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Annual Report
and Accounts 2015/16

Table of contents

  • Page 1
    Annual Report and Accounts 2015/16

  • Page 2
    ... by management to assess the underlying performance of the business. Reconciliations to statutory financial information are shown on page 196. Online report The PDF of our Annual Report and Accounts 2015/16 includes a full search facility. You can find the document by visiting the investor relations...

  • Page 3
    ... brevity, we do not define terms or provide explanations every time they are used; please refer to the glossary for this information as well as an important notice in relation to forward-looking statements with our cautionary statement. National Grid Annual Report and Accounts 2015/16 Contents 01

  • Page 4
    .... UK Gas Transmission We own and operate the gas national transmission system in Great Britain, with day-to-day responsibility for balancing supply and demand. Our network comprises approximately 7,660 kilometres (4,760 miles) of high pressure pipe and 24 compressor stations. In 2015/16, the gas...

  • Page 5
    ... gas each year. Other Activities Our other activities mainly relate to nonregulated businesses and other commercial operations not included within the business segments including: interconnectors; UK-based gas metering activities; UK property management; a UK LNG import terminal; US LNG operations...

  • Page 6
    ... both the US Electricity Transmission and Distribution businesses. "Being responsible and sustainable is central to both what we do and how we do it" Responsible business www.nationalgrid.com/responsibility Our KPIs pages 18-21 04 National Grid Annual Report and Accounts 2015/16 Strategic Report

  • Page 7
    ... and the Board. Effective succession planning for both Executive and Non-executive Director positions helps make sure we have the right mix of skills and experience to manage change as the Company evolves. Viability statement During 2015/16 the Board reviewed and approved the Company's principal...

  • Page 8
    ... to manage their energy use. That's why we are developing the way we think and work at National Grid - improving our end-to-end processes, removing waste and focusing on the things that create value for our customers. We have done more work during the year to develop this high performance culture...

  • Page 9
    ...'s gas and electricity networks, most of which were originally constructed during the nation's ambitious post-World War II building boom, have served us well over the last half-century. John Pettigrew Chief Executive National Grid Annual Report and Accounts 2015/16 Chief Executive's review 07

  • Page 10
    ...be met in providing energy to consumers, but which are often in tension. Regulatory changes are a response to choices that governments make in seeking to appropriately balance these often conflicting objectives. 08 National Grid Annual Report and Accounts 2015/16 Strategic Report of ou E nergy...

  • Page 11
    ... its investigation into the energy market and set out numerous remedies, including proposals to address locational pricing on the electricity transmission network. In May 2016, Ofgem stated that it will undertake a mid-period review of the RIIO outputs for our transmission businesses. In the US...

  • Page 12
    ... and distribution networks. Companies that pay to use transmission networks buy electricity from generators and sell it to consumers. In focus Our business model pages 14-15 Real-time balancing Through our Electricity Network Control Centre we balance the UK's energy needs in real time. Read more...

  • Page 13
    ...999998% Electricity transmission reliability in England and Wales 3 Transmission 27.5 TWh Amount of electricity we forecast, plan for and procure annually across three states in the US 4 Distribution 3.5 million US electricity customers 5 Supply National Grid Annual Report and Accounts 2015/16...

  • Page 14
    ... of high pressure pipeline in the UK D 3 Distribution 24,341 2 Transmission T New gas heating customers in the US 10.9 million Customers serviced in the UK 1 Production and importation 31% Approximate percentage of UK gas from LNG imports 12 National Grid Annual Report and Accounts 2015/16...

  • Page 15
    ... 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 16
    ... work and how we manage our impact on the communities in which we operate. We aim to maintain a clear and consistent strategy over the long term to provide stable returns to our investors and consistent levels of service to our customers and communities. Our transmission and distribution businesses...

  • Page 17
    ... customers. The way in which our investment is funded is also an important part of our business. The long-term, sustainable nature of our assets and our credit ratings help us secure efficient funding from a variety of sources. National Grid Annual Report and Accounts 2015/16 Our business model...

  • Page 18
    ... and strategy. Further information on all our KPIs is provided on pages 18-21. Strategic objective Deliver operational excellence Engage our people Stimulate innovation Description Achieve world-class levels of safety, reliability, security and customer service. Create an inclusive, high...

  • Page 19
    ... profit for the year attributable to equity shareholders. This excludes exceptional items and remeasurements (see page 111). Adjusted earnings per share provides a measure of shareholder return that is comparable over time. National Grid Annual Report and Accounts 2015/16 Our vision and strategy...

  • Page 20
    ... Group RoE is one of the performance measures for the Long Term Performance Plan, outturns for which are calculated on a three year basis. No specific target. Our overall aim is to achieve between 5% and 7% of regulated asset base growth each year. 18 National Grid Annual Report and Accounts 2015...

  • Page 21
    Strategic Report Value added Reflects value to shareholders of dividend and growth in National Grid's assets, net of the growth in overall debt. Employee lost time injury frequency rate Number of employee lost time injuries per 100,000 hours worked in a 12-month period. Our ambition is to achieve ...

  • Page 22
    ... and operate a business that has an inclusive and diverse culture. We do not have a specific target on how much we invest in this area; our overall aim is to make sure we are creating shared value for the communities that we serve and work in. 20 National Grid Annual Report and Accounts 2015/16...

  • Page 23
    ... similar to last year that focused on energy-saving solutions and bill management. We achieved our target of increasing engagement compared with the previous year. Our targets for each business area are set out in the table above. National Grid Annual Report and Accounts 2015/16 Our KPIs...

  • Page 24
    ...March 2015 compared with 31 March 2014. We have also included analysis of our UK regulated financial performance by segment on page 108. UK Electricity Transmission UK Gas Transmission UK Gas Distribution US Regulated Other activities For the year ended 31 March 2016, adjusted operating profit...

  • Page 25
    ... statement is provided on page 95. Year ended 31 March £m 2016 2015 2014 Regulated asset base growth In total, our UK regulated asset value (RAV) and US rate base increased by £1.8 billion (5%) to £38.8 billion. This reflects the continued high levels of investment in our networks in both the UK...

  • Page 26
    ... return on equity US RoE for calendar year 2015 decreased 40bps to 8.0%, reflecting high winter gas leak and snow removal costs at the start of 2015, together with rate base growth as a result of record capital investment spend. US return on equity1 % 9.2 8.8 9.0 8.4 8.0 2011 2012 2013 2014...

