European Union.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. IFRIC 18 will be adopted by the Company
with effect from 1 July 2009, subject to endorsement by the European Union.Amendment to IFRS 7 on improving
disclosures about financial instruments
    
    Enhances disclosures about fair value and liquidity risk. The amendment will be adopted by
the Company with effect from 1 April 2009, subject to endorsement by the European Union.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.
The amendment will be adopted by the Company with effect from 1 April 2009, subject
to endorsement by the European Union.Improvements to IFRS 2009
    
    Contains amendments to various existing standards. The amendments will be adopted by
the Company with effect from 1 April 2010, subject to endorsement by the European Union.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Consolidated income statement
   
  2009
    
    
    2009
    
    
    2008
    *
    
    2008
    *
    
    2007
    
    
    2007Notes
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mRevenue
    
    
    1(a)
    
    
    
    
    
    
    
    15,624
    
    
    
    
    
    
    
    11,423
    
    
    
    
    
    
    
    8,695Other operating income
    
    
    2
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    83Operating costs
    
    
    3
    
    
    
    
    
    
    
    (13,064
    )
    
    
    
    
    
    
    (8,534
    )
    
    
    
    
    
    
    (6,265
    )Operating profitBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    1(b)
    
    
    
    2,915
    
    
    
    
    
    
    
    2,595
    
    
    
    
    
    
    
    2,031Exceptional items, remeasurements and stranded cost recoveries
    
    
    4
    
    
    
    (292
    )
    
    
    
    
    
    
    369
    
    
    
    
    
    
    
    482Total operating profit
    
    
    1(b)
    
    
    
    
    
    
    
    2,623
    
    
    
    
    
    
    
    2,964
    
    
    
    
    
    
    
    2,513Interest income and similar income
    
    
    6
    
    
    
    
    
    
    
    1,315
    
    
    
    
    
    
    
    1,275
    
    
    
    
    
    
    
    1,144Interest expense and other finance costs
Before exceptional items and remeasurements
    
    
    6
    
    
    
    (2,465
    )
    
    
    
    
    
    
    (2,045
    )
    
    
    
    
    
    
    (1,691
    )Exceptional items and remeasurements
    
    
    4,6
    
    
    
    (84
    )
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (217
    )6
    
    
    
    
    
    
    
    (2,549
    )
    
    
    
    
    
    
    (2,061
    )
    
    
    
    
    
    
    (1,908
    )Share of post-tax results of joint ventures and associates
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    2Profit before taxationBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    
    
    
    
    1,770
    
    
    
    
    
    
    
    1,829
    
    
    
    
    
    
    
    1,486Exceptional items, remeasurements and stranded cost recoveries
    
    
    4
    
    
    
    (376
    )
    
    
    
    
    
    
    353
    
    
    
    
    
    
    
    265Total profit before taxation
    
    
    
    
    
    
    
    
    
    
    1,394
    
    
    
    
    
    
    
    2,182
    
    
    
    
    
    
    
    1,751TaxationBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    7
    
    
    
    (517
    )
    
    
    
    
    
    
    (579
    )
    
    
    
    
    
    
    (442
    )Exceptional items, remeasurements and stranded cost recoveries
    
    
    4,7
    
    
    
    45
    
    
    
    
    
    
    
    (28
    )
    
    
    
    
    
    
    1Total taxation
    
    
    7
    
    
    
    
    
    
    
    (472
    )
    
    
    
    
    
    
    (607
    )
    
    
    
    
    
    
    (441
    )Profit from continuing operations after taxationBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    
    
    
    
    1,253
    
    
    
    
    
    
    
    1,250
    
    
    
    
    
    
    
    1,044Exceptional items, remeasurements and stranded cost recoveries
    
    
    4
    
    
    
    (331
    )
    
    
    
    
    
    
    325
    
    
    
    
    
    
    
    266Profit for the year from continuing operations
    
    
    
    
    
    
    
    
    
    
    922
    
    
    
    
    
    
    
    1,575
    
    
    
    
    
    
    
    1,310Profit for the year from discontinued operationsBefore exceptional items and remeasurements
    
    
    8
    
    
    
    9
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    104Exceptional items and remeasurements
    
    
    8
    
    
    
    16
    
    
    
    
    
    
    
    1,590
    
    
    
    
    
    
    
    (18
    )8
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    1,618
    
    
    
    
    
    
    
    86Profit for the year
    
    
    
    
    
    
    
    
    
    
    947
    
    
    
    
    
    
    
    3,193
    
    
    
    
    
    
    
    1,396Attributable to:Equity shareholders of the parent
    
    
    
    
    
    
    
    
    
    
    944
    
    
    
    
    
    
    
    3,190
    
    
    
    
    
    
    
    1,394Minority interests
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    2947
    
    
    
    
    
    
    
    3,193
    
    
    
    
    
    
    
    1,396Earnings per share from continuing operationsBasic
    
    
    10
    
    
    
    
    
    
    
    37.4p
    
    
    
    
    
    
    
    60.3p
    
    
    
    
    
    
    
    48.1pDiluted
    
    
    10
    
    
    
    
    
    
    
    37.1p
    
    
    
    
    
    
    
    59.9p
    
    
    
    
    
    
    
    47.8pEarnings per shareBasic
    
    
    10
    
    
    
    
    
    
    
    38.5p
    
    
    
    
    
    
    
    122.3p
    
    
    
    
    
    
    
    51.3pDiluted
    
    
    10
    
    
    
    
    
    
    
    38.2p
    
    
    
    
    
    
    
    121.6p
    
    
    
    
    
    
    
    50.9p
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Consolidated balance sheet
     
  2009
    
    
    2008
    *Notes
    
    
    £m
    
    
    £mNon-current assetsGoodwill
    
    
    11
    
    
    
    5,391
    
    
    
    3,904Other intangible assets
    
    
    12
    
    
    
    370
    
    
    
    271Property, plant and equipment
    
    
    13
    
    
    
    29,545
    
    
    
    24,331Deferred tax assets
    
    
    16
    
    
    
    137
    
    
    
    Pension asset
    
    
    5
    
    
    
    269
    
    
    
    846Other non-current assets
    
    
    14
    
    
    
    106
    
    
    
    164Financial and other investments
    
    
    15
    
    
    
    361
    
    
    
    251Derivative financial assets
    
    
    17
    
    
    
    1,533
    
    
    
    1,063Total non-current assets
    
    
    
    
    
    
    37,712
    
    
    
    30,830Current assetsInventories and current intangible assets
    
    
    18
    
    
    
    556
    
    
    
    438Trade and other receivables
    
    
    19
    
    
    
    2,672
    
    
    
    2,265Financial and other investments
    
    
    15
    
    
    
    2,197
    
    
    
    2,095Derivative financial assets
    
    
    17
    
    
    
    593
    
    
    
    463Cash and cash equivalents
    
    
    20
    
    
    
    737
    
    
    
    174Total current assets
    
    
    
    
    
    
    6,755
    
    
    
    5,435Assets of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    1,506Total assets
    
    
    1(d)
    
    
    
    44,467
    
    
    
    37,771Current liabilitiesBorrowings
    
    
    21
    
    
    
    (3,253
    )
    
    
    (3,882
    )Derivative financial liabilities
    
    
    17
    
    
    
    (307
    )
    
    
    (114
    )Trade and other payables
    
    
    22
    
    
    
    (2,835
    )
    
    
    (2,480
    )Current tax liabilities
    
    
    
    
    
    
    (383
    )
    
    
    (295
    )Provisions
    
    
    24
    
    
    
    (248
    )
    
    
    (375
    )Total current liabilities
    
    
    
    
    
    
    (7,026
    )
    
    
    (7,146
    )Non-current liabilitiesBorrowings
    
    
    21
    
    
    
    (23,540
    )
    
    
    (17,121
    )Derivative financial liabilities
    
    
    17
    
    
    
    (633
    )
    
    
    (319
    )Other non-current liabilities
    
    
    23
    
    
    
    (2,092
    )
    
    
    (1,721
    )Deferred tax liabilities
    
    
    16
    
    
    
    (2,661
    )
    
    
    (3,259
    )Pensions and other post-retirement benefit obligations
    
    
    5
    
    
    
    (3,080
    )
    
    
    (1,746
    )Provisions
    
    
    24
    
    
    
    (1,451
    )
    
    
    (1,022
    )Total non-current liabilities
    
    
    
    
    
    
    (33,457
    )
    
    
    (25,188
    )Liabilities of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    (63
    )Total liabilities
    
    
    1(d)
    
    
    
    (40,483
    )
    
    
    (32,397
    )Net assets
    
    
    
    
    
    
    3,984
    
    
    
    5,374EquityCalled up share capital
    
    
    25
    
    
    
    294
    
    
    
    294Share premium account
    
    
    26
    
    
    
    1,371
    
    
    
    1,371Retained earnings
    
    
    26
    
    
    
    7,135
    
    
    
    8,943Other equity reserves
    
    
    26
    
    
    
    (4,830
    )
    
    
    (5,252
    )Shareholders equity
    
    
    
    
    
    
    3,970
    
    
    
    5,356Minority interests
    
    
    26
    
    
    
    14
    
    
    
    18Total equity
    
    
    
    
    
    
    3,984
    
    
    
    5,374
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)  Sir John Parker
 Steve Lucas
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Consolidated statement of recognised
 income and expense
  
  2009
    
    
    2008
    *
    
    2007Notes
    
    
    £m
    
    
    £m
    
    
    £mExchange adjustments
    
    
    
    
    
    
    464
    
    
    
    (25
    )
    
    
    (179
    )Actuarial net (loss)/gain
    
    
    5
    
    
    
    (2,018
    )
    
    
    432
    
    
    
    365Deferred tax on actuarial net gains and losses
    
    
    7
    
    
    
    678
    
    
    
    (98
    )
    
    
    (70
    )Net (losses)/gains taken to equity in respect of cash flow hedges
    
    
    
    
    
    
    (1
    )
    
    
    (32
    )
    
    
    47Transferred to profit or loss on cash flow hedges
    
    
    
    
    
    
    (53
    )
    
    
    (7
    )
    
    
    (45
    )Deferred tax on cash flow hedges
    
    
    7
    
    
    
    19
    
    
    
    2
    
    
    
    (10
    )Net gains/(losses) taken to equity on available-for-sale investments
    
    
    
    
    
    
    9
    
    
    
    6
    
    
    
    (3
    )Transferred to profit or loss on sale of available-for-sale investments
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    (1
    )Deferred tax on available-for-sale investments
    
    
    7
    
    
    
    7
    
    
    
    2
    
    
    
    (1
    )Net (expense)/income recognised directly in equity
    
    
    
    
    
    
    (913
    )
    
    
    280
    
    
    
    103Profit for the year
    
    
    
    
    
    
    947
    
    
    
    3,193
    
    
    
    1,396Total recognised income and expense for the year
    
    
    
    
    
    
    34
    
    
    
    3,473
    
    
    
    1,499Attributable to:Equity shareholders of the parent
    
    
    
    
    
    
    26
    
    
    
    3,470
    
    
    
    1,498Minority interests
    
    
    
    
    
    
    8
    
    
    
    3
    
    
    
    134
    
    
    
    3,473
    
    
    
    1,499
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Consolidated cash flow statement
   
  2009
    
    
    2008
    
    
    2007Notes

    
    £m
    
    
    £m
    
    
    £mCash flows from operating activitiesTotal operating profit
    
    
    
    
    
    
    2,623
    
    
    
    2,964
    
    
    
    2,513Adjustments for:Exceptional items, remeasurements and stranded cost recoveries
    
    
    
    
    
    
    292
    
    
    
    (369
    )
    
    
    (482
    )Depreciation and amortisation
    
    
    
    
    
    
    1,122
    
    
    
    994
    
    
    
    871Share-based payment charge
    
    
    
    
    
    
    22
    
    
    
    18
    
    
    
    15Changes in working capital
    
    
    
    
    
    
    54
    
    
    
    (150
    )
    
    
    127Changes in provisions
    
    
    
    
    
    
    (99
    )
    
    
    (5
    )
    
    
    (31
    )Changes in pensions and other post-retirement benefit obligations
    
    
    
    
    
    
    (678
    )
    
    
    (333
    )
    
    
    (125
    )Cash flows relating to exceptional items
    
    
    
    
    
    
    (131
    )
    
    
    (132
    )
    
    
    (86
    )Cash flows relating to stranded cost recoveries
    
    
    
    
    
    
    359
    
    
    
    278
    
    
    
    288Cash flows generated from continuing operations
    
    
    
    
    
    
    3,564
    
    
    
    3,265
    
    
    
    3,090Cash flows relating to discontinued operations (excluding tax)
    
    
    27
    (a)
    
    
    (8
    )
    
    
    10
    
    
    
    181Cash generated from operations
    
    
    
    
    
    
    3,556
    
    
    
    3,275
    
    
    
    3,271Tax paid
    
    
    
    
    
    
    (143
    )
    
    
    (110
    )
    
    
    (313
    )Net cash inflow from operating activities
    
    
    
    
    
    
    3,413
    
    
    
    3,165
    
    
    
    2,958Cash flows from investing activitiesAcquisition of subsidiaries, net of cash acquired
    
    
    
    28

    
    
    
    
    
    
    (3,502
    )
    
    
    (269
    )Acquisition of other investments
    
    
    
    
    
    
    (73
    )
    
    
    (26
    )
    
    
    Sale of investments in subsidiaries and other investments
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    19Purchases of intangible assets
    
    
    
    
    
    
    (78
    )
    
    
    (45
    )
    
    
    (33
    )Purchases of property, plant and equipment
    
    
    
    
    
    
    (3,107
    )
    
    
    (2,832
    )
    
    
    (2,185
    )Disposals of property, plant and equipment
    
    
    
    
    
    
    27
    
    
    
    26
    
    
    
    21Interest received
    
    
    
    
    
    
    85
    
    
    
    206
    
    
    
    216Purchases of financial investments
    
    
    
    
    
    
    (6,173
    )
    
    
    (8,788
    )
    
    
    (3,699
    )Sales of financial investments
    
    
    
    
    
    
    6,272
    
    
    
    8,833
    
    
    
    1,974Cash flows used in continuing operations  investing activities
    
    
    
    
    
    
    (3,047
    )
    
    
    (6,073
    )
    
    
    (3,956
    )Cash flows relating to discontinued operations  investing activities (net of tax)
    
    
    27
    (b)
    
    
    1,049
    
    
    
    3,050
    
    
    
    (105
    )Net cash flow used in investing activities
    
    
    
    
    
    
    (1,998
    )
    
    
    (3,023
    )
    
    
    (4,061
    )Cash flows from financing activitiesProceeds from issue of share capital and sale of treasury shares
    
    
    
    
    
    
    8
    
    
    
    23
    
    
    
    16Proceeds from loans received
    
    
    
    
    
    
    4,892
    
    
    
    1,568
    
    
    
    5,519Repayment of loans
    
    
    
    
    
    
    (2,618
    )
    
    
    (650
    )
    
    
    (2,311
    )Net movements in short-term borrowings and derivatives
    
    
    
    
    
    
    (633
    )
    
    
    671
    
    
    
    (163
    )Interest paid
    
    
    
    
    
    
    (1,061
    )
    
    
    (900
    )
    
    
    (813
    )Exceptional finance costs on the repayment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45
    )Dividends paid to shareholders
    
    
    
    
    
    
    (838
    )
    
    
    (780
    )
    
    
    (730
    )Cash paid to shareholders under B share scheme
    
    
    
    
    
    
    
    
    
    
    (26
    )
    
    
    (26
    )Repurchase of share capital and purchase of treasury shares
    
    
    
    
    
    
    (627
    )
    
    
    (1,498
    )
    
    
    (169
    )Net cash flow (used in)/from financing activities
    
    
    
    
    
    
    (877
    )
    
    
    (1,592
    )
    
    
    1,278Net increase/(decrease) in cash and cash equivalents
    
    
    
    
    
    
    538
    
    
    
    (1,450
    )
    
    
    175Exchange movements
    
    
    
    
    
    
    18
    
    
    
    4
    
    
    
    (14
    )Cash included within assets of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    (23
    )Net cash and cash equivalents at start of year
    
    
    
    
    
    
    164
    
    
    
    1,587
    
    
    
    1,449Net cash and cash equivalents at end of year (i)
    
    
    
    20

    
    
    720
    
    
    
    164
    
    
    
    1,587
 
 (i)
    Net of bank overdrafts of £17m (2008: £10m; 2007: £6m).
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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 the UK, the
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
    
    
    businesses
    
    
    parties
    
    
    sales
    
    
    businesses
    
    
    parties
    
    
    sales
    
    
    businesses
    
    
    parties2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007
    
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mBusiness segments  continuing operationsTransmission UK
    
    
    3,487
    
    
    
    2
    
    
    
    3,485
    
    
    
    2,956
    
    
    
    16
    
    
    
    2,940
    
    
    
    2,816
    
    
    
    18
    
    
    
    2,798Transmission US
    
    
    420
    
    
    
    83
    
    
    
    337
    
    
    
    299
    
    
    
    61
    
    
    
    238
    
    
    
    270
    
    
    
    47
    
    
    
    223Gas Distribution UK
    
    
    1,466
    
    
    
    79
    
    
    
    1,387
    
    
    
    1,383
    
    
    
    70
    
    
    
    1,313
    
    
    
    1,193
    
    
    
    92
    
    
    
    1,101Gas Distribution US
    
    
    4,786
    
    
    
    3
    
    
    
    4,783
    
    
    
    2,845
    
    
    
    2
    
    
    
    2,843
    
    
    
    638
    
    
    
    
    
    
    
    638Electricity Distribution &
Generation US
    
    
    4,972
    
    
    
    1
    
    
    
    4,971
    
    
    
    3,508
    
    
    
    2
    
    
    
    3,506
    
    
    
    3,430
    
    
    
    2
    
    
    
    3,428Other activities
    
    
    719
    
    
    
    58
    
    
    
    661
    
    
    
    642
    
    
    
    59
    
    
    
    583
    
    
    
    567
    
    
    
    60
    
    
    
    50715,850
    
    
    
    226
    
    
    
    15,624
    
    
    
    11,633
    
    
    
    210
    
    
    
    11,423
    
    
    
    8,914
    
    
    
    219
    
    
    
    8,695Total excluding stranded cost
recoveries
    
    
    
    
    
    
    
    
    
    
    15,189
    
    
    
    
    
    
    
    
    
    
    
    11,041
    
    
    
    
    
    
    
    
    
    
    
    8,269Stranded cost recoveries
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    
    
    
    
    
    
    
    
    382
    
    
    
    
    
    
    
    
    
    
    
    42615,624
    
    
    
    
    
    
    
    
    
    
    
    11,423
    
    
    
    
    
    
    
    
    
    
    
    8,695Geographical segmentsUK
    
    
    
    
    
    
    
    
    
    
    5,334
    
    
    
    
    
    
    
    
    
    
    
    4,787
    
    
    
    
    
    
    
    
    
    
    
    4,397US
    
    
    
    
    
    
    
    
    
    
    10,290
    
    
    
    
    
    
    
    
    
    
    
    6,636
    
    
    
    
    
    
    
    
    
    
    
    4,29815,624
    
    
    
    
    
    
    
    
    
    
    
    11,423
    
    
    
    
    
    
    
    
    
    
    
    8,695
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



1. Segmental analysis
   (b) Operating profit
 Before exceptional items,
    
    
    After exceptional items,remeasurements and stranded
    
    
    remeasurements and stranded2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mBusiness segments  continuing operationsTransmission UK
    
    
    1,126
    
    
    
    1,021
    
    
    
    946
    
    
    
    1,063
    
    
    
    1,013
    
    
    
    936Transmission US
    
    
    175
    
    
    
    128
    
    
    
    108
    
    
    
    173
    
    
    
    122
    
    
    
    107Gas Distribution UK
    
    
    672
    
    
    
    595
    
    
    
    409
    
    
    
    629
    
    
    
    574
    
    
    
    412Gas Distribution US
    
    
    612
    
    
    
    392
    
    
    
    71
    
    
    
    226
    
    
    
    487
    
    
    
    67Electricity Distribution & Generation US
    
    
    265
    
    
    
    330
    
    
    
    364
    
    
    
    531
    
    
    
    696
    
    
    
    859Other activities
    
    
    65
    
    
    
    129
    
    
    
    133
    
    
    
    1
    
    
    
    72
    
    
    
    1322,915
    
    
    
    2,595
    
    
    
    2,031
    
    
    
    2,623
    
    
    
    2,964
    
    
    
    2,513Geographical segmentsUK
    
    
    1,875
    
    
    
    1,752
    
    
    
    1,491
    
    
    
    1,729
    
    
    
    1,667
    
    
    
    1,482US
    
    
    1,040
    
    
    
