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Trusted
to perform
Annual Report and
Accounts 2013/14

Table of contents

  • Page 1
    Trusted to perform Annual Report and Accounts 2013/14

  • Page 2
    ...740 energy-efficient LED fixtures, delivering predicted annual energy savings for Ford of 10.7 million kilowatt hours for up to 10 years. National Grid is investing over $50 million to rebuild the Gardenville power station, connected to the Stamping Plant via National Grid's 115 kV electricity lines...

  • Page 3
    ... and stranded cost recoveries. See page 182 for more information about these adjusted profit measures. 3. Comparative earnings per share (EPS) data has been restated for the impact of the scrip dividend issues. Our financial results are reported in sterling. The average exchange rate, as detailed...

  • Page 4
    ...share in respect of the financial year ending 31 March 2013. The Board is proposing a recommended final dividend of 27.54p (2012/13: 26.36p) Effective governance We have developed a new remuneration policy to align more closely with RIIO, the continued evolution of our US business and shareholder...

  • Page 5
    Strategic Report Corporate Governance Financial Statements Additional Information 03 Nick Winser, Executive Director UK, will step down from the Board in July 2014 at the AGM. He will continue with his roles as President of the European Network of Transmission System Operators for Electricity (...

  • Page 6
    ...been a year of solid performance for National Grid against a backdrop of intense public focus on energy prices, as well as new regulatory frameworks in both the UK and US. Safety is, as always, at the heart of the way we operate. In the UK we achieved an employee lost time injury frequency rate (IFR...

  • Page 7
    ... as harnessing ideas to help find more efficient ways of working to meet our stakeholders' needs. An area we know we can improve is customer service. We saw some good results such as reduced complaints in the UK and our scores for UK Gas Transmission, as well as increases in three out of our four US...

  • Page 8
    06 National Grid Annual Report and Accounts 2013/14 Financial review We have delivered another year of solid financial performance with a good start under RIIO in the UK and consolidation of underlying improvements in the US. Our financial KPIs Adjusted earnings per share Adjusted operating ...

  • Page 9
    ... new regulatory arrangements under the RIIO framework in place from this year. This performance represents 260bps outperformance over allowed returns. UK return on equity % 16 UK regulated assets1 US regulated assets2 Other invested capital Total assets Dividend paid Movement in goodwill Net debt...

  • Page 10
    08 National Grid Annual Report and Accounts 2013/14 Financial review continued US regulated return on equity The US RoE has decreased 20bps to 9.0%, mainly driven by lower allowed rates in our KEDNY and Long Island Generation businesses following the introduction of new rate plans during the year....

  • Page 11
    ... specific programmes. They also highlight areas for further improvement and allow us to make sure our actions culminate in sustainable long-term growth in shareholder value. We have changed our financial KPIs during 2013/14 to reflect the changing metrics used to monitor the Group following RIIO. We...

  • Page 12
    ... Grid Annual Report and Accounts 2013/14 Non-financial KPIs Non-financial KPIs are often leading indicators of future financial performance. Improvements in these measures build our competitive advantage. Employee lost time injury frequency rate (IFR) per 100,000 hours worked Definition Number...

  • Page 13
    ... Group-wide employee opinion surveys. Managers receive a scorecard that aims to create greater leadership accountability and we produce survey reports and action plans at Company, regional, business unit, function and team levels. People pages 40 - 41 Not measured 2009/10 2010/11 2011/12 2012...

  • Page 14
    ...priced gas over the long term, changing supply and demand patterns. Long-term certainty needed to secure investment Current uncertainty in the UK market has led some developers to delay investing in new generation capacity. An agreement on long-term prices for low carbon generation under Electricity...

  • Page 15
    ... grids will change the way loads are balanced across the distribution network, allowing our customers to make smarter energy choices and increasing network flexibility. Our infrastructure needs the flexibility to respond innovatively to emerging developments, potentially by being managed differently...

  • Page 16
    ... and other stakeholders. Excellence in our operational processes will allow us to manage our assets efficiently, deliver network improvements quickly and provide services that meet the changing demands of our customers. Engagement with our customers and communities will make sure what we do reflects...

  • Page 17
    ...ways of thinking and working to benefit every aspect of what we do. Embedding innovation and new technology into our operations helps us deliver continuous improvements in the quality and cost of our services. Work with external stakeholders to shape UK, EU and US energy policy. Policy decisions by...

  • Page 18
    ...or operate any electricity generation in the UK. We sell the electricity generated by our plants on Long Island to LIPA under a long-term power supply agreement. The contract allows us to recover our efficient operating costs and provides a return on equity on our investment in the generation assets...

  • Page 19
    ... UK. In the US, our distribution networks serve around 3.4 million customers in upstate New York, Massachusetts and Rhode Island. 3 US states in which we distribute electricity The supply of electricity involves buying electricity and selling it on to customers. It also involves customer services...

  • Page 20
    18 National Grid Annual Report and Accounts 2013/14 What we do Gas The gas industry connects producers, processors, storage, transmission and distribution network operators, as well as suppliers to industrial, commercial and domestic users. Production and importation Transmission 9.7% ...

  • Page 21
    ... services to supply companies, under contract. In the UK, customers pay the supplier for the cost of gas and for its transportation. We transport the gas through our network on behalf of shippers, who pay us transportation charges. In the US, gas distribution companies, including National Grid, sell...

  • Page 22
    20 National Grid Annual Report and Accounts 2013/14 How we make money from our regulated assets In the UK we have one regulator for our businesses, Ofgem. In the US, different services and locations are regulated by different bodies. For the areas in which we operate, these are the relevant state ...

  • Page 23
    ...reduces working capital requirements. Maximising incentives - positive performance under incentive mechanisms, and delivery of the outputs our customers and regulatory stakeholders require, helps us to make the most of our allowed returns. Funding and cash flow management - securing low cost funding...

  • Page 24
    ...condition; • an inability to access capital markets at commercially acceptable interest rates could affect how we maintain and grow our businesses; and • customers and counterparties may not perform their obligations. Risk management approach Our Company-wide corporate risk management process...