  • Page 27
    ... cash flows we generate, before capital investment but after dividends paid to shareholders, compared with the level of debt we hold. The principal adjustments made to net debt are in respect of pension deficits and hybrid debt instruments. RCF/net debt was 11.5% for the year (2014/15: 11.2%; 2013...

  • Page 28
    ... objectives (our risk appetite). The Board also regularly monitors and reviews our internal controls and risk management processes. You can read more about this on page 29. This year we refined our risk management processes as a result of changes implemented by the UK Corporate Governance Code 2014...

  • Page 29
    ... even if our cost of service is periodically updated through rate case filings. • The primary measures we have to manage this risk include our business planning process (five-year plan approved each year by the Board), annual portfolio review by the Board, financing strategies (including hedging...

  • Page 30
    ... adapting our networks to meet the challenges • We undertake biannual reviews and briefings of increasing distributed energy resources. of emerging trends and developments and their implications for the Company with the Board. 28 National Grid Annual Report and Accounts 2015/16 Strategic Report

  • Page 31
    ... performance and involve 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 in previous years, we identified a number of weaknesses in our...

  • Page 32
    ... markets and the robust financial position of the Group, including the ability to sell assets, raise capital and suspend or reduce the payment of dividends. It has also considered Ofgem's legal duty to have regard for the need to fund licenced National Grid Gas plc and National Grid Electricity...

  • Page 33
    ... we announced our plans to commence a process to sell a majority stake in our Gas Distribution business. Since then we have been working on how we separate Gas Distribution from National Grid and create a stand-alone business ready for sale; making sure it has the right people, assets, systems and...

  • Page 34
    ... to work with our contractors to share best practice in safety management. Following a seven year period of consultation, community engagement and planning applications we received a development consent order (DCO) for the construction of a new transmission circuit to connect the nuclear power...

  • Page 35
    ...-day supply and demand patterns. We also need to prepare for an uncertain energy landscape in the long term. UK reliance on imported gas supplies will vary depending on the level of gas supply from the UKCS and the development of indigenous gas sources. We are working closely with our customers...

  • Page 36
    ... the first time and the market responded, helping meet peak demand. We can't be complacent though. We will continue to work with DECC and Ofgem to make sure we have the right tools in place to balance the system in the future. 34 National Grid Annual Report and Accounts 2015/16 Strategic Report

  • Page 37
    ... in helping develop the UK's future energy strategy, and that of Europe. Our approach includes working with customers and stakeholders on initiatives such as the translation of new EU code requirements for gas, the development of new demand side services in the form of the Power Responsive programme...

  • Page 38
    ... Distribution business is developing sources of renewable gas that can be transported through our existing networks. This approach means we can deliver low carbon heat directly to people's homes without the need for costly new infrastructure. In 2015/16 we connected 12 new anaerobic digestion plants...

  • Page 39
    ... in service delivery, reducing the number and size of excavations, and introducing the new customer communication materials. Optimise our processes and work more collaboratively to continue to operate an efficient network for employees and customers. Create further value in the business to...

  • Page 40
    .../diesel units. 27.5TWh of electricity we forecast, plan for and procure annually across three states. 3.6m consumers received services from our gas distribution networks including 24,341 new gas heating customers in 2015/16. 38 National Grid Annual Report and Accounts 2015/16 Strategic Report

  • Page 41
    ... the costs to operate our business. In New York, we proposed to update and reset our gas delivery rates that will allow us to continue investing in our natural gas networks and improving service to our 1.8 million gas customers in Brooklyn, Queens and Staten Island and Long Island/Rockaway Peninsula...

  • Page 42
    ... 345 kV transmission line along rights-of-way in Connecticut, Massachusetts and Rhode Island. Along with three other leading energy companies, we announced in January 2016, a proposal - The Wind and Hydro Response - to deliver 400 MW of reliable, cost-effective clean energy to New England. The Wind...

  • Page 43
    ... print company, planned to invest in a new printing press that would increase its production output and help grow the business. Our energy efficiency consultant Khaled Halabi worked alongside the company, studying its printing process, determining that the proposed new press would use substantially...

  • Page 44
    ... for both UK energy consumers and for National Grid. Interconnectors provide a ï¬,exible supply of power in times of system stress and are an efficient way of transporting energy from where there is excess supply to where it's needed most. We're currently operating two electricity interconnectors...

  • Page 45
    ... an end-to-end, dual-fuel smart metering offering to energy suppliers. UK Property National Grid Property is responsible for the management, clean-up and disposal of surplus sites in the UK, most of which are former gas works. During 2015/16, we sold two sites and exchanged contracts on several high...

  • Page 46
    ... the EY Women in Power and Energy Index 2015. At the end of 2015, we were one of the first FTSE organisations to publish UK gender pay data. In the UK, we have signed up to the Living Wage Foundation. We have committed to making sure our employees and those of our new suppliers are paid at least the...

  • Page 47
    ... who are directors of subsidiaries, or who have responsibility for planning, directing or controlling the activities of the Company, or a strategically significant part of the Company, and are employees of the Company. Financial year ended 31 March 2016 Male Our Board Senior management Whole Company...

  • Page 48
    ...time on the Company's strategy for the short and long term, the Group's principal risks and risk appetite, US rate case filings and the proposed sale of our UK Gas Distribution business, all of which are referenced in more detail later in this report. Changes to the UK Corporate Governance Code 2014...

  • Page 49
    ... Corporation. He was President and Chief Executive Officer of General Electric Security and then President, Global Services of United Technologies Fire & Security. Dean was also a member of the Board of Directors of the National Fire Protection Association from 2010 to 2014 and lead network member...

  • Page 50
    ... 3 years Career: A qualified accountant with significant financial experience, Mark was Chief Accountant and then Group Financial Controller of Simon Group plc before joining International Power plc as Group Financial Controller and later as Chief Financial Officer. Mark was a Non-executive Director...

  • Page 51
    .... Management committees Executive Committee Share-schemes Sub-Committee Investment Committee Global Security and Resilience Committee Group Ethics and Compliance Committee Disclosure Committee Global Retirement Plan Committee National Grid Annual Report and Accounts 2015/16 Corporate...

  • Page 52
    ... Buffalo, New York office which will include a site tour. These visits provide the opportunity for Directors to meet local management teams, discuss aspects of the business with employees, and gain insight into our day-to-day business. Site visits 50 National Grid Annual Report and Accounts 2015...