    843
    
    
    
    540
    
    
    
    894
    
    
    
    1,297
    
    
    
    1,0312,915
    
    
    
    2,595
    
    
    
    2,031
    
    
    
    2,623
    
    
    
    2,964
    
    
    
    2,513
  (c) Capital expenditure and depreciation
 Capital expenditure
    
    
    Depreciation and amortisation2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mBusiness segments  continuing operationsTransmission UK
    
    
    1,259
    
    
    
    1,600
    
    
    
    1,235
    
    
    
    353
    
    
    
    372
    
    
    
    352Transmission US
    
    
    182
    
    
    
    111
    
    
    
    108
    
    
    
    56
    
    
    
    40
    
    
    
    41Gas Distribution UK
    
    
    598
    
    
    
    514
    
    
    
    490
    
    
    
    177
    
    
    
    181
    
    
    
    170Gas Distribution US
    
    
    421
    
    
    
    188
    
    
    
    36
    
    
    
    172
    
    
    
    91
    
    
    
    24Electricity Distribution & Generation US
    
    
    355
    
    
    
    257
    
    
    
    218
    
    
    
    223
    
    
    
    146
    
    
    
    127Other activities
    
    
    427
    
    
    
    383
    
    
    
    258
    
    
    
    146
    
    
    
    164
    
    
    
    1573,242
    
    
    
    3,053
    
    
    
    2,345
    
    
    
    1,127
    
    
    
    994
    
    
    
    871Discontinued operations
    
    
    
    
    
    
    1
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    723,242
    
    
    
    3,054
    
    
    
    2,375
    
    
    
    1,127
    
    
    
    994
    
    
    
    943Geographical segmentsUK
    
    
    2,270
    
    
    
    2,493
    
    
    
    2,007
    
    
    
    679
    
    
    
    709
    
    
    
    739US
    
    
    972
    
    
    
    560
    
    
    
    365
    
    
    
    448
    
    
    
    285
    
    
    
    196Rest of the world
    
    
    
    
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    83,242
    
    
    
    3,054
    
    
    
    2,375
    
    
    
    1,127
    
    
    
    994
    
    
    
    943
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  1. Segmental analysis
 (d) Total assets and total liabilities
 Total assets
    
    
    Total liabilities2009
    
    
    2008
    *
    
    2009
    
    
    2008
    *£m
    
    
    £m
    
    
    £m
    
    
    £mBusiness segments  continuing operationsTransmission UK
    
    
    10,451
    
    
    
    10,076
    
    
    
    (1,501
    )
    
    
    (1,455
    )Transmission US*
    
    
    2,238
    
    
    
    1,565
    
    
    
    (190
    )
    
    
    (83
    )Gas Distribution UK
    
    
    6,158
    
    
    
    5,765
    
    
    
    (1,279
    )
    
    
    (1,222
    )Gas Distribution US*
    
    
    10,112
    
    
    
    7,251
    
    
    
    (2,024
    )
    
    
    (1,612
    )Electricity Distribution & Generation US*
    
    
    7,854
    
    
    
    5,674
    
    
    
    (3,523
    )
    
    
    (2,429
    )Other activities*
    
    
    2,289
    
    
    
    2,068
    
    
    
    (1,189
    )
    
    
    (523
    )39,102
    
    
    
    32,399
    
    
    
    (9,706
    )
    
    
    (7,324
    )Discontinued operations*
    
    
    
    
    
    
    1,506
    
    
    
    
    
    
    
    (83
    )39,102
    
    
    
    33,905
    
    
    
    (9,706
    )
    
    
    (7,407
    )Joint ventures  continuing operations
    
    
    168
    
    
    
    71
    
    
    
    
    
    
    
    Unallocated*
    
    
    5,197
    
    
    
    3,795
    
    
    
    (30,777
    )
    
    
    (24,990
    )44,467
    
    
    
    37,771
    
    
    
    (40,483
    )
    
    
    (32,397
    )Geographical segmentsUK
    
    
    18,527
    
    
    
    17,533
    
    
    
    (3,602
    )
    
    
    (3,365
    )US*
    
    
    20,743
    
    
    
    16,443
    
    
    
    (6,104
    )
    
    
    (4,042
    )Unallocated*
    
    
    5,197
    
    
    
    3,795
    
    
    
    (30,777
    )
    
    
    (24,990
    )44,467
    
    
    
    37,771
    
    
    
    (40,483
    )
    
    
    (32,397
    )
 
 *
    Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28) and adjusted to present comparatives on a basis consistent
with current year classification  
 2. Other operating income
  
 3. Operating costs
 Before exceptional items,
    
    
    Exceptional items,remeasurements and stranded
    
    
    remeasurements and stranded
    
    
    Total2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    *
    
    2007
    
    
    2009
    
    
    2008
    *
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mDepreciation of property, plant
and equipment
    
    
    1,058
    
    
    
    940
    
    
    
    830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,058
    
    
    
    940
    
    
    
    830Amortisation of intangible assets
    
    
    64
    
    
    
    50
    
    
    
    41
    
    
    
    5
    
    
    
    4
    
    
    
    
    
    
    
    69
    
    
    
    54
    
    
    
    41Payroll costs
    
    
    1,415
    
    
    
    1,071
    
    
    
    794
    
    
    
    34
    
    
    
    108
    
    
    
    26
    
    
    
    1,449
    
    
    
    1,179
    
    
    
    820Other operating charges:Purchases of electricity
    
    
    2,199
    
    
    
    1,589
    
    
    
    1,680
    
    
    
    28
    
    
    
    (95
    )
    
    
    (87
    )
    
    
    2,227
    
    
    
    1,494
    
    
    
    1,593Purchases of gas
    
    
    3,228
    
    
    
    2,011
    
    
    
    544
    
    
    
    334
    
    
    
    (141
    )
    
    
    
    
    
    
    3,562
    
    
    
    1,870
    
    
    
    544Rates and property taxes
    
    
    881
    
    
    
    608
    
    
    
    472
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    881
    
    
    
    608
    
    
    
    472Electricity transmission services
scheme direct costs
    
    
    904
    
    
    
    574
    
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    904
    
    
    
    574
    
    
    
    558Payments to Scottish electricity
transmission network owners
    
    
    243
    
    
    
    226
    
    
    
    237
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    243
    
    
    
    226
    
    
    
    237Other
    
    
    2,345
    
    
    
    1,452
    
    
    
    1,165
    
    
    
    326
    
    
    
    137
    
    
    
    5
    
    
    
    2,671
    
    
    
    1,589
    
    
    
    1,17012,337
    
    
    
    8,521
    
    
    
    6,321
    
    
    
    727
    
    
    
    13
    
    
    
    (56
    )
    
    
    13,064
    
    
    
    8,534
    
    
    
    6,265Operating costs include:Research expenditure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    13
    
    
    
    6Operating lease rentalsPlant and machinery
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    33
    
    
    
    21Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    30
    
    
    
    63
 
 * Comparatives have been adjusted to present items on a basis consistent with the current year classification
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



3. Operating costs
 (a) Payroll costs
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mWages and salaries
    
    
    1,615
    
    
    
    1,169
    
    
    
    819Social security costs
    
    
    118
    
    
    
    84
    
    
    
    65Other pension costs
    
    
    160
    
    
    
    218
    
    
    
    132Share-based payments
    
    
    22
    
    
    
    18
    
    
    
    15Severance costs (excluding pension costs)
    
    
    16
    
    
    
    14
    
    
    
    141,931
    
    
    
    1,503
    
    
    
    1,045Less: payroll costs capitalised
    
    
    (482
    )
    
    
    (324
    )
    
    
    (225
    )1,449
    
    
    
    1,179
    
    
    
    820
   (b) Number of employees
 31 March
    
    
    Average
    
    
    31 March
    
    
    Average2009
    
    
    2009
    
    
    2008
    
    
    2008Number
    
    
    Number
    
    
    Number
    
    
    NumberUK
    
    
    10,457
    
    
    
    10,456
    
    
    
    10,223
    
    
    
    10,093US
    
    
    17,429
    
    
    
    17,669
    
    
    
    18,098
    
    
    
    14,288Rest of the world
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    5Continuing operations
    
    
    27,886
    
    
    
    28,125
    
    
    
    28,326
    
    
    
    24,386Discontinued operations
    
    
    
    
    
    
    83
    
    
    
    204
    
    
    
    11927,886
    
    
    
    28,208
    
    
    
    28,530
    
    
    
    24,505
  (c) Key management compensation
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mSalaries and short-term employee benefits
    
    
    11
    
    
    
    9
    
    
    
    8Post-employment benefits
    
    
    3
    
    
    
    8
    
    
    
    5Termination benefits
    
    
    
    
    
    
    
    
    
    
    1Share-based payments
    
    
    5
    
    
    
    3
    
    
    
    319
    
    
    
    20
    
    
    
    17
  (d) Directors emoluments
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  3. Operating costs
 (e) Auditors remuneration
 2009
    
    
    2008
    *
    
    2007£m
    
    
    £m
    
    
    £mAudit servicesAudit of parent company and consolidated financial statements
    
    
    1.5
    
    
    
    1.4
    
    
    
    1.2Other servicesAudit of subsidiary financial statements pursuant to legislation
    
    
    5.8
    
    
    
    5.1
    
    
    
    2.8Other services supplied pursuant to legislation
    
    
    2.4
    
    
    
    2.4
    
    
    
    2.2Services relating to tax compliance
    
    
    0.6
    
    
    
    0.7
    
    
    
    0.6Services relating to tax advisory
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.7Services relating to corporate finance transactions
    
    
    0.1
    
    
    
    0.7
    
    
    
    1.4All other services
    
    
    0.8
    
    
    
    0.4
    
    
    
    1.3Fees paid by associated pension schemesAudit of pension schemes of the Company pursuant to legislation
    
    
    
    
    
    
    
    
    
    
    0.211.5
    
    
    
    11.2
    
    
    
    10.4Total services pursuant to legislation
    
    
    9.7
    
    
    
    8.9
    
    
    
    6.4Total other services
    
    
    1.8
    
    
    
    2.3
    
    
    
    4.011.5
    
    
    
    11.2
    
    
    
    10.4
 
 * Comparatives have been restated to present items on a basis consistent with the current year
classification
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



4. Exceptional items, remeasurements and stranded cost recoveries
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mExceptional items  restructuring costs (i)
    
    
    (192
    )
    
    
    (133
    )
    
    
    (22
    )Exceptional items  environmental related provisions (ii)
    
    
    (78
    )
    
    
    (92
    )
    
    
    Exceptional items  gain on disposal of subsidiary
    
    
    
    
    
    
    6
    
    
    
    Exceptional items  other (iii)
    
    
    (5
    )
    
    
    (23
    )
    
    
    Remeasurements  commodity contracts (iv)
    
    
    (443
    )
    
    
    232
    
    
    
    81Stranded cost recoveries (v)
    
    
    426
    
    
    
    379
    
    
    
    423Total exceptional items, remeasurements and stranded cost recoveries included within operating profit
    
    
    (292
    )
    
    
    369
    
    
    
    482Exceptional items  debt restructuring costs (vi)
    
    
    
    
    
    
    
    
    
    
    (45
    )Remeasurements  commodity contracts (iv)
    
    
    (2
    )
    
    
    (9
    )
    
    
    (19
    )Remeasurements  net (losses)/gains on derivative financial instruments (vii)
    
    
    (82
    )
    
    
    (7
    )
    
    
    (153
    )Total exceptional items and remeasurements included within finance costs
    
    
    (84
    )
    
    
    (16
    )
    
    
    (217
    )Total exceptional items, remeasurements and stranded cost recoveries before taxation
    
    
    (376
    )
    
    
    353
    
    
    
    265Exceptional tax item  deferred tax credit arising from the reduction in the UK tax rate (viii)
    
    
    
    
    
    
    170
    
    
    
    Exceptional tax item  deferred tax charge arising from change in UK industrial building allowance regime (ix)
    
    
    (49
    )
    
    
    
    
    
    
    Tax on exceptional items  restructuring costs (i)
    
    
    59
    
    
    
    49
    
    
    
    12Tax on exceptional items  environmental related provisions (ii)
    
    
    16
    
    
    
    20
    
    
    
    Tax on exceptional items  gain on disposal of subsidiary
    
    
    
    
    
    
    (4
    )
    
    
    Tax on exceptional items  other (iii)
    
    
    2
    
    
    
    5
    
    
    
    Tax on remeasurements  commodity contracts (iv)
    
    
    179
    
    
    
    (90
    )
    
    
    (25
    )Tax on exceptional items  debt restructuring costs (vi)
    
    
    
    
    
    
    
    
    
    
    14Tax on remeasurements  derivative financial instruments (vii)
    
    
    8
    
    
    
    (28
    )
    
    
    169Tax on stranded cost recoveries (v)
    
    
    (170
    )
    
    
    (150
    )
    
    
    (169
    )Tax on exceptional items, remeasurements and stranded cost recoveries
    
    
    45
    
    
    
    (28
    )
    
    
    1Total exceptional items, remeasurements and stranded cost recoveries
    
    
    (331
    )
    
    
    325
    
    
    
    266Total exceptional items after taxation
    
    
    (247
    )
    
    
    (2
    )
    
    
    (41
    )Total commodity contract remeasurements after taxation
    
    
    (266
    )
    
    
    133
    
    
    
    37Total derivative financial instrument remeasurements after taxation
    
    
    (74
    )
    
    
    (35
    )
    
    
    16Total stranded cost recoveries after taxation
    
    
    256
    
    
    
    229
    
    
    
    254Total exceptional items, remeasurements and stranded cost recoveries after taxation
    
    
    (331
    )
    
    
    325
    
    
    
    266
 
 (i)
    Restructuring costs include costs related to the integration of KeySpan (£53m), planned cost
reduction programmes in our UK businesses (£21m), the restructuring of our liquefied natural gas
(LNG) storage facilities (£50m), and transformation related initiatives (£68m). For the year ended
31 March 2008, restructuring costs included pension related costs of £83m arising as a result of
actual and planned redundancies.(ii)
    Environmental charges include £42m due to significant movements in discount rates arising from
reductions in market risk free rates due to the current economic conditions together with £25m
arising from changes in landfill tax legislation in the UK. For the year ended 31 March 2009, the
UK charge was £37m and the US charge £41m. For 2008, the revision of cost estimates for
environmental provisions resulted in a charge in the UK of £44m and a charge of £48m in the US.
Costs incurred with respect to US environmental provisions are substantially recoverable from
customers.(iii)
    Other costs for the year ended 31 March 2009 include an amortisation charge on
acquisition-related intangibles of £5m (2008: £4m).(iv)
    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.(v)
    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 £435m (2008: £382m; 2007: £426m) and operating costs of £9m (2008: £3m; 2007:
£3m).(vi)
    Debt restructuring costs in the year ended 31 March 2007 represent debt redemption costs
related to the restructuring of our debt portfolio.(vii)
    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. At 31 March
2008, these remeasurements included a loss of £3m relating to pre-tax losses on investment related
derivative financial instruments that offset on a post-tax basis. The tax charge in the year ended
31 March 2009 includes a £1m (2008: £11m) adjustment in respect of prior years. For the year ended
31 March 2007, remeasurements include a loss of £126m relating to pre-tax losses on investment
related derivative financial instruments.(viii)
    The exceptional tax credit in the prior period 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.(ix)
    The exceptional tax charge of £49m in the period 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.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes
to the consolidated financial statements
  
  5. Pensions and other post-retirement benefits
    Pensions
    
    
    US other post-retirement benefits2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mDefined contribution scheme costs
    
    
    5
    
    
    
    5
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Defined
benefit scheme costs
Current service cost
    
    
    134
    
    
    
    125
    
    
    
    113
    
    
    
    32
    
    
    
    21
    
    
    
    15Past service cost
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    7
    
    
    
    5
    
    
    
    7Curtailment gain on redundancies
    
    
    (4
    )
    
    
    (16
    )
    
    
    (10
    )
    
    
    
    
    
    
    (4
    )
    
    
    Settlements on redundancies
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefits on redundancies
    
    
    19
    
    
    
    80
    
    
    
    23
    
    
    
    
    
    
    
    1
    
    
    
    Curtailment cost  augmentations
    
    
    6
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Total in payroll costs  continuing
    
    
    160
    
    
    
    218
    
    
    
    132
    
    
    
    39
    
    
    
    23
    
    
    
    22Curtailment gain on sale of subsidiary undertaking
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest cost
    
    
    1,106
    
    
    
    912
    
    
    
    806
    
    
    
    144
    
    
    
    89
    
    
    
    63Expected return on plan assets
    
    
    (1,163
    )
    
    
    (1,014
    )
    
    
    (885
    )
    
    
    (73
    )
    
    
    (50
    )
    
    
    (41
    )Total in finance costs  continuing
    
    
    (57
    )
    
    
    (102
    )
    
    
    (79
    )
    
    
    71
    
    
    
    39
    
    
    
    22Current service cost
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    Interest cost
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    Total in discontinued operations
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    
  Pensions
    
    
    US other post-retirement benefits2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mActuarial net (loss)/gain during the year
    
    
    (1,906
    )
    
    
    497
    
    
    
    357
    
    
    
    (112
    )
    
    
    (65
    )
    
    
    8Exchange differences
    
    
    (141
    )
    
    
    3
    
    
    
    40
    
    
    
    (408
    )
    
    
    3
    
    
    
    75Total recognised for the year
    
    
    (2,047
    )
    
    
    500
    
    
    
    397
    
    
    
    (520
    )
    
    
    (62
    )
    
    
    83Cumulative actuarial (loss)/gain
    
    
    (584
    )
    
    
    1,322
    
    
    
    825
    
    
    
    (203
    )
    
    
    (91
    )
    
    
    (26
    )
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



5. Pensions and other post-retirement benefits
  Pensions
    
    
    US other post-retirement benefits2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mPresent value of funded obligations
    
    
    (15,797
    )
    
    
    (16,233
    )
    
    
    (16,044
    )
    
    
    (2,299
    )
    
    
    (1,784
    )
    
    
    (1,126
    )Fair value of plan assets
    
    
    14,797
    
    
    
    16,536
    
    
    
    15,468
    
    
    
    722
    
    
    
    737
    
    
    
    531(1,000
    )
    
    
    303
    
    
    
    (576
    )
    
    
    (1,577
    )
    
    
    (1,047
    )
    
    
    (595
    )Present value of unfunded obligations
    
    
    (203
    )
    
    
    (158
    )
    
    
    (83
    )
    
    
    
    
    
    
    
    
    
    
    Other post-employment liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74
    )
    
    
    (34
    )
    
    
    (33
    )Unrecognised past service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    36
    
    
    
    42Net (liability)/asset in the balance sheet
    
    
    (1,203
    )
    
    
    145
    
    
    
    (659
    )
    
    
    (1,608
    )
    
    
    (1,045
    )
    
    
    (586
    )Liabilities
    
    
    (1,472
    )
    
    
    (701
    )
    
    
    (696
    )
    
    
    (1,608
    )
    
    
    (1,045
    )
    
    
    (586
    )Assets
    
    
    269
    
    
    
    846
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    Net (liability)/asset
    
    
    (1,203
    )
    
    
    145
    
    
    
    (659
    )
    
    
    (1,608
    )
    
    
    (1,045
    )
    
    
    (586
    )Changes in the present value of the defined benefit obligationsOpening defined benefit obligations (including unfunded obligations)
    
    
    (16,391
    )
    
    
    (16,127
    )
    
    
    (16,616
    )
    
    
    (1,784
    )
    
    
    (1,126
    )
    
    
    (1,223
    )Current service cost
    
    
    (136
    )
    
    
    (127
    )
    
    
    (115
    )
    
    
    (32
    )
    
    
    (22
    )
    
    
    (15
    )Interest cost
    
    
    (1,106
    )
    
    
    (912
    )
    
    
    (808
    )
    
    
    (144
    )
    
    
    (89
    )
    
    
    (63
    )Actuarial gains/(losses)
    
    
    1,719
    
    
    
    1,335
    
    
    
    450
    
    
    
    215
    
    
    
    8
    
    
    
    (4
    )Curtailment gain on redundancies
    
    
    4
    
    
    
    16
    
    
    
    10
    
    
    
    
    
    
    
    4
    
    
    
    Curtailment gain on sale of subsidiary undertaking
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net transfers and disposals
    
    
    3
    
    
    
    8
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Special termination benefits
    
    
    (19
    )
    
    
    (80
    )
    
    
    (23
    )
    
    
    
    
    
    
    (1
    )
    
    
    Curtailment cost  augmentations
    
    
    (6
    )
    
    
    (3
    )
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    Acquisition of subsidiary undertakings
    
    
    
    
    
    
    (1,362
    )
    
    
    (89
    )
    
    
    
    
    
    
    (639
    )
    