  • Page 25
    ... to file new rate cases so our businesses can earn a fair and reasonable rate of return. Our rate filings include structural changes where appropriate, such as revenue decoupling mechanisms, capital trackers, commodity-related bad debt true-ups and pension and other post-employment benefit true-ups...

  • Page 26
    24 National Grid Annual Report and Accounts 2013/14 Internal control and risk management continued Strategic objective Risk description Deliver operational excellence Failure to achieve levels of financial performance required to meet regulatory requirements. The Group operates under a number of ...

  • Page 27
    ... senior management from both operational and financial areas of the business. Each month the Finance Director presents a consolidated financial report to the Board. As part of our assessment of financial controls, we have identified a number of weaknesses in our US financial control framework. Plans...

  • Page 28
    ...the year the Remuneration Committee has discretion to reduce APP awards to take account of any safety, customer, service-related, environmental or governance issues that may have occurred. The Remuneration Committee aligns the remuneration policy to our Company strategy and main business objectives...

  • Page 29
    Strategic Report Corporate Governance Financial Statements Additional Information 27 Long Term Performance Plan (LTPP) Our LTPP aims to drive long-term performance, aligning Executive Director incentives to key strategic objectives and shareholder interests. Performance measures set are ...

  • Page 30
    28 National Grid Annual Report and Accounts 2013/14 Trusted to provide a reliable service for our customers National Grid's UK Gas Distribution networks serve thousands of businesses across a large central region of the UK, connected by over 130,000 kilometres of our gas distribution pipeline. ...

  • Page 31
    ...DC) schemes. These changes aim to make sure our total reward package remains both competitive in the market and sustainable under RIIO. • Working on the 2013 triennial valuations of our two DB pension plans (for further information see note 29 under 'Notes to the consolidated financial statements...

  • Page 32
    ... efficiency for our maintenance programme. We are implementing the policy throughout 2014 to minimise disruption to customers and planned work. • We worked closely with DECC and Ofgem to help inform and manage security of supply through a period of significant change in the UK energy market...

  • Page 33
    ... making sure that the new European codes governing the operation of the gas market in the UK are successfully introduced for our customers. 11% UK Gas Transmission adjusted operating profit of Group total • We delivered our strongest-ever safety performance across all areas, achieving 12 months...

  • Page 34
    ... Grid Annual Report and Accounts 2013/14 Trusted for 50 years Derek Hicks began working at National Grid in 1963 as an industrial and commercial Gas Fitter in the City of London. In August 2013 he celebrated his 50 year career milestone, having dedicated his entire working life to our Company...

  • Page 35
    ...over the RIIO period. 25% UK Gas Distribution adjusted operating profit of Group total Where we are heading We have articulated an ambition for 2017 - to be the best gas distribution business in Britain. We are using modern technology and new, innovative techniques to develop gas networks that are...

  • Page 36
    34 National Grid Annual Report and Accounts 2013/14 Trusted to support education and skills in communities National Grid provides electricity delivery services to the City of Buffalo in upstate New York. The Beecher Clubhouse, shown in this photo, is one of a number of Boys & Girls Clubs of Buffalo...

  • Page 37
    ...-to-end business processes, including: • delivery; • maintenance and operation of electric and gas assets; • supply chain management; • meter to cash; and • emergency response. Four main principles govern our business improvement strategy: safety and reliability; stewardship; customer...

  • Page 38
    36 National Grid Annual Report and Accounts 2013/14 Principal operations continued US Regulated business All jurisdictions have benefited from emergency response improvements. This has been a focus for the US business in response to the major storms we have experienced in recent years, such as ...

  • Page 39
    ... $44 million in benefits from natural gas efficiency). FERC Clean Line energy investment: Clean Line Energy Partners is developing several long-haul HVDC transmission lines to connect the best renewable energy resources to communities. Five projects are currently in development which span across...

  • Page 40
    ...customers a number of developments to the Grain site to enhance its revenue earning capability. UK Property National Grid Property is responsible in the UK for the management, clean-up and disposal of surplus sites, most of which are former gas works. During 2013/14 we have sold 45 sites, exchanged...

  • Page 41
    ...Report Corporate Governance Financial Statements Additional Information 39 Trusted to deliver critical infrastructure projects National Grid has completed 22 out of 32 kilometres of tunnels needed for London Power Tunnels, part of the £1 billion construction project to replace the high voltage...

  • Page 42
    40 National Grid Annual Report and Accounts 2013/14 People If we are to achieve our strategic goals, we need to make sure our employees have the right skills and capabilities. During 2013/14 we have focused particularly on the areas that we believe can generate the most value for the Company ...

  • Page 43
    ... of the Company, or a strategically significant part of the Company, and are employees of the Company. Financial year ended 31 March 2014 Male Female Total % male % female Non-financial KPIs pages 10 - 11 Board diversity page 56 Health and wellbeing Our health and wellbeing programmes for 2013/14...

  • Page 44
    42 National Grid Annual Report and Accounts 2013/14 Corporate Governance Contents 44 44 44 45 45 46 46 46 48 48 49 53 54 55 56 56 57 58 Governance framework Our Board Board composition Director induction and development Investor engagement Board and committee evaluation Non-executive Director ...

  • Page 45
    ... Corporate Governance Financial Statements Additional Information 43 Our Board 1 2 3 4 5 6 7 8 9 10 11 Audit Committee Finance Committee Nominations Committee Remuneration Committee Safety, Environment and Health Committee (ch) Chairman of committee ^ Including National Grid Group plc...

  • Page 46
    44 National Grid Annual Report and Accounts 2013/14 Corporate Governance continued Governance framework Compliance statement The Board considers that it complied in full with the provisions of the UK Corporate Governance Code 2012 (the Code) during the financial year being reported, see page 51 for...

  • Page 47
    ... prospectuses, credit ratings, materials relating to the retail bond issued in 2011 and subsidiary year-end reports. The website also contains information about our long-term debt maturity profile, so investors can see our future refinancing needs. Investor engagement We believe it is important to...

  • Page 48
    46 National Grid Annual Report and Accounts 2013/14 Corporate Governance continued Individual shareholders Engagement with individual shareholders, who represent more than 95% of the total number of shareholders on our share register, is led by the Group General Counsel & Company Secretary. ...