  • Page 53
    ...programme for institutional investors and research analysts, providing the opportunity for our current and potential investors to meet with executive and operational management. Further detail on www.investors. nationalgrid.com National Grid Annual Report and Accounts 2015/16 Corporate Governance...

  • Page 54
    ... experience; is a suitably qualified audit committee financial expert within the meaning of the SEC requirements; and is independent within the meaning of the New York Stock Exchange listing rules. Safety, Environment & Health Director Board Meetings Audit Finance Nominations Remuneration...

  • Page 55
    ... year and has recently circulated to the Board the material to be covered at the July strategy day. Board focus Continue to manage the strategy agenda. Responsibility: Chairman/ Chief Executive/Group General Counsel & Company Secretary National Grid Annual Report and Accounts 2015/16 Board...

  • Page 56
    ... received regular updates of the overall Group control environment, including a presentation from the UK finance team on the status of the UK finance change programme. Following the introduction of RIIO, the UK business has undergone significant change, which in turn demanded a different level of...

  • Page 57
    ... in place to meet the requirements of the 2014 UK Corporate Governance Code and the FRC guidance on Risk Management, Internal Control and Related Financial and Business Reporting. Going forwards, the Committee will also receive reports to be considered by the Board on risk process developments to...

  • Page 58
    ... and Audit Committee Responsibilities) Order 2014 - statement of compliance. The Company confirms that it complied with the provisions of the Competition and Markets Authority's Order for the financial year under review. 56 National Grid Annual Report and Accounts 2015/16 Corporate Governance

  • Page 59
    ... communication plans. The Committee also considers PwC's response to accounting, financial control and audit issues as they arise, and meets with them at least annually without management present, providing the external auditors with the opportunity to raise any matters in confidence. National Grid...

  • Page 60
    ... and returns was derived from audited financial information. In order to maintain the external auditors' independence and objectivity, management reviewed and considered PwC's findings and PwC did not make any decisions on behalf of management. 58 National Grid Annual Report and Accounts 2015/16...

  • Page 61
    ... leadership of National Grid over many years. 2015/16 has also seen changes within the treasury team, with a new Group Tax and Treasury Director taking on the role in early 2016. With accompanying changes in the UK and US treasury teams I look forward to working with the new management team to build...

  • Page 62
    ...the year Over the year the Safety, Environment and Health Committee has seen the Company make further progress in process safety management and the safety performance of both the UK and US businesses. The US has closed the gap on the UK in terms of combined employee and contractor Lost Time Injuries...

  • Page 63
    ... time considering succession planning over the long term, for both Executive and Non-executive Director positions, to make sure we have the right mix of skills and experience for the future. The main focus of these discussions was to take account of the recruitment process for the Chief Executive...

  • Page 64
    ... available in the Annual Report and Accounts. 8 Objective met. Ongoing. Progress against the objectives, the policy and the new targets will continue to be reviewed annually and reported in the Annual Report and Accounts. 62 National Grid Annual Report and Accounts 2015/16 Corporate Governance

  • Page 65
    ...Counsel & Company Secretary, the Global Tax and Treasury Director, the Global Financial Controller, the Director of Investor Relations, the Head of Corporate Audit and the Deputy Group General Counsel, with other attendees as appropriate. National Grid Annual Report and Accounts 2015/16 Management...

  • Page 66
    ... and Remuneration Committees, and their views are actively sought when developing proposals on strategy. Around the Board meetings, the Chairman holds meetings with the Nonexecutive Directors without the Executive Directors present. 64 National Grid Annual Report and Accounts 2015/16 Corporate...

  • Page 67
    ... other Directors will seek re-election at the 2016 AGM as set out in the Notice of Meeting, with the exception of Steve Holliday who is retiring from the Company with effect from 22 July 2016. National Grid Annual Report and Accounts 2015/16 Statement of compliance with the UK Corporate Governance...

  • Page 68
    ... for the 2016 AGM, available on our website, sets out in full the resolutions for consideration by shareholders, together with explanatory notes and further information on the Directors standing for election and re-election. 66 National Grid Annual Report and Accounts 2015/16 Corporate Governance

  • Page 69
    ...interests in shares People Political donations and expenditure Research and development Risk management Share capital 66 187 84 47 14 193 193 193 176 194 79 74 44 05 188 126 08 21 194 06 26 29 194 189 44 194 194 26 189 National Grid Annual Report and Accounts 2015/16 Index to Directors' Report and...

  • Page 70
    ... the Long Term Performance Plan (LTPP) paid only in shares, and half of the Annual Performance Plan (APP) paid in shares; • very high levels of personal shareholding required to be held by senior executives - 500% of pre-tax salary for the CEO and 400% for other Executive Directors; • three-year...

  • Page 71
    ... date of the 2014 and 2015 LTPP awards, the Committee has decided to make no changes to the performance metrics and targets for the 2016 LTPP award. Executive Director shareholdings Two years ago, we introduced high levels of shareholding requirements for our Executive Directors, in order to further...

  • Page 72
    ... Directors and general industry and energy services companies with similar revenue for US Executive Directors Annual Performance Plan (APP) • Maximum opportunity is 125% of salary • 50% paid in cash, 50% paid in shares, which must be retained until later of two years and meeting shareholding...

  • Page 73
    ... cost of providing these varies from year to year. Participation in tax-approved all-employee share plans is subject to limits set by the relevant tax authorities from time to time. National Grid Annual Report and Accounts 2015/16 Directors' remuneration policy - approved by shareholders in 2014...

  • Page 74
    ... For service from 1 April 2013 increases to pensionable pay are receive 50% of the pension benefit capped at the lower of 3% or the increase in inflation. The pension (100% if the participant died scheme rules allow for indexed prior salaries to be used for all while an active employee after members...

  • Page 75
    ... and personal accident insurance plans and receives a fully expensed car or cash alternative to a car, with the use of a driver, when required. There is no provision for termination payments. National Grid Annual Report and Accounts 2015/16 Directors' remuneration policy - approved by shareholders...

  • Page 76
    Corporate Governance continued Directors' remuneration policy - approved by shareholders in 2014 continued Shareholding requirement The requirement of Executive Directors to build up and hold a relatively high value of National Grid shares ensures they share a significant level of risk with ...

  • Page 77
    ... CEO Update on corporate governance and disclosure issues and review of AGM outcomes Directors' Remuneration Report planning for 2016 Review of competitive benchmarking for secondary comparator groups Review of gender and ethnicity pay statistics disclosure for external website Update on 2015...