    
    (19
    )Plan amendments
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Employee contributions
    
    
    (13
    )
    
    
    (15
    )
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    Benefits paid (including unfunded obligations)
    
    
    1,003
    
    
    
    875
    
    
    
    845
    
    
    
    116
    
    
    
    78
    
    
    
    62Transferred to liabilities of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    Exchange adjustments
    
    
    (1,058
    )
    
    
    (6
    )
    
    
    189
    
    
    
    (670
    )
    
    
    3
    
    
    
    142Closing defined benefit obligations (including unfunded obligations)
    
    
    (16,000
    )
    
    
    (16,391
    )
    
    
    (16,127
    )
    
    
    (2,299
    )
    
    
    (1,784
    )
    
    
    (1,126
    )Changes in the fair value of plan assetsOpening fair value of plan assets
    
    
    16,536
    
    
    
    15,468
    
    
    
    15,341
    
    
    
    737
    
    
    
    531
    
    
    
    568Expected return on plan assets
    
    
    1,163
    
    
    
    1,014
    
    
    
    887
    
    
    
    73
    
    
    
    50
    
    
    
    41Actuarial (losses)/gains
    
    
    (3,625
    )
    
    
    (838
    )
    
    
    (93
    )
    
    
    (327
    )
    
    
    (73
    )
    
    
    12Assets distributed on settlements and transfers
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers (out)/in
    
    
    (3
    )
    
    
    (8
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Employer contributions
    
    
    799
    
    
    
    465
    
    
    
    276
    
    
    
    93
    
    
    
    46
    
    
    
    28Employee contributions
    
    
    13
    
    
    
    15
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of subsidiary undertakings
    
    
    
    
    
    
    1,302
    
    
    
    82
    
    
    
    
    
    
    
    259
    
    
    
    7Benefits paid
    
    
    (1,003
    )
    
    
    (875
    )
    
    
    (845
    )
    
    
    (116
    )
    
    
    (76
    )
    
    
    (58
    )Transferred to liabilities of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    (46
    )
    
    
    
    
    
    
    
    
    
    
    Exchange adjustments
    
    
    917
    
    
    
    9
    
    
    
    (149
    )
    
    
    262
    
    
    
    
    
    
    
    (67
    )Closing fair value of plan assets
    
    
    14,797
    
    
    
    16,536
    
    
    
    15,468
    
    
    
    722
    
    
    
    737
    
    
    
    531Actual return on plan assets
    
    
    (2,462
    )
    
    
    176
    
    
    
    794
    
    
    
    (254
    )
    
    
    (23
    )
    
    
    53Expected contributions to defined benefit plans in the following year
    
    
    552
    
    
    
    581
    
    
    
    307
    
    
    
    123
    
    
    
    128
    
    
    
    27
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes
to the consolidated financial statements
  
  6. Finance income and costs
 2009
    
    
    2008
    *
    
    2007£m
    
    
    £m
    
    
    £mInterest income and similar incomeExpected return on pension and other post-retirement benefit plan assets
    
    
    1,236
    
    
    
    1,064
    
    
    
    926Interest income on financial instruments:Interest income from bank deposits and other financial assets
    
    
    60
    
    
    
    209
    
    
    
    214Interest receivable on finance leases
    
    
    1
    
    
    
    2
    
    
    
    3Gains transferred from equity on disposal of available-for-sale investments
    
    
    18
    
    
    
    
    
    
    
    11,315
    
    
    
    1,275
    
    
    
    1,144Interest expense and other finance costsBefore exceptional items and remeasurements
    
    
    (2,465
    )
    
    
    (2,045
    )
    
    
    (1,691
    )Exceptional items and remeasurements
    
    
    (84
    )
    
    
    (16
    )
    
    
    (217
    )(2,549
    )
    
    
    (2,061
    )
    
    
    (1,908
    )Net finance costs
    
    
    (1,234
    )
    
    
    (786
    )
    
    
    (764
    )Interest expense and other finance costs comprise the following:Interest on pension and other post-retirement benefit plan obligations
    
    
    (1,250
    )
    
    
    (1,001
    )
    
    
    (869
    )Interest expense on financial liabilities held at amortised cost:Interest on bank loans and overdrafts
    
    
    (136
    )
    
    
    (71
    )
    
    
    (48
    )Interest on other borrowings
    
    
    (1,135
    )
    
    
    (990
    )
    
    
    (768
    )Interest on finance leases
    
    
    (14
    )
    
    
    (11
    )
    
    
    (1
    )Exceptional debt redemption costs
    
    
    
    
    
    
    
    
    
    
    (45
    )Interest on derivatives
    
    
    5
    
    
    
    (46
    )
    
    
    (54
    )Unwinding of discounts on provisions
    
    
    (68
    )
    
    
    (45
    )
    
    
    (21
    )Less: Interest capitalised (i)
    
    
    133
    
    
    
    119
    
    
    
    70Interest expense and other finance costs before exceptional items and remeasurements
    
    
    (2,465
    )
    
    
    (2,045
    )
    
    
    (1,736
    )Net gains/(losses) on derivative financial instruments included in remeasurements:Ineffectiveness on derivatives designated as fair value hedges (ii)
    
    
    (34
    )
    
    
    1
    
    
    
    18Ineffectiveness on derivatives designated as cash flow hedges
    
    
    (18
    )
    
    
    13
    
    
    
    Ineffectiveness on derivatives designated as net investment hedges
    
    
    (2
    )
    
    
    14
    
    
    
    25On undesignated forward rate risk relating to derivatives designated as net investment hedges
    
    
    112
    
    
    
    (53
    )
    
    
    (82
    )On derivatives not designated as hedges or ineligible for hedge accounting (iii)
    
    
    (140
    )
    
    
    18
    
    
    
    (114
    )Financial element of remeasurements on commodity contracts
    
    
    (2
    )
    
    
    (9
    )
    
    
    (19
    )Net losses on derivative financial instruments included in remeasurements (iv)
    
    
    (84
    )
    
    
    (16
    )
    
    
    (172
    )Interest expense and other finance costs after exceptional items and remeasurements
    
    
    (2,549
    )
    
    
    (2,061
    )
    
    
    (1,908
    )
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)(i)
    Interest on funding attributable to assets in the course of construction was capitalised during
the year at a rate of 5.7% (2008: 6.3%; 2007: 5.6%).(ii)
    Includes a net gain on instruments designated as fair value hedges of £382m (2008: £87m gain;
2007: £100m loss) less a net loss of £416m (2008: £86m loss; 2007: £118m gain) arising from fair
value adjustments to the carrying value of debt.(iii)
    Includes a loss of £nil (2008: £3m; 2007: £126m) relating to pre-tax losses on investment
related derivative financial instruments which offset on a post-tax basis.(iv)
    Includes a net foreign exchange loss on financing activities of £1,500m (2008: £885m loss;
2007: £122m gain). These amounts are offset by foreign exchange gains and losses on derivative
financial instruments measured at fair value.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



7. Taxation
 Taxation on items charged/(credited) to the income statement
 2009
    
    
    2008
    *
    
    2007£m
    
    
    £m
    
    
    £mTaxation before exceptional items, remeasurements and stranded cost recoveries
    
    
    517
    
    
    
    579
    
    
    
    442Exceptional tax items (see note 4)
    
    
    49
    
    
    
    (170
    )
    
    
    Taxation on other exceptional items, remeasurements and stranded cost recoveries
    
    
    (94
    )
    
    
    198
    
    
    
    (1
    )Taxation on total exceptional items, remeasurements and stranded cost recoveries (see note 4)
    
    
    (45
    )
    
    
    28
    
    
    
    (1
    )Total tax charge
    
    
    472
    
    
    
    607
    
    
    
    441
 Taxation as a percentage of profit before taxation
 2009
    
    
    2008
    *
    
    2007%
    
    
    %
    
    
    %Before exceptional items, remeasurements and stranded cost recoveries
    
    
    29.2
    
    
    
    31.7
    
    
    
    29.7After exceptional items, remeasurements and stranded cost recoveries
    
    
    33.9
    
    
    
    27.8
    
    
    
    25.2
  2009
    
    
    2008
    *
    
    2007£m
    
    
    £m
    
    
    £mUnited KingdomCorporation tax at 28% (2008: 30%; 2007: 30%)
    
    
    37
    
    
    
    214
    
    
    
    66Corporation tax adjustment in respect of prior years (i)
    
    
    (54
    )
    
    
    (156
    )
    
    
    (28
    )Deferred tax
    
    
    339
    
    
    
    42
    
    
    
    168Deferred tax adjustment in respect of prior years (ii)
    
    
    
    
    
    
    67
    
    
    
    9322
    
    
    
    167
    
    
    
    215OverseasCorporate tax
    
    
    105
    
    
    
    209
    
    
    
    109Corporate tax adjustment in respect of prior years
    
    
    38
    
    
    
    31
    
    
    
    (149
    )Deferred tax
    
    
    37
    
    
    
    191
    
    
    
    207Deferred tax adjustment in respect of prior years
    
    
    (30
    )
    
    
    9
    
    
    
    59150
    
    
    
    440
    
    
    
    226Total tax charge
    
    
    472
    
    
    
    607
    
    
    
    441
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)(i)
    The UK corporation tax adjustment in respect of prior years includes a £2m credit (2008: £9m
charge; 2007: £51m credit) that relates to exceptional items, remeasurements and stranded cost
recoveries.(ii)
    The UK deferred tax adjustment in respect of prior years includes a £1m charge (2008: £2m
charge; 2007: £5m credit) that relates to exceptional items, remeasurements and stranded cost
recoveries. Taxation on items (credited)/charged to equity
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mCorporation tax credit on share-based payments
    
    
    (2
    )
    
    
    (7
    )
    
    
    (2
    )Deferred tax (credit)/charge on available-for-sale investments
    
    
    (7
    )
    
    
    (2
    )
    
    
    1Deferred tax (credit)/charge on revaluation of cash flow hedges
    
    
    (19
    )
    
    
    (2
    )
    
    
    10Deferred tax charge/(credit) on share-based payments
    
    
    3
    
    
    
    12
    
    
    
    (11
    )Deferred tax (credit)/charge on actuarial (losses)/gains
    
    
    (678
    )
    
    
    98
    
    
    
    70(703
    )
    
    
    99
    
    
    
    68Total tax (credit)/charge recognised in the consolidated statement of recognised income and expense
    
    
    (704
    )
    
    
    94
    
    
    
    81Total tax charge/(credit) relating to share-based payments recognised directly in equity
    
    
    1
    
    
    
    5
    
    
    
    (13
    )(703
    )
    
    
    99
    
    
    
    68
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  7. Taxation
  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 recoveries2009
    
    
    2009
    
    
    2008
    *
    
    2008
    *
    
    2007
    
    
    2007£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mProfit before taxationBefore exceptional items, remeasurements
and stranded cost recoveries
    
    
    1,770
    
    
    
    1,770
    
    
    
    1,829
    
    
    
    1,829
    
    
    
    1,486
    
    
    
    1,486Exceptional items, remeasurements
and stranded cost recoveries
    
    
    
    
    
    
    (376
    )
    
    
    
    
    
    
    353
    
    
    
    
    
    
    
    265Profit before taxation from continuing operations
    
    
    1,770
    
    
    
    1,394
    
    
    
    1,829
    
    
    
    2,182
    
    
    
    1,486
    
    
    
    1,751Profit from continuing operations multiplied
by rate of corporation tax in the UK of 28%
(2008: 30%; 2007: 30%)
    
    
    496
    
    
    
    390
    
    
    
    549
    
    
    
    655
    
    
    
    446
    
    
    
    525Effects of:Adjustments in respect of prior years
    
    
    (45
    )
    
    
    (46
    )
    
    
    (60
    )
    
    
    (49
    )
    
    
    (53
    )
    
    
    (109
    )Expenses not deductible for tax purposes
    
    
    76
    
    
    
    82
    
    
    
    102
    
    
    
    117
    
    
    
    44
    
    
    
    111Non-taxable income
    
    
    (35
    )
    
    
    (34
    )
    
    
    (75
    )
    
    
    (51
    )
    
    
    (61
    )
    
    
    (154
    )Adjustment in respect of foreign tax rates
    
    
    38
    
    
    
    32
    
    
    
    25
    
    
    
    67
    
    
    
    22
    
    
    
    70Impact of share-based payments
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2
    
    
    
    9
    
    
    
    9Remeasurement of deferred tax  change
in UK tax rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (170
    )
    
    
    
    
    
    
    Other
    
    
    (14
    )
    
    
    47
    
    
    
    36
    
    
    
    36
    
    
    
    35
    
    
    
    (11
    )Total taxation from continuing operations
    
    
    517
    
    
    
    472
    
    
    
    579
    
    
    
    607
    
    
    
    442
    
    
    
    441%
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %Effective income tax rate
    
    
    29.2
    
    
    
    33.9
    
    
    
    31.7
    
    
    
    27.8
    
    
    
    29.7
    
    
    
    25.2
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28) Factors that may affect future tax charges
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



8. Discontinued operations
   Results of discontinued operations
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mRevenue
    
    
    97
    
    
    
    201
    
    
    
    383Operating costs
    
    
    (84
    )
    
    
    (166
    )
    
    
    (321
    )Operating profit before exceptional items, remeasurements and stranded cost recoveries
    
    
    13
    
    
    
    35
    
    
    
    117Exceptional items (i)
    
    
    
    
    
    
    
    
    
    
    (55
    )Total operating profit from discontinued operations
    
    
    13
    
    
    
    35
    
    
    
    62Net finance costs before remeasurement finance income
    
    
    
    
    
    
    
    
    
    
    (2
    )Remeasurement finance income (ii)
    
    
    
    
    
    
    8
    
    
    
    37Profit before tax from discontinued operations
    
    
    13
    
    
    
    43
    
    
    
    97Taxation
    
    
    (4
    )
    
    
    (7
    )
    
    
    (11
    )Profit after tax from discontinued operations
    
    
    9
    
    
    
    36
    
    
    
    86Gain on disposal of Ravenswood
    
    
    27
    
    
    
    
    
    
    
    Gain on disposal of UK and US wireless operations
    
    
    
    
    
    
    1,506
    
    
    
    Gain on disposal of Basslink
    
    
    
    
    
    
    80
    
    
    
    Gain on disposal of discontinued operations before tax
    
    
    27
    
    
    
    1,586
    
    
    
    Taxation (iii)
    
    
    (11
    )
    
    
    (4
    )
    
    
    Gain on disposal of discontinued operations
    
    
    16
    
    
    
    1,582
    
    
    
    Total profit for the year from discontinued operationsBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    9
    
    
    
    28
    
    
    
    104Exceptional items, remeasurements and stranded cost recoveries
    
    
    16
    
    
    
    1,590
    
    
    
    (18
    )25
    
    
    
    1,618
    
    
    
    86
 
 (i)
    The exceptional item for the year ended 31 March 2007 reflects an impairment of goodwill within
the US wireless infrastructure operations.(ii)
    Remeasurement finance income for the year ended 31 March 2008 comprised £8m of mark-to-market
gains on financial instruments (2007: £13m) and for the year ended 31 March 2007 an additional £24m
relating to the recognition of gains on the termination of a hedging arrangement.(iii)
    The tax charge for the year ended 31 March 2009 includes a current tax charge of £564m offset
by a deferred tax credit of £564m. 
 9. Dividends
  2009
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    2007pence
    
    
    
    
    
    
    pence
    
    
    
    
    
    
    pence(per ordinary
    
    
    2009
    
    
    (per ordinary
    
    
    2008
    
    
    (per ordinary
    
    
    2007share)
    
    
    £m
    
    
    share)
    
    
    £m
    
    
    share)
    
    
    £mOrdinary dividends: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
    
    
    
    300
    
    
    
    
    
    
    
    Final dividend for the year ended 31 March 2007
    
    
    
    
    
    
    
    
    
    
    17.80
    
    
    
    480
    
    
    
    
    
    
    
    Interim dividend for the year ended 31 March 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.90
    
    
    
    297Final dividend for the year ended 31 March 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.90
    
    
    
    43333.94
    
    
    
    838
    
    
    
    29.50
    
    
    
    780
    
    
    
    26.80
    
    
    
    730
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  10. Earnings per share
    (a) Basic earnings per share
 Earnings
    
    
    
    
    
    
    Earnings
    
    
    
    
    
    
    EarningsEarnings
    
    
    per share
    
    
    Earnings
    
    
    per share
    
    
    Earnings
    
    
    per share2009
    
    
    2009
    
    
    2008
    *
    
    2008
    *
    
    2007
    
    
    2007£m
    
    
    pence
    
    
    £m
    
    
    pence
    
    
    £m
    
    
    penceAdjusted earnings  continuing operations
    
    
    1,250
    
    
    
    50.9
    
    
    
    1,247
    
    
    
    47.8
    
    
    
    1,042
    
    
    
    38.3Exceptional items after taxation
    
    
    (247
    )
    
    
    (10.1
    )
    
    
    (2
    )
    
    
    (0.1
    )
    
    
    (41
    )
    
    
    (1.5
    )Commodity contract remeasurements after taxation
    
    
    (266
    )
    
    
    (10.8
    )
    
    
    133
    
    
    
    5.1
    
    
    
    37
    
    
    
    1.3Derivative financial instrument remeasurements after taxation
    
    
    (74
    )
    
    
    (3.0
    )
    
    
    (35
    )
    
    
    (1.3
    )
    
    
    16
    
    
    
    0.6Stranded cost recoveries after taxation
    
    
    256
    
    
    
    10.4
    
    
    
    229
    
    
    
    8.8
    
    
    
    254
    
    
    
    9.4Earnings  continuing operations
    
    
    919
    
    
    
    37.4
    
    
    
    1,572
    
    
    
    60.3
    
    
    
    1,308
    
    
    
    48.1Adjusted earnings  discontinued operations
    
    
    9
    
    
    
    0.4
    
    
    
    28
    
    
    
    1.1
    
    
    
    104
    
    
    
    3.8Gain on disposal of operations after taxation
    
    
    16
    
    
    
    0.7
    
    
    
    1,582
    
    
    
    60.6
    
    
    
    
    
    
    
    Other exceptional items and remeasurements
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    0.3
    
    
    
    (18
    )
    
    
    (0.6
    )Earnings  discontinued operations
    
    
    25
    
    
    
    1.1
    
    
    
    1,618
    
    
    
    62.0
    
    
    
    86
    
    
    
    3.2Earnings
    
    
    944
    
    
    
    38.5
    
    
    
    3,190
    
    
    
    122.3
    
    
    
    1,394
    
    
    
    51.32009
    
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    
    2007millions
    
    
    
    
    
    
    millions
    
    
    
    
    
    
    millionsWeighted average number of shares  basic
    
    
    
    
    
    
    2,455
    
    
    
    
    
    
    
    2,609
    
    
    
    
    
    
    
    2,719
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28) (b) Diluted earnings per share
 Earnings
    
    
    
    
    
    
    Earnings
    
    
    
    
    
    
    EarningsEarnings
    
    
    per share
    
    
    Earnings
    
    
    per share
    
    
    Earnings
    
    
    per share2009
    
    
    2009
    
    
    2008
    *
    
    2008
    *
    
    2007
    
    
    2007£m
    
    
    pence
    
    
    £m
    
    
    pence
    
    
    £m
    
    
    penceAdjusted diluted earnings  continuing operations
    
    
    1,250
    
    
    
    50.6
    
    
    
    1,247
    
    
    
    47.5
    
    
    
    1,042
    
    
    
    38.1Exceptional items after taxation
    
    
    (247
    )
    
    
    (10.1
    )
    
    
    (2
    )
    
    
    (0.1
    )
    
    
    (41
    )
    
    
    (1.5
    )Commodity contract remeasurements after taxation
    
    
    (266
    )
    
    
    (10.8
    )
    
    
    133
    
    
    
    5.1
    
    
    
    37
    
    
    
    1.3Derivative financial instrument remeasurements after taxation
    
    
    (74
    )
    
    
    (3.0
    )
    
    
    (35
    )
    
    
    (1.3
    )
    
    
    16
    
    
    
    0.6Stranded cost recoveries after taxation
    
    
    256
    
    
    
    10.4
    
    
    
    229
    
    
    
    8.7
    
    
    
    254
    
    
    
    9.3Diluted earnings  continuing operations
    
    
    919
    
    
    
    37.1
    
    
    
    1,572
    
    
    
    59.9
    
    
    
    1,308
    
    
    
    47.8Adjusted diluted earnings  discontinued operations
    
    
    9
    
    
    
    0.4
    
    
    
    28
    
    
    
    1.1
    
    
    
    104
    
    
    
    3.8Gain on disposal of operations after taxation
    
    
    16
    
    
    
    0.7
    
    
    
    1,582
    
    
    
    60.3
    
    
    
