National Grid 2014 Annual Report Download - page 4

Chairman’s
statement
Our vision statement ‘Connecting you to your
energy today, trusted to help you meet your
energy needs tomorrow’ emphasises the
importance of trust, which we earn not just
bymeeting our commitments, but by making
surethat we do so in the right way.
It has been an important and challenging year for
National Grid – and the energy sector in general –
on both sides of the Atlantic.
Although we did not experience any major storm-
related outages in our service areas during 2013/14,
severe winter weather conditions – the polar vortex
in the US and serious flooding in the UK – continued
to test the resilience of our networks. I am pleased
to report these have performed well as a result of
prudent investments in past years, as well as the
commitment of our people.
Energy policies in both the UK and US strive to
findan acceptable balance between affordability
tothe ultimate consumers, security of supply and
sustainability considerations. Particularly since last
September, the focus of UK media and political
attention has been moving between each of these
three factors, with no enduring consensus of what
constitutes the optimum position.
In the UK, the eight year RIIO settlement we
accepted in February 2013 incentivises us to be as
efficient as possible while ensuring that savings we
achieve can be shared with consumers. Through
these incentives we can maximise our efforts to help
hard-pressed consumers and deliver good returns
to our shareholders.
Transparency
In our continuing efforts to be fair, balanced and
understandable in our reporting we are including
additional information this year and explaining
sometechnical matters in greater detail, so that
weare as transparent as we can be.
In particular, I draw your attention to one aspect
ofour results. There have always been differences
between IFRS reported results and underlying
economic performance; however, one of the benefits
of the RIIO price control regime is that it provides
greater transparency of regulatory adjustments to
revenue in our principal UK businesses. The
commentary on ‘timing differences and regulated
revenue adjustments’ contained in the Financial
review on page 08 aims to help understanding of
this matter.
The Board has recommended an increase in the
final dividend to 27.54p per ordinary share ($2.3107
per American Depositary Share). If approved, this
will bring the full-year dividend to 42.03p per ordinary
share ($3.4801 per American Depositary Share), an
increase of 2.9% over the 40.85p per ordinary share
in respect of the financial year ending 31 March 2013.
Effective governance
We have developed a new remuneration policy to
align more closely with RIIO, the continued evolution
of our US business and shareholder value creation.
The policy will be subject to shareholder approval at
the AGM in July – a requirement of recent legislation.
You can read our full Remuneration Report,
introduced by Jonathan Dawson, our new
Remuneration Committee Chairman, on page 58.
As we describe on page 07, the high level of take-up
of the scrip dividend in the last couple of years led
toconcerns about the potential dilutive effect of this
option. This meant that we decided not to offer the
scrip element for the 2013/14 interim dividend paid
in January this year, asour forecast capital
investment programme was already fully funded.
Ido appreciate, from the letters sent to me, that
thiscaused some dissatisfaction. We have now
identified a way of offering the scrip option for both
the full-year and interim dividend, which balances
shareholders’ appetite for the scrip dividend option
with our cash requirements. At the AGM we are
seeking approval for the allotment and buy-back
authorities we need to do this. The scrip dividend
option has been offered for the 2013/14 final
dividend subject to shareholder approval of the
relevant resolutions at the AGM.
The Board is proposing
a recommended final
dividend of
27.54p
(2012/13: 26.36p)
02 National Grid Annual Report and Accounts 2013/14