  • Page 78
    ...UK corporate tax rate. US RoE: US RoE actual is adjusted to capture half of the realised gains achieved from the exchange of National Grid USA's share in the Iroquois pipeline joint venture. Safety Group strategy Financial strategy Business growth Operational excellence Customer experience Employee...

  • Page 79
    ... DB pension over the year shown above multiplied by 20 plus the increase in the lump sum shown above, less the reduction in salary due to FPS. Each element is calculated separately and rounded to produce the numbers in the table above. National Grid Annual Report and Accounts 2015/16 Annual report...

  • Page 80
    Corporate Governance continued Annual report on remuneration continued Single total figure of remuneration - Non-executive Directors (audited information) The following table shows a single total figure in respect of qualifying service for 2015/16, together with comparative figures for 2014/15: ...

  • Page 81
    Corporate Governance Statement of Directors' shareholdings and share interests (audited information) The Executive Directors are required to build up and hold a shareholding from vested share plan awards. Deferred share plan awards are not taken into account for these purposes until the end of the ...

  • Page 82
    ... end of the financial year in the 2016/17 annual report on remuneration. Steve Holliday will be eligible to receive a prorated portion of the 2016/17 APP. Weighting Adjusted EPS Group or UK or US RoE Individual objectives 35% 35% 30% 80 National Grid Annual Report and Accounts 2015/16 Corporate...

  • Page 83
    ... services to the Committee in the year. Voting on 2013/14 Directors' Remuneration Policy at 2014 AGM The voting figures shown refer to votes cast at the 2014 AGM and represent 61.76% of the issued share capital. In addition, shareholders holding 74 million shares abstained. For Against Number...

  • Page 84
    ... 4 - Derivative financial instruments 173 Note 5 - Investments 173 Note 6 - Borrowings 173 Note 7 - Share capital 173 Note 8 - Shareholders' equity and reserves 173 Note 9 - Parent Company guarantees 173 Note 10 - Audit fees 82 National Grid Annual Report and Accounts 2015/16 Financial Statements

  • Page 85
    ... of our business model (set out in the Strategic Report on pages 14 to 15), and showing how the disclosures reflect this strategy. Audit opinions We have two audit opinions on our financial statements, reflecting our listing on both the London Stock Exchange and the New York Stock Exchange. Due to...

  • Page 86
    ... fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy. Directors' Report The Directors' Report, prepared in accordance with the requirements of the Companies Act 2006 and the UK Listing...

  • Page 87
    ... during the year was National Grid's announcement of the potential sale of a majority stake in UK Gas Distribution. The changes in business processes and financial control in National Grid US continued throughout the year. National Grid Annual Report and Accounts 2015/16 Financial Statements 85

  • Page 88
    ...UK Gas Distribution transaction, the Group team visited both components on a number of occasions for meetings with our team and local National Grid management. The Group consolidation, financial statement disclosures and corporate activities including tax, treasury related activities and UK pensions...

  • Page 89
    ... risk of error in financial information reported by National Grid US, a significant portion of both US and Group senior audit team members' time has been spent developing our audit response to the US control environment, which is summarised below, and discussing this with management and the Audit...

  • Page 90
    ... of National Grid plc continued Area of focus How our audit addressed the area of focus and what we reported to the Audit Committee Accuracy of capital expenditures A key focus for National Grid is network investment with total capital expenditures across the Group of £3.9bn during 2015/16 (2014...

  • Page 91
    ... and reported this to the Audit Committee. We considered this immaterial for adjustment in the Group financial statements. Accounting for net pension obligations National Grid provides defined pension and other post-employment benefits to employees in the UK and US through a number of schemes. At...

  • Page 92
    ... number of customers who settle within agreed terms. In the US, different services and locations are regulated by different authorities and are subject to numerous price controls. Unlike the UK, revenue is earned through the transportation and supply of gas and electricity to end customers, which...

  • Page 93
    ... this responsibility. Corporate Governance Statement Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to ten further provisions of the Code. We have nothing to report having performed our review. National Grid Annual Report and Accounts 2015...

  • Page 94
    Independent auditors' report to the Members of National Grid plc continued Responsibilities for the financial statements and the audit Our responsibilities and those of the directors As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the ...

  • Page 95
    ... statement of changes in equity, present fairly, in all material respects, the financial position of National Grid plc and its subsidiaries at 31 March 2016 and 31 March 2015, and the results of their operations and their cash flows for each of the three years in the period ended 31 March 2016...

  • Page 96
    ... income statement for the years ended 31 March Notes 2016 £m 2016 £m 2015 £m 2015 £m 2014 £m 2014 £m Revenue Operating costs Operating profit Before exceptional items and remeasurements Exceptional items and remeasurements Total operating profit Finance income Finance costs Before...

  • Page 97
    ... year rate plan and the benefits of capex trackers and the stronger US dollar. UK Electricity Transmission revenue increased by £223m, mostly reflecting the recovery of higher pass-through costs such as payments to other UK network owners and system balancing costs. Operating costs Operating costs...

  • Page 98
    ...of £414m (2014/15: net loss of £472m) on our pension and other post-retirement benefit schemes which is due to changes in key assumptions made in the valuation calculation of pension liabilities and differences between the expected and actual pension asset returns. Exchange adjustments Adjustments...

  • Page 99
    ... bringing the total dividend for the year to 43.34p, a 1.1% increase on 2014/15. The Directors intend to continue the policy of increasing the annual dividend by at least the rate of RPI inflation for the foreseeable future. National Grid Annual Report and Accounts 2015/16 Financial Statements 97

  • Page 100
    ... tax liabilities Pensions and other post-retirement benefit obligations Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Share premium account Retained earnings Other equity reserves Shareholders' equity Non-controlling interests Total equity 9 10 11...

  • Page 101
    ...cash flow statement on page 100. Net pension and other post-retirement obligations A summary of the total UK and US assets and liabilities and the overall net IAS 19 (revised) accounting deficit is shown below: Net plan liability UK £m US £m Total £m As at 1 April 2015 Exchange movements Current...

  • Page 102
    ... Share-based payment charge Gain on exchange of associate for available-for-sale investment Changes in working capital Changes in provisions Changes in pensions and other post-retirement benefit obligations Cash flows relating to exceptional items Cash generated from operations Tax paid Net cash...