    
    
    
    
    Other exceptional items and remeasurements
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    0.3
    
    
    
    (18
    )
    
    
    (0.7
    )Diluted earnings  discontinued operations
    
    
    25
    
    
    
    1.1
    
    
    
    1,618
    
    
    
    61.7
    
    
    
    86
    
    
    
    3.1Diluted earnings
    
    
    944
    
    
    
    38.2
    
    
    
    3,190
    
    
    
    121.6
    
    
    
    1,394
    
    
    
    50.92009
    
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    
    2007millions
    
    
    
    
    
    
    millions
    
    
    
    
    
    
    millionsWeighted average number of shares  diluted
    
    
    
    
    
    
    2,472
    
    
    
    
    
    
    
    2,624
    
    
    
    
    
    
    
    2,737
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28) (c) Reconciliation of basic to diluted average number of shares
 2009
    
    
    2008
    
    
    2007millions
    
    
    millions
    
    
    millionsWeighted average number of ordinary shares  basic
    
    
    2,455
    
    
    
    2,609
    
    
    
    2,719Effect of dilutive potential ordinary shares  employee share plan
    
    
    17
    
    
    
    15
    
    
    
    18Weighted average number of ordinary shares  diluted
    
    
    2,472
    
    
    
    2,624
    
    
    
    2,737
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



11. Goodwill
 £mCost at 1 April 2007
    
    
    1,480Exchange adjustments
    
    
    23Acquisition of subsidiary undertakings (see note 28)*
    
    
    2,401Cost at 31 March 2008*
    
    
    3,904Exchange adjustments
    
    
    1,487Cost at 31 March 2009
    
    
    5,391Net book value at 31 March 2009
    
    
    5,391Net book value at 31 March 2008*
    
    
    3,904
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  12. Other intangible assets
 Acquisition-Software
    
    
    related
    
    
    Other
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £mNon-currentCost at 1 April 2007
    
    
    286
    
    
    
    
    
    
    
    24
    
    
    
    310Exchange adjustments
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    4Acquisition of subsidiary undertakings (see note 28)*
    
    
    42
    
    
    
    92
    
    
    
    
    
    
    
    134Additions
    
    
    44
    
    
    
    
    
    
    
    1
    
    
    
    45Disposals
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Cost at 31 March 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
    
    
    
    670Amortisation at 1 April 2007
    
    
    165
    
    
    
    
    
    
    
    1
    
    
    
    166Exchange adjustments
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Amortisation charge for the year
    
    
    48
    
    
    
    4
    
    
    
    2
    
    
    
    54Amortisation at 31 March 2008
    
    
    214
    
    
    
    4
    
    
    
    3
    
    
    
    221Exchange adjustments
    
    
    12
    
    
    
    1
    
    
    
    1
    
    
    
    14Amortisation charge for the year
    
    
    59
    
    
    
    5
    
    
    
    5
    
    
    
    69Reclassifications (i)
    
    
    5
    
    
    
    
    
    
    
    (1
    )
    
    
    4Disposals
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (8
    )Amortisation at 31 March 2009
    
    
    282
    
    
    
    10
    
    
    
    8
    
    
    
    300Net book value at 31 March 2009
    
    
    243
    
    
    
    119
    
    
    
    8
    
    
    
    370Net book value at 31 March 2008*
    
    
    159
    
    
    
    88
    
    
    
    24
    
    
    
    271
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)(i)
    Primarily represents reclassifications from other receivables and between categories.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



13. 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 2007
    
    
    778
    
    
    
    25,466
    
    
    
    1,972
    
    
    
    771
    
    
    
    28,987Exchange adjustments
    
    
    3
    
    
    
    17
    
    
    
    1
    
    
    
    
    
    
    
    21Additions
    
    
    39
    
    
    
    599
    
    
    
    2,307
    
    
    
    64
    
    
    
    3,009Acquisition of subsidiary undertakings (see note 28)*
    
    
    347
    
    
    
    2,797
    
    
    
    129
    
    
    
    7
    
    
    
    3,280Disposals
    
    
    (40
    )
    
    
    (135
    )
    
    
    
    
    
    
    (56
    )
    
    
    (231
    )Reclassifications (i)
    
    
    25
    
    
    
    1,840
    
    
    
    (1,783
    )
    
    
    57
    
    
    
    139Cost at 31 March 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
    
    
    
    42,394Depreciation at 1 April 2007
    
    
    192
    
    
    
    9,433
    
    
    
    
    
    
    
    467
    
    
    
    10,092Exchange adjustments
    
    
    1
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    7Depreciation charge for the year (ii)
    
    
    26
    
    
    
    853
    
    
    
    
    
    
    
    75
    
    
    
    954Disposals
    
    
    (17
    )
    
    
    (113
    )
    
    
    
    
    
    
    (49
    )
    
    
    (179
    )Depreciation at 31 March 2008
    
    
    202
    
    
    
    10,179
    
    
    
    
    
    
    
    493
    
    
    
    10,874Exchange adjustments
    
    
    18
    
    
    
    1,050
    
    
    
    
    
    
    
    3
    
    
    
    1,071Depreciation charge for the year (ii)
    
    
    36
    
    
    
    958
    
    
    
    
    
    
    
    83
    
    
    
    1,077Impairment charge for the year
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    29Disposals
    
    
    (19
    )
    
    
    (157
    )
    
    
    
    
    
    
    (26
    )
    
    
    (202
    )Reclassifications
    
    
    5
    
    
    
    25
    
    
    
    
    
    
    
    (30
    )
    
    
    Depreciation at 31 March 2009
    
    
    242
    
    
    
    12,084
    
    
    
    
    
    
    
    523
    
    
    
    12,849Net book value at 31 March 2009
    
    
    1,262
    
    
    
    25,432
    
    
    
    2,485
    
    
    
    366
    
    
    
    29,545Net book value at 31 March 2008*
    
    
    950
    
    
    
    20,405
    
    
    
    2,626
    
    
    
    350
    
    
    
    24,331
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)(i)
    Reclassifications included an amount of £139m transferred
to trade and other payables, and other non-current liabilities.(ii)
    Includes amounts in respect of capitalised depreciation of £19m (2008: £14m).  2009
    
    
    2008
    *£m
    
    
    £mFreehold
    
    
    1,191
    
    
    
    904Long leasehold (over 50 years)
    
    
    5
    
    
    
    5Short leasehold (under 50 years)
    
    
    66
    
    
    
    411,262
    
    
    
    950
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  14. Other non-current assets
 2009
    
    
    2008
    *£m
    
    
    £mLease receivables
    
    
    
    
    
    
    4Prepayments
    
    
    6
    
    
    
    7Other receivables
    
    
    92
    
    
    
    95Commodity contract assets
    
    
    8
    
    
    
    58106
    
    
    
    164
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)   
 15. Financial and other investments
 2009
    
    
    2008£m
    
    
    £mNon-currentAvailable-for-sale investments
    
    
    193
    
    
    
    180Investments in joint ventures and associates
    
    
    168
    
    
    
    71361
    
    
    
    251CurrentAvailable-for-sale investments
    
    
    2,038
    
    
    
    2,062Loans and receivables
    
    
    159
    
    
    
    332,197
    
    
    
    2,095Total financial and other investments
    
    
    2,558
    
    
    
    2,346Financial and other investments include the following:Investments in short-term money funds
    
    
    1,758
    
    
    
    1,803UK managed investments in equity and bonds
    
    
    240
    
    
    
    224US managed investments in equity and bonds
    
    
    123
    
    
    
    107Restricted cash balancesCollateral
    
    
    159
    
    
    
    17Other
    
    
    
    
    
    
    10Cash surrender value of life insurance policies
    
    
    102
    
    
    
    101Investment in joint ventures and associates
    
    
    168
    
    
    
    71Other investments
    
    
    8
    
    
    
    132,558
    
    
    
    2,346
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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 2007
    
    
    (4
    )
    
    
    (29
    )
    
    
    (532
    )
    
    
    (9
    )
    
    
    (452
    )
    
    
    (1,026
    )Deferred tax liabilities at 31 March 2007
    
    
    3,290
    
    
    
    
    
    
    
    65
    
    
    
    30
    
    
    
    30
    
    
    
    3,415At 1 April 2007
    
    
    3,286
    
    
    
    (29
    )
    
    
    (467
    )
    
    
    21
    
    
    
    (422
    )
    
    
    2,389Exchange adjustments
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    10Charged/(credited) to income statement (i)
    
    
    123
    
    
    
    
    
    
    
    (9
    )
    
    
    (2
    )
    
    
    196
    
    
    
    308Charged/(credited) to equity
    
    
    
    
    
    
    12
    
    
    
    98
    
    
    
    (4
    )
    
    
    
    
    
    
    106Acquisition of subsidiary undertakings (note 28)*
    
    
    389
    
    
    
    
    
    
    
    (250
    )
    
    
    (1
    )
    
    
    305
    
    
    
    443Other
    
    
    (2
    )
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    3At 31 March 2008*
    
    
    3,795
    
    
    
    (16
    )
    
    
    (626
    )
    
    
    14
    
    
    
    92
    
    
    
    3,259Deferred 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
    
    
    
    4,5334,297
    
    
    
    (13
    )
    
    
    (1,388
    )
    
    
    (4
    )
    
    
    (368
    )
    
    
    2,524
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)(i)
    Deferred tax credited to the income statement includes a £564m tax credit (2008: £1m tax
credit) reported within profit for the year from discontinued operations.  2009
    
    
    2008
    *£m
    
    
    £mDeferred tax liabilities
    
    
    2,661
    
    
    
    3,259Deferred tax assets
    
    
    (137
    )
    
    
    2,524
    
    
    
    3,259
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)   2009
    
    
    2008£m
    
    
    £mCapital losses
    
    
    214
    
    
    
    220Non-trade deficits
    
    
    2
    
    
    
    10Trading losses
    
    
    4
    
    
    
    
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  17. Derivative financial instruments
  2009
    
    
    2008Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mFair value hedgesInterest rate swaps
    
    
    193
    
    
    
    
    
    
    
    193
    
    
    
    23
    
    
    
    (8
    )
    
    
    15Cross-currency interest rate swaps
    
    
    899
    
    
    
    (26
    )
    
    
    873
    
    
    
    271
    
    
    
    (43
    )
    
    
    2281,092
    
    
    
    (26
    )
    
    
    1,066
    
    
    
    294
    
    
    
    (51
    )
    
    
    243Cash flow hedgesInterest rate swaps
    
    
    5
    
    
    
    (94
    )
    
    
    (89
    )
    
    
    49
    
    
    
    (76
    )
    
    
    (27
    )Cross-currency interest rate swaps
    
    
    1,056
    
    
    
    (5
    )
    
    
    1,051
    
    
    
    609
    
    
    
    (8
    )
    
    
    601Foreign exchange forward contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    (7
    )
    
    
    91,061
    
    
    
    (99
    )
    
    
    962
    
    
    
    674
    
    
    
    (91
    )
    
    
    583Net investment hedgesCross-currency interest rate swaps
    
    
    55
    
    
    
    (1,033
    )
    
    
    (978
    )
    
    
    362
    
    
    
    (49
    )
    
    
    313Foreign exchange forward contracts
    
    
    62
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )117
    
    
    
    (1,033
    )
    
    
    (916
    )
    
    
    362
    
    
    
    (69
    )
    
    
    293Derivatives not in a formal hedge relationshipInterest rate swaps
    
    
    247
    
    
    
    (257
    )
    
    
    (10
    )
    
    
    76
    
    
    
    (100
    )
    
    
    (24
    )Interest rate swaptions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )Cross-currency interest rate swaps
    
    
    67
    
    
    
    (9
    )
    
    
    58
    
    
    
    4
    
    
    
    
    
    
    
    4Foreign exchange forward contracts
    
    
    32
    
    
    
    (1
    )
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    Forward rate agreements
    
    
    
    
    
    
    (16
    )
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    357
    
    
    
    (283
    )
    
    
    74
    
    
    
    80
    
    
    
    (106
    )
    
    
    (26
    )2,627
    
    
    
    (1,441
    )
    
    
    1,186
    
    
    
    1,410
    
    
    
    (317
    )
    
    
    1,093Hedge positions offset within derivative instruments
    
    
    (501
    )
    
    
    501
    
    
    
    
    
    
    
    116
    
    
    
    (116
    )
    
    
    Total
    
    
    2,126
    
    
    
    (940
    )
    
    
    1,186
    
    
    
    1,526
    
    
    
    (433
    )
    
    
    1,093
  2009
    
    
    2008Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mIn one year or less
    
    
    593
    
    
    
    (307
    )
    
    
    286
    
    
    
    463
    
    
    
    (114
    )
    
    
    349Current
    
    
    593
    
    
    
    (307
    )
    
    
    286
    
    
    
    463
    
    
    
    (114
    )
    
    
    349In more than one year, but not more than two years
    
    
    44
    
    
    
    (28
    )
    
    
    16
    
    
    
    104
    
    
    
    (3
    )
    
    
    101In more than two years, but not more than three years
    
    
    259
    
    
    
    (229
    )
    
    
    30
    
    
    
    113
    
    
    
    (21
    )
    
    
    92In more than three years, but not more than four years
    
    
    128
    
    
    
    (48
    )
    
    
    80
    
    
    
    358
    
    
    
    (68
    )
    
    
    290In more than four years, but not more than five years
    
    
    281
    
    
    
    (113
    )
    
    
    168
    
    
    
    170
    
    
    
    (36
    )
    
    
    134In more than five years
    
    
    821
    
    
    
    (215
    )
    
    
    606
    
    
    
    318
    
    
    
    (191
    )
    
    
    127Non-current
    
    
    1,533
    
    
    
    (633
    )
    
    
    900
    
    
    
    1,063
    
    
    
    (319
    )
    
    
    7442,126
    
    
    
    (940
    )
    
    
    1,186
    
    
    
    1,526
    
    
    
    (433
    )
    
    
    1,093
  2009
    
    
    2008£m
    
    
    £mInterest rate swaps
    
    
    (12,382
    )
    
    
    (10,105
    )Interest rate swaptions
    
    
    
    
    
    
    (202
    )Cross-currency interest rate swaps
    
    
    (10,701
    )
    
    
    (7,120
    )Foreign exchange forward contracts
    
    
    (2,802
    )
    
    
    (2,020
    )Forward rate agreements
    
    
    (10,388
    )
    
    
    Other
    
    
    (758
    )
    
    
    Total
    
    
    (37,031
    )
    
    
    (19,447
    )
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



18. Inventories and current intangible assets
 2009
    
    
    2008
    *£m
    
    
    £mRaw materials and consumables
    
    
    163
    
    
    
    116Work in progress
    
    
    13
    
    
    
    16Fuel stocks
    
    
    341
    
    
    
    178Current intangible assets  emission allowances
    
    
    39
    
    
    
    128556
    
    
    
    438
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)  
 19. Trade and other receivables
 2009
    
    
    2008
    *£m
    
    
    £mTrade receivables
    
    
    1,569
    
    
    
    1,158Other receivables
    
    
    47
    
    
    
    80Commodity contract assets
    
    
    41
    
    
    
    78Prepayments and accrued income
    
    
    1,015
    
    
    
    9492,672
    
    
    
    2,265
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)  Provision for impairment of receivables
 2009
    
    
    2008
    *£m
    
    
    £mAt 1 April
    
    
    159
    
    
    
    102Exchange adjustments
    
    
    72
    
    
    
    (1
    )Charge for the year, net of recoveries
    
    
    206
    
    
    
    108Acquisition of subsidiary undertaking
    
    
    
    
    
    
    41Uncollectable amounts written off against receivables
    
    
    (134
    )
    
    
    (91
    )At 31 March
    
    
    303
    
    
    
    159
 
 * Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)  2009
    
    
    2008£m
    
    
    £mUp to 3 months past due
    
    
    160
    
    
    
    1003 to 6 months past due
    
    
    45
    
    
    
    36Over 6 months past due
    
    
    78
    
    
    
    52283
    
    
    
    188
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
  20. Cash and cash equivalents
 2009
    
    
    2008£m
    
    
    £mCash at bank
    
    
    87
    
    
    
    93Short-term deposits
    
    
    650
    
    
    
    81Cash and cash equivalents excluding bank overdrafts
    
    
    737
    
    
    
    174Bank overdrafts
    
    
    (17
    )
    
    
    (10
    )Net cash and cash equivalents
    
    
    720
    
    
    
    164
     
 21. Borrowings
  2009
    
    
    2008£m
    
    
    £mCurrentBank loans
    
    
    604
    
    
    
    502Bonds
    
    
    1,826
    
    
    
    2,545Commercial paper
    
    
    766
    
    
    
    562Finance leases
    
    
    33
    
    
    
    256Other loans
    
    
    7
    
    
    
    7Bank overdrafts
    
    
    17
    
    
    
    103,253
    
    
    
    3,882Non-currentBank loans
    
    
    3,140
    
    
    
    1,541Bonds
    
    
    20,002
    
    
    
    15,287Finance leases
    
    
    205
    
    
    
    165Other loans
    
    
    193
    
    
    
    12823,540
    
    
    
    17,121Total borrowings
    
    
    26,793
    
    
    
    21,003
  2009
    
    
    2008£m
    
    
    £mIn one year or less
    
    
    3,253
    
    
    
    3,882In more than one year, but not more than two years
    
    
    2,014
    
    
    
    1,386In more than two years, but not more than three years
    
    
    2,543
    
    
    
    1,413In more than three years, but not more than four years
    
    
    1,400
    
    
    
    1,700In more than four years, but not more than five years
    
    
    2,457
    
    
    
    1,302In more than five years:by instalments
    
    
    76
    
    
    
    78other than by instalments
    
    
    15,050
    
    
    
    11,24226,793
    
    
    
    21,003
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



21. Borrowingscontinued
    2009
    
    
    2008£m
    
    
    £mGross finance lease liabilities repayable as follows:In one year or less
    
    
    46
    
    
    
    266In more than one year, but not more than five years
    
    
    148
    
    
    
    120In more than five years
    
    
    124
    
    
    
    99318
    
    
    
    485Less: finance charges allocated to future periods
    
    
    (80
    )
    
    
    (64
    )238
    
    
    
    421The present value of finance lease liabilities is as follows:In one year or less
    
    
    33
    
    
    
    256In more than one year, but not more than five years
    
    
    117
    
    
    
    94In more than five years
    
    
    88
    
    
    
    71238
    
    
    
    421
  
 22. Trade and other payables
 2009
    
    
    2008
    *£m
    
    
    £mTrade payables
    
    
    1,653
    
    
    
    1,708Commodity contract liabilities
    
    
    203
    
    
    
    36Social security and other taxes
    
    
    111
    
    
    
    114Other payables
    
    
    650
    
    
    
    518Deferred income
    
    
    218
    
    
    
    1042,835
    
    
    
    2,480
   
 23. Other non-current liabilities
 2009
    
    
    2008£m
    
    
    £mCommodity contract liabilities
    
    
    156
    
    
    
    88Other payables
    
    
    396
    
    
    
    347Deferred income
    
    
    1,540
    
    
    
    1,2862,092
    
    
    
    1,721
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
 
 24. Provisions
 Decom-
    
    
    Environ-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Totalmissioning
    
    
    mental
    
    
    Emissions
    
    
    Restructuring
    
    
    Other
    
    
    provisions£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 April 2007
    
    
    70
    
    
    
    372
    
    
    
    1
    
    
    
    56
    
    
    
    95
    
    
    
    594Exchange adjustments
    
    
    
    
    
    
    3
    
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    6Acquisition of subsidiary undertakings*
    
    
    23
    
    
    
    390
    
    
    
    111
    
    
    
    
    
    
    
    180
    
    
    
    704Additions
    
    
    5
    
    
    
    124
    
    
    
    5
    
    
    
    25
    
    
    
    17
    
    
    
    176Unused amounts reversed
    
    
    (4
    )
    
    
    (14
    )
    
    
    (1
    )
    
    
    
    
    
    
    (5
    )
    
    
    (24
    )Unwinding of discount*
    
    
    6
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    45Utilised
    
    
    (13
    )
    
    
    (69
    )
    
    
    (4
    )
    
    
    (15
    )
    
    
    (3
    )
    
    
    (104
    )At 31 March 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
    
    
    
    1,699
  2009
    
    
    2008
    *£m
    
    
    £mCurrent
    
    
    248
    
    
    
    375Non-current
    
    
    1,451
    
    
    
    1,0221,699
    
    
    
    1,397
  Decommissioning provision
  Environmental provision
  2009
    
    
    2008Discounted
    
    
    Undiscounted
    
    
    Discounted
    
    
    Undiscounted
    
    
    Nominal£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    discount rateUK gas site decontamination (i)
    
    
    226
    
    
    
    317
    
    
    