  • Page 49
    Strategic Report Corporate Governance Financial Statements Additional Information 47 Area Mechanics Actions from last year's review Chief Executive to meet with Executive Directors immediately after each Board meeting to discuss how the Board operated as a team and contributions from Directors...

  • Page 50
    48 National Grid Annual Report and Accounts 2013/14 Corporate Governance continued How our Board operates The Chairman sets the Board's agenda in line with its responsibilities and role as set out in the matters reserved for the Board, and the main challenges and opportunities facing the Company, ...

  • Page 51
    ... implications of this new arrangement and its impact on the financial control environment. We also reviewed the disclosures within this Annual Report to ensure they provide a fair, balanced and understandable view in the context of current accounting standards. Next year is also looking busy with an...

  • Page 52
    ... Code to ensure that the Annual Report and Accounts, taken as a whole, is 'fair, balanced and understandable'. In reaching this conclusion the Committee reviewed, among other things, the impact of the introduction of the RIIO price control regime in the UK on the Group's IFRS reported results, see...

  • Page 53
    ... financial reporting, the Committee reviews and challenges the proposed external audit plan to make sure that PwC has identified all key risks and developed robust audit procedures. The Committee also considers PwC's response to accounting, financial control and audit issues as they arise, and meets...

  • Page 54
    ... need to access capital markets to raise additional funds from time to time. We have a long and successful history in this regard; however, our business plan also models various KPIs used by lenders and credit rating agencies in assessing a company's credit worthiness. These models indicate that we...

  • Page 55
    ... Corporate Governance Financial Statements Additional Information 53 Finance Committee Matters considered Examples of matters the Committee considered during the year include: • long-term funding requirements; • setting and reviewing treasury policies; • treasury performance updates...

  • Page 56
    ... 2013; • update on the UK and US safety and environment strategy, leadership and governance processes, looking at work done to coordinate approaches in the two regions. This includes the establishment of a Group-level safety, environment and health management committee which meets monthly and...

  • Page 57
    ... was reviewed and updated to reflect the new balance of skills, knowledge and experience on the Board. Diversity of background, thinking styles and expertise have been important criteria in the transition of the Board. During the year the Committee reviewed our Board diversity policy. Progress...

  • Page 58
    ...to-day management and operational decisions it considers necessary to safeguard the interests of the Company and to further the strategy, business objectives and targets established by the Board. The Committee plays an important role in the development of our people and in driving a high-performance...

  • Page 59
    ... page 176 Audit information page 52 10 Board of Directors page 43 Business model page 14 Change of control provisions page 173 Code of Ethics page 177 Steve Holliday, Committee chairman Andrew Bonfield, Finance Director Stephanie Hazell, Group Strategy & Corporate Development Director (joined the...

  • Page 60
    58 National Grid Annual Report and Accounts 2013/14 Remuneration Report • Stronger alignment with our business model and the long-term value drivers around a dividend-led total return. It is proposed to move to two key LTPP metrics - RoE (50% weighting) and value growth (50% weighting): - RoE is...

  • Page 61
    Strategic Report Corporate Governance Financial Statements Additional Information 59 In addition to the incentive plans review, the Committee reviewed future pension policy and the Executive Directors' salaries. Last year there were no salary increases for Executive Directors. For the year ...

  • Page 62
    ... in the following HM Revenue & Customs (UK) or Internal Revenue Service (US) tax advantaged all-employee share plans: Sharesave: UK employees may make monthly contributions from net salary for a period of 3 or 5 years. The savings can be used to purchase shares at a discounted price, set at the...

  • Page 63
    ...used for all members. They both participate in the unfunded scheme in respect of benefits in excess of the Lifetime Allowance. Tom King participates in a qualified pension plan and in an Executive Supplemental Retirement Plan. These plans are noncontributory, cash balance and final average pay plans...

  • Page 64
    ... and Accounts 2013/14 Remuneration Report continued Annual Performance Plan Operation Performance metrics and targets are agreed at the start of each financial year. Performance metrics are aligned with strategic business priorities. Targets are set with reference to the budget. Awards are paid in...

  • Page 65
    Strategic Report Corporate Governance Financial Statements Additional Information 63 Long Term Performance Plan continued Operation Purpose and link to strategy: to drive long-term performance, aligning Executive Director incentives to key strategic objectives and shareholder interests. ...

  • Page 66
    ... long-term performance-related pay. All employees are entitled to base salary, benefits and pension. Many employees are eligible for an APP award based on Company and/or individual performance. Eligibility and the maximum opportunity available is based on market practice for the employee's job...

  • Page 67
    Strategic Report Corporate Governance Financial Statements Additional Information 65 Service contracts and policy on payment for loss of office In line with our policy, all Executive Directors have service contracts which are terminable by either party with 12 months' notice. The contracts ...

  • Page 68
    66 National Grid Annual Report and Accounts 2013/14 Remuneration Report continued Total remuneration opportunity The total remuneration for each of the Executive Directors that could result from the remuneration policy in 2014 under three different performance levels - below threshold (when only ...

  • Page 69
    ... changes New format remuneration report Single total figure of remuneration - Executive Directors (audited information) The following table shows a single total figure in respect of qualifying service for 2013/14, together with comparative figures for 2012/13: Salary £'000 2013/14 2012/13 Benefits...

  • Page 70
    ... table: Andrew Bonfield Steve Holliday Tom King Nick Winser Safety Stakeholder relations Employee engagement Capability development Financial strategy Operational excellence UK Electricity Market Reform (EMR) US foundation (system implementation) Group strategy Proportion of maximum achieved 53.33...

  • Page 71
    ...Report Corporate Governance Financial Statements Additional Information 69 Total pension entitlements (audited information) The table below provides details of the Executive Directors' pension benefits: Increase in accrued pension over year, net of inflation £'000 pa Transfer value of increase...

  • Page 72
    70 National Grid Annual Report and Accounts 2013/14 Remuneration Report continued LTPP and DSP (conditional awards) granted during the financial year (audited information) LTPP Basis of award Face value '000 Proportion vesting at threshold performance Number of shares Performance period end date ...