  • Page 103
    ... year ended 31 March 2016, cash flow from operations increased by £310m to £5,660m. Changes in working capital improved by £155m over the prior year, principally in the US due to the collection of winter 2015 billings and lower closing balances due to milder weather. 2012 2013 2014 2015 2016...

  • Page 104
    ... the financial statements of the Company and its subsidiaries, together with a share of the results, assets and liabilities of jointly controlled entities (joint ventures) and associates using the equity method of accounting, where the investment is carried at cost plus post-acquisition changes in...

  • Page 105
    ... or assets and liabilities for the year ended 31 March 2016. • Amendment to IAS 19 'Defined Benefit Plans: Employee Contributions'; • Annual Improvements to IFRSs 2010-2012 Cycle; and • Annual Improvements to IFRSs 2011-2013 Cycle. National Grid Annual Report and Accounts 2015/16 Financial...

  • Page 106
    ...on a day-to-day basis. Our strategy in action We own a portfolio of businesses that range from businesses with high levels of investment and growth (such as UK Electricity Transmission) to cash generative developed assets with minimal investment requirements (such as National Grid Metering, included...

  • Page 107
    ... New York. Other activities primarily relate to non-regulated businesses and other commercial operations not included within the above segments, including: UK gas metering activities; the Great Britain-France Interconnector; UK property management; a UK LNG import terminal (National Grid Grain LNG...

  • Page 108
    ... expenditure 2016 2015 £m £m 2014 £m Depreciation and amortisation 2016 2015 2014 £m £m £m Operating segments: UK Electricity Transmission UK Gas Transmission UK Gas Distribution US Regulated Other activities Geographical areas: UK US By asset type: Property, plant and equipment Non-current...

  • Page 109
    ...Clean Line. In the UK, adjusted operating profit was £32m higher as a result of strong auction revenues at the French interconnector and higher property sales. Capital investment in our Other activities was at a similar level to last year at £218m. National Grid Annual Report and Accounts 2015/16...

  • Page 110
    ... UK Gas Distribution was unchanged at £819m. This reflects similar achieved operational return on equity year-on-year, with the benefit of a higher asset base being offset by lower allowed cost of debt. Reconciliation of regulated financial performance to operating profit 2016 £m 2015 £m % change...

  • Page 111
    ... and remeasurements 2016 2015 £m £m Total 2015 £m 2014 £m 2016 £m 2014 £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 owners Other Operating costs include...

  • Page 112
    ... Key management compensation 2016 £m 2015 £m 2014 £m Short-term employee benefits Post-employment benefits Share-based payment 9 1 4 14 10 9 4 23 9 1 5 15 Key management compensation relates to the Board, including the Executive Directors and Non-executive Directors for the years presented...

  • Page 113
    ... Debt redemption costs in the year ending 31 March 2015 represents costs arising from a liability management programme. We reviewed and restructured the Group debt portfolio following the commencement of the RIIO price controls in 2013 and the slow down in our planned UK capital investment programme...

  • Page 114
    ...prior year debt redemption costs have been treated as exceptional (see note 4). 2016 £m 2015 £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 costs Net interest on pensions and...

  • Page 115
    ...tax rates and tax laws used to compute the amounts are those that have been enacted or substantively enacted by the reporting date. The calculation of the Group's total tax charge involves a degree of estimation and judgement, and management periodically evaluates positions taken in tax returns with...

  • Page 116
    ... income and equity 2016 £m 2015 £m 2014 £m Current tax Share-based payment Available-for-sale investments Deferred tax Available-for-sale investments Cash flow hedges Share-based payment Remeasurements of net retirement benefit obligations Total tax recognised in the statement of comprehensive...

  • Page 117
    ...UK corporation tax rate of 20% (2015: 21%; 2014: 23%) Effect of: Adjustments in respect of prior years Expenses not deductible for tax purposes Non-taxable income Adjustment in respect of foreign tax rates Impact of share-based payment Deferred tax impact of change in UK and US tax rates Other Total...

  • Page 118
    ... current and prior reporting periods: Pensions and other postretirement benefits £m Accelerated tax depreciation £m Sharebased payment £m Financial instruments £m Other net temporary differences £m Total £m Deferred tax (assets)/liabilities Deferred tax assets at 31 March 2014 Deferred...

  • Page 119
    ... of UK tax legislation. Taxes collected £m 1. VAT 2. PAYE and NIC 3. UK corporation tax 4. Business rates 5. Other Total 3 1 57 285 347 13 703 3 2 751 147 1 £m 1. VAT 2. PAYE and NIC 3. Other Total 751 147 1 899 4 347 National Grid Annual Report and Accounts 2015/16 Financial Statements...

  • Page 120
    ... employee share plans Weighted average number of ordinary shares - diluted 1. Comparative amounts have been restated to reflect the impact of additional shares issued as scrip dividends. 3,755 16 3,771 3,798 17 3,815 3,798 19 3,817 118 National Grid Annual Report and Accounts 2015/16 Financial...

  • Page 121
    ...the year to meet future growth plans and pay out the remainder in accordance with our dividend policy. Interim dividends are recognised when they become payable to the Company's shareholders. Final dividends are recognised when they are approved by shareholders. 2016 Cash dividend paid £m 2015 Cash...

  • Page 122
    .... As part of their review in 2014/15, the Directors specifically reviewed the carrying value of goodwill associated with Clean Line Energy Partners LLC. This review resulted in a full impairment being recorded of £12m. 120 National Grid Annual Report and Accounts 2015/16 Financial Statements

  • Page 123
    ...from property, plant and equipment (see note 11) and reclasses between cost and accumulated amortisation of £nil (2015: £6m). 1,222 59 207 16 1,504 22 220 (3) 1 1,744 (553) (20) (121) (8) (702) (8) (147) - (857) 887 802 National Grid Annual Report and Accounts 2015/16 Financial Statements 121

  • Page 124
    ...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 accumulated depreciation and any impairment losses. Cost includes the purchase price of the asset...

  • Page 125
    ..., plant and equipment) and the benefit to be received from the asset is not due to be received until after 31 March 2017. 2016 £m 2015 £m Commodity contract assets Other receivables Prepayments 10 37 35 82 29 39 12 80 National Grid Annual Report and Accounts 2015/16 Financial Statements 123

  • Page 126
    ... of the UK pension scheme Trustees of £nil (2015: £92m). 3. Refers to collateral placed with counterparties with whom we have entered into a credit support annex to the ISDA (International Swaps and Derivatives Association) Master Agreement. Available-for-sale investments are recorded at fair...

