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National Grid Gas plc Annual Report and Accounts 2010/11 15
Reconciliation of operating profit to profit and earnings
Years ended 31 March
2011 2010
£m £m
Operating profit 1,189 1,110
Net finance costs (394) (221)
Total profit before taxation 795 889
Taxation (100) (288)
Profit 695 601
Attributable to non-controlling interests (1) (1)
Earnings 694 600
Reconciliation of adjusted operating profit to total
operating profit
Years ended 31 March
2011 2010
Continuing operations £m £m
Adjusted operating profit 1,254 1,297
Exceptional items (65) (187)
Total operating profit 1,189 1,110
Reconciliation of adjusted profit before taxation to total
profit before taxation
Years ended 31 March
2011 2010
Continuing operations £m £m
Adjusted profit before taxation 884 1,043
Exceptional items (96) (187)
Remeasurements 7 33
Total profit before taxation 795 889
Net finance costs
Net finance costs excluding exceptional items and
remeasurements were £370 million in 2010/11 compared with
£254 million in 2009/10. The increase is due to higher
accretions on index-linked debt following the return of UK
inflation.
Exceptional items and remeasurements
Exceptional charges of £65 million in 2010/11 consisted of
restructuring costs of £57 million and other charges of £8
million.
Exceptional charges of £187 million in 2009/10 consisted of
restructuring charges of £72 million, environmental charges of
£14 million, pension deficit charges of £58 million and other
charges of £43 million.
There were exceptional charges of £31 million during 2010/11
relating to the early redemption of debt following the rights issue
by National Grid in June 2010 (2009/10: £nil).
Financial remeasurements relate to net gains on derivative
financial instruments of £7 million (2009/10: £33 million gains).
Taxation
The net tax charge of £100 million in 2010/11 comprised a £268
million charge on adjusted profit before tax and a £168 million
credit on exceptional items and remeasurements. This
compares with a net charge of £288 million in 2009/10,
comprising a £322 million charge on adjusted profit before tax
and a £34 million credit on exceptional items and
remeasurements.
The effective tax rate before and after exceptional items and
remeasurements was 30% and 13% respectively (2009/10:
31% and 32%), compared with a standard UK corporation tax
rate of 28% in both years.
Analysis of operating profit and adjusted
operating profit
2010/11 compared with 2009/10
Changes in revenue and other operating income, operating
costs and operating profit for 2010/11 compared with 2009/10
are analysed by operating segment as follows:
Revenue
and other
operating
income
Operating
costs
Operating
profit
Continuing operations £m £m £m
2009/10 results 2,761 (1,651) 1,110
Add back 2009/10 exceptional items - 187 187
2009/10 adjusted results 2,761 (1,464) 1,297
Gas Transmission (36) 6 (30)
Gas Distribution 7 (7) -
Gas Metering (18) 6 (12)
Other activities (7) 6 (1)
Sales between businesses 10 (10) -
2010/11 adjusted results 2,717 (1,463) 1,254
2010/11 exceptional items - (65) (65)
2010/11 results 2,717 (1,528) 1,189
The principal movements by operating segment are shown on
the next page.