National Grid 2008 Annual Report Download - page 674

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 1583
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: 147
Description: EXHIBIT 15.1
0/11343.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/343/11*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 1583
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: 147 Description: EXHIBIT 15.1
0/11343.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/343/11*
Table of Contents
Annual Report and Accounts 2007/08
155
29. Commitments and contingencies continued
(d) Other commitments, contingencies and guarantees
The value of other commitments, contingencies and guarantees at 31 March 2008 amounted to £1,387m (2007: £537m),
including guarantees amounting to £925m (2007: £229m) and commitments largely relating to gas purchasing and property
remediation of £432m (2007: £198m).
Details of the guarantees entered into by the Company or its subsidiary undertakings at 31 March 2008 are shown below:
The Company has entered into an agreement with a stockbroker to repurchase the Company’s shares, which is cancellable at
any time other than during a close period. The Company entered a close period on 1 April 2008, at which point authority
existed for the repurchase of shares up to a maximum value of £248m during the close period. The close period ended
following the full year results announcement on 15 May 2008. During the period between 1 April and 14 May 2008, share
repurchases amounted to £97.8m.
(e) Amounts receivable under sublease arrangements
The total of future minimum sublease payments expected to be received under non-cancellable subleases is £35m (2007:
£32m).
(f) Litigation and claims
On 25 February 2008, the Gas and Electricity Markets Authority (GEMA) imposed a £41.6m fine on National Grid for
infringement of the Competition Act 1998 in relation to a number of metering contracts entered into with gas suppliers in 2004.
We believe that the contracts do not infringe competition law, they were entered into voluntarily by gas suppliers, and Ofgem
was consulted throu
g
hout the process of contract development and ne
g
otiation. Therefore, we have lod
g
ed an appeal with the
Competition Appeal Tribunal. GEMA has suspended the fine pending the outcome of the appeal and no provision has been
made in the accounts.
We remain convinced that National Grid has not breached the Competition Act 1998, that our position will be upheld and the
fine reversed upon appeal.
30. Related party transactions
The following information is provided in accordance with IAS 24, Related Party Disclosures, as being material transactions with
related parties during the year. These transactions are with joint ventures and associates and a pension plan and were in the
normal course of business and are summarised below:
At 31 March 2008, there were amounts receivable and payable from and to related parties amounting to £nil (2007: £nil; 2006:
£nil) and £2m (2007: £2m; 2006: £1m) respectively, which are due on normal commercial terms.
Details of investments in principal subsidiary undertakings, joint ventures and associates are disclosed in note 37 and
information relating to pension fund arrangements is disclosed in notes 5 and 31. For details of Directors and key management
remuneration, refer to note 3c and the auditable section of the Directors’ Remuneration Report.
(i) guarantees of a subsidiary company’s obligations under a membership interest and stock purchase agreement
amounting to £282m. These will expire on closing the agreement;
(ii) a letter of support of obligations under a shareholders’ agreement relating to the interconnector project between Great
Britain and The Netherlands amounting to approximately £227m. This expires in 2010;
(iii) a guarantee amounting to approximately £105m of half of the obligations of the interconnector project between Great
Britain and The Netherlands. This expires in 2010;
(iv) guarantees of certain obligations in respect of the UK Grain LNG Import Terminal for which the maximum annual liability
amounts to £86m. These run for varying lengths of time, expiring between 2019 and 2028;
(v) guarantees of £59m relating to certain property obligations of subsidiary undertakings. The majority of these expire by
December 2025;
(vi) a guarantee of £50m in respect of liabilities under a meter operating contract that runs until May 2008;
(vii) an uncapped guarantee, for which the maximum liability is estimated at £40m, to The Crown Estates in support of the
transfer of the interconnector between France and England to National Grid Interconnectors Limited as part of the
Licence to Assign Lease. This is ongoing;
(
viii
)
letters of credit in su
pp
ort of
g
as balancin
g
obli
g
ations amountin
g
to £25m, lastin
g
for less than one
y
ear;
(ix) collateral of £15m to secure syndicate insurance obligations which are evergreen;
(x) guarantees in respect of a former associate amounting to £14m, the majority of which relates to its obligations to supply
telecommunications services. These are open-ended; and
(xi) other guarantees amounting to £22m arising in the normal course of business and entered into on normal commercial
terms. These guarantees run for varying lengths of time.
2008 2007 2006
£m £m £m
Sales: Services supplied to a pension plan 3 4 4
Purchases: Services received from
j
oint ventures and associates 33 26 32