  • Page 127
    ... and cash equivalents All other current assets Non-current liabilities Current liabilities Equity Carrying amount of the Group's investment (National Grid ownership 50%) 376 77 3 (8) (30) 418 209 355 46 2 (10) (14) 379 189 2016 £m 2015 £m Income statement - BritNed Development Limited Revenue...

  • Page 128
    ... exposure to fluctuations in interest rate and foreign exchange rate on borrowings and other contractual cash flows. Specifically, we use derivatives to manage these risks from our financing portfolio to optimise the overall cost of accessing the debt capital markets. These derivatives are analysed...

  • Page 129
    ... contracts are transferred to equity to offset gains or losses on translation of the net investment in the non-sterling denominated subsidiaries, with any ineffective portion recognised immediately in the income statement. National Grid Annual Report and Accounts 2015/16 Financial Statements...

  • Page 130
    .... 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 by using it to fulfil a service to a customer or to maintain our network (consumables...

  • Page 131
    ... 6 months past due Over 6 months past due 214 48 142 404 299 60 156 515 For further information on our wholesale and retail credit risk, refer to note 30(a). For further information on our commodity risk, refer to note 30(e). National Grid Annual Report and Accounts 2015/16 Financial Statements...

  • Page 132
    ... to invest in our networks, the value 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...

  • Page 133
    ... repayment through the capital and money markets. The average long-term debt maturity of the portfolio is 12 years (2015: 13 years). Further information on our bonds can be found in the debt investor section of our website. National Grid Annual Report and Accounts 2015/16 Financial Statements 131

  • Page 134
    ... of the Electricity Supply Pension Scheme and the National Grid YouPlan. In the US, we have a number of plans and also provide healthcare and life insurance benefits to eligible retired US employees. The fair value of associated plan assets and present value of DB obligations are updated annually in...

  • Page 135
    ... are calculated using discount rates set with reference to yields on high-quality corporate bonds prevailing in the US and UK debt markets and will fluctuate as yields change. Plan funds are invested in a variety of asset classes, principally: equities, government securities, corporate bonds...

  • Page 136
    ... UK pensions 2015 £m 2014 £m 2016 £m US pensions 2015 £m 2014 £m US other post-retirement benefits 2016 2015 2014 £m £m £m Included within operating costs Administration costs Included within payroll costs Defined contribution scheme costs Defined benefit scheme costs: Current service cost...

  • Page 137
    ... The geographical split of pensions and other post-retirement benefits is as shown below: 2016 £m UK pensions 2015 £m 2014 £m 2016 £m US pensions 2015 £m 2014 £m US other post-retirement benefits 2016 2015 2014 £m £m £m Opening net defined benefit liability (Cost)/credit recognised in the...

  • Page 138
    ... other post-retirement benefits is as shown below: 2016 £m UK pensions 2015 £m 2014 £m 2016 £m US pensions 2015 £m 2014 £m US other post-retirement benefits 2016 2015 2014 £m £m £m Opening defined benefit obligations Current service cost Interest cost Actuarial gains/(losses) - experience...

  • Page 139
    ... Changes in the fair value of plan assets 2016 £m 2015 £m 2014 £m Opening fair value of plan assets Interest income Return on assets (less)/greater than assumed Administration costs Employer contributions Employee contributions Benefits paid Exchange adjustments Closing fair value of plan assets...

  • Page 140
    ...1 (19) 30 14 2 7 - - - 23 1 1 - - (7) 18 336 28 57 (5) 12 (56) 372 9 33 (3) 10 (60) 361 2016 £m 1,645 133 105 (12) 73 (209) 1,735 42 96 (27) 73 (200) 1,719 2015 £m Current Non-current 236 1,483 1,719 235 1,500 1,735 138 National Grid Annual Report and Accounts 2015/16 Financial Statements

  • Page 141
    ... are based on experience from previous years and there is, therefore, no identifiable payment date. Other provisions also include £13m (2015: £13m) in respect of obligations associated with investments in joint ventures. National Grid Annual Report and Accounts 2015/16 Financial Statements 139

  • Page 142
    ... the year the Company made payments totalling £6m (2015: £7m) to National Grid Employee Share Trusts, outside of its share repurchase programme, to enable the trustees to make purchases of National Grid plc shares in order to satisfy the requirements of employee share option and reward plans. The...

  • Page 143
    ... presented, they have been disclosed as a separate classification of equity. Translation £m Cash flow hedge £m AvailableCapital for-sale redemption £m £m Merger £m Total £m At 1 April 2013 Exchange adjustments Net gains taken to equity Transferred to/(from) profit or loss Tax At 31 March 2014...

  • Page 144
    ... market funds that invest in highly liquid instruments of high credit quality, is subject to our counterparty risk management policy. The movement in cash and cash equivalents is reconciled to movements in net debt. (a) Reconciliation of net cash flow to movement in net debt 2016 £m 2015 £m 2014...

  • Page 145
    ... (2015: £131m; 2014: £nil) is included in net interest charge on the components of net debt and an exceptional cash outflow of £nil (2015: £152m; 2014: £nil) is included in net interest paid on the components of net debt. National Grid Annual Report and Accounts 2015/16 Financial Statements...

  • Page 146
    ... includes information that is important to enable a full understanding of our financial position, particularly areas of potential risk that could affect us in the future. We also include specific disclosures for British Transco Finance Inc., Niagara Mohawk Power Corporation and National Grid Gas plc...

  • Page 147
    ...Market value of plan assets at latest valuation Actuarial value of benefits due to members Market value as percentage of benefits Funding deficit Funding deficit (net of tax) 1. National Grid UK Pension Scheme 2. National Grid Electricity Group of the Electricity Supply Pension Scheme 31 March 2013...

  • Page 148
    ...) (see below). National Grid Electricity Group of the Electricity Supply Pension Scheme The 2013 actuarial funding valuation showed that, based on long-term financial assumptions, the contribution rate required to meet future benefit accrual was 33.4% of pensionable earnings (currently 27.5% by...

  • Page 149
    ... current year presentation. 2. Includes return seeking non-conventional asset classes. US other post-retirement benefits 2016 Quoted Unquoted £m £m Total £m Quoted £m 2015 Unquoted £m Total £m Quoted £m 2014 Unquoted £m Total £m Equities Corporate bonds Government securities Diversified...