    192
    
    
    
    280
    
    
    
    5.0
    %US sites (ii)
    
    
    876
    
    
    
    1,272
    
    
    
    643
    
    
    
    963
    
    
    
    5.5
    %Other (iii)
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    n/a1,104
    
    
    
    1,591
    
    
    
    837
    
    
    
    1,245
 (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 2010 to 2058 with some 50%
of the spend over the next six 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 2010
and 2059. 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.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



24. Provisionscontinued
 Emissions provision
  Restructuring provision
  Other provisions
   
 25. Share capital
 Allotted, called upand fully paidOrdinary shares
    
    millions
    
    
    £mAt 31 March 2006
    
    
    2,720
    
    
    
    310Issued during the year
    
    
    4
    
    
    
    Repurchased during the year (i)
    
    
    (23
    )
    
    
    (2
    )At 31 March 2007
    
    
    2,701
    
    
    
    308Issued during the year ended 31 March 2008 (ii)
    
    
    8
    
    
    
    1Repurchased during the year ended 31 March 2008 (iii)
    
    
    (127
    )
    
    
    (15
    )At 31 March 2008 and 31 March 2009
    
    
    2,582
    
    
    
    294
 (i)
    
    From 20 November 2006 to 22 March 2007, the Company repurchased and subsequently cancelled
under its share repurchase programme 22,388,381 ordinary shares for aggregate consideration of
£169m, including transaction costs. The shares repurchased had a nominal value of £2m and
represented approximately 1% of the ordinary shares in issue as at 31 March 2007. The consideration
was charged against retained earnings.(ii)
    
    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.(iii)
    
    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.
 17 43
 B shares
  17 43
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
 
 25. Share capitalcontinued
 Treasury shares
   (i)
    
    From 1 April 2008 to 24 September 2008 the Company repurchased, under its share repurchase
programme 85m ordinary shares for aggregate consideration of £597m, including transaction costs.
The shares repurchased have a nominal value of £10m and represented approximately 3% of the
ordinary shares in issue as at 31 March 2009.(ii)
    
    During the year, 1m treasury shares were gifted to a National Grid Employee Share Trust and 2m
treasury shares were re-issued in relation to employee share schemes, in total representing
approximately 0.1% of the ordinary shares in issue as at 31 March 2009.
The nominal value of these shares was £0.3m and the total proceeds received were £8m.(iii)
    
    During the year the Company made gifts totalling £5m to National Grid Employee Share Trusts,
outside of its share repurchase programme, to enable the trustees to make purchases of National
Grid plc shares in order to satisfy the requirements of employee share option and reward plans.
  Additional information in respect of share capital
 2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007millions
    
    
    £m
    
    
    millions
    
    
    £m
    
    
    millions
    
    
    £mConsideration received in respect of ordinary shares
issued during the year
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    23
    
    
    
    4
    
    
    
    16Authorised share capital
Ordinary shares (i)
    
    
    4,392
    
    
    
    501
    
    
    
    4,392
    
    
    
    501
    
    
    
    4,388
    
    
    
    500Non-cumulative B shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,150
    
    
    
    3154,392
    
    
    
    501
    
    
    
    4,392
    
    
    
    501
    
    
    
    7,538
    
    
    
    815
 (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.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



26. Reconciliation of movements in total 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 2006
    
    
    310
    
    
    
    1,316
    
    
    
    6,817
    
    
    
    (4,961
    )
    
    
    3,482
    
    
    
    11
    
    
    
    3,493Total recognised income and expense for the year
    
    

    
    
    
    
    
    
    
    1,689
    
    
    
    (191
    )
    
    
    1,498
    
    
    
    1
    
    
    
    1,499Equity dividends
    
    
    
    
    
    
    
    
    
    
    (730
    )
    
    
    
    
    
    
    (730
    )
    
    
    
    
    
    
    (730
    )Issue of ordinary share capital
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Repurchase of shares
    
    
    (2
    )
    
    
    
    
    
    
    (169
    )
    
    
    2
    
    
    
    (169
    )
    
    
    
    
    
    
    (169
    )Other movements in minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Share-based payment
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Tax on share-based payment
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13At 31 March 2007
    
    
    308
    
    
    
    1,332
    
    
    
    7,635
    
    
    
    (5,150
    )
    
    
    4,125
    
    
    
    11
    
    
    
    4,136Total recognised income and expense 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
    
    
    
    
    
    
    
    27Repurchase of share capital and purchase
of treasury shares (i)
    
    
    (15
    )
    
    
    
    
    
    
    (1,522
    )
    
    
    15
    
    
    
    (1,522
    )
    
    
    
    
    
    
    (1,522
    )Other movements in minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Share-based payment
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18Transfer between reserves
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Tax on share-based payment
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )At 31 March 2008*
    
    
    294
    
    
    
    1,371
    
    
    
    8,943
    
    
    
    (5,252
    )
    
    
    5,356
    
    
    
    18
    
    
    
    5,374Total recognised income and expense for the year
    
    
    
    
    
    
    
    
    
    
    (396
    )
    
    
    422
    
    
    
    26
    
    
    
    8
    
    
    
    34Equity dividends
    
    
    
    
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    (838
    )Repurchase of share capital and purchase
of treasury shares (i)
    
    
    
    
    
    
    
    
    
    
    (603
    )
    
    
    
    
    
    
    (603
    )
    
    
    
    
    
    
    (603
    )Other movements in minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )Share-based payment
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Tax on share-based payment
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )At 31 March 2009
    
    
    294
    
    
    
    1,371
    
    
    
    7,135
    
    
    
    (4,830
    )
    
    
    3,970
    
    
    
    14
    
    
    
    3,984
  (i)
    
    From 1 April 2008 to 24 September 2008, the Company repurchased under its share repurchase
programme 85 million ordinary shares (year ended 31 March 2008: 200 million; year ended 31 March
2007: 22 million) for aggregate consideration of £597m (2008: £1,516m; 2007: £169m) including
transaction costs. The shares repurchased have a nominal value of 1117/43
pence each and represented 3% of the ordinary shares in issue as at 31 March 2009. Included within
total equity is a deduction of £1,173m for treasury shares (2008: £570m; 2007: £nil). Further
purchases of shares relating to employee share schemes were made for an aggregate consideration of
£6m (2008: £6m; 2007: £nil).
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
 
 26. Reconciliation of movements in total equitycontinued
 Other equity reserves
  Cash flow
    
    
    Available-
    
    
    CapitalTranslation
    
    
    hedge
    
    
    for-sale
    
    
    redemption
    
    
    Merger
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 April 2006
    
    
    127
    
    
    
    37
    
    
    
    6
    
    
    
    2
    
    
    
    (5,133
    )
    
    
    (4,961
    )Net (expense)/income recognised directly in equity
    
    
    (175
    )
    
    
    (11
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (191
    )Repurchase of share capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2At 31 March 2007
    
    
    (48
    )
    
    
    26
    
    
    
    1
    
    
    
    4
    
    
    
    (5,133
    )
    
    
    (5,150
    )Net (expense)/income recognised directly in equity
    
    
    (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
    )Net income/(expense) recognised directly in equity
    
    
    457
    
    
    
    (30
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    422At 31 March 2009
    
    
    384
    
    
    
    (72
    )
    
    
    4
    
    
    
    19
    
    
    
    (5,165
    )
    
    
    (4,830
    )
     
 27. Consolidated cash flow statement
 (a) Cash
flow from operating activities  discontinued operations
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mOperating profit
    
    
    13
    
    
    
    35
    
    
    
    62Adjustments for:Exceptional items
    
    
    
    
    
    
    
    
    
    
    55Depreciation and amortisation
    
    
    
    
    
    
    
    
    
    
    72Changes in working capital, provisions and pensions
    
    
    (21
    )
    
    
    (25
    )
    
    
    (8
    )Cash flow relating to discontinued operations
    
    
    (8
    )
    
    
    10
    
    
    
    181
 (b) Cash
flow from investing activities  discontinued operations
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mDisposal proceeds (i)
    
    
    1,617
    
    
    
    3,064
    
    
    
    27Tax arising on disposal
    
    
    (564
    )
    
    
    
    
    
    
    Acquisition of subsidiaries, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (85
    )Other investing activities
    
    
    (4
    )
    
    
    (14
    )
    
    
    (47
    )Cash flow relating to discontinued operations
    
    
    1,049
    
    
    
    3,050
    
    
    
    (105
    )
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



27. Consolidated cash flow statementcontinued
 (c) Reconciliation of net cash flow to movement in net debt
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mMovement in cash and cash equivalents
    
    
    538
    
    
    
    (1,450
    )
    
    
    175(Decrease)/increase in financial investments
    
    
    (99
    )
    
    
    (45
    )
    
    
    1,725Increase in borrowings and derivatives
    
    
    (1,641
    )
    
    
    (1,589
    )
    
    
    (3,045
    )Cash paid to shareholders under B share scheme
    
    
    
    
    
    
    26
    
    
    
    26Net interest paid
    
    
    956
    
    
    
    694
    
    
    
    597Change in net debt resulting from cash flows
    
    
    (246
    )
    
    
    (2,364
    )
    
    
    (522
    )Changes in fair value of financial assets and liabilities and exchange movements
    
    
    (3,625
    )
    
    
    (133
    )
    
    
    331Net interest charge on the components of net debt
    
    
    (1,161
    )
    
    
    (901
    )
    
    
    (655
    )Borrowings of subsidiary undertaking acquired
    
    
    
    
    
    
    (2,446
    )
    
    
    (48
    )Amounts reclassified to businesses held for sale
    
    
    
    
    
    
    17
    
    
    
    (42
    )Other non-cash movements
    
    
    
    
    
    
    (26
    )
    
    
    (2
    )Movement in net debt (net of related derivative financial instruments) in the year
    
    
    (5,032
    )
    
    
    (5,853
    )
    
    
    (938
    )Net debt at start of year
    
    
    (17,641
    )
    
    
    (11,788
    )
    
    
    (10,850
    )Net debt (net of related derivative financial instruments) at end of year
    
    
    (22,673
    )
    
    
    (17,641
    )
    
    
    (11,788
    )
 (d) Analysis of changes in net debt
 Cash
    
    
    
    
    
    
    Net cashand cash
    
    
    Bank
    
    
    and cash
    
    
    Financialequivalents
    
    
    overdrafts
    
    
    equivalents
    
    
    investments
    (i)
    
    Borrowings
    (i)
    
    Derivatives
    (i)
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mAt 31 March 2006
    
    
    1,452
    
    
    
    (3
    )
    
    
    1,449
    
    
    
    384
    
    
    
    (13,126
    )
    
    
    443
    
    
    
    (10,850
    )Cash flow
    
    
    178
    
    
    
    (3
    )
    
    
    175
    
    
    
    1,509
    
    
    
    (2,233
    )
    
    
    27
    
    
    
    (522
    )Fair value gains and losses and exchange movements
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )
    
    
    (9
    )
    
    
    511
    
    
    
    (157
    )
    
    
    331Interest charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    215
    
    
    
    (833
    )
    
    
    (37
    )
    
    
    (655
    )Other non-cash movements
    
    
    (23
    )
    
    
    
    
    
    
    (23
    )
    
    
    (1
    )
    
    
    (30
    )
    
    
    (38
    )
    
    
    (92
    )At 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
    )
 (i)
    
    Includes interest. Accrued interest at 31 March 2009 was £258m (2008: £225m).
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes
to the consolidated financial statements  supplementary information
 
 
 28. Acquisitions
     Provisionalfair values
    
    
    Changes(as previously
    
    
    to
    
    
    Finalreported)
    
    
    fair values
    
    
    fair value£m
    
    
    £m
    
    
    £mOther intangible assets
    
    
    135
    
    
    
    (1
    )
    
    
    134Property, plant and equipment
    
    
    3,282
    
    
    
    (2
    )
    
    
    3,280Financial and other investments  non-current
    
    
    129
    
    
    
    
    
    
    
    129Other non-current assets
    
    
    271
    
    
    
    (91
    )
    
    
    180Inventories and current intangibles
    
    
    505
    
    
    
    (17
    )
    
    
    488Trade and other receivables
    
    
    477
    
    
    
    (4
    )
    
    
    473Financial and other investments  current
    
    
    33
    
    
    
    
    
    
    
    33Cash and cash equivalents
    
    
    260
    
    
    
    
    
    
    
    260Assets of businesses held for sale
    
    
    1,487
    
    
    
    (2
    )
    
    
    1,485Borrowings  current
    
    
    (545
    )
    
    
    
    
    
    
    (545
    )Trade and other payables
    
    
    (654
    )
    
    
    (35
    )
    
    
    (689
    )Current tax liabilities
    
    
    (95
    )
    
    
    (1
    )
    
    
    (96
    )Borrowings  non-current
    
    
    (1,934
    )
    
    
    
    
    
    
    (1,934
    )Other non-current liabilities
    
    
    (169
    )
    
    
    
    
    
    
    (169
    )Deferred tax liabilities
    
    
    (591
    )
    
    
    148
    
    
    
    (443
    )Pensions and other post-retirement benefit obligations
    
    
    (440
    )
    
    
    
    
    
    
    (440
    )Provisions
    
    
    (643
    )
    
    
    (61
    )
    
    
    (704
    )Liabilities of businesses held for sale
    
    
    (73
    )
    
    
    
    
    
    
    (73
    )Minority interest
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )Net assets acquired
    
    
    1,427
    
    
    
    (66
    )
    
    
    1,361Goodwill arising on acquisition
    
    
    2,335
    
    
    
    66
    
    
    
    2,401Total consideration
    
    
    3,762
    
    
    
    
    
    
    
    3,762
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



28. Acquisitionscontinued
 Pro forma information
  2008
    *
    
    2008
    *Actual
    
    
    Pro forma£m
    
    
    £mContinuing operationsRevenue
    
    
    11,423
    
    
    
    12,345Operating profit before exceptional items, remeasurements and stranded cost recoveries
    
    
    2,595
    
    
    
    2,625Total operating profit
    
    
    2,964
    
    
    
    2,901Profit after taxationBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    1,250
    
    
    
    1,165Exceptional items, remeasurements and stranded cost recoveries
    
    
    325
    
    
    
    268Profit for the year  continuing operations
    
    
    1,575
    
    
    
    1,433Attributable to:Equity shareholders of the parent
    
    
    1,572
    
    
    
    1,430Minority interests
    
    
    3
    
    
    
    3Profit for the year  continuing operations
    
    
    1,575
    
    
    
    1,433
 Earnings
    
    
    Earningsper share
    
    
    per sharepence
    
    
    penceAdjusted earnings  continuing operations
    
    
    47.8p
    
    
    
    44.5pEarnings  continuing operations
    
    
    60.3p
    
    
    
    54.8p
  
 29.
Commitments and
contingencies
 (a) Future capital expenditure
 2009
    
    
    2008£m
    
    
    £mContracted for but not provided
    
    
    1,493
    
    
    
    1,097
 (b) Lease commitments
  2009
    
    
    2008£m
    
    
    £mIn one year or less
    
    
    82
    
    
    
    83In more than one year, but not more than two years
    
    
    79
    
    
    
    83In more than two years, but not more than three years
    
    
    73
    
    
    
    80In more than three years, but not more than four years
    
    
    72
    
    
    
    69In more than four years, but not more than five years
    
    
    91
    
    
    
    66In more than five years
    
    
    549
    
    
    
    356946
    
    
    
    737
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
 
 29. Commitments and contingenciescontinued
 (c) Energy purchase commitments
   2009
    
    
    2008
    *£m
    
    
    £mIn one year or less
    
    
    990
    
    
    
    794In more than one year, but not more than two years
    
    
    816
    
    
    
    491In more than two years, but not more than three years
    
    
    620
    
    
    
    380In more than three years, but not more than four years
    
    
    412
    
    
    
    205In more than four years, but not more than five years
    
    
    379
    
    
    
    43In more than five years
    
    
    428
    
    
    
    1483,645
    
    
    
    2,061
    (d) Other commitments, contingencies and guarantees
   (i)
    
    a guarantee in respect of Ravenswood Unit 40 financing amounting to
approximately £268m. 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 £264m. This
expires in 2010;(iii)
    
    guarantees of certain obligations in respect of the UK Grain LNG Import Terminal amounting to
approximately £188m. These run for varying lengths of time, expiring between now and 2028;(iv)
    
    a guarantee amounting to approximately £122m of half of the obligations of the interconnector
project between Britain and the Netherlands. This expires in 2010;(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 £21m, lasting for less
than one year;(viii)
    
    guarantees of £15m 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; and(xi)
    
    other guarantees amounting to £22m arising in the normal course of business and entered into
on normal commercial terms. These guarantees run for varying lengths of time.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



29. Commitments and contingenciescontinued
 (e) Amounts receivable under sublease arrangements
  (f) Litigation and claims
     
 30. Related party transactions
  2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mSales: Services supplied to a pension plan
    
    
    4
    
    
    
    3
    
    
    
    4Purchases: Services received from joint ventures and associates
    
    
    44
    
    
    
    33
    
    
    
    26
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
 
 31. Actuarial information on pensions and other post-retirement benefits
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



31. Actuarial information on pensions and other post-retirement benefitscontinued
 US retiree healthcare and life insurance plans
    Asset allocations and actuarial assumptions
  UK pensions
    
    
    US pensions
    
    
    US other post-retirement benefits2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007%
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %Equities (i)
    
    
    35.2
    
    
    
    35.9
    
    
    
    35.8
    
    
    
    50.4
    
    
    
    60.6
    
    
    
    63.7
    
    
    
    63.7
    
    
    
    63.1
    
    
    
    68.5Corporate bonds (ii)
    
    
    32.7
    
    
    
    25.0
    
    
    
    18.6
    
    
    
    42.3
    
    
    
    33.6
    
    
    
    33.5
    
    
    
    34.2
    
    
    
    32.3
    
    
    
    31.1Gilts
    
    
    22.2
    
    
    
    29.8
    
    
    
    33.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Property
    
    
    5.4
    
    
    
    6.7
    
    
    
    8.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    4.5
    
    
    
    2.6
    
    
    
    3.2
    
    
    
    7.3
    
    
    
    5.8
    
    
    
    2.8
    
    
    
    2.1
    
    
    
    4.6
    
    
    
    0.4Total
    
    
    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 2009 were ordinary shares of National Grid plc with a
value of £17m (2008: £24m; 2007: £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.
    UK pensions
    
    
    US pensions
    
    
    US other post-retirement benefits2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007%
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %Discount rate (i)
    
    
    6.8
    
    
    
    6.6
    
    
    
    5.4
    
    
    
    7.3
    
    
    
    6.5
    
    
    
    5.8
    
    
    
    7.3
    
    
    
    6.5
    
    
    
    5.8Expected return on plan assets
    
    
    6.2
    
    
    
    6.4
    
    
    
    6.1
    
    
    
    7.8
    
    
    
    7.9
    
    
    
    8.3
    
    
    
    7.4
    
    
    
    7.6
    
    
    
    8.3Rate of increase in salaries (ii)
    
    
    3.8
    
    
    
    4.6
    
    
    
    4.2
    
    
    
    3.5
    
    
    
    4.0
    
    
    
    4.1
    
    
    
    3.5
    
    
    
    4.0
    
    
    
    4.1Rate of increase in pensions
in payment
    
    
    3.0
    
    
    
    3.8
    
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aRate of increase in pensions
in deferment
    
    
    2.9
    
    
    
    3.7
    
    
    
    3.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aRate of increase in retail price
index or equivalent
    
    
    2.9
    
    
    
    3.7
    
    
    
    3.2
    
    
    
    2.3
    
    
    
    3.0
    
    
    
    2.5
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aInitial healthcare cost trend rate
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    9.0
    
    
    
    10.0
    
    
    
    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 age related scale has also been used where appropriate.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
 
 31. Actuarial information on pensions and other post-retirement benefitscontinued
   2009
    
    
    2008UK
    
    
    US
    
    
    UK
    
    
    USyears
    
    
    years
    
    
    years
    
    
    yearsToday:Males
    
    
    21.0
    
    
    
    18.2
    
    
    
    20.9
    
    
    
    18.2Females
    
    
    23.3
    
    
    
    20.5
    
    
    
    23.1
    
    
    
    20.5In 20 years:Males
    
    
    23.3
    
    
    
    18.2
    
    
    
    23.2
    
    
    
    18.2Females
    
    
    25.6
    
    
    
    20.5
    
    
    
    25.4
    
    
    
    20.5
  Change inpensions and other
    
    
    Change inpost-retirement obligation
    
    
    annual pension cost2009
    
    
    2008
    
    
    2009
    
    
    2008£m
    
    
    £m
    
    
    £m
    
    
    £m0.1% increase in discount rate
    
    
    233
    
    
    
    251
    
    
    
    4
    
    
    
