National Grid 2008 Annual Report Download - page 562

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 47871
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: 43
Description: EXHIBIT 15.1
0/4239.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/239/4*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 47871
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: 43 Description: EXHIBIT 15.1
0/4239.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/239/4*
Table of Contents
Annual Report and Accounts 2007/08
51
£1,021m £128m 8% 24%
Transmission UK
adjusted operating profit
Transmission US
adjusted operating profit
Transmission UK
increase in adjusted
operating profit
Transmission US
increase in adjusted
operating profit at
constant currenc
y
expenditure relatin
g
to tower foundations and steelwork (with
effect from 1 April 2007 this type of expenditure is
remunerated as part of the regulatory asset base). Gas
shrinkage costs decreased mainly due to warmer weather
resulting in lower volumes.
The £102 million increase in UK electricity and gas
transmission adjusted operating profit comparing 2006/07
with 2005/06 reflects the movements in revenue and
operating costs, excluding exceptional items, as described
above.
The £10 million exceptional char
g
e in 2006/07 was driven by
the establishment of shared services functions in the UK and
the implementation of a review of our business processes.
Financial results – Transmission US
The average exchange rates used to translate the results of
US operations during 2007/08, 2006/07 and 2005/06 were
$2.01:£1, $1.91:£1 and $1.79:£1 respectively.
2007/08 compared with 2006/07
The principal movements between 2006/07 and 2007/08 can
be summarised as follows:
Revenue and operating costs decreased by £13 million and
£8 million in 2007/08 respectively as a consequence of
exchan
g
e rate movements when compared with 2006/07. On
a constant currency basis revenue and operating costs
increased by £42 million and £17 million respectively. This
reflected an increase in allowed revenues of £27 million and
£15 million arising from the timing of revenue recoveries,
while operatin
g
costs increased by £17 million as a
consequence of higher wages and other expenditure.
Years ended 31 March
2008 2007 2006
£m £m £m
Revenue 299 270 310
Operating costs excluding
exceptional items (171) (162) (183)
Ad
j
usted o
p
eratin
g
p
rofit 128 108 127
Exceptional items (6) (1) –
O
p
eratin
g
p
rofit 122 107 127
Operating Operating
Revenue costs profit
£m £m £m
2006/07 results 270
(
163
)
107
Add back exce
p
tional items
–
1 1
2006/07 adjusted results 270 (162) 108
Exchan
g
e movements
(
13
)
8
(
5
)
2006/07 constant currency results 257 (154) 103
Allowed revenues 27
–
27
Timin
g
of recoveries 15
–
15
Other
–
(
17
)
(
17
)
2007/08 ad
j
usted results 299
(
171
)
128
Exce
p
tional items
–
(
6
)
(
6
)
2007/08 results 299 (177) 122
The £6 million exceptional charge in 2007/08 relates to the
integration of the operations acquired with KeySpan, in
particular costs arising from voluntary early redundancies,
compared with £1 million incurred in 2006/07. As a
consequence adjusted operating profit increased by
£25 million in 2007/08 compared to 2006/07 on a constant
currency basis and by £20 million in total. After reflecting
exceptional items, operating profit was £15 million higher in
2007/08 than in 2006/07.
2006/07 compared with 2005/06
The principal movements between 2005/06 and 2006/07 can
be summarised as follows:
The £21 million decrease in revenue comparin
g
2006/07 with
2005/06 on a constant currency basis was due to the impact
of the timing of a revenue adjustment mechanism in New
York, lower US interconnector revenues reflecting a
declining investment base and the November 2005 closure
of GridAmerica, a multi-system independent transmission
company that managed electricity transmission operations
for other utilities in the US (£4 million in 2005/06). In addition,
there was no repeat of the one-off tariff adjustment of
£7 million in 2005/06 to revenues collected from another
business segment. Partly offsetting these decreases was
higher revenue from New England due to a higher
investment base.
Operating costs, excluding exceptional items, decreased by
£10 million in 2006/07 compared with 2005/06 on a constant
currency basis. This is mainly due to the non-recurrence of
the one-off £7 million operating cost adjustment reflected in
2005/06 as referred to above and a £3 million reduction in
operating costs following the closure of GridAmerica in
2005/06. The £19 million overall decrease in adjusted
operating profit and £20 million decrease in operating profit
in 2006/07 compared with 2005/06 reflects the £11 million
movement in revenue and operating costs as described
above, together with unfavourable exchange movements of
£8 million and, in the case of operating profit, £1 million
exceptional costs relating to the then anticipated acquisition
of KeySpan.
Operating Operating
Revenue costs profit
£m £m £m
2005/06 results and adjusted
results 310
(
183
)
127
Exchan
g
e movements
(
19
)
11
(
8
)
2005/06 constant currency results 291 (172) 119
Tariff ad
j
ustment not re
p
eated
(
7
)
7
–
GridAmerica
(
4
)
3
(
1
)
Other chan
g
es
(
10
)
–
(
10
)
2006/07 ad
j
usted results 270
(
162
)
108
Exce
p
tional items
–
(
1
)
(
1
)
2006/07 results 270
(
163
)
107