  • Page 150
    ... yields on high-quality corporate bonds prevailing in the UK and US debt markets at the reporting date. 2. A promotional scale has also been used where appropriate. The UK assumption stated is that relating to service prior to 1 April 2014. The UK assumption for the rate of increase in salaries...

  • Page 151
    ... risk arises from the investment of surplus funds and from the use of derivative financial instruments. As at 31 March 2016, the following limits were in place for investments held with banks and financial institutions: Maximum limit £m Long-term limit £m Triple 'A' G8 sovereign entities...

  • Page 152
    ... financial assets and liabilities offset in the statement of financial position primarily relate to commodity contracts. Offsets relate to margin payments for NYMEX gas futures which are traded on a recognised exchange. 150 National Grid Annual Report and Accounts 2015/16 Financial Statements

  • Page 153
    ... associated with our UK inflation linked revenues. The table in note 19 sets out the carrying amount, by contractual maturity, of borrowings that are exposed to interest rate risk before taking into account interest rate swaps. National Grid Annual Report and Accounts 2015/16 Financial Statements...

  • Page 154
    ...probability of those cash flows occurring. Instruments used to manage foreign exchange transaction risk include foreign exchange forward contracts and foreign exchange swaps. Our policy for managing foreign exchange translation risk relating to our net investment in foreign operations is to maintain...

  • Page 155
    ... 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 156
    ... is an important aspect of our capital risk management strategy and balance sheet efficiency. As noted on page 25, we monitor our balance sheet efficiency using several metrics including our retained cash flow/net debt and interest cover. Interest cover for the year ended 31 March 2016 was 5.5 (2015...

  • Page 157
    ... contracts 2016 2015 Income Income statement statement £m £m 10% increase in commodity prices¹ 10% decrease in commodity prices1 Volume forecast uplift2 Volume forecast reduction2 +10% market area price change -10% market area price change +20 basis point change in Limited Price Inflation...

  • Page 158
    ... European Investment Bank (EIB), of which £900m is currently undrawn, and an Export Credit Agreement (ECA) totalling £162m, which is undrawn. Further information on our bonds can be found on the debt investor section of our website. 156 National Grid Annual Report and Accounts 2015/16 Financial...

  • Page 159
    ... Grid Electricity Group Trustee Limited National Grid Electricity Transmission plc National Grid Energy Metering Limited National Grid Five Limited* National Grid Four Limited National Grid Fourteen Limited National Grid Gas Finance (No 1) plc National Grid Gas Holdings Limited National Grid Gas plc...

  • Page 160
    ...Gas Company British Transco Capital Inc. British Transco Finance, Inc. Broken Bridge Corp. Colonial Gas Company EUA Energy Investment Corporation GridAmerica Holdings Inc. Grid NY LLC KeySpan CI Midstream Limited KeySpan Corporation KeySpan Energy Corporation KeySpan Energy Services Inc. KeySpan Gas...

  • Page 161
    ...A list of the Group's associates as at 31 March 2016 is given below. All associates are included in the Group's financial statements using the equity method of accounting. Incorporated in the US Algonquin Gas Transmission LLC (20%) Clean Line Energy Partners LLC (32%) Connecticut Yankee Atomic Power...

  • Page 162
    ...change of 0.5%5 US long-term rate of increase in salaries change of 0.5% UK change of one year to life expectancy at age 65 US change of one year to life expectancy at age 65 Assumed US healthcare cost trend rates change of 1% Unbilled revenue at 31 March change of 10% (post-tax) No hedge accounting...

  • Page 163
    ... and National Grid Gas plc include the investments in subsidiaries recorded on the basis of equity accounting principles for the purposes of presenting condensed consolidating financial information under IFRS. The summary statements of financial position present these investments within non-current...

  • Page 164
    ... 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 Total operating profit Net finance income/(costs) Dividends receivable Interest in equity accounted affiliates Profit before...

  • Page 165
    ... costs Purchases of electricity Purchases of gas Rates and property tax Balancing Service Incentive Scheme Payments to other UK network owners Other operating costs Total operating profit Net finance costs Dividends receivable Interest in equity accounted affiliates Profit before tax Tax Profit...

  • Page 166
    ... costs Purchases of electricity Purchases of gas Rates and property tax Balancing Service Incentive Scheme Payments to other UK network owners Other operating costs Total operating profit Net finance costs Dividends receivable Interest in equity accounted affiliates Profit before tax Tax Profit...

  • Page 167
    ... tax liabilities Pensions and other post-retirement benefit obligations Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Share premium account Retained earnings Other equity reserves Shareholders' equity Non-controlling interests Total equity - - - - 318...

  • Page 168
    ... tax liabilities Pensions and other post-retirement benefit obligations Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Share premium account Retained earnings Other equity reserves Shareholders' equity Non-controlling interests Total equity - - - - 341...

  • Page 169
    ...) 4,019 (1,330) (2,972) (283) Cash dividends were received by National Grid plc from subsidiary undertakings amounting to £930m during the year ended 31 March 2016 (2015: £1,355m; 2014: £1,050m). Maturity analysis of parent Company borrowings 2016 £m 2015 £m Total borrowings are repayable as...

  • Page 170
    ... Company is a public limited liability company incorporated and domiciled in England, with its registered office at 1-3 Strand, London, WC2N 5EH. The financial statements of National Grid plc for the year ended 31 March 2016 were approved by the Board of Directors on 18 May 2016. The Company meets...

  • Page 171
    ... when they are paid to the Company's shareholders. Final dividends are recognised when they are approved by shareholders. J. Directors' remuneration Full details of Directors' remuneration are disclosed on pages 68 to 81. National Grid Annual Report and Accounts 2015/16 Financial Statements 169

  • Page 172
    ... individual financial statements of the Company, which were approved by the Board of Directors on 18 May 2016 and were signed on its behalf by: Sir Peter Gershon Chairman Andrew Bonfield Finance Director National Grid plc Registered number: 4031152 170 National Grid Annual Report and Accounts 2015...

  • Page 173
    ... equity movements Scrip dividend related share issue1 Purchase of treasury shares Issue of treasury shares Purchase of own shares Share awards to employees of subsidiary undertakings Dividends paid to equity shareholders At 31 March 2016 1. Included within share premium account are costs associated...

  • Page 174
    ... financial statements 1. Fixed asset investments Shares in subsidiary undertakings £m At 1 April 2014 Additions At 31 March 2015 Additions At 31 March 2016 8,803 20 8,823 22 8,845 During the year there was a capital contribution of £22m (2015: £20m) which represents the fair value of equity...

