annual report 
and accounts
200607 dear shareholder
we are pleased to report a good financial performance 
for the year ended 31 march 2007 adjusted operating 
profit
†
was £2454 million and adjusted earnings per 
share
†
was 477p up 5 operating profit was 
£2513 million and basic earnings per share was 481p 
up 16 these results reflect the company’s sound 
platform of operational performance and we are confident
they provide a solid basis for our future investment 
as part of our aim to be worldclass in all we do we have
undertaken a fresh strategic review at the core of this 
review was the need to ensure we are maximising value 
for shareholders and continuing our focus on providing a 
safe efficient and reliable service while acting responsibly 
as a result of the review we are now focusing on our 
core skills of operating in the gas and electricity sector 
in the us and uk we are committed to ensuring a 
disciplined approach to running our business reducing 
inefficiencies and developing more effective ways of 
working to support this the company has been 
reorganised under lines of business to allow further 
integration and knowledge transfer between our us 
and uk businesses 
we continue to invest in the development of our 
workforce with the aim of employing and retaining 
the highest calibre people both now and in the future 
we are proud of the commitment and professionalism 
demonstrated by our talented and diverse employees 
the company’s goal of worldclass performance remains 
unchanged we believe this will be achieved through our 
investment programmes and our determination to continue
to create value in our existing businesses we are both 
confident of the company’s ability to continue to provide 
good financial performance and value for our shareholders
sir john parker steve holliday
chairman chief executive
what’s inside
01 business overview
01 highlights
02 chairman’s statement
04 chief executive’s review
06 what we do
08 how we do business
10 what we have achieved
10 transmission
12 gas distribution
14 electricity distribution
16 nonregulated businesses
18 board of directors
20 operating and financial review
20 about national grid
24 current and future developments
26 objectives and strategy
30 key performance indicators
32 performance during the year
44 transmission
50 gas distribution
56 electricity distribution
60 nonregulated businesses and other
63 discontinued operations
64 financial position and financial 
management
71 accounting policies
76 independent verifier’s report on 
corporate responsibility
77 corporate governance
86 directors’ reports
86 directors’ report
88 directors’ remuneration report
99 financial statements
99 contents to financial statements
100 statement of directors’ 
responsibilities
101 independent auditors’ report
102 accounting policies
108 consolidated income statement 
109 consolidated balance sheet 
110 consolidated statement of recognised 
income and expense
111 consolidated cash flow statement 
112 notes to the accounts
173 company accounting policies
175 company balance sheet
176 notes to the company accounts
180 glossary of terms
181 definitions
182 summary consolidated financial 
information 
183 shareholder information
important notice
this document contains certain statements that are neither reported 
financial results nor other historical information these statements are 
forwardlooking statements within the meaning of section 27a of the 
securities act of 1933 as amended and section 21e of the securities 
exchange act of 1934 as amended for a description of factors that 
could affect future results reference should be made to the full 
‘cautionary statement’ on the inside back cover  annual report and accounts 200607 01
operating and
financial review
corporate
governance
business 
overview
directors’
reports
financial
statements
shareholder
information
highlights
for more information see wwwnationalgridcom
revenue
£8695m
200506 £8868m down 2
lost time injuries
142
200506 117 up 21
cash generated from operations
£3090m
200506 £2973m up 4
capital expenditure
£2345m
200506 £1907m up 23
adjusted operating profit
†
£2454m
200506 £2457m
percentage of females in workforce
237
200506 234
operating profit 
£2513m
200506 £2374m up 6 
return on equity
124
three year average
adjusted earnings per share
†
477p
200506 455p up 5
reduction in greenhouse gas emissions
35
200506 26
earnings per share
481p
200506 416p up 16
ordinary dividends
287p
200506 261p up 10


Summary:
 02 national grid plc
chairman’s statement
sir john parker
board
in january 2007 the role of chief executive successfully
transferred from roger urwin to steve holliday steve served 
as deputy chief executive from april 2006 through to december
when roger stood down the nonexecutive directors agreed 
a handover plan of responsibility and this assisted in ensuring 
a smooth transition and providing management continuity the
success of this approach is demonstrated by the continued
strength of the company’s performance throughout this period
roger’s depth of experience and leadership will be missed and 
all the directors wish him well in his new ventures 
i am confident that steve will provide strong leadership of the
executive team as we enter a new phase in the development 
of national grid i also believe that our new operating model 
and our refreshed strategy will position us to take full advantage
of the value creating opportunities we foresee over the next 
few years
other changes to the board saw mike jesanis step down as 
an executive director of national grid he had been with the
company for 23 years and had been a member of the board
since july 2004 we will miss his contributions and knowledge
and we wish him well in the future 
paul joskow one of our nonexecutive directors has