  • Page 73
    ...Report Corporate Governance Financial Statements Additional Information 71 Directors Share ownership requirements (multiple of salary) Number of shares required to hold Number of shares owned outright (including connected persons) Number of shares held as a multiple of current salary Share...

  • Page 74
    72 National Grid Annual Report and Accounts 2013/14 Remuneration Report continued Performance graph and table This chart shows National Grid plc's five year annual total shareholder return (TSR) performance against the FTSE 100 index, of which National Grid is a constituent. It assumes dividends ...

  • Page 75
    ... the total reward packages for the Executive Directors and other senior employees. NBS and Towers Watson are members of the Remuneration Consultants Group and have signed up to that group's Code of Conduct. Towers Watson also provides general remuneration, pension and benefits advice and services to...

  • Page 76
    ... Borrowings - Trade and other payables - Other non-current liabilities - Pensions and other post-retirement benefits - Provisions - Share capital - Other equity reserves - Net debt Primary statement 156 Company balance sheet Notes to the Company financial statements Fixed asset investments Debtors...

  • Page 77
    ...on what the disclosures mean and why they are important to the understanding of our financial performance and position. Some of these boxes highlight 'Our strategy in action', drawing out the key elements of our business model (set out in the Strategic Report on pages 14 and 21), and showing how the...

  • Page 78
    ...Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy. By order of the Board Alison Kay Group General Counsel & Company Secretary 18 May 2014 Company...

  • Page 79
    ... the Members of National Grid plc Report on the financial statements Our opinion In our opinion: • the financial statements, defined below, give a true and fair view of the state of the Group's and of the Company's affairs as at 31 March 2014 and of the Group's profit and cash flows for the year...

  • Page 80
    ... transactions National Grid has a significant treasury position with total borrowings as detailed in note 19. The valuation of derivatives is a complex and judgemental area and the strategies used by the directors for hedge accounting are varied. How the scope of our audit addressed the area of...

  • Page 81
    ...year National Grid US transitioned the operation of another significant contract, the LIPA Management Services Agreement (MSA), to a new contractor. This process was complex and involved the transition of a significant number of employees, and related accounting judgements. LIPA MSA transition costs...

  • Page 82
    ... of the Annual Report, as required by the Code Provision C.1.1, the directors state that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Group's performance, business model and strategy. On page...

  • Page 83
    ... Additional Information section appearing on page 170 of the 2014 Annual Report and Accounts. As discussed in note 1, the Group changed the manner in which it accounts for employee benefits. Our responsibility is to express opinions on these financial statements and on the Company's internal control...

  • Page 84
    ...the London Stock Exchange and is also quoted on the New York Stock Exchange. These consolidated financial statements were approved for issue by the Board of Directors on 18 May 2014. These consolidated financial statements have been prepared in accordance with International Accounting Standards (IAS...

  • Page 85
    Strategic Report Corporate Governance Financial Statements Additional Information 83 Recent accounting developments C. Areas of judgement and key sources of estimation uncertainty The preparation of financial statements requires management to make estimates and assumptions that affect the ...

  • Page 86
    84 National Grid Annual Report and Accounts 2013/14 Consolidated income statement for the years ended 31 March 2013 (restated)1 £m 2013 (restated)1 £m 2012 (restated)1 £m 2012 (restated)1 £m Notes 2014 £m 2014 £m Revenue Operating costs Operating profit Before exceptional items, ...

  • Page 87
    ... EPS amounts for comparative periods have been restated for shares issued via scrip dividends and the bonus element of the 2010 rights issue. Exchange rates Our financial results are reported in sterling. Transactions for our US operations are denominated in dollars, so the related amounts that are...

  • Page 88
    ... rates and exchange rates. The net gain for the year was £63m (2012/13: £31m loss). Remeasurements of net retirement benefit obligations We had a net gain after tax of £313m (2012/13: net cost of £535m) on our pension and other post-employment benefit schemes which is due to changes in key...

  • Page 89
    Strategic Report Corporate Governance Financial Statements Additional Information 87 Consolidated statement of changes in equity for the years ended 31 March Called up share capital £m Share premium account £m Total Other equity shareholders' 1 equity reserves £m £m Noncontrolling interests...

  • Page 90
    ...National Grid Annual Report and Accounts 2013/14 Consolidated statement of financial position as at 31 March 2013 (restated)1 £m Notes 2014 £m Non-current assets Goodwill Other intangible assets Property, plant and equipment Other non-current assets Pension assets Financial and other investments...

  • Page 91
    ... on plan assets reflects the asset allocations in the different plans. In both the UK and US, returns on equities were above the assumed rate; however, UK government securities had negative returns and corporate bonds were close to nil. Further information on our pension and other post-retirement...

  • Page 92
    ... impairment Share-based payment charge Changes in working capital Changes in provisions Changes in pensions and other post-retirement benefit obligations Cash flows relating to exceptional items Cash flows relating to stranded cost recoveries Cash generated from operations Tax paid Net cash inflow...

  • Page 93
    ... of our gas and electricity businesses in New Hampshire in the US. Dividends paid Dividends paid in the year ended 31 March 2014 amounted to £1,059m. This was £249m higher than 2012/13, reflecting the 4% increase in the final dividend for the year ended 31 March 2013 paid in August 2013, together...

  • Page 94
    ...impact of additional shares issued as scrip dividends. The effect of the change in accounting policy on the statement of cash flows was immaterial, with no impact on the cash position at any of the reporting dates. We have revised our pension and other post-retirement benefit obligations disclosures...

  • Page 95
    ... Corporate Governance Financial Statements Additional Information 93 2. Segmental analysis This note sets out the financial performance for the year split into the different parts of the business (operating segments). We monitor and manage the performance of these operating segments on a day...

  • Page 96
    ...New York and Massachusetts. Other activities primarily relate to non-regulated businesses and other commercial operations not included within the above segments, including: the Great Britain-France electricity interconnector; UK-based gas metering activities; UK property management; a UK LNG import...

  • Page 97
    ...page 93. Total non-current assets other than derivative financial assets, financial and other investments, deferred tax assets and pension assets located in the UK and US were £24,531m and £18,349m respectively as at 31 March 2014 (31 March 2013: UK £23,344m, US £19,340m; 31 March 2012: UK £21...