    40.5% increase in long-term rate of increase in salaries
    
    
    116
    
    
    
    131
    
    
    
    5
    
    
    
    5Increase of one year to life expectations at age 60
    
    
    541
    
    
    
    588
    
    
    
    5
    
    
    
    4
  2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mIncreaseEffect on the aggregate of the service costs and interest costs
    
    
    29
    
    
    
    16
    
    
    
    14Effect on defined benefit obligations
    
    
    294
    
    
    
    251
    
    
    
    170DecreaseEffect on the aggregate of the service costs and interest costs
    
    
    (24
    )
    
    
    (13
    )
    
    
    (12
    )Effect on defined benefit obligations
    
    
    (254
    )
    
    
    (214
    )
    
    
    (147
    )
  2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mDetails of experience gains/(losses) for all plansPresent value of funded and unfunded obligations
    
    
    (18,299
    )
    
    
    (18,175
    )
    
    
    (17,253
    )
    
    
    (17,839
    )
    
    
    (16,837
    )Fair value of plan assets
    
    
    15,519
    
    
    
    17,273
    
    
    
    15,999
    
    
    
    15,909
    
    
    
    14,565(2,780
    )
    
    
    (902
    )
    
    
    (1,254
    )
    
    
    (1,930
    )
    
    
    (2,272
    )Difference between the expected and actual return on plan assets
    
    
    (3,952
    )
    
    
    (911
    )
    
    
    (81
    )
    
    
    1,521
    
    
    
    405Experience (losses)/gains on plan liabilities
    
    
    (125
    )
    
    
    152
    
    
    
    9
    
    
    
    192
    
    
    
    42Actuarial gains/(losses) on plan liabilities
    
    
    1,934
    
    
    
    1,343
    
    
    
    446
    
    
    
    (1,340
    )
    
    
    (152
    )
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



32. Supplementary information on derivative financial instruments
  Treasury financial instruments
     Cash
flow hedges
     Net investment hedges
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 33. Financial risk
   (a) Market risk
      2009
    
    2008Sterling
    
    
    Euro
    
    
    US dollar
    
    
    Other
    
    
    Total
    
    
    Sterling
    
    
    Euro
    
    
    US dollar
    
    
    Other
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCash and cash
equivalents
    
    
    632
    
    
    
    4
    
    
    
    101
    
    
    
    
    
    
    
    737
    
    
    
    168
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    174Financial investments
    
    
    1,377
    
    
    
    132
    
    
    
    617
    
    
    
    71
    
    
    
    2,197
    
    
    
    1,063
    
    
    
    92
    
    
    
    898
    
    
    
    42
    
    
    
    2,095Borrowings (i)
    
    
    (12,424
    )
    
    
    (7,214
    )
    
    
    (6,435
    )
    
    
    (720
    )
    
    
    (26,793
    )
    
    
    (9,111
    )
    
    
    (5,342
    )
    
    
    (5,769
    )
    
    
    (781
    )
    
    
    (21,003
    )Pre-derivative
position
    
    
    (10,415
    )
    
    
    (7,078
    )
    
    
    (5,717
    )
    
    
    (649
    )
    
    
    (23,859
    )
    
    
    (7,880
    )
    
    
    (5,244
    )
    
    
    (4,871
    )
    
    
    (739
    )
    
    
    (18,734
    )Derivative effect
    
    
    2,040
    
    
    
    7,116
    
    
    
    (8,622
    )
    
    
    652
    
    
    
    1,186
    
    
    
    1,069
    
    
    
    5,301
    
    
    
    (6,016
    )
    
    
    739
    
    
    
    1,093Net debt position
    
    
    (8,375
    )
    
    
    38
    
    
    
    (14,339
    )
    
    
    3
    
    
    
    (22,673
    )
    
    
    (6,811
    )
    
    
    57
    
    
    
    (10,887
    )
    
    
    
    
    
    
    (17,641
    )(i)    Includes bank overdrafts.The overall exposure to US dollars largely relates to our net investment hedge activities as
described and shown in note 32.The currency exposure on other financial instruments is as follows:2009
    
    2008Sterling
    
    
    Euro
    
    
    US dollar
    
    
    Other
    
    
    Total
    
    
    Sterling
    
    
    Euro
    
    
    US dollar
    *
    
    Other
    
    
    Total
    *£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mTrade and other
receivables
    
    
    138
    
    
    
    
    
    
    
    1,519
    
    
    
    
    
    
    
    1,657
    
    
    
    182
    
    
    
    
    
    
    
    1,134
    
    
    
    
    
    
    
    1,316Trade and other
payables
    
    
    (1,196
    )
    
    
    
    
    
    
    (1,421
    )
    
    
    
    
    
    
    (2,617
    )
    
    
    (1,290
    )
    
    
    
    
    
    
    (1,086
    )
    
    
    
    
    
    
    (2,376
    )Other non-current
liabilities
    
    
    1
    
    
    
    
    
    
    
    (553
    )
    
    
    
    
    
    
    (552
    )
    
    
    (18
    )
    
    
    
    
    
    
    (417
    )
    
    
    
    
    
    
    (435
    )
 *Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



33. Financial risk
     2009
    
    
    2008£m
    
    
    £mFixed interest rate borrowingsIn one year or less
    
    
    (2,103
    )
    
    
    (2,620
    )In more than one year, but not more than two years
    
    
    (809
    )
    
    
    (906
    )In more than two years, but not more than three years
    
    
    (1,398
    )
    
    
    (642
    )In more than three years, but not more than four years
    
    
    (981
    )
    
    
    (1,008
    )In more than four years, but not more than five years
    
    
    (1,821
    )
    
    
    (900
    )In more than five years
    
    
    (8,637
    )
    
    
    (5,579
    )(15,749
    )
    
    
    (11,655
    )Floating interest rate borrowings (including inflation-linked)
    
    
    (11,044
    )
    
    
    (9,348
    )Total borrowings
    
    
    (26,793
    )
    
    
    (21,003
    )
  2009
    
    2008Fixed-
    
    
    Floating-
    
    
    Inflation-
    
    
    
    
    
    
    
    
    
    
    Fixed-
    
    
    Floating-
    
    
    Inflation-rate
    
    
    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
    
    
    
    
    
    
    737
    
    
    
    
    
    
    
    
    
    
    
    737
    
    
    
    
    
    
    
    174
    
    
    
    
    
    
    
    
    
    
    
    174Financial investments
    
    
    217
    
    
    
    1,922
    
    
    
    
    
    
    
    58
    
    
    
    2,197
    
    
    
    223
    
    
    
    1,835
    
    
    
    
    
    
    
    37
    
    
    
    2,095Borrowings (iii)
    
    
    (15,749
    )
    
    
    (6,001
    )
    
    
    (5,043
    )
    
    
    
    
    
    
    (26,793
    )
    
    
    (11,655
    )
    
    
    (4,825
    )
    
    
    (4,523
    )
    
    
    
    
    
    
    (21,003
    )Pre-derivative
position
    
    
    (15,532
    )
    
    
    (3,342
    )
    
    
    (5,043
    )
    
    
    58
    
    
    
    (23,859
    )
    
    
    (11,432
    )
    
    
    (2,816
    )
    
    
    (4,523
    )
    
    
    37
    
    
    
    (18,734
    )Derivative effect (iv)
    
    
    148
    
    
    
    589
    
    
    
    345
    
    
    
    104
    
    
    
    1,186
    
    
    
    1,814
    
    
    
    (708
    )
    
    
    (2
    )
    
    
    (11
    )
    
    
    1,093Net debt position
    
    
    (15,384
    )
    
    
    (2,753
    )
    
    
    (4,698
    )
    
    
    162
    
    
    
    (22,673
    )
    
    
    (9,618
    )
    
    
    (3,524
    )
    
    
    (4,525
    )
    
    
    26
    
    
    
    (17,641
    )
 (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 2009/10 maturing short-dated interest rate derivatives is included.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 33. Financial risk
 (b) 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
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



33. Financial risk
 (c) Liquidity analysis
   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
    )
 Due
    
    
    Due
    
    
    DueDue
    
    
    between
    
    
    between
    
    
    3 yearswithin
    
    
    1 and 2
    
    
    2 and 3
    
    
    and1 year
    
    
    years
    
    
    years
    
    
    beyond
    
    
    TotalAt 31 March 2008
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mNon derivative financial liabilitiesBorrowings, excluding finance lease liabilities
    
    
    (3,379
    )
    
    
    (1,345
    )
    
    
    (1,380
    )
    
    
    (14,626
    )
    
    
    (20,730
    )Interest payments on borrowings (i)
    
    
    (822
    )
    
    
    (728
    )
    
    
    (663
    )
    
    
    (7,946
    )
    
    
    (10,159
    )Finance lease liabilities
    
    
    (266
    )
    
    
    (38
    )
    
    
    (34
    )
    
    
    (147
    )
    
    
    (485
    )Other non interest-bearing liabilities*
    
    
    (2,226
    )
    
    
    (347
    )
    
    
    
    
    
    
    
    
    
    
    (2,573
    )Derivative financial liabilitiesDerivative contracts  receipts
    
    
    990
    
    
    
    495
    
    
    
    710
    
    
    
    5,329
    
    
    
    7,524Derivative contracts  payments
    
    
    (647
    )
    
    
    (364
    )
    
    
    (587
    )
    
    
    (5,538
    )
    
    
    (7,136
    )Commodity contracts
    
    
    (490
    )
    
    
    (257
    )
    
    
    (188
    )
    
    
    (279
    )
    
    
    (1,214
    )Total at 31 March 2008
    
    
    (6,840
    )
    
    
    (2,584
    )
    
    
    (2,142
    )
    
    
    (23,207
    )
    
    
    (34,773
    )
 *Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
 (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.
 (d) Sensitivity analysis
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 33. Financial risk
  §
    
    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 US 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.
  2009
    
    2008Income
    
    
    Other equity
    
    
    Income
    
    
    Other equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves+/- £m
    
    
    +/- £m
    
    
    +/- £m
    
    
    +/- £mUK retail price index +/- 0.50%
    
    
    17
    
    
    
    
    
    
    
    16
    
    
    
    UK interest rates +/- 0.50%
    
    
    67
    
    
    
    77
    
    
    
    46
    
    
    
    57US interest rates +/- 0.50%
    
    
    63
    
    
    
    13
    
    
    
    31
    
    
    
    7US dollar exchange rate +/- 10% (i)
    
    
    55
    
    
    
    880
    
    
    
    38
    
    
    
    590
 (i)
    Prior year comparatives have been restated for US dollar exchange rate +/- 10% impact on the
income statement to present on a basis consistent with current year.
   (e) Capital and risk management
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



34. Commodity risk
        2009
    
    2008Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    *
    
    Liabilities
    *
    
    Total
    *£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCommodity purchase contracts accounted for
as derivative contractsForward purchases of electricity
    
    
    
    
    
    
    (121
    )
    
    
    (121
    )
    
    
    
    
    
    
    (47
    )
    
    
    (47
    )Forward purchases/sales of gas
    
    
    35
    
    
    
    (34
    )
    
    
    1
    
    
    
    42
    
    
    
    (30
    )
    
    
    12Forward purchases of electricity capacity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (12
    )
    
    
    (11
    )Derivative financial instruments linked to commodity pricesElectricity swaps
    
    
    
    
    
    
    (30
    )
    
    
    (30
    )
    
    
    
    
    
    
    (26
    )
    
    
    (26
    )Gas swaps
    
    
    14
    
    
    
    (173
    )
    
    
    (159
    )
    
    
    73
    
    
    
    (9
    )
    
    
    64Gas options
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    1
    
    
    
    
    
    
    
    1NYMEX gas and electricity futures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    1949
    
    
    
    (359
    )
    
    
    (310
    )
    
    
    136
    
    
    
    (124
    )
    
    
    12
 *Comparatives have been adjusted to present items on a basis consistent with the current year
categories
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 34. Commodity risk
  2009
    
    2008Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mIn one year or less
    
    
    41
    
    
    
    (203
    )
    
    
    (162
    )
    
    
    78
    
    
    
    (36
    )
    
    
    42Current
    
    
    41
    
    
    
    (203
    )
    
    
    (162
    )
    
    
    78
    
    
    
    (36
    )
    
    
    42In more than one year, but less than two years
    
    
    6
    
    
    
    (41
    )
    
    
    (35
    )
    
    
    40
    
    
    
    (36
    )
    
    
    4In more than two years, but less than three years
    
    
    2
    
    
    
    (27
    )
    
    
    (25
    )
    
    
    14
    
    
    
    (12
    )
    
    
    2In more than three years, but less than four years
    
    
    
    
    
    
    (17
    )
    
    
    (17
    )
    
    
    4
    
    
    
    (18
    )
    
    
    (14
    )In more than four years, but less than five years
    
    
    
    
    
    
    (16
    )
    
    
    (16
    )
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )In more than five years
    
    
    
    
    
    
    (55
    )
    
    
    (55
    )
    
    
    
    
    
    
    (10
    )
    
    
    (10
    )Non-current
    
    
    8
    
    
    
    (156
    )
    
    
    (148
    )
    
    
    58
    
    
    
    (88
    )
    
    
    (30
    )Total
    
    
    49
    
    
    
    (359
    )
    
    
    (310
    )
    
    
    136
    
    
    
    (124
    )
    
    
    12
  2009
    
    2008*Forward purchases of electricity (i)
    
    4,524 GWh
    
    5,467 GWhForward purchases/sales of gas (ii)
    
    298m Dth
    
    110m DthForward purchases of electricity capacity
    
    
    
    
    
    23 GWhElectricity swaps
    
    4,090 GWh
    
    879 GWhGas swaps
    
    88m Dth
    
    85m DthGas options
    
    1m Dth
    
    2m DthNYMEX electricity futures
    
    18 GWh
    
    581 GWhNYMEX gas futures (iii)
    
    30m Dth
    
    19m Dth
 *Comparatives have been adjusted to present items on a basis consistent with the current year
categories
 (i)
    Forward electricity purchases have terms up to 12 years. The contractual obligations of these
contracts are £348m (2008: £316m).(ii)
    Forward gas purchases have terms up to 7 years. The contractual obligations of these contracts are £700m (2008: £873m).(iii)
    In 2009 NYMEX futures have been offset with related margin accounts.
  2009
    
    2008Income
    
    
    Other equity
    
    
    Income
    
    
    Other equitystatement
    
    
    reserves
    
    
    statement
    
    
    reserves£m
    
    
    £m
    
    
    £m
    
    
    £m10% increase in commodity prices
    
    
    56
    
    
    
    (1
    )
    
    
    25
    
    
    
    (1
    )10% reduction in commodity prices
    
    
    (72
    )
    
    
    1
    
    
    
    (22
    )
    
    
    1
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



35. 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
    
    
    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 160m
    
    KeySpan 4.9% Notes (i)
    
    
    2008USD 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
    
    
    2010(National Grid Energy Delivery Long Island)KeySpan Ravenswood LLC
    
    USD 412m
    
    Ravenswood Master Lease Notes (i)
    
    
    2009National Grid Electricity Transmission plc
    
    EUR 600m
    
    4.125% Fixed Rate (i)
    
    
    2008EUR 600m
    
    6.625% Fixed Rate (ii)
    
    
    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 (ii)
    
    
    2031National Grid Gas plc
    
    GBP 250m
    
    8.875% Fixed Rate (i)
    
    
    2008AUD 500m
    
    7.0% Fixed Rate (i)
    
    
    2008GBP 300m
    
    5.375% Fixed Rate
    
    
    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
    
    
    2009GBP 503m
    
    4.1875% Index-Linked
    
    
    2022GBP 503m
    
    7.0% Fixed Rate
    
    
    2024EUR 800m
    
    5.125% Fixed Rate (ii)
    
    
    2013EUR 163m
    
    4.36% EUR-HICP Linked (ii)
    
    
    2018GBP 444m
    
    6.0% Fixed Rate (ii)
    
    
    2038
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 35. Bonds and facilities
 Issuer
    
    Original Notional Value
    
    Description of instrument
    
    DueNational Grid plc
    
    CAD 200m
    
    4.98% Fixed Rate
    
    
    2011EUR 500m
    
    3.75% Fixed Rate (i)
    
    
    2008EUR 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
    
    
    2009EUR 450m
    
    Floating Rate (i)
    
    
    2008GBP 300m
    
    5.25% Fixed Rate
    
    
    2011GBP 310m
    
    5.5% Fixed Rate
    
    
    2013USD 1,000m
    
    6.3% Fixed Rate
    
    
    2016EUR 578m
    
    6.5% Fixed Rate (ii)
    
    
    2014GBP 400m
    
    6.125% Fixed Rate (ii)
    
    
    2014NGG Finance plc
    
    EUR 750m
    
    6.125% Fixed Rate
    
    
    2011Niagara Mohawk Power Corporation
    
    USD 600m
    
    7.75% Senior Notes (i)
    
    
    2008Bank loans and other loans National Grid plc
    
    USD 250m
    
    Floating Rate (ii)
    
    
    2011USD 150m
    
    Floating Rate (ii)
    
    
    2011USD 150m
    
    Floating Rate
    
    
    2011USD 200m
    
    Floating Rate (ii)
    
    
    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 (ii)
    
    
    2011NGT Five Limited
    
    GBP 500m
    
    5.917% Index-Linked (ii)
    
    
    2013
 (i)
    Matured during the year ended 31 March 2009.(ii)
    Issued during the year ended 31 March 2009.
     2009
    
    
    2008£m
    
    
    £mExpiring:In one year or less
    
    
    1,155
    
    
    
    756In more than one year, but not more than two years
    
    
    1,820
    
    
    
    408In more than two years
    
    
    
    
    
    
    1,6992,975
    
    
    
    2,863
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



36. Share options and reward plans
  Active share plans
     Additional information in respect of active share plans
 2009
    
    
    2008
    
    
    2007millions
    
    
    millions
    
    
    millionsPerformance Share Plan
Awards of ordinary share equivalents at 1 April
    
    
    7.5
    
    
    
    8.0
    
    
    
    9.2Awards made
    
    
    3.5
    
    
    
    3.1
    
    
    
    2.6Lapses/forfeits
    
    
    (0.7
    )
    
    
    (3.4
    )
    
    
    (3.8
    )Awards vested
    
    
    (0.8
    )
    
    
    (0.2
    )
    
    
    Awards of ordinary share equivalents at 31 March
    
    
    9.5
    
    
    
    7.5
    
    
    
    8.0Conditional awards available for release at 31 March
    
    
    1.8
    
    
    
    
    
    
    
    Deferred Share Plan
Awards of ordinary share equivalents at 1 April
    
    
    0.5
    
    
    
    0.4
    
    
    
    Awards made
    
    
    0.6
    
    
    
    0.2
    
    
    
    0.4Awards vested
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    Awards of ordinary share equivalents at 31 March
    
    
    1.0
    
    
    
    0.5
    
    
    
    0.4Conditional awards available for release at 31 March
    
    
    
    
    
    
    
    
    
    
    0.1Retention Award Plans
Awards of ordinary share equivalents at 1 April
    
    
    0.8
    
    
    
    
    
    
    
    Awards made
    
    
    
    
    
    
    0.8
    
    
    
    Awards vested
    
    
    (0.3
    )
    
    
    
    
    
    
    Awards of ordinary share equivalents at 31 March
    
    
    0.5
    
    
    
    0.8
    
    
    
    Conditional awards available for release at 31 March
    
    
    
    
    
    
    
    
    
    
    
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 36. Share options and reward plans
 Non-active share plans
    Additional information in respect of non-active share plans
 2009
    
    
    2008
    
    
    2007000s
    
    
    000s
    
    
    000sShare Matching Plan
Awards at 1 April
    
    
    202
    
    
    
    384
    
    
    
    436Dividend reinvestment shares
    
    
    
    
    
    
    1
    
    
    
    Awards exercised
    
    
    (113
    )
    
    
    (183
    )
    
    
    (52
    )Awards at 31 March
    
    
    89
    
    
    
    202
    
    
    
    384Options exercisable at 31 March
    
    
    89
    
    
    
    109
    
    
    
    164Transitional Share Awards/Special Share Awards
Awards of ordinary share equivalents at 1 April
    
    
    3
    
    
    
    77
    
    
    
    133Lapses/forfeits
    
    
    
    
    
    
    (1
    )
    
    
    (6
    )Awards vested
    
    
    (3
    )
    
    
    (73
    )
    
    
    (50
    )Awards of ordinary share equivalents at 31 March
    
    
    
    
    
    
    3
    
    
    
    77Conditional awards available for release at 31 March
    
    
    
    
    
    
    3
    
    
    
    1
 Share options
  Sharesave
    
    
    Executive Planscheme options
    
    
    optionsWeighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    Totalprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    options£
    
    
    millions
    
    
    £
    
    
    millions
    
    
    millionsAt 31 March 2006
    
    
    3.68
    
    
    