announced his intention to stand down after the annual general
meeting in july he has been a member of the board since 2000
and his support and advice have been greatly valued throughout
this time
i am pleased to welcome mark fairbairn as the executive director
responsible for our gas distribution business in the uk and us
mark has worked within national grid for 18 years in a variety 
of roles most recently as chief operating officer of our uk gas
distribution business
we welcome linda adamany to the board as a new 
nonexecutive director her energy sector experience in the us
market in particular will further strengthen the board 
following the expected completion of the keyspan acquisition
we will be welcoming bob catell as deputy chairman bob is
currently the chairman and ceo of keyspan 
we will seek to ensure that the board reflects the broadly 
equal us and uk split of the business following the keyspan
acquisition
i believe our refreshed strategy
will position us to take full
advantage of the value creating
opportunities we foresee over
the next few years  1000
we aim to have placed 
1000 young people in training 
and jobs through the ‘young 
offender programme’ by the 
end of this calendar year
477p
adjusted earnings per share
†
for continuing operations
481p earnings per share 
for continuing operations
287p
ordinary dividends
annual report and accounts 200607 03
operating and
financial review
corporate
governance
business 
overview
directors’
reports
financial
statements
shareholder
information
the board continues to support a robust process of review 
of its own performance and that of its committees we also
devote time to the programmes we have in place to identify 
and develop the leaders of the future which is the basis of 
good management succession planning we attach importance 
to giving people in the boardroom and throughout our organisation
the right opportunities and experience to grow and develop 
we see these as crucial investments in the best interests of 
all our stakeholders now and into the future 
safety
safety is at the heart of our activities and it continues to be 
at the top of the board’s agenda it is disappointing to see 
that the injury rate has increased this year so we are conscious
that we must increase our safety focus and ensure that it
remains a top priority in all our activities including with 
our contractors as we deliver a larger capital investment
programme over the next five years the board is supported 
in this critical area and in its management of the environment
and its other corporate responsibilities by the diligent work 
of the risk and responsibility committee 
as part of the continued focus on safety i was delighted by 
the quality of entries for this year’s chairman’s awards which 
aim to encourage innovation and continuous improvement in
safety health and environmental performance by recognising
outstanding achievements in these fields the winners ranged
from flat bed truck safety rails through to the development and
introduction of new operating procedures more details of some 
of these can be found later in the business overview section 
dividend policy 
the board has approved a final dividend of 178p per ordinary
share resulting in a total dividend of 287p per ordinary share 
an increase of 10 this yearonyear increase reflects our belief
that the business is in a position to deliver good growth for
shareholders through continuing cost efficiencies and capital
growth we will carry on with the strategic refocusing of the
business and disciplined approach to investment our aim
continues to be to increase sterling dividends per ordinary 
share by 7 per year through to march 2008
governance
the board is committed to pursuing leading governance
practices – we strive for constant improvement through rigorous
review of our internal processes this year we have undertaken 
a comprehensive review of business processes and systems to
ensure compliance with sarbanesoxley requirements 
community investment
support for and involvement with our local communities and
customers continues to be important to us through our
programmes of community investment in both our uk and us
operations we endeavour to ensure national grid operates in 
a responsible manner
in the us national grid and its employees donated nearly 
22 million £12 million to united way a national network 
of organisations that works to create lasting positive changes 
in people’s lives and their communities in addition to financial
support many employees volunteered their time and participated
in the united way’s ‘annual day of caring’ where they painted
cleaned gardened and built playgrounds in local communities 
i am proud of our continued leadership of the ‘young offender
programme’ in the uk and that there are now 80 companies
involved alongside us the programme has continued to develop
this year providing stable employment opportunities to offenders
this contributes to a significant reduction in the national 
reoffending rate from over 70 to about 7 for offenders
participating in the national grid programme collectively we 
aim to have placed 1000 young people into training and jobs
through the programme by the end of this calendar year 
outlook
the board remains confident that national grid is well positioned
to continue to generate value for its shareholders we are
entering a period of significant investment and the development
of our new operating model should allow us successfully to take
on this challenge we will continue to focus on safety efficiency
of our operations and providing a reliable service to our
customers while acting responsibly in everything we do 
sir john parker
chairman
†
excludes the impact of exceptional items and remeasurements