National Grid 2008 Annual Report Download - page 585

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 17818
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: 63
Description: EXHIBIT 15.1
0/5259.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/259/5*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 17818
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: 63 Description: EXHIBIT 15.1
0/5259.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/259/5*
Table of Contents
Annual Report and Accounts 2007/08
71
Operating performance
There was a decrease in the total number of employee lost
time injuries in non-regulated businesses and other
operations to 2 in 2007/08 compared with 15 in 2006/07 and
12 in 2005/06.
Our non-regulated businesses and other operations
operated reliably and efficiently throughout the year.
All 22 National Grid Meterin
g
standards of service have been
met for the year ended 31 March 2008.
During the year ended 31 March 2008, we invested £383
million in our non-regulated businesses, £125 million higher
than in 2006/07, which had been £21 million lower than
capital expenditure in 2005/06.
The primary reason for the increase in 2007/08 related to the
construction of Phase II of the Grain LNG import facility,
which is anticipated to be completed durin
g
2008.
In addition, we invested an additional £90 million during the
year relating to Phase III of the facility, which involves
construction of a second unloading jetty, an additional
190,000m
3
LNG storage tank and associated processing
equipment. Phase III is expected to increase the capacity
available at the terminal to 14.8 million tonnes per annum,
equivalent to around 20% of anticipated UK gas demand for
2010/11. Long-term contracts have been signed with E.ON,
Iberdrola and Centrica.
National Grid Metering and OnStream are investing in
technology, such as automated meter reading systems and
smart metering respectively, in response to customer
requirements. Capital expenditure in our metering
businesses was, however, £23 million lower in 2007/08
reflecting market anticipation of the outcome on smart
metering discussions.
In addition to the capital expenditure discussed above, we
have invested a further £21 million (2006/07: £nil, 2005/06:
£nil) in joint venture arrangements. We have entered into a
j
oint venture with the owner and operator of the Dutch
electricity transmission network, TenneT Holding, to
construct the BritNed electricity interconnector between the
UK and the Netherlands. Following the granting of a
re
g
ulatory exemption order in November 2007 and subject to
receiving both environmental consents for BritNed and the
necessary Dutch overhead transmission reinforcement
project, National Grid expects to invest around £200 million
in this project. This will make an important contribution to the
UK’s security of supply when it is commissioned towards the
end of 2010. Investment began in 2007/08 with total
investment to 31 March 2008 of £19 million.
Safety,
efficiency,
reliability and
customer
service
Our objectives include zero employee lost time
injuries, to operate efficiently and to operate
reliably. We also aim to improve the quality of
service to our customers.
Capital
investment
Our objective is to deliver on our capital
investment programme for non-regulated
businesses and other operations.
Durin
g
the year, we also entered into an a
g
reement with Elia
to explore the potential for constructing an electricity
interconnector with Belgium. This is still at a development
stage with further work and approvals required before
construction can start.
Financial performance
The results for non-regulated businesses, other operations
and corporate activities for the years ended 31 March 2008,
2007 and 2006 were as follows:
2007/08 compared with 2006/07
The principal movements between 2007/08 and 2006/07 can
be summarised as follows:
Revenue and other operating income from non-regulated
businesses and other operations increased by £71 million
from £638 million in 2006/07 to £709 million in 2007/08. The
principal reasons for this increase were the inclusion of
£49 million with respect to seven months of non-regulated
activities acquired with KeySpan and an increase of
£14 million in our metering businesses, reflecting portfolio
growth at OnStream. Increased revenue for our other
operations principally relates to Fulcrum. This was partially
offset by a £37 million reduction in revenue following the
disposal of Advantica in August 2007.
Operating costs excluding exceptional items were £75 million
higher in 2007/08 compared with 2006/07, comprising an
increase of £51 million from non-re
g
ulated activities acquired
with KeySpan and an increase of £13 million in our metering
businesses as a result of increased volumes, together with
£52 million from Fulcrum and other activities, partially offset
by a reduction in costs following the disposal of Advantica of
£34 million.
Contributions from non-regulated businesses to adjusted
operating profit comprised £104 million (2006/07: £103
million) from Metering; £93 million (2006/07: £86 million)
from Property; £12 million (2006/07: £9 million) from Grain
LNG; a £1 million loss (2006/07: profit £2 million) from
Advantica and a loss of £2 million (2006/07: n/a) from US
non-regulated businesses acquired with KeySpan.
Years ended 31 March
2008 2007 2006
Continuing operations £m £m £m
Revenue 642 567 701
Other o
p
eratin
g
income 67 71 74
Operatin
g
costs excludin
g
exceptional
items
(
580
)
(
505
)
(
625
)
Ad
j
usted o
p
eratin
g
p
rofit 129 133 150
Exceptional items (57) (1) 18
O
p
eratin
g
p
rofit 72 132 168
Revenue
and other
operating Operating Operating
income costs profit
£m £m £m
2006/07 results 638
(
506
)
132
Add back exce
p
tional items
–
11
2006/07 adjusted results 638 (505) 133
Meterin
g
14
(
13
)
1
Pro
p
ert
y
–
7 7
Grain LNG 3
–
3
Advantica (37) 34 (3)
US non-re
g
ulated business 49
(
51
)
(
2
)
Fulcrum and other activities 42
(
52
)
(
10
)
2007/08 adjusted results 709 (580) 129
2007/08 exce
p
tional items
–
(
57
)
(
57
)
2007/08 results 709 (637) 72