National Grid 2008 Annual Report Download - page 561

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 43953
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: 42
Description: EXHIBIT 15.1
0/7238.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/238/7*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 43953
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: 42 Description: EXHIBIT 15.1
0/7238.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/238/7*
Table of Contents
50
Transmission continued
National Grid plc
£2,956m £299m £1,600m £111m
Transmission UK
revenue
Transmission US
revenue
Transmission UK
capital expenditure
Transmission US
capital expenditure
for 2006/07. The reduction related to non-Transmission
activities of New England Power.
In New York, our electricity transmission activities are
combined with electricity distribution under a single rate plan
and the combined returns for these activities are included
within our Electricity Distribution & Generation business
commentary on page 66.
Financial results – Transmission UK
The results for the Transmission UK segment for the years
ended 31 March 2008, 2007 and 2006 were as follows:
Revenue and other operating income increased by £134
million in 2007/08 compared with 2006/07. Allowed revenues
increased by £176 million, driven by the five year
transmission price controls that came into effect on 1
April 2007. As expected, revenues from our French
interconnector and LNG storage businesses were lower in
2007/08, down by a combined £62 million on 2006/07, as
demand for capacity returned closer to normal levels
following the abnormal demand in 2006/07.
Years ended 31 March
2008 2007 2006
Continuing operations £m £m £m
Revenue 2,956 2,816 2,710
Other o
p
eratin
g
income
–
6
–
Operating costs excluding
exceptional items (1,935) (1,876) (1,866)
Ad
j
usted o
p
eratin
g
p
rofit 1,021 946 844
Exce
p
tional items
(
8
)
(
10
)
(
1
)
O
p
eratin
g
p
rofit 1,013 936 843
2007/08 compared with 2006/07
The principal movements between 2006/07 and 2007/08
can be summarised as follows:
Revenue
and other
operating Operating Operating
income costs profit
£m £m £m
2006/07 results 2,822 (1,886) 936
Add back 2006/07
exce
p
tional items
–
10 10
2006/07 adjusted results 2,822 (1,876) 946
Allowed revenues 176
–
176
Timin
g
on recoveries 10
–
10
Lower French
interconnector and LNG
stora
g
e auctions
(
62
)
–
(
62
)
Depreciation and
amortisation
–
(
20
)
(
20
)
Other 10 (39) (29)
2007/08 ad
j
usted results 2,956
(
1,935
)
1,021
2007/08 exce
p
tional items
–
(
8
)
(
8
)
2007/08 results 2,956
(
1,943
)
1,013
Operating costs, excluding exceptional items, increased by
£59 million in 2007/08 compared with 2006/07. As expected,
depreciation and amortisation increased by £20 million as a
result of increasin
g
capital investment. Other items increased
costs by £39 million, principally because of higher pass-
through costs and increased non-price controlled activities,
both recovered through revenue.
The £8 million exceptional char
g
e in 2007/08 relates to costs
incurred in establishing a shared services function in the UK
and from the continuation of our review of business
processes, compared with £10 million in 2006/07.
As a consequence, adjusted operating profit, excluding
exceptional items, increased by £75 million in 2007/08
compared to 2006/07, while operating profit increased by
£77 million.
2006/07 compared with 2005/06
The principal movements between 2005/06 and 2006/07 can
be summarised as follows:
Revenue and other operating income increased by £112
million in 2006/07 compared with 2005/06, driven by an
increase of £85 million in electricity transmission owner
revenue from the regulatory settlement with Ofgem for the
extension of the previous price control for 2006/07, a 6%
increase in real terms. The balance of the increase arose
from higher incentivised costs associated with balancing the
electricity system, which flow through to revenue, higher
pass-through costs, partly offset by unfavourable timing
impacts on gas revenue and lower interconnector auction
income.
Operating costs, excluding exceptional items, increased by
£10 million in 2006/07 compared with 2005/06. Transmission
owner depreciation and amortisation decreased by
£27 million due to the impact of accelerated depreciation
charges and early asset write offs in 2005/06 partly offset by
an increase in depreciation reflecting the increasing capital
programme. Higher other operating costs reflected higher
incentivised BSIS costs resulting from higher response and
constraint costs partly offset by lower margin costs, higher
pass-through costs and higher
Revenue
and other
operating Operating Operating
income costs profit
£m £m £m
2005/06 results 2,710
(
1,867
)
843
Add back 2005/06 exceptional
items
–
11
2005/06 ad
j
usted results 2,710
(
1,866
)
844
Allowed revenues 106
(
3
)
103
Timin
g
on recoveries
(
64
)
–
(
64
)
Transmission owner
de
p
reciation
–
27 27
Other 70
(
34
)
36
2006/07 adjusted results 2,822 (1,876) 946
2006/07 exce
p
tional items
–
(
10
)
(
10
)
2006/07 results 2,822 (1,886) 936