  • Page 98
    ... Our capital investment programme continues in the US, with a further £1,219m invested in 2013/14, including gas leak reduction programmes and gas growth and connection spend. UK Electricity Transmission For the year ended 31 March 2014, revenue in the UK Electricity Transmission segment increased...

  • Page 99
    ... recoveries 2014 £m 2013 (restated)1 £m 2012 (restated)1 £m 2014 £m Total 2013 (restated)1 £m 2012 (restated)1 £m Depreciation and amortisation Payroll costs Purchases of electricity Purchases of gas Rates and property taxes Balancing Services Incentive Scheme Payments to other UK network...

  • Page 100
    98 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 3. Operating costs continued (c) Key management compensation 2014 £m 2013 £m 2012 £m Short-term employee benefits Post-employment benefits Share-based payment 9 1 5 15 8 3 5 16 10 6 5...

  • Page 101
    ... financial indices and prices over which we have no control. Stranded cost recoveries represent the recovery, through charges to electricity customers in upstate New York and New England, of historical generation-related costs, related to generation assets that are no longer owned by National Grid...

  • Page 102
    100 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 4. Exceptional items, remeasurements and stranded cost recoveries continued 2014 £m 2013 £m 2012 £m Included within operating profit Exceptional items Restructuring costs1 Gas holder ...

  • Page 103
    .... 2013 (restated)1 £m 2012 (restated)1 £m 2014 £m Finance income Interest income on financial instruments Bank deposits and other financial assets Gains on disposal of available-for-sale investments Finance income Finance costs Net interest on pensions and other post-retirement benefit...

  • Page 104
    102 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 6. Taxation Tax is payable in the territories where we operate, mainly the UK and US. This note gives further details of the tax charge and tax liabilities, including current and deferred ...

  • Page 105
    ... and stranded cost recoveries 1. See note 1 on page 92. 22.5 10.3 24.4 20.5 28.9 19.4 The tax charge for the year can be analysed as follows: 2014 £m 2013 (restated)1 £m 2012 (restated)1 £m Current tax UK corporation tax at 23% (2013: 24%; 2012: 26%) UK corporation tax adjustment...

  • Page 106
    ... Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 6. Taxation continued Tax charged/(credited) to other comprehensive income and equity 2014 £m 2013 (restated)1 £m 2012 (restated)1 £m Current tax Share-based payment Available-for-sale investments...

  • Page 107
    ... 31 March 2012 At 1 April 2012 as previously reported Impact of change in accounting policy1 At 1 April 2012 (restated) Exchange adjustments Charged/(credited) to income statement Charged/(credited) to other comprehensive income and equity Other At 31 March 2013 (restated) Deferred tax assets at 31...

  • Page 108
    ... place in respect of UK capital expenditure on fixed assets and we also rank highly in respect of investment in research and development. National Grid's economic contribution also supports a significant number of UK jobs in our supply chain. The most significant amounts making up the 2013/14 total...

  • Page 109
    ... Corporate Governance Financial Statements Additional Information 107 7. Earnings per share (EPS) EPS is the amount of post-tax profit attributable to each ordinary share. Basic EPS is calculated on profit for the year attributable to equity shareholders divided by the weighted average number...

  • Page 110
    108 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 8. Dividends Dividends represents the return of profits to shareholders. Dividends are paid as an amount per ordinary share held. We retain part of the profits generated in the year to meet...

  • Page 111
    ... the year relate to a further investment in Clean Line Energy Partners LLC, a developer of long-distance, HVDC transmission projects in the US to move renewable energy to market. Under IFRS 10, this investment is now accounted for as a subsidiary rather than an equity investment. National Grid has...

  • Page 112
    110 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 10. Other intangible assets Other intangible assets includes software and acquisition-related assets (such as brand names and customer relationships), which are written down (amortised) ...

  • Page 113
    ..., create new customer connections and ensure our networks are flexible and resilient. Our business plan envisages these additional investments will be funded through a mixture of cash generated from operations and the issue of new debt. Property, plant and equipment is recorded at cost, less...

  • Page 114
    112 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 11. Property, plant and equipment continued Land and buildings £m Plant and machinery £m Assets in the course of construction £m Motor vehicles and office equipment £m Total £m Cost ...

  • Page 115
    ... Report Corporate Governance Financial Statements Additional Information 113 13. Financial and other investments Financial and other investments includes two main categories. Assets classified as available-for-sale typically represent investments in short-term money funds and quoted investments...

  • Page 116
    114 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 14. Investments in joint ventures and associates Investments in joint ventures and associates represents businesses we do not control, but instead exercise joint control or significant ...

  • Page 117
    ... Corporate Governance Financial Statements Additional Information 115 15. Derivative financial instruments continued The maturity profile of derivative financial instruments is as follows: 2014 Assets £m Liabilities £m Total £m Assets £m 2013 Liabilities £m Total £m Less than 1 year...

  • Page 118
    116 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 15. Derivative financial instruments continued Cash flow hedges continued When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity...

  • Page 119
    Strategic Report Corporate Governance Financial Statements Additional Information 117 16. Inventories and current intangible assets Inventories represent assets that we intend to use in order to generate revenue in the short term, either by selling the asset itself (for example fuel stocks) or ...

  • Page 120
    118 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 17. Trade and other receivables Trade and other receivables are amounts which are due from our customers for services (and commodities in the US) we have provided. Other receivables also ...

  • Page 121
    ... networks, the level of debt is expected to increase over time. To maintain a strong balance sheet and to allow us to access capital markets at commercially acceptable interest rates, we balance the amount of debt we issue with the value of our assets and take account of certain other metrics used...

  • Page 122
    120 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 19. Borrowings continued Total borrowings are repayable as follows: 2014 £m 2013 £m Less than 1 year In 1-2 years In 2-3 years In 3-4 years In 4-5 years More than 5 years: by instalments...

  • Page 123
    ... the capital and money markets. The maturity profile of long-term debt in our major entities is illustrated below: National Grid long-term debt maturity profile £m National Grid Gas Group National Grid Electricity Transmission National Grid plc/NGG Finance National Grid USA/National Grid North...