    19.9
    
    
    
    5.01
    
    
    
    7.2
    
    
    
    27.1Granted
    
    
    5.58
    
    
    
    4.2
    
    
    
    
    
    
    
    
    
    
    
    4.2Lapsed  expired
    
    
    3.82
    
    
    
    (0.9
    )
    
    
    5.48
    
    
    
    (1.9
    )
    
    
    (2.8
    )Exercised
    
    
    3.43
    
    
    
    (1.9
    )
    
    
    5.00
    
    
    
    (2.1
    )
    
    
    (4.0
    )At 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
    
    
    
    21.6Included within options outstanding at 31 March 2009, 31 March 2008 and 31 March 2007 were the
following options that were exercisable:At 31 March 2009
    
    4.57
    
    
    0.1
    
    
    4.81
    
    
    1.0
    
    
    1.1At 31 March 2008
    
    
    3.74
    
    
    
    0.5
    
    
    
    4.78
    
    
    
    1.3
    
    
    
    1.8At 31 March 2007
    
    
    3.17
    
    
    
    4.1
    
    
    
    4.63
    
    
    
    2.4
    
    
    
    6.5
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



36. Share options and reward plans
   2009
    
    
    2008
    
    
    2007£
    
    
    £
    
    
    £Sharesave scheme options
    
    
    6.99
    
    
    
    7.79
    
    
    
    6.50Executive Plan options
    
    
    6.81
    
    
    
    7.68
    
    
    
    6.68
 Additional information in respect of share options
 2009
    
    
    2008
    
    
    2007£m
    
    
    £m
    
    
    £mShare options exercisedCash received on exercise of all share options during the year
    
    
    8
    
    
    
    23
    
    
    
    16Tax benefits realised from share options exercised during the year
    
    
    4
    
    
    
    10
    
    
    
    5
  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
    
    
    5.33
    
    
    
    0.1
    
    
    
    5.33
    
    
    
    0.1
    
    
    
    424.0-566.5
    
    
    
    2003-20105.27
    
    
    
    0.1
    
    
    
    5.26
    
    
    
    0.6
    
    
    
    526.0-623.0
    
    
    
    2004-20114.68
    
    
    
    0.8
    
    
    
    4.68
    
    
    
    0.8
    
    
    
    434.5-481.5
    
    
    
    2006-20134.81
    
    
    
    1.0
    
    
    
    4.95
    
    
    
    1.5
  Share-based payment charges
  Awards under share option plans
  2009
    
    
    2008
    
    
    2007Average share price
    
    
    684.0
    p
    
    
    846.0
    p
    
    
    746.0
    pAverage exercise price
    
    
    488.0
    p
    
    
    655.0
    p
    
    
    558.0
    pAverage fair value
    
    
    153.7
    p
    
    
    190.0
    p
    
    
    166.8
    p
   2009
    
    
    2008
    
    
    2007Dividend yield (%)
    
    
    5.0
    
    
    
    4.5
    
    
    
    4.5Volatility (%)
    
    
    22.4-26.1
    
    
    
    15.6-18.9
    
    
    
    15.6-18.9Risk-free investment rate (%)
    
    
    2.5
    
    
    
    4.2
    
    
    
    4.2Average life (years)
    
    
    4.2
    
    
    
    4.1
    
    
    
    3.9
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 36. Share options and reward plans
   (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
  2009
    
    
    2008
    
    
    2007Average share price
    
    
    670.1
    p
    
    
    766.9
    p
    
    
    594.0
    pAverage fair value
    
    
    458.1
    p
    
    
    522.8
    p
    
    
    403.1
    p
  2009
    
    
    2008
    
    
    2007Dividend yield (%)
    
    
    4.4
    
    
    
    4.4
    
    
    
    4.4Risk-free investment rate (%)
    
    
    2.5
    
    
    
    4.1
    
    
    
    4.1
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



37. Subsidiary undertakings, joint ventures and associates
 Principal subsidiary undertakings
 
 Principal activityNational Grid Gas plc (i)
    
    Transmission and distribution of gasNational Grid Electricity Transmission plc (i)
    
    Transmission of electricity in England and WalesNew England Power Company (incorporated in the US) (i)
    
    Transmission of electricityMassachusetts Electric Company (incorporated in the US) (i)
    
    Distribution of electricityThe Narragansett Electric Company (incorporated in the US) (i)
    
    Distribution of electricityNiagara Mohawk Power Corporation (incorporated in the US) (i)
    
    Distribution and transmission of electricity and gasNational Grid Metering Limited (i)
    
    Metering servicesOnStream Metering Services Limited (i)
    
    Metering servicesNational Grid Grain LNG Limited (i)
    
    LNG importation terminalBoston Gas Company (incorporated in the US) (i)
    
    Distribution of gasNational Grid Electric Services LLC (incorporated in the US) (i)
    
    Transmission and distribution of electricityNational Grid Generation LLC (incorporated in the US) (i)
    
    Generation of electricityNew England Electric Transmission Corporation (incorporated in the US) (i)
    
    Transmission of electricityNantucket Electric Company (incorporated in the US) (i)
    
    Distribution of electricityKeySpan Gas East Corporation (incorporated in the US) (i)
    
    Distribution of gasThe Brooklyn Union Gas Company (incorporated in the US) (i)
    
    Distribution of gasNGG Finance plc (ii)
    
    FinancingBritish Transco Finance Inc. (incorporated in the US) (i)
    
    FinancingBritish Transco International Finance BV (incorporated in The Netherlands) (i)
    
    FinancingNational Grid Property Limited (i)
    
    Property servicesNational Grid Holdings One plc (ii)
    
    Holding companyLattice Group plc (i)
    
    Holding companyNational Grid USA (incorporated in the US) (i)
    
    Holding companyNiagara Mohawk Holdings, Inc. (incorporated in the US) (i)
    
    Holding companyNational Grid Commercial Holdings Limited (i)
    
    Holding companyNational Grid Gas Holdings Limited (i)
    
    Holding companyNational Grid (US) Holdings Limited (ii)
    
    Holding companyNational Grid Holdings Limited (i)
    
    Holding companyKeySpan Corporation (incorporated in the US) (i)
    
    Holding company
 (i)
    Issued ordinary share capital held by subsidiary undertakings.(ii)
    Issued ordinary share
capital held by National Grid plc.
 Principal joint ventures and associates
 
 % ownership
    
    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
    
    
    Gas pipeline constructionIroquois Gas Transmission System, L.P. (incorporated in the US)
    
    
    20.4
    
    
    Transmission of gas
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
 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.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
 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
    )
    
    
    
    
    
    
    
    
    
    
    (744
    )
    
    
    
    
    
    
    (1,353
    )Purchases of gas
    
    
    
    
    
    
    (297
    )
    
    
    
    
    
    
    (110
    )
    
    
    (1,604
    )
    
    
    
    
    
    
    (2,011
    )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
 *Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
 (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.
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
 Summary income statements for the year ended 31 March 2007  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
    
    
    
    
    
    
    2,189
    
    
    
    
    
    
    
    2,231
    
    
    
    4,593
    
    
    
    (318
    )
    
    
    8,695Other operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    77
    
    
    
    
    
    
    
    83Operating costsDepreciation and amortisation
    
    
    
    
    
    
    (102
    )
    
    
    
    
    
    
    (389
    )
    
    
    (380
    )
    
    
    
    
    
    
    (871
    )Payroll costs
    
    
    
    
    
    
    (209
    )
    
    
    
    
    
    
    (228
    )
    
    
    (383
    )
    
    
    
    
    
    
    (820
    )Purchases of electricity
    
    
    
    
    
    
    (633
    )
    
    
    
    
    
    
    
    
    
    
    (960
    )
    
    
    
    
    
    
    (1,593
    )Purchases of gas
    
    
    
    
    
    
    (309
    )
    
    
    
    
    
    
    (113
    )
    
    
    (122
    )
    
    
    
    
    
    
    (544
    )Rates and property taxes
    
    
    
    
    
    
    (104
    )
    
    
    
    
    
    
    (211
    )
    
    
    (157
    )
    
    
    
    
    
    
    (472
    )Electricity transmission services scheme direct costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (558
    )
    
    
    
    
    
    
    (558
    )Payments to Scottish electricity transmission
network owners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237
    )
    
    
    
    
    
    
    (237
    )Other operating charges
    
    
    (2
    )
    
    
    (154
    )
    
    
    
    
    
    
    (531
    )
    
    
    (801
    )
    
    
    318
    
    
    
    (1,170
    )(2
    )
    
    
    (1,511
    )
    
    
    
    
    
    
    (1,472
    )
    
    
    (3,598
    )
    
    
    318
    
    
    
    (6,265
    )Operating profit
    
    
    (2
    )
    
    
    678
    
    
    
    
    
    
    
    765
    
    
    
    1,072
    
    
    
    
    
    
    
    2,513Net finance income/(costs)
    
    
    18
    
    
    
    (131
    )
    
    
    
    
    
    
    (280
    )
    
    
    (371
    )
    
    
    
    
    
    
    (764
    )Dividends receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,850
    
    
    
    (1,850
    )
    
    
    Interest in equity accounted affiliates
    
    
    1,286
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    (1
    )
    
    
    (1,298
    )
    
    
    2Profit before taxation
    
    
    1,302
    
    
    
    547
    
    
    
    
    
    
    
    500
    
    
    
    2,550
    
    
    
    (3,148
    )
    
    
    1,751Taxation
    
    
    8
    
    
    
    (238
    )
    
    
    
    
    
    
    (239
    )
    
    
    28
    
    
    
    
    
    
    
    (441
    )Profit for the year from continuing operations
    
    
    1,310
    
    
    
    309
    
    
    
    
    
    
    
    261
    
    
    
    2,578
    
    
    
    (3,148
    )
    
    
    1,310Profit for the year from discontinued operations
    
    
    86
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    73
    
    
    
    (86
    )
    
    
    86Profit for the year
    
    
    1,396
    
    
    
    309
    
    
    
    
    (i)
    
    
    274
    
    
    
    2,651
    
    
    
    (3,234
    )
    
    
    1,396Attributable to:Equity shareholders
    
    
    1,394
    
    
    
    309
    
    
    
    
    
    
    
    274
    
    
    
    2,649
    
    
    
    (3,232
    )
    
    
    1,394Minority interests
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    (2
    )
    
    
    21,396
    
    
    
    309
    
    
    
    
    (i)
    
    
    274
    
    
    
    2,651
    
    
    
    (3,234
    )
    
    
    1,396
 (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.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
 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 (i)
    
    
    6,398
    
    
    
    23
    
    
    
    
    
    
    
    15
    
    
    
    9,606
    
    
    
    (15,681
    )
    
    
    361Derivative financial assets
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    688
    
    
    
    287
    
    
    
    
    
    
    
    1,533Total non-current assets
    
    
    8,755
    
    
    
    4,904
    
    
    
    
    
    
    
    16,763
    
    
    
    32,300
    
    
    
    (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
    
    
    20,751
    
    
    
    5,488
    
    
    
    213
    
    
    
    18,397
    
    
    
    45,318
    
    
    
    (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 (i)
    
    
    3,984
    
    
    
    1,377
    
    
    
    
    
    
    
    5,770
    
    
    
    8,534
    
    
    
    (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 (i)
    
    
    3,970
    
    
    
    1,377
    
    
    
    
    
    
    
    5,769
    
    
    
    8,535
    
    
    
    (15,681
    )
    
    
    3,970Minority interests
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    14Total equity (i)
    
    
    3,984
    
    
    
    1,377
    
    
    
    
    
    
    
    5,770
    
    
    
    8,534
    
    
    
    (15,681
    )
    
    
    3,984
 (i)
    Includes parent Companys subsidiaries, associates and joint ventures presented on an equity
accounted basis.
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
 Balance sheets as at 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
    
    
    £mNon-current assetsGoodwill
    
    
    
    
    
    
    564
    
    
    
    
    
    
    
    
    
    
    
    3,340
    
    
    
    
    
    
    
    3,904Other intangible assets
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    56
    
    
    
    203
    
    
    
    
    
    
    
    271Property, plant and equipment
    
    
    
    
    
    
    2,756
    
    
    
    
    
    
    
    9,761
    
    
    
    11,814
    
    
    
    
    
    
    
    24,331Deferred tax assets
    
    
    3
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    Other non-current assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,010
    
    
    
    
    
    
    
    1,010Amounts owed by subsidiary undertakings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,630
    
    
    
    1,067
    
    
    
    (6,697
    )
    
    
    Financial and other investments (i)
    
    
    3,183
    
    
    
    20
    
    
    
    
    
    
    
    19
    
    
    
    11,082
    
    
    
    (14,053
    )
    
    
    251Derivative financial assets
    
    
    751
    
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    211
    
    
    
    
    
    
    
    1,063Total non-current assets
    
    
    3,937
    
    
    
    3,419
    
    
    
    
    
    
    
    15,567
    
    
    
    28,727
    
    
    
    (20,820
    )
    
    
    30,830Current assetsInventories and current intangible assets
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    31
    
    
    
    389
    
    
    
    
    
    
    
    438Trade and other receivables
    
    
    3
    
    
    
    401
    
    
    
    
    
    
    
    254
    
    
    
    1,607
    
    
    
    
    
    
    
    2,265Amounts owed by subsidiary undertakings
    
    
    11,350
    
    
    
    
    
    
    
    154
    
    
    
    125
    
    
    
    6,465
    
    
    
    (18,094
    )
    
    
    Financial and other investments
    
    
    787
    
    
    
    2
    
    
    
    
    
    
    
    499
    
    
    
    807
    
    
    
    
    
    
    
    2,095Derivative financial assets
    
    
    341
    
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    41
    
    
    
    
    
    
    
    463Cash and cash equivalents
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    3
    
    
    
    166
    
    
    
    
    
    
    
    174Total current assets
    
    
    12,481
    
    
    
    426
    
    
    
    154
    
    
    
    993
    
    
    
    9,475
    
    
    
    (18,094
    )
    
    
    5,435Assets of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,506
    
    
    
    
    
    
    
    1,506Total assets
    
    
    16,418
    
    
    
    3,845
    
    
    
    154
    
    
    
    16,560
    
    
    
    39,708
    
    
    
    (38,914
    )
    
    
    37,771Current liabilitiesBorrowings
    
    
    (1,019
    )
    
    
    (351
    )
    
    
    (3
    )
    
    
    (680
    )
    
    
    (1,829
    )
    
    
    
    
    
    
    (3,882
    )Derivative financial liabilities
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    (8
    )
    
    
    
    
    
    
    (114
    )Trade and other payables
    
    
    (51
    )
    
    
    (231
    )
    
    
    
    
    
    
    (580
    )
    
    
    (1,618
    )
    
    
    
    
    
    
    (2,480
    )Amounts owed to subsidiary undertakings
    
    
    (4,804
    )
    
    
    (170
    )
    
    
    
    
    
    
    (1,490
    )
    
    
    (11,630
    )
    
    
    18,094
    
    
    
    Current tax liabilities
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    (27
    )
    
    
    (227
    )
    
    
    
    
    
    
    (295
    )Provisions
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (50
    )
    
    
    (309
    )
    
    
    
    
    
    
    (375
    )Total current liabilities
    
    
    (5,953
    )
    
    
    (809
    )
    
    
    (3
    )
    
    
    (2,854
    )
    
    
    (15,621
    )
    
    
    18,094
    
    
    
    (7,146
    )Non-current liabilitiesBorrowings
    
    
    (4,460
    )
    
    
    (417
    )
    
    
    (151
    )
    
    
    (4,906
    )
    
    
    (7,187
    )
    
    
    
    
    
    
    (17,121
    )Derivative financial liabilities
    
    
    (179
    )
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    (57
    )
    
    
    
    
    
    
    (319
    )Other non-current liabilities
    
    
    
    
    
    
    (188
    )
    
    
    
    
    
    
    (1,043
    )
    
    
    (490
    )
    
    
    
    
    
    
    (1,721
    )Amounts owed to subsidiary undertakings
    
    
    (452
    )
    
    
    (615
    )
    
    
    
    
    
    
    
    
    
    
    (5,630
    )
    
    
    6,697
    
    
    
    Deferred tax liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,630
    )
    
    
    (1,699
    )
    
    
    70
    
    
    
    (3,259
    )Pensions and other post-retirement benefit obligations
    
    
    
    
    
    
    (784
    )
    
    
    
    
    
    
    
    
    
    
    (962
    )
    
    
    
    
    
    
    (1,746
    )Provisions
    
    
    
    
    
    
    (166
    )
    
    
    
    
    
    
    (64
    )
    
    
    (792
    )
    
    
    
    
    
    
    (1,022
    )Total non-current liabilities
    
    
    (5,091
    )
    
    
    (2,170
    )
    
    
    (151
    )
    
    
    (7,726
    )
    
    
    (16,817
    )
    
    
    6,767
    
    
    
    (25,188
    )Liabilities of businesses held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    
    
    
    
    (63
    )Total liabilities
    
    
    (11,044
    )
    
    
    (2,979
    )
    
    
    (154
    )
    
    
    (10,580
    )
    
    
    (32,501
    )
    
    
    24,861
    
    
    
    (32,397
    )Net assets (i)
    
    
    5,374
    
    
    
    866
    
    
    
    
    
    
    
    5,980
    
    
    
    7,207
    
    
    
    (14,053
    )
    
    
    5,374EquityCalled up share capital
    
    
    294
    
    
    
    94
    
    
    
    
    
    
    
    45
    
    
    
    182
    
    
    
    (321
    )
    
    
    294Share premium account
    
    
    1,371
    
    
    
    1,486
    
    
    
    
    
    
    
    204
    
    
    
    3,642
    
    
    
    (5,332
    )
    
    
    1,371Retained earnings
    
    
    8,943
    
    
    
    (723
    )
    
    
    
    
    
    
    4,433
    
    
    
    10,049
    
    
    
    (13,759
    )
    
    
    8,943Other equity reserves
    
    
    (5,252
    )
    
    
    9
    
    
    
    
    
    
    
    1,298
    
    
    
    (6,666
    )
    
    
    5,359
    
    
    
    (5,252
    )Total shareholders equity (i)
    
    
    5,356
    
    
    
    866
    
    
    
    
    
    
    
    5,980
    
    
    
    7,207
    
    
    
    (14,053
    )
    
    
    5,356Minority interests
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Total equity (i)
    
    
    5,374
    
    
    
    866
    
    
    
    
    
    
    
    5,980
    
    
    
    7,207
    
    
    
    (14,053
    )
    
    
    5,374
 *Comparatives have been restated for the finalisation of the fair value exercise on the acquisition
of KeySpan Corporation (see note 28)
 (i)
    Includes parent Companys subsidiaries, associates and joint ventures presented on an equity accounted basis.
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the consolidated financial statements
  
 38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
 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 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 provided by/(used in) 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 (used in)/provided by 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 (used in)/provided by investing activities 
continuing operations
    
    
    1,547
    
    
    
    (209
    )
    
    
    
    
    
    
    (1,630
    )
    
    
    (3,658
    )
    
    
    (2,123
    )
    
    
    (6,073
    )Net cash provided by/(used in) investing activities 
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    3,054
    
    
    
    
    
    
    
    3,050Net cash (used in)/provided by 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
    )Year ended 31 March 2007Net cash provided by operating activities 
continuing operations
    
    
    1
    
    
    
    374
    
    
    
    
    
    
    
    1,341
    
    
    
    1,064
    
    
    
    
    
    
    
    2,780Net cash provided by operating activities 
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178
    
    
    
    
    
    
    
    178Net cash provided by operating activities
    
    
    1
    
    
    
    374
    
    
    
    
    
    
    
    1,341
    
    
    
    1,242
    
    
    
    
    
    
    
    2,958Net cash used in investing activities 
continuing operations
    
    
    (1,225
    )
    
    
    (140
    )
    
    
    
    
    
    
    (1,381
    )
    
    
    (403
    )
    
    
    (807
    )
    
    
    (3,956
    )Net cash (used in)/provided by investing activities 
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    (132
    )
    
    
    
    
    
    
    (105
    )Net cash used in investing activities
    
    
    (1,225
    )
    
    
    (140
    )
    
    
    
    
    
    
    (1,354
    )
    
    
    (535
    )
    
    
    (807
    )
    
    
    (4,061
    )Net cash provided by/(used in) financing activities
    
    
    940
    
    
    
    (232
    )
    
    
    
    
    
    
    (42
    )
    
    
    (195
    )
    
    
    807
    
    
    
    1,278Increase/(decrease) in cash and cash equivalents in the year
    
    
    (284
    )
    
    
    2
    
    
    
    
    
    
    
    (55
    )
    
    
    512
    
    
    
    
    
