National Grid 2008 Annual Report Download - page 534

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 58545
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 18
Description: EXHIBIT 15.1
0/4214.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/214/4*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 58545
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 18 Description: EXHIBIT 15.1
0/4214.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/214/4*
Table of Contents
Performance against our objectives
26
Performance a
g
ainst our ob
j
ectives
National Grid plc
Our performance and the progress we have made against
the objectives we have set ourselves are described below
and on the following pages. This includes commentary on
our financial results on pages 36 to 43 and information on
the performance and financial results of each business in the
business sections on pages 44 to 73.
We measure the achievement of our objectives through the
use of qualitative assessments and throu
g
h the monitorin
g
of
quantitative indicators, called key performance indicators
(KPIs). In line with our operating objectives, we use both
financial and non-financial KPIs. Where relevant, KPIs are
used as our primary measures of whether we are achieving
our objectives; however, the scale and size of our operations
means we use many other detailed performance measures
in addition to KPIs. We also use KPIs to measure
performance against our primary objective of growing our
businesses to create value for our shareholders. We use
qualitative assessments to judge progress against our
objectives in areas where numerical measures are less
relevant.
The majority of our KPIs are unchanged from last year,
except that we have reflected the acquisition of the Rhode
Island gas distribution business in all our KPIs this year. We
have also included new KPIs measuring our financial
performance.
These comprise indicators of our performance in: obtainin
g
a
return on investment through a return on equity measure;
financial discipline through measures for interest cover and
return of cash to shareholders through our share repurchase
programme; and shareholder return through a dividend
growth measure. Total shareholder return is now presented
as a cumulative three year measure. We have retained the
KPI for gas safety-related service standards in the UK, but it
is now presented as part of the Gas Distribution section on
page 56.
We have incorporated the KeySpan acquisition into certain
of our KPIs, in particular financial KPIs which reflect the
results of operations acquired from their acquisition on 24
August 2007, together with the associated increase in
interest on debt used to finance the acquisition. To assist in
understandin
g
the financial impact of the acquisition we have
also included ‘pro forma’ financial measures which illustrate
what our financial performance mi
g
ht have been like if we
had owned KeySpan for the entire financial year
commencing on 1 April 2007. The remaining KPIs will be
updated in next year’s Annual Report and Accounts to reflect
the integration of KeySpan into our businesses.
Responsibility
We believe operating responsibly is essential to the way we
conduct our operations, invest, develop our people and
manage our relationships. It underpins everything we do.
We always strive to operate to the highest standards of
corporate governance and we believe in strong business
ethics, based around our Framework for Responsible
Business and our core values of respecting others and
valuing diversity, demonstrating integrity and openness in all
relationships, taking ownership for driving performance and
operating as one team.
Our corporate responsibility performance is reported in line
with our corporate responsibility reportin
g
principles.
We continue to enjoy external recognition of our responsible
business approach. We remain on the Dow Jones
Sustainability World and FTSE4Good indices and once
again have been rated as a ‘platinum’ company in the
Business in the Community 2007 corporate responsibility
index, confirming that our approach to responsible business
is world-class.
In March 2007, we published our Standards of Ethical
Business Conduct that replaced our UK Code of Business
Conduct, and in December 2007, following the completion of
the KeySpan acquisition, these Standards also replaced the
US Standards of Conduct, thereby providing a single set of
standards throughout National Grid. The new standards
provide a common set of practical guidelines to help ensure
that our behaviours are lawful, we comply with our policies
and licences and we follow the values set out in our
Framework for Responsible Business and our core values. In
2007/08, there were 11.6 substantiated breaches per 1,000
employees compared with 8.0 in 2006/07 and 4.8 in
2005/06. Offences include such things as fraud, internet and
email abuse, drugs and alcohol abuse and misuse of
company vehicles and other assets. Disciplinary actions can
range from a verbal warning to dismissal.
In our 2008 employee engagement survey, which included
for the first time employees who joined us on the acquisition
of KeySpan, 61% (2006: 65%) of respondents considered
something would be done if they reported an inappropriate
business practice or an ethical issue, while 47% (2006: 65%)
believed National Grid is a good company for customers to
do business with.
Our approach to corporate governance and business ethics
is described in more detail in the Corporate Governance
section on pages 88 to 97.
£3.8bn £3.1bn £1.5bn £3.1bn
KeySpan acquisition
completed for £3.8 billion
consideration
Wireless and Basslink
sold for £3.1billion
proceeds
Share repurchases Capital expenditure