  • Page 124
    .... 22. Pensions and other post-retirement benefits Substantially all our employees are members of either DB or DC pension plans. The principal UK plans are the National Grid UK Pension Scheme, the National Grid Electricity Group of the Electricity Supply Pension Scheme and The National Grid YouPlan...

  • Page 125
    ... rate hedging and active management of foreign exchange exposure. Amounts recognised in the statement of financial position UK pensions 2014 £m 2013 (restated)1 £m 2012 (restated)1 £m 2014 £m US pensions 2013 (restated)1 £m 2012 (restated)1 £m US other post-retirement benefits 2014 £m 2013...

  • Page 126
    124 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 22. Pensions and other post-retirement benefits continued Amounts recognised in the income statement and the statement of other comprehensive income UK pensions 2014 £m 2013 (restated)1 ...

  • Page 127
    ...assumed Administration costs Transfers out Employer contributions Employee contributions Benefits paid Assets distributed in settlements and transfers Exchange adjustments Closing fair value of plan assets Actual return on plan assets Expected contributions to plans in the following year 1. See note...

  • Page 128
    126 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 23. Provisions We make provisions when an obligation exists, resulting from a past event and it is probable that cash will be paid to settle it, but the exact amount of cash required can ...

  • Page 129
    ...relating to a number of sites owned and managed by subsidiary undertakings, together with certain US sites that National Grid no longer owns. The environmental provision is as follows: 2014 Discounted £m Undiscounted £m Real discount rate Discounted £m 2013 Undiscounted £m Real discount rate UK...

  • Page 130
    128 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 24. Share capital Ordinary share capital represents the total number of shares issued which are publicly traded. We also disclose the number of treasury shares the Company holds, which are ...

  • Page 131
    Strategic Report Corporate Governance Financial Statements Additional Information 129 25. Other equity reserves Other equity reserves are different categories of equity as required by accounting standards and represent the impact of a number of our historical transactions. Other equity reserves...

  • Page 132
    130 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 26. Net debt Net debt represents the amount of borrowings and overdrafts, less cash, financial investments and related derivatives. Funding and liquidity risk management is carried out by ...

  • Page 133
    ... 31 March 2013 Cash flow Fair value gains and losses and exchange movements Interest income/(charges) Extinguishment of debt resulting from LIPA MSA transition (note 4) Other non-cash movements At 31 March 2014 Balances at 31 March 2014 comprise: Non-current assets Current assets Current liabilities...

  • Page 134
    132 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements - supplementary information This section includes information that is important to enable a full understanding of our financial position, particularly areas of potential risk that could affect us in ...

  • Page 135
    ...our trade union partners, and the positive outcome of trade union ballots, National Grid, working with the Trustees, will implement changes to the benefits provided by its two UK DB pension schemes from 1 April 2014. From April 2014 an annual cap will be placed on future increases to the salary used...

  • Page 136
    ...National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 29. Actuarial information on pensions and other post-retirement benefits continued National Grid UK Pension Scheme The 2010 actuarial funding valuation showed that, based on long-term financial...

  • Page 137
    ... Corporate Governance Financial Statements Additional Information 135 29. Actuarial information on pensions and other post-retirement benefits continued US retiree healthcare and life insurance plans National Grid provides healthcare and life insurance benefits to eligible retired US employees...

  • Page 138
    ... following financial assumptions in assessing DB liabilities: UK pensions 2014 % 2013 % 2012 % 2014 % US pensions 2013 % 2012 % US other post-retirement benefits 2014 % 2013 % 2012 % Discount rate1 Rate of increase in salaries 2 Rate of increase in RPI 3 Initial healthcare cost trend rate Ultimate...

  • Page 139
    ... regulated codes Uniform Network Code and Connection and Use of System Code. These set out the level of credit relative to the RAV for each credit rating. In the US, we are required to supply electricity and gas under state regulations. Our credit policies and practices are designed to limit credit...

  • Page 140
    ... American Energy Standards Board) agreements. National Grid has similar arrangements in relation to bank account balances and bank overdrafts; and trade payables and trade receivables which are subject to general terms and conditions. However, these balances are immaterial. Related amounts available...

  • Page 141
    Strategic Report Corporate Governance Financial Statements Additional Information 139 30. Financial risk management continued (b) Liquidity risk Our policy is to determine our liquidity requirements by the use of both short-term and long-term cash flow forecasts. These forecasts are ...

  • Page 142
    ... Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 30. Financial risk management continued (c) Interest rate risk National Grid's interest rate risk arises from our long-term borrowings. Borrowings issued at variable rates expose National Grid to cash...

  • Page 143
    ... guidance with regard to specific hedging limits. Energy purchase contracts for the forward purchase of electricity or gas that are used to satisfy physical delivery requirements to customers or for energy that the Company uses itself meet the normal purchase, sale or usage exemption of IAS 39...

  • Page 144
    ... credit ratings for our regulated companies is an important aspect of our capital risk management strategy and balance sheet efficiency. We monitor our balance sheet efficiency using several metrics including our interest cover. Interest cover for the year ended 31 March 2014 was 4.1 (2013...

  • Page 145
    ...nor do we currently expect they will prevent the planned payment of dividends in future in line with our dividend policy. Some of our regulatory and bank loan agreements additionally impose lower limits for the long-term credit ratings that certain companies within the Group must hold. All the above...

  • Page 146
    144 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 30. Financial risk management continued (g) Fair value analysis continued Our level 3 derivative financial instruments include cross-currency swaps with an embedded call option, currency ...

  • Page 147
    Strategic Report Corporate Governance Financial Statements Additional Information 145 31. Borrowing facilities To support our long-term liquidity requirements and provide backup to commercial paper and other borrowings, we agree loan facilities with financial institutions over and above the ...

  • Page 148
    ... indicated, are incorporated in England and Wales. Principal activity National Grid Gas plc National Grid Electricity Transmission plc New England Power Company 1 Massachusetts Electric Company 1 The Narragansett Electric Company 1 Niagara Mohawk Power Corporation 1 National Grid Metering Limited...

