National Grid 2014 Annual Report Download - page 23

Strategic Report Corporate Governance Financial Statements Additional Information
How our
strategy
creates
value
Customer and community value
Safety and reliability – we aim to provide reliable
networks safely, which is essential to safeguard our
customers, employees and the communities in
which we operate.
Affordability – we aim to provide services in a
cost-efficient way, which helps to reduce the impact
on customer bills.
Customer service – providing essential services
that meet the needs of our customers and
communities is a crucial part of the value they
expect from us.
Sustainability – we aim to protect the environment
and preserve resources for current and future
generations.
Emergency services – we provide telephone call
centres, coordinate the response to gas emergencies,
and respond to severe weather events.
Community engagement – we listen to the
communities we serve and work hard to address
concerns about the development of our networks.
Our employees volunteer for community-based
projects and we support educational initiatives
inschools.
Shareholder value
Regulatory frameworks – operating within sound
regulatory frameworks provides stability. Ensuring
these frameworks maintain a balance between risk
and return underpins our investment proposition.
Reputation – our approach to safety and our
reliability record underpin our reputation. These are
important factors that enable positive participation
inregulatory discussions and the pursuit of new
business opportunities.
Efficient operations – efficient capital and
operational expenditure allows us to deliver network
services at a lower cost and 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 and carefully managing our cash
flows are essential to maintaining strong returns for
our investors.
Disciplined investment – we can achieve future
revenue and earnings growth by increasing our
regulatory asset value and rate base in line with
regulatory capital allowances. Investment in
non-regulated assets helps us to use and enhance
our core capabilities with the aim of delivering
attractive returns.
Our business model – a virtuous circle of growth
CREATING
VALUE
Cash flow
Revenue
Customers and
communities
Reinvestment in
our business
Customers and communities –
our focus on safety and reliability,
aswell as efficient investment in our
networks, means that we are able
toprovide our customers and the
communities in which we operate
withthe highest quality service we
can. This makes sure they are able
toaccess vital and reliable services
whenever they need, wherever
weoperate.
Reinvestment in our business –
to continue generating reasonable
returns for our shareholders and
revenue growth, we reinvest efficiently
in our regulated assets. This is critical
to the sustainability of our business.
By challenging our investment
decisions, we continue to deliver
reliable, cost-effective networks
thatbenefit our customers.
Revenue – the majority of our
revenue is set in accordance with
our regulatory agreements. This
allows us a level of certainty over
future revenues if we continue to
meet safety and reliability targets,
as well as the efficiency and
innovation targets included in the
new RIIO licence agreements in
ourUK regulated businesses.
Cash flow – our ability to convert
revenue to cash is an important
factor in the ongoing reinvestment
in our business and our ability to
provide sustainable value growth
for our shareholders. Our focus
onefficient development of
ournetworks is important in
maximising free cash flow.
Our vision and strategic objectives explain
what is important to us, so we can meet
our commitments and deliver value.
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