National Grid 2008 Annual Report Download - page 587

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 3695
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: 65
Description: EXHIBIT 15.1
0/6261.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/261/6*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 3695
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: 65 Description: EXHIBIT 15.1
0/6261.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/261/6*
Table of Contents
Annual Report and Accounts 2007/08
73
Discontinued operations
Wireless Basslink Ravenswood £4.6bn
Sold Sold Agreed to sell Total proceeds from sales
and ex
p
ected sales
About discontinued operations
Principal operations
Our discontinued operations at 31 March 2008 comprise the
Ravenswood generation station, KeySpan Communications
and KeySpan Engineering Associates, all of which were
acquired as part of the acquisition of KeySpan. During the
year, they also included our UK and US wireless
infrastructure operations, and our Basslink electricity
interconnector in Australia that we sold on 3 April, 15 August
and 31 August 2007 respectively.
Our UK wireless infrastructure operations were sold to
Macquarie UK Broadcast Ventures Limited on 3 April 2007
for £2.5 billion and our US wireless infrastructure operations
were sold in Au
g
ust 2007 for proceeds of £147 million. We
sold Basslink for £485 million on 31 August 2007.
Ravenswood
The Ravenswood generation station, a 2,480 MW facility in
Queens in New York City is primarily fuelled by natural gas,
and provides over 20% of New York City’s electricity supply.
Divestiture of Ravenswood is a condition of the New York
Public Service Commission order approving the acquisition
of KeySpan by National Grid.
On 31 March 2008, we announced that we had entered into
an agreement to sell the Ravenswood generation station for
$2.9 billion (£1.4 billion) to TransCanada Corporation,
subject to regulatory approvals. The proceeds are subject to
customary closing adjustments. Completion is expected
during the summer of 2008.
KeySpan Communications and KeySpan Engineering
Associates
KeySpan Communications operates a fibre optic
telecommunications network that extends through parts of
New York City, Long Island and New Jersey with over 1,600
route kilometres of network and over 120,000 kilometres of
fibre. It also has access to transatlantic cable systems linkin
g
Long Island with Paris and London.
KeySpan Engineering Associates provides engineering,
design and consulting services for commercial, institutional
and industrial customers and operates within the
northeastern US.
We have entered into an agreement to sell KeySpan
Communications to Lightower Fiber LLC, subject to
regulatory approval.
Performance against our objectives
Delivering our strategy
The disposal of these operations will complete our
programme of disposals of non-core businesses, enablin
g
us
to achieve our objective of focusing our operations on
electricity and gas infrastructure and related businesses in
the UK and the US.
Operating performance
The financial performance of these operations is described
below, excluding operations discontinued in prior years.
Capital investment in operations discontinued in the year
was considerably lower than in 2006/07 and 2005/06 at
£1 million reflecting the disposal of our UK wireless
infrastructure operations in April 2007 and only five months’
activity for both our US wireless operations and Basslink
which were disposed of in Au
g
ust 2007.
Financial performance
The operating results for discontinued operations for the
years ended 31 March 2008, 2007 and 2006 relating to
operations sold or discontinued during the year were as
follows:
In 2007/08, revenue, operating costs and operating profit
decreased primarily as a consequence of the sales of the UK
wireless operations on 3 April 2007 and the US wireless
operations and Basslink in August 2007, partially offset by
contributions from the Ravenswood generation station,
KeySpan Communications and KeySpan Engineering
Associates from 24 August 2007 onwards.
In 2006/07, revenue, operating costs and adjusted operating
profit increased compared with 2005/06 as a consequence of
the first year of operation of Basslink and growth in our UK
wireless infrastructure operations. Exceptional char
g
es of
£55 million in 2006/07 arose from impairment to goodwill
recorded in our US wireless operations compared with
£5 million of restructuring costs in 2005/06.
Years ended 31 March
2008 2007 2006
£m £m £m
Revenue 201 383 325
Operatin
g
costs excludin
g
exceptional
items and remeasurements
(
166
)
(
266
)
(
255
)
Adjusted operating profit 35 117 70
Exce
p
tional items
–
(
55
)
(
5
)
O
p
eratin
g
p
rofit 35 62 65