  • Page 149
    ... financial instruments1 Commodity contract liabilities Pensions and other post-retirement benefits 2 (pre-tax) UK discount rate change of 0.5% 3 US discount rate change of 0.5%3 UK RPI rate change of 0.5% 4 UK long-term rate of increase in salaries change of 0.5%5 US long-term rate of increase...

  • Page 150
    148 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 33. Sensitivities on areas of estimation and uncertainty continued Pensions and other post-retirement benefits assumptions Sensitivities have been prepared to show how the DB obligations ...

  • Page 151
    ... National Grid plc £m Other subsidiaries £m Consolidation adjustments £m Revenue Operating costs Depreciation and amortisation Payroll costs Purchases of electricity Purchases of gas Rates and property tax Balancing Service Incentive Scheme Payments to other UK network owners Other operating...

  • Page 152
    ...restated)1 £m £m £m National Grid plc (restated)1 £m Revenue Operating costs Depreciation and amortisation Payroll costs Purchases of electricity Purchases of gas Rates and property tax Balancing Service Incentive Scheme Payments to other UK network owners Other operating costs 2,129 (119...

  • Page 153
    ... (restated)1 £m £m £m National Grid plc (restated)1 £m Revenue Operating costs Depreciation and amortisation Payroll costs Purchases of electricity Purchases of gas Rates and property tax Balancing Service Incentive Scheme Payments to other UK network owners Other operating costs 1 1 2,269...

  • Page 154
    152 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 34. Additional disclosures in respect of guaranteed securities continued Statements of financial position as at 31 March 2014 - IFRS Parent guarantor Issuer of notes Niagara Mohawk Power ...

  • Page 155
    ... Inc. £m National Grid Gas plc £m Non-current assets Goodwill Other intangible assets Property, plant and equipment Other non-current assets Amounts owed by subsidiary undertakings Pension assets Financial and other investments Derivative financial assets Total non-current assets Current assets...

  • Page 156
    154 National Grid Annual Report and Accounts 2013/14 Notes to the consolidated financial statements continued 34. Additional disclosures in respect of guaranteed securities continued Cash flow statements Parent guarantor Issuer of notes Niagara Mohawk Power Corporation £m British Transco Finance ...

  • Page 157
    Strategic Report Corporate Governance Financial Statements Additional Information 155 Company accounting policies We are required to include the stand-alone balance sheet of our ultimate parent Company, National Grid plc, under the Companies Act 2006. This is because the publicly traded shares...

  • Page 158
    156 National Grid Annual Report and Accounts 2013/14 Company balance sheet at 31 March Notes 2014 £m 2013 £m Fixed assets Investments Current assets Debtors (amounts falling due within one year) Debtors (amounts falling due after more than one year) Investments Cash at bank and in hand Total ...

  • Page 159
    ...£20m (2013: £20m) which represents the fair value of equity instruments granted to subsidiaries' employees arising from equity-settled employee share schemes. On 27 March 2014, the Company also acquired a further 98,851 ordinary shares of £1 each in National Grid (US) Holdings Limited for a total...

  • Page 160
    158 National Grid Annual Report and Accounts 2013/14 Notes to the Company financial statements continued 4. Derivative financial instruments The fair values of derivative financial instruments are: 2014 Assets £m Liabilities £m Total £m Assets £m 2013 Liabilities £m Total £m Amounts falling ...

  • Page 161
    ... available-for-sale reserve Share awards to employees of subsidiary undertakings Net decrease in shareholders' funds Opening shareholders' funds Closing shareholders' funds 1. For further details of dividends paid and payable to shareholders, refer to note 8 to the consolidated financial statements...

  • Page 162
    ... improve the cost and effectiveness of our services; manage and operate our networks efficiently; deliver high-quality services to our customers and wider stakeholder community; and invest in the development of the network in a manner that ensures long-term security of supply. Our UK Electricity...

  • Page 163
    ... invested + controllable operating costs) Fast money RAV (slow money) X Allowed return Depreciation of RAV Revenue Other costs eg tax Performance against incentives Allowed returns The cost of capital allowed under RIIO is as follows: Transmission Gas Electricity Gas Distribution Cost of equity...

  • Page 164
    ... Debt Equity Return Controllable costs Non-controllable costs Depreciation Taxes Lagged recoveries Allowed revenue Our rate plans Each operating company has a set of rates for service. We have three electric distribution operations (upstate New York, Massachusetts, and Rhode Island) and six gas...

  • Page 165
    ...(upstate New York, New York City, Long Island, Massachusetts (2), and Rhode Island). Distribution and transmission electricity services in upstate New York are recovered with a combined rate billed to end use customers. In New England, retail transmission rates recover wholesale transmission charges...

  • Page 166
    ... National Grid a one-time rate reopener in contract year six. The A&RPSA also contains new options for modernising the power plants through retirement or repowering existing facilities to reduce energy costs and improve environmental performance. Rhode Island Rhode Island 2014/15 electricity and gas...

  • Page 167
    Strategic Report Corporate Governance Financial Statements Additional Information 165 Summary of US price controls and rate plans Commodity-related bad debt true-up§ P P P P P P n/a n/a n/a n/a Achieved return on equity (31 Dec 2013) Capital tracker‡ Pension/ OPEB true-up Allowed return on...

  • Page 168
    ... to 16 years. Rhode Island Pennsylvania New Jersey At present, environmental issues are not preventing our UK and US businesses from utilising any material operating assets in the course of their operations. *Access to electricity and gas transmission and distribution assets on property owned by...

  • Page 169
    ... material adverse impact on our business, reputation, results of operations and financial position. For more information about environmental, climate change and health and safety matters relating to our business, see the corporate responsibility section of our website. Infrastructure and IT systems...

  • Page 170
    ... US financial systems and controls over financial reporting, or are not able to deliver our RIIO operating model and the US Elevate 2015 strategy successfully, we may not achieve the expected benefits, our business may be materially adversely affected and our performance, results of operations and...

  • Page 171
    ... capital markets. Some of the debt we issue is rated by credit rating agencies and changes to these ratings may affect both our borrowing capacity and borrowing costs. In addition, restrictions imposed by regulators may also limit how we service the financial requirements of our current businesses...

  • Page 172
    ...Assurance process in which managers affirm, among other things, they have control frameworks in place to assist in the accurate reporting of data and other information. These initiatives emphasise the importance of information security, the quality of data collection and the affirmation process that...