    
    
    175
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



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
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Company accounting policies
  
 F. Hedge accounting
 G. Parent Company guarantees
  H. Share-based payments
   I. Dividends
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Company balance sheet
   
  2009
    
    
    2008Notes
    
    
    £m
    
    
    £mFixed assetsInvestments
    
    
    2
    
    
    
    7,840
    
    
    
    4,276Current assetsDebtors (amounts falling due within one year)
    
    
    3
    
    
    
    11,157
    
    
    
    8,545Debtors (amounts falling due after more than one year)
    
    
    3
    
    
    
    1,799
    
    
    
    2,811Derivative financial instruments (amounts falling due within one year)
    
    
    5
    
    
    
    329
    
    
    
    341Derivative financial instruments (amounts falling due after more than one year)
    
    
    5
    
    
    
    558
    
    
    
    751Current asset investments
    
    
    6
    
    
    
    509
    
    
    
    787Cash at bank
    
    
    
    
    
    
    1
    
    
    
    14,353
    
    
    
    13,235Creditors (amounts falling due within one year)Borrowings
    
    
    7
    
    
    
    (1,422
    )
    
    
    (1,019
    )Derivative financial instruments
    
    
    5
    
    
    
    (375
    )
    
    
    (79
    )Other creditors
    
    
    
    
    
    
    (6,926
    )
    
    
    (4,855
    )4
    
    
    
    (8,723
    )
    
    
    (5,953
    )Net current assets
    
    
    
    
    
    
    5,630
    
    
    
    7,282Total assets less current liabilities
    
    
    
    
    
    
    13,470
    
    
    
    11,558Creditors (amounts falling due after more than one year)Borrowings
    
    
    7
    
    
    
    (6,471
    )
    
    
    (4,460
    )Derivative financial instruments
    
    
    5
    
    
    
    (511
    )
    
    
    (179
    )Amounts owed to subsidiary undertakings
    
    
    
    
    
    
    (1,062
    )
    
    
    (452
    )(8,044
    )
    
    
    (5,091
    )Net assets employed
    
    
    
    
    
    
    5,426
    
    
    
    6,467Capital and reservesCalled up share capital
    
    
    8
    
    
    
    294
    
    
    
    294Share premium account
    
    
    9
    
    
    
    1,371
    
    
    
    1,371Cash flow hedge reserve
    
    
    9
    
    
    
    12
    
    
    
    14Other equity reserves
    
    
    9
    
    
    
    146
    
    
    
    124Profit and loss account
    
    
    9
    
    
    
    3,603
    
    
    
    4,664Total shareholders funds
    
    
    10
    
    
    
    5,426
    
    
    
    6,467
   Sir John Parker  Steve Lucas
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the Company financial statements
  
 1. Adoption of new accounting standards
 New financial reporting standards (FRS) and abstracts adopted in 2008/09
  Amendments to FRS 26 and FRS 29
    
    Permits reclassification of financial assets in certain circumstances.on reclassification of financial assetsNew FRSs not yet adoptedThe Company has yet to adopt the following FRSs, however, they are not expected to have a material impact on the Companys results or assets and
liabilities.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. The amendment to FRS 20 has been adopted with effect from 1 April 2009.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 will be
adopted on 
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 will be adopted on 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 will be adopted on 1 April 2010.Improvements to FRS 2008
    
    Contains amendments to various existing standards. The amendments are effective,
in most cases, from 1 January 2009, or otherwise for annual periods beginning on or
after 1 July 2009.UITF 46 on hedges of a net
investment in a foreign operation
    
    Clarifies that 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. UITF 46 has
been adopted by the Company with effect from 1 April 2009.
 
 2. Fixed asset investments
 Shares in
    
    
    Loan tosubsidiary
    
    
    subsidiaryundertakings
    
    
    undertaking
    
    
    Total£m
    
    
    £m
    
    
    £mAt 31 March 2007
    
    
    3,380
    
    
    
    327
    
    
    
    3,707Additions
    
    
    896
    
    
    
    
    
    
    
    896Reclassification of loan as amounts owed by subsidiary undertakings
    
    
    
    
    
    
    (327
    )
    
    
    (327
    )At 31 March 2008
    
    
    4,276
    
    
    
    
    
    
    
    4,276Additions
    
    
    7,103
    
    
    
    
    
    
    
    7,103Disposals
    
    
    (3,539
    )
    
    
    
    
    
    
    (3,539
    )At 31 March 2009
    
    
    7,840
    
    
    
    
    
    
    
    7,840
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



3. Debtors
 2009
    
    
    2008£m
    
    
    £mAmounts falling due within one year:Amounts owed by subsidiary undertakings
    
    
    11,153
    
    
    
    8,542Prepayments and accrued income
    
    
    4
    
    
    
    311,157
    
    
    
    8,545Amounts falling due after more than one year:Amounts owed by subsidiary undertakings
    
    
    1,796
    
    
    
    2,808Deferred taxation
    
    
    3
    
    
    
    31,799
    
    
    
    2,811
 Deferredtaxation£mAt 1 April 2007
    
    
    3Credited to equity
    
    
    4Charged to the profit and loss account (i)
    
    
    (4
    )At 1 April 2008
    
    
    3Credited to equity
    
    
    1Charged to the profit and loss account
    
    
    (1
    )At 31 March 2009
    
    
    3
 (i)
    Included is a deferred tax charge of £2m in respect of prior years.
 
 4. Creditors (amounts falling due within one year)
 2009
    
    
    2008£m
    
    
    £mBorrowings (note 7)
    
    
    1,422
    
    
    
    1,019Derivative financial instruments
    
    
    375
    
    
    
    79Amounts owed to subsidiary undertakings
    
    
    6,898
    
    
    
    4,804Other creditors
    
    
    28
    
    
    
    518,723
    
    
    
    5,953
 
 5. Derivative financial instruments
  2009
    
    2008Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    Total£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mCurrent
    
    
    329
    
    
    
    (375
    )
    
    
    (46
    )
    
    
    341
    
    
    
    (79
    )
    
    
    262Non-current
    
    
    558
    
    
    
    (511
    )
    
    
    47
    
    
    
    751
    
    
    
    (179
    )
    
    
    572887
    
    
    
    (886
    )
    
    
    1
    
    
    
    1,092
    
    
    
    (258
    )
    
    
    834
  2009
    
    
    2008£m
    
    
    £mInterest rate swaps
    
    
    (6,343
    )
    
    
    (4,952
    )Interest rate swaptions
    
    
    
    
    
    
    (202
    )Cross-currency interest rate swaps
    
    
    (7,612
    )
    
    
    (4,919
    )Foreign exchange forward contracts
    
    
    (9,013
    )
    
    
    (5,721
    )Forward rate agreements
    
    
    (5,063
    )
    
    
    Total
    
    
    (28,031
    )
    
    
    (15,794
    )
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Notes to the Company financial statements
  
 6. Current asset investments
 2009
    
    
    2008£m
    
    
    £mInvestments in short term money funds
    
    
    166
    
    
    
    787Short term deposits
    
    
    234
    
    
    
    Restricted cash balances
Collateral
    
    
    109
    
    
    
    509
    
    
    
    787
 
 7. Borrowings
  2009
    
    
    2008£m
    
    
    £mAmounts falling due within one year:Bank loans and overdrafts
    
    
    942
    
    
    
    192Bonds
    
    
    480
    
    
    
    8271,422
    
    
    
    1,019Amounts falling due after more than one year:Bank loans
    
    
    720
    
    
    
    75Bonds
    
    
    5,751
    
    
    
    4,3856,471
    
    
    
    4,460Total borrowings
    
    
    7,893
    
    
    
    5,479
 2009
    
    
    2008£m
    
    
    £mTotal borrowings are repayable as follows:In one year or less
    
    
    1,422
    
    
    
    1,019In more than one year, but not more than two years
    
    
    976
    
    
    
    342In more than two years, but not more than three years
    
    
    1,360
    
    
    
    650In more than three years, but not more than four years
    
    
    933
    
    
    
    999In more than four years, but not more than five years
    
    
    450
    
    
    
    792In more than five years, other than by instalments
    
    
    2,752
    
    
    
    1,6777,893
    
    
    
    5,479
  
 8. Called up share capital
 Called up and fully paidmillions
    
    
    £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 and 31 March 2009
    
    
    2,582
    
    
    
    294
 (i)
    Included within issued share capital were 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.
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



9. Reserves
 Share
    
    
    Cash flow
    
    
    Other
    
    
    Profitpremium
    
    
    hedge
    
    
    equity
    
    
    and lossaccount
    
    
    reserve
    
    
    reserves
    
    
    account£m
    
    
    £m
    
    
    £m
    
    
    £mAt 1 April 2007
    
    
    1,332
    
    
    
    22
    
    
    
    91
    
    
    
    4,582Net loss transferred from equity in respect of cash flow hedges (net of tax)
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    Issue of ordinary share capital
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    B shares converted to ordinary shares
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of share capital and purchase of treasury shares (i)
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    (1,520
    )Issue of treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Share-based payment
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    Retained profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,590At 31 March 2008
    
    
    1,371
    
    
    
    14
    
    
    
    124
    
    
    
    4,664Net loss transferred 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
    
    
    
    3,603
 (i)
    From 1 April 2008 to 24 September 2008, the Company repurchased under its share repurchase
programme 85m (2008: 200m) ordinary shares for aggregate consideration of £597m (2008: £1,516m)
including transaction costs. Further purchases of shares outside the official share repurchase
programme were for an aggregate consideration of £5m (2008: £4m).
  
 10. Reconciliation of movements in shareholders funds
 2009
    
    
    2008£m
    
    
    £mProfit for the year after taxation
    
    
    371
    
    
    
    2,370Dividends (i)
    
    
    (838
    )
    
    
    (780
    )(Loss)/profit for the financial year
    
    
    (467
    )
    
    
    1,590Proceeds of issue of ordinary shares
    
    
    
    
    
    
    13Proceeds of issue of treasury shares
    
    
    8
    
    
    
    12B shares converted to ordinary shares
    
    
    
    
    
    
    27Movement on cash flow hedge reserve (net of tax)
    
    
    (2
    )
    
    
    (8
    )Share-based payment
    
    
    22
    
    
    
    18Repurchase of share capital and purchase of treasury shares
    
    
    (602
    )
    
    
    (1,520
    )Net (decrease)/increase in shareholders funds
    
    
    (1,041
    )
    
    
    132Opening shareholders funds
    
    
    6,467
    
    
    
    6,335Closing shareholders funds
    
    
    5,426
    
    
    
    6,467
 (i)
    For further details of dividends paid and payable to shareholders, refer to note 9 in the
consolidated financial statements.
 
 11. Commitments and contingencies
   
 12. Directors and employees
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Definitions and glossary of terms
  
 A
 accelerated tax depreciation
   
 American Depositary Shares (ADSs)
   
 Annual General Meeting (AGM)
  B
 B shares
   
 BETTA
   
 Board
   
 brownfield
  C
 consolidated financial statements
   
 called up share capital
   
 carrying value
 Combined Code
   
 the Company, National Grid, we, our or us
   
 contingent liability
  D
 deferred tax
   
 Dth
   
 derivative
  E
 employee engagement index
   
 equity
  F
 FERC
   
 finance lease
   
 financial year
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



FRS
   
 FSA
  G
 Great Britain
   
 GW
 9
  
 GWh
  H
 HSE
  I
 IAS or IFRS
   
 individual financial statements
   
 IFRIC
  J
 joint venture
  K
 KeySpan
   
 kV
 kW
   
 kWh
   
 L
 lifetime allowance
   
 LNG
 
  
 lost time injury (LTI)
   
 lost time injury frequency
  M
 m3
   
 mcm
   
 MW
   
 MWh
  N
 New England
   
 northeastern US
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Definitions and glossary of terms
  
 O
 Ofgem
   
 ordinary shares
 17 43
 P
 PAS 55
   
 Personal Lifetime Allowance
   
 purchase accounting
  R
 regulated controllable operating costs
   
 regulatory asset value (RAV)
  S
 scm
 3
  
 SEC
   
 share premium
 subsidiary
  T
 therm
   
 treasury shares
   
 tonne
   
 tonnes CO2 equivalent
   
 TWh
  U
 UK
   
 UK GAAP
   
 Uniform Network Code
   
 US
   
 US GAAP
  V
 vanilla return
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Summary consolidated financial information
  
 Financial summary (unaudited)
  31 March
    
    
    31 March
    
    
    31 March
    
    
    31 March
    
    
    31 March2009
    
    
    2008
    *
    
    2007
    
    
    2006
    
    
    2005£m
    
    
    £m
    
    
    £m
    
    
    £m
    
    
    £mSummary income statementRevenue
    
    
    15,624
    
    
    
    11,423
    
    
    
    8,695
    
    
    
    8,868
    
    
    
    7,174Operating profitBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    2,915
    
    
    
    2,595
    
    
    
    2,031
    
    
    
    1,968
    
    
    
    1,936Exceptional items, remeasurements and stranded cost recoveries
    
    
    (292
    )
    
    
    369
    
    
    
    482
    
    
    
    406
    
    
    
    1772,623
    
    
    
    2,964
    
    
    
    2,513
    
    
    
    2,374
    
    
    
    2,113Profit before taxationBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    1,770
    
    
    
    1,829
    
    
    
    1,486
    
    
    
    1,369
    
    
    
    1,235Exceptional items, remeasurements and stranded cost recoveries
    
    
    (376
    )
    
    
    353
    
    
    
    265
    
    
    
    349
    
    
    
    1771,394
    
    
    
    2,182
    
    
    
    1,751
    
    
    
    1,718
    
    
    
    1,412Profit for the year attributable to equity shareholdersBefore exceptional items, remeasurements and stranded cost recoveries
    
    
    1,259
    
    
    
    1,275
    
    
    
    1,146
    
    
    
    1,075
    
    
    
    1,376Exceptional items, remeasurements and stranded cost recoveries
    
    
    (315
    )
    
    
    1,915
    
    
    
    248
    
    
    
    2,773
    
    
    
    48944
    
    
    
    3,190
    
    
    
    1,394
    
    
    
    3,848
    
    
    
    1,424Summary statement of net assetsNon-current assets
    
    
    37,712
    
    
    
    30,830
    
    
    
    21,109
    
    
    
    22,106
    
    
    
    25,596Current assets
    
    
    6,755
    
    
    
    5,435
    
    
    
    5,312
    
    
    
    3,818
    
    
    
    1,964Assets of businesses held for sale
    
    
    
    
    
    
    1,506
    
    
    
    1,968
    
    
    
    
    
    
    
    Total assets
    
    
    44,467
    
    
    
    37,771
    
    
    
    28,389
    
    
    
    25,924
    
    
    
    27,560Current liabilities
    
    
    (7,026
    )
    
    
    (7,146
    )
    
    
    (3,360
    )
    
    
    (5,683
    )
    
    
    (5,974
    )Non-current liabilities
    
    
    (33,457
    )
    
    
    (25,188
    )
    
    
    (20,443
    )
    
    
    (16,748
    )
    
    
    (19,465
    )Liabilities of businesses held for sale
    
    
    
    
    
    
    (63
    )
    
    
    (450
    )
    
    
    
    
    
    
    Total liabilities
    
    
    (40,483
    )
    
    
    (32,397
    )
    
    
    (24,253
    )
    
    
    (22,431
    )
    
    
    (25,439
    )Net assets
    
    
    3,984
    
    
    
    5,374
    
    
    
    4,136
    
    
    
    3,493
    
    
    
    2,121Summary cash flow statementCash generated from operationsContinuing operations
    
    
    3,564
    
    
    
    3,265
    
    
    
    3,090
    
    
    
    2,973
    
    
    
    2,820Discontinued operations
    
    
    (8
    )
    
    
    10
    
    
    
    181
    
    
    
    138
    
    
    
    6383,556
    
    
    
    3,275
    
    
    
    3,271
    
    
    
    3,111
    
    
    
    3,458Tax paid
    
    
    (143
    )
    
    
    (110
    )
    
    
    (313
    )
    
    
    (140
    )
    
    
    (150
    )Net cash inflow from operating activities
    
    
    3,413
    
    
    
    3,165
    
    
    
    2,958
    
    
    
    2,971
    
    
    
    3,308Net cash flows (used in)/from investing activities
    
    
    (1,998
    )
    
    
    (3,023
    )
    
    
    (4,061
    )
    
    
    4,052
    
    
    
    (2,900
    )Net cash flows (used in)/from financing activities
    
    
    (877
    )
    
    
    (1,592
    )
    
    
    1,278
    
    
    
    (5,842
    )
    
    
    (400
    )Net increase/(decrease) in cash and cash equivalents
    
    
    538
    
    
    
    (1,450
    )
    
    
    175
    
    
    
    1,181
    
    
    
    8
 
 *Comparatives for the year ended 31 March 2008 have been restated for the finalisation of the fair
value exercise on the acquisition of KeySpan Corporation
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Shareholder Information
  
 Financial calendar
  3 June 2009
    
    Ordinary shares go ex-dividend for 2008/095 June 2009
    
    Record date for 2008/09 final dividend22 July 2009
    
    Scrip election date for 2008/09 final dividend*27 July 2009
    
    2009 Annual General Meeting andinterim management statement19 August 2009
    
    2008/09 final dividend paid to qualifyingordinary shareholders19 November 2009
    
    2009/10 half-year results2 December 2009
    
    Ordinary shares go ex-dividend4 December 2009
    
    Record date for 2009/10 interim dividend20 January 2010
    
    2009/10 interim dividend paid to qualifyingordinary shareholdersJan/Feb 2010
    
    Interim management statementMay 2010
    
    2009/10 preliminary results
 *
    Please see below for further information about dividends Dividends
 Website and electronic communication
  Shareholder networking
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Share dealing, individual savings accounts (ISAs) and ShareGift
     Capital Gains Tax (CGT)
  Shareholdings
  Size of
    
    Number of
    
    
    % of
    
    
    Number of
    
    
    % ofshareholding
    
    shareholders
    
    
    shareholders
    
    
    shares
    
    
    shares1-50
    
    
    218,395
    
    
    
    19.0310
    
    
    
    6,696,656
    
    
    
    0.259451-100
    
    
    341,876
    
    
    
    29.7911
    
    
    
    23,267,985
    
    
    
    0.9012101-500
    
    
    488,641
    
    
    
    42.5802
    
    
    
    97,718,218
    
    
    
    3.7846501-1000
    
    
    52,955
    
    
    
    4.6145
    
    
    
    37,343,673
    
    
    
    1.44631,001-10,000
    
    
    43,419
    
    
    
    3.7835
    
    
    
    100,505,395
    
    
    
    3.892610,001-50,000
    
    
    1,173
    
    
    
    0.1022
    
    
    
    22,967,883
    
    
    
    0.889550,001-100,000
    
    
    250
    
    
    
    0.0218
    
    
    
    18,213,246
    
    
    
    0.7054100,001-500,000
    
    
    454
    
    
    
    0.0396
    
    
    
    108,346,256
    
    
    
    4.1963500,001-1,000,000
    
    
    146
    
    
    
    0.0127
    
    
    
    102,168,112
    
    
    
    3.95701,000,001+
    
    
    269
    
    
    
    0.0234
    
    
    
    2,064,747,427
    
    
    
    79.9677Total
    
    
    1,147,578
    
    
    
    100
    
    
    
    2,581,974,851
    
    
    
    100
 Share price
   
 Share price
 
  
  
 ADR price
 
   
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Shareholder Information
  
 Capita Registrars
 ()
    
    0871 664 0500*
(from outside the UK: +44 20 7098 1198)
(textphone: 18001 0870 242 2379)
*Calls are charged at 10p per minute plus network extras()
    
    nationalgrid@capitaregistrars.com
www.nationalgrid.com/shareholders()
    
    National Grid Share Register
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield HD8 0GA
 The Bank of New York Mellon
 ()
    
    1-800-466-7215
(from outside the US: +1-212-815-3700)()
    
    shrrelations@mellon.com
www.bnymellon.com/shareowner()
    
    The Bank of New York Mellon
Shareholders Correspondence
PO Box 358516
Pittsburgh, PA
15252-8516
 
   Cautionary Statement
  National Grid plc
  www.nationalgrid.com
 
 
    
 National Grid plcAnnual Report and Accounts 2008/09




---



##### Table of Contents



Designed by Addisonwww.addison.co.uk()Printed on revive 100 uncoated paper. This paper is made from 100% de-inked post consumer waste. It
has been certified according to the rules of the Forest Stewardship Council (FSC) and it is
produced at a mill that is certified to ISO 14001 environmental management standards. The mill uses
pulps that are an elemental chlorine free (ECF) process and the inks used are all vegetable oil
based.




---



##### Table of Contents



National Grid plc
 
 
 www.nationalgrid.com