National Grid 2008 Annual Report Download - page 589

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 61142
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: 67
Description: EXHIBIT 15.1
0/8263.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/263/8*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 61142
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: 67 Description: EXHIBIT 15.1
0/8263.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/263/8*
Table of Contents
Annual Report and Accounts 2007/08
75
48
y
ears 62% 55% £17.3bn
Longest maturity of our
borrowings
Proportion of net debt
in US dollars
Proportion of net debt
at fixed rates
Pension plan assets
The principal measure of our balance sheet efficiency is our
interest cover ratio as described under financial discipline on
page 42. Interest cover for the year ended 31 March 2008
decreased to 3.2 from 3.8 for the year ended 31 March 2007.
Our target long-term range for interest cover is between 3.0
and 3.5.
The decrease occurred as a result of the KeySpan
acquisition completing in August 2007 and associated
seasonal variations in earnings. KeySpan’s post acquisition
period earnings are proportionally greater than pre
acquisition period earnings due to seasonal weather
impacts.
Equity shareholders’ funds
Equity shareholders’ funds rose from £4,125 million at 31
March 2007 to £5,362 million at 31 March 2008.
The increase was mainly explained by the retained profit for
the year to March 2008 of £2,416 million, net other
recognised income of £280 million, comprising net foreign
exchange adjustments relating to the retranslation of US
dollar denominated net assets and associated hedges,
actuarial gains, net gains on hedges and available-for-sale
investments and tax thereon, and £1,522 million of share
repurchases.
Liquidity and treasury management
Cash flow
Cash flows from our operations are largely stable over a
period of years, but they do depend on the timing of
customer payments and exchange rate movements. Our
electricity and
g
as transmission and distribution operations in
the UK and US are subject to multi-year rate agreements
with re
g
ulators. Si
g
nificant chan
g
es in volumes, for example
as a consequence of weather conditions, can affect cash
inflows in particular, with abnormally mild or extreme weather
driving volumes down or up respectively. Subject to this, we
have essentially stable cash flows in the UK, while in the US,
the regulatory mechanisms for recovering costs from
customers can result in very significant cash flow swings
from year to year.
Cash flow forecasting
Both short- and long-term cash flow forecasts are produced
frequently to assist in identifying our liquidity requirements.
These forecasts, supplemented by a financial headroom
position, are supplied to the Finance Committee of the Board
regularly to assess funding adequacy for at least a 12 month
period. We also maintain committed facilities to support our
liquidity requirements.
Credit facilities and unutilised Commercial Paper and
Medium Term Note Programmes
At 31 March 2008, we had the following programmes:
The short-term (364 day) committed facilities include an
option to extend these facilities. The US committed facilities
provide commercial paper back up for KeySpan Corporation
and liquidity support for New England Power Company.
Note 35 to the consolidated financial statements shows the
maturity profile of undrawn committed borrowing facilities in
sterling as at 31 March 2008.
Programme Amount Status
National Grid plc
US commercial
p
a
p
er
p
ro
g
ramme $3.0 billion Unutilised
Euro commercial
p
a
p
er
p
ro
g
ramme $1.5 billion Unutilised
National Grid Electricit
y
Transmission
p
lc
US commercial
p
a
p
er
p
ro
g
ramme $1.0 billion Unutilised
Euro commercial
p
a
p
er
p
ro
g
ramme $1.0 billion Unutilised
National Grid
p
lc and National Grid Electricit
y
Transmission
p
lc
Euro medium term note
p
ro
g
ramme

€15.0 billion

6.3 billion
unissued
National Grid Gas
p
lc
US commercial
p
a
p
er
p
ro
g
ramme $2.5 billion Unutilised
Euro commercial paper programme $1.25 billion Unutilised
Euro medium term note
p
ro
g
ramme

€10.0 billion

5.3 billion
unissued
National Grid USA
US commercial
p
a
p
er
p
ro
g
ramme $2.0 billion $1.2 billion
unissued
Euro medium term note
p
ro
g
ramme

€4.0 billion

3.9 billion
unissued
KeySpan Corporation
US commercial
p
a
p
er
p
ro
g
ramme $1.5 billion $1.2 billion
unissued
We have both committed and uncommitted borrowing
facilities that are available for
g
eneral corporate purposes. At
31 March 2008, we had the following committed and
uncommitted facilities:
Facility Amount Status
National Grid plc
Short-term committed facilities $1.5 billion Undrawn
National Grid Gas plc
Lon
g
-term committed facilities £0.8 billion Undrawn
National Grid Electricit
y
Transmission
p
lc
Long-term committed facilities £0.4 billion Undrawn
National Grid’s US subsidiaries
Committed facilities $1.7 billion Undrawn
National Grid
p
lc and certain UK subsidiaries
Uncommitted borrowin
g
facilities £0.8 billion Undrawn