  • Page 173
    ...'s National Ambassador, Vice Chair for Business in the Community and Chair of the Energy and Efficiency Industrial Partnership. Experience: • Chief Executive • Engineer • Government/regulatory • Partnering/JV/contract management • City • Utilities - energy • Customer • Oil...

  • Page 174
    ...Gas Distribution between 2010 and 2012; and UK Chief Operating Officer from 2012 to 2014. Currently UK Chief Operating Officer. Experience: • Government/regulatory • Partnering/JV/contract management • Utilities - energy • US Maria Richter, Non-executive Director Appointment to the Board...

  • Page 175
    ... General Counsel and Company Secretary from 2000 to 2008 and Commercial Director, UK Transmission from 2008 to 2012. Capital gains tax (CGT) CGT information relating to National Grid shares for UK resident shareholders can be found on our website under Investors, Shareholder Services. Share prices...

  • Page 176
    ... National Grid Annual Report and Accounts 2013/14 Directors' Report disclosures continued Material interests in shares As at 31 March 2014, National Grid had been notified of the following holdings in voting rights of 3% or more in the issued share capital of the Company: Number of ordinary shares...

  • Page 177
    ... in relation to the management of the scrip dividend scheme, see page 02. Share price The following graph represents the movement of National Grid's share price during 2013/14. A graph showing the total shareholder return over the last five years is available on page 72. Ordinary share price US...

  • Page 178
    ... Director is not required to hold shares in National Grid in order to qualify as a Director. Summary The Articles set out the internal regulations of the Company and cover such matters as the rights of shareholders and the conduct of the Board and general meetings. Copies are available upon request...

  • Page 179
    ... for senior financial professionals. This code is available on our website (where any amendments or waivers will also be posted). There were no amendments to, or waivers of, our Code of Ethics during the year. Corporate governance practices: differences from New York Stock Exchange (NYSE) listing...

  • Page 180
    ...National Grid Annual Report and Accounts 2013/14 Other disclosures continued Description of securities other than equity securities: depositary fees and charges The Bank of New York Mellon, as Depositary, collects its fees for delivery and surrender of ADSs directly from investors depositing shares...

  • Page 181
    ... sold and National Grid adopted as our name Rhode Island gas distribution network acquired UK and US wireless infrastructure operations and the Basslink electricity interconnector in Australia sold KeySpan Corporation acquired Ravenswood generation station sold Rights issue raised £3.2 billion New...

  • Page 182
    ... tax on dividends paid to US shareholders controlling less than 10% of the voting capital of National Grid. The UK does not, however, currently impose a withholding tax on such dividends. Cash distributions received by a US Holder with respect to their ADSs or ordinary shares generally will be...

  • Page 183
    ... market prices for our ordinary shares and ADSs for the periods indicated: Ordinary share (pence) High Low ADS ($) High Low The All-employee Share Plans The all-employee share plans allow UK- or US-based employees to participate in either HMRC (UK) or Internal Revenue Service (US) approved plans...

  • Page 184
    ...the comparable total profit measures presented. Management uses adjusted profit measures as the basis for monitoring financial performance and in communicating financial performance to investors in external presentations and announcements of financial results. Internal financial reports, budgets and...

  • Page 185
    ... prior year due to the use of surplus funds from the rights issue; the benefit of lower average net debt as a result of those buy backs; and a favourable variance in pension interest primarily due to a higher than expected rate of return on US pension assets. Financial remeasurements relate to net...

  • Page 186
    ...revenues under UK price control allowances partly offset by a £10 million increase in charges under the balancing services incentive scheme. Timing increased by £67 million, with in year over-recovery of £29 million compared with a prior year under-recovery of £38 million. Our controllable costs...

  • Page 187
    ... US commodity contract assets and available-for-sale investments, and an equity investment in Clean Line Energy Partners LLC of $12.5 million by 31 March 2013. Inventories and current intangible assets, and trade and other receivables Inventories and current intangible assets, and trade and other...

  • Page 188
    ... financial years ended 31 March 2014. It should be read in conjunction with the consolidated financial statements and related notes, together with the Strategic Review. The information presented below for the years ended 31 March 2010, 2011, 2012, 2013 and 2014 has been prepared under IFRS issued...

  • Page 189
    ... Current liabilities Non-current liabilities Liabilities of businesses held for sale Total liabilities Net assets Shareholders' equity Summary cash flow statement Cash generated from continuing operations Tax (paid)/received Net cash inflow from operating activities Net cash flows used in investing...

  • Page 190
    ...) Securities of National Grid listed on the New York Stock Exchange, each of which represents five ordinary shares. They are evidenced by American Depositary Receipts or ADRs. Annual General Meeting (AGM) Meeting of shareholders of the Company held each year to consider ordinary and special business...

  • Page 191
    ... relation to National Grid. Research shows that a highly engaged workforce leads to increased productivity and employee retention, therefore we use employee engagement as a measure of organisational health in relation to business performance. equity In financial statements, the amount of net assets...

  • Page 192
    ... operational expenditure, capital expenditure and financing costs, including a return on equity invested. PSA The 15 year power supply agreement with LIPA which came into effect on 28 May 2013, under which the Company supplies electricity to communities and businesses across Long Island. R rate...

  • Page 193
    ... Northern Ireland. UK Corporate Governance Code 2012 (the Code) Guidance, issued by the Financial Reporting Council, on how companies should be governed, applicable to UK listed companies including National Grid. UK GAAP Generally accepted accounting principles in the UK. These differ from IFRS and...

  • Page 194
    192 National Grid Annual Report and Accounts 2013/14 Want more information or help? Capita Asset Services For queries about ordinary shares: 0871 402 3344 Calls cost 8 pence per minute plus network extras. Lines are open 8.30am to 5.30pm, Monday to Friday, excluding public holidays. If calling from...

  • Page 195
    ... in exchange rates, interest rates and commodity price indices; restrictions and conditions (including filing requirements) in our borrowing and debt arrangements, funding costs and access to financing; regulatory requirements for us to maintain financial resources in certain parts of our business...

  • Page 196