National Grid 2008 Annual Report Download - page 570

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 48334
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: 51
Description: EXHIBIT 15.1
0/4247.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/247/4*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 48334
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: 51 Description: EXHIBIT 15.1
0/4247.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/247/4*
Table of Contents
Annual Report and Accounts 2007/08
59
£595m £392m 45% 476%
Gas Distribution UK
adjusted operating profit
Gas Distribution US
adjusted operating profit
Gas Distribution UK
increase in adjusted
operating profit
Gas Distribution US
increase in adjusted
operating profit at
constant currenc
y
In summary, revenue and other operating income were
£27 million lower, operating costs were £47 million higher
and exceptional charges were £54 million lower.
Financial results – Gas Distribution 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.
Revenue and operating costs excluding exceptional items
and remeasurements increased by £2,239 million and
£1,915 million respectively in 2007/08 compared with
2006/07 on a constant currency basis, an increase of 369%
and 356% in each case. The rise in revenue and operating
cost primarily arose from five months of additional activities
from the gas distribution network in Rhode Island we
acquired from Southern Union Company in Au
g
ust 2006 and
seven months of activities from the gas distribution networks
we acquired with KeySpan in Au
g
ust 2007.
Adjusted operating profit was £324 million higher in 2007/08
than 2006/07 on a constant currency basis, an increase of
476%. Exceptional charges of £46 million in 2007/08 related
to integration initiatives, including the cost of voluntary early
redundancies, while favourable mark-to-market commodity
contract remeasurement gains were recorded as a
consequence of higher energy prices
Years ended 31 March
2008 2007 2006
£m £m £m
Revenue 2,845 638 571
Operating costs excluding exceptional
items and remeasurements (2,453) (567) (524)
Ad
j
usted o
p
eratin
g
p
rofit 392 71 47
Exceptional items and remeasurements 95 (4) –
O
p
eratin
g
p
rofit 487 67 47
2007/08 compared with 2006/07
The principal movements between 2006/07 and 2007/08 can be
summarised as follows:
Operating Operating
Revenue costs profit
£m £m £m
2006/07 results 638
(
571
)
67
Add back exce
p
tional items
–
4 4
2006/07 adjusted results 638 (567) 71
Exchan
g
e movements
(
32
)
29
(
3
)
2006/07 constant currency results 606 (538) 68
Ke
y
S
p
an 2,181
(
1,832
)
349
Rhode Island
g
as o
p
erations 61
(
74
)
(
13
)
Bad debt ex
p
ense
–
(
3
)
(
3
)
Pension and benefit costs
–
(
3
)
(
3
)
Other (3) (3) (6)
2007/08 ad
j
usted results 2,845
(
2,453
)
392
2007/08 exceptional items – (46) (46)
2007/08 remeasurements
–
141 141
2007/08 results 2,845
(
2,358
)
487
compared with contracted amounts as at 31 March 2008.
The benefit of these gains will be realised in subsequent
periods and passed back to consumers.
Operating profit was £420 million higher in 2007/08 than
2006/07, an increase of 627%. In summary, revenue was
£2,207 million higher, operating costs were £1,886 million
higher, exceptional charges were £42 million higher and
remeasurement gains were £141 million.
2006/07 compared with 2005/06
The principal movements between 2005/06 and 2006/07 can
be summarised as follows:
Revenue increased by £103 million in 2006/07 compared
with 2005/06 on a constant currency basis, an increase of
19%. The rise in revenue was primarily due to seven months
of revenue from the gas distribution network in Rhode Island
we acquired from Southern Union Company in Au
g
ust 2006.
This increase was partially offset by a reduction of purchase
gas recovery due to lower purchased gas costs.
Operating costs increased by £76 million in 2006/07
compared with 2005/06 on a constant currency basis, an
increase of 15%. This rise is largely due to £159 million of
costs incurred in the
g
as distribution network in Rhode Island
in the seven months subsequent to its acquisition in
August 2006. This increase was partially offset by lower
purchased gas costs of £79 million due to lower gas prices
and lower sales volumes.
Adjusted operating profit was £27 million higher in 2006/07
than 2005/06 on a constant currency basis, an increase of
61%. Exceptional charges of £4 million in 2006/07 related to
merger integration initiatives.
Operating profit was £20 million higher in 2006/07 than
2005/06, an increase of 43%. In summary, revenue was
£67 million higher, operating costs were £43 million higher
and exceptional charges were £4 million higher.
Operating Operating
Revenue costs profit
£m £m £m
2005/06 results and adjusted results 571 (524) 47
Exchan
g
e movements
(
36
)
33
(
3
)
2005/06 constant currency results 535 (491) 44
Purchased
g
as
(
77
)
79 2
Rhode Island
g
as o
p
erations 176
(
159
)
17
Bad debts
–
(
3
)
(
3
)
Pension and benefit costs – 5 5
Other 4 2 6
2006/07 ad
j
usted results 638
(
567
)
71
Exceptional items – (4) (4)
2006/07 results 638
(
571
)
67