  • Page 175
    ...share capital, refer to note 24 to the consolidated financial statements. 8. Shareholders' equity and reserves At 31 March 2016 the profit and loss account reserve stood at £2,880m (2015: £3,726m) of which £86m (2015: £86m) related to gains on intra-group transactions which was not distributable...

  • Page 176
    ...capital Share price Shareholder analysis Taxation Other disclosures All-employee share plans Change of control provisions Code of Ethics Conflicts of interest Corporate governance practices: differences from New York Stock Exchange (NYSE) listing standards Directors' indemnity Employees Human rights...

  • Page 177
    .... Access to electricity and gas transmission and distribution assets on property owned by others is controlled through various agreements. As submitted by the Company in its 2014/15 Gas Distribution Regulatory Reporting Pack. National Grid Annual Report and Accounts 2015/16 The business in detail...

  • Page 178
    ...the services we give our customers, stakeholders and communities; and • efficiently balance the transmission networks to support the wholesale markets. Our UK Electricity Transmission (UK ET), UK Gas Transmission (UK GT) and UK Gas Distribution (UK GD) businesses operate under eight separate price...

  • Page 179
    ... controllable operating costs) RAV (slow money) X Allowed return Depreciation of RAV Revenue Fast money Other costs e.g. tax Performance against incentives Allowed returns The cost of capital allowed under RIIO is as follows: Transmission Gas Electricity Gas Distribution Cost of equity (post...

  • Page 180
    ... capital investments and operating costs. US regulatory revenue requirement Capex and RoE Cost of service 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 distribution...

  • Page 181
    ... two to three years to update the capital investment allowances and rate bases across many of our businesses. These filings are expected to capture the benefit of recent increased investments in asset replacement and network reliability, and reflect long-term growth in costs, including property tax...

  • Page 182
    ...electricity and gas operations and network strategy functions, and includes a review of staffing levels, resource planning, work management, overtime levels, contractor use and succession planning. The final report is expected to be issued in July 2016. Rhode Island Rhode Island electricity and gas...

  • Page 183
    ... New York and New England since January 2014 and May 2015 respectively. The competitive transmission planning processes instituted under Order 1000 have opened National Grid's service territory to competition from nonincumbent transmission developers and also created opportunities for National Grid...

  • Page 184
    ... transmission and distribution, excluding stranded costs. 2. KeySpan Energy Delivery New York (The Brooklyn Union Gas Company). 3. KeySpan Energy Delivery Long Island (KeySpan Gas East Corporation). Rate filing made New rates effective Rate plan ends Rates continue indefinitely Multi-year rate plan...

  • Page 185
    ... are imposed or our ability to recover these costs under regulatory frameworks changes, this could have a material adverse impact on our business, reputation, results of operations and financial position. National Grid Annual Report and Accounts 2015/16 Internal control and risk factors 183

  • Page 186
    ...lack of supply. Operational performance could be materially adversely affected by a failure to maintain the health of our assets or networks, inadequate forecasting of demand, inadequate record keeping or control of data or failure of information systems and supporting technology. This in turn could...

  • Page 187
    ... to make additional contributions to these pension schemes which, to the extent they are not recoverable under our price controls or state rate plans, could materially adversely affect the results of our operations and financial condition. National Grid Annual Report and Accounts 2015/16 Internal...

  • Page 188
    ... limits for the long-term senior unsecured debt credit ratings that certain companies within the Group must hold or the amount of equity within their capital structures. One of the principal limits requires National Grid plc to hold an investment grade long-term senior unsecured debt credit rating...

  • Page 189
    ...the powers of the Company. They may delegate authorities to committees and day-to-day management and decision-making to individual Executive Directors. The committee structure is set out on page 49. General The Company is incorporated under the name National Grid plc and is registered in England and...

  • Page 190
    ... Company since the year end. Exchange controls There are currently no UK laws, decrees or regulations that restrict the export or import of capital, including, but not limited to, foreign exchange control restrictions, or that affect the remittance of dividends, interest or other payments to non UK...

  • Page 191
    ... last day of each month during the period. See weighted average exchange rate on page 95. Material interests in shares As at 31 March 2016, 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 192
    ... to market developments. This authority is in line with investor guidelines. The Directors currently have no intention of issuing new shares, or of granting rights to subscribe for or convert any security into shares, except in relation to, or in connection with, the operation and management of...

  • Page 193
    ...than one year. For non-corporate US Holders, long-term capital gain is generally taxed at a lower rate than ordinary income. A US Holder's ability to deduct capital losses is subject to significant limitations. The statements regarding US and UK tax laws and administrative practices set forth below...

  • Page 194
    ... information relating to National Grid shares for UK resident shareholders on our website under: Investors, Shareholder centre, More information and help. Share prices on specific dates are also available on our website. 192 National Grid Annual Report and Accounts 2015/16 Additional Information

  • Page 195
    ... monthly basis at a 15% discounted price. Under the plan, employees may contribute up to 20% of base pay each year, up to a maximum annual contribution of $18,888 to purchase ADSs in National Grid. Change of control provisions No compensation would be paid for loss of office of Directors on a change...

  • Page 196
    ... operations on pages 31 to 43. Research and development Expenditure on research and development during the year was £29 million (2014/15: £23 million; 2013/14: £12 million). Innovation funding throughout 2015/16 has sustained investment across all three of our UK Regulated business areas: UK...

  • Page 197
    ... align with our goals and objectives. This collaboration has also helped inform our strategic direction in response to jurisdictional requests for modernisation (Grid Modernization in Massachusetts and 'Reforming the Energy Vision' in New York). In the year, we invested and participated in several...

  • Page 198
    ... financial statements on page 118. Year ended 31 March 2016 2015 £m £m 2014 £m Adjusted operating profit Adjusted net finance costs Share of post-tax results of joint ventures and associates Adjusted profit before tax Adjusted tax Adjusted profit after tax Attributable to non-controlling...

  • Page 199
    ... 2014 Revenue Revenue for the year ended 31 March 2015 increased by £392 million to £15,201 million. This increase was driven by higher revenues in our UK ET business, reflecting increases in allowed Transmission Owner revenues, and higher core allowances and pass-through costs in UK GT. Revenues...

  • Page 200
    ... affecting our operations in the years ended 31 March 2014 and 2015. Our capital investment programme continued in the US, with a further £1,501 million invested in 2014/15, including gas leak reduction programmes and electricity capacity and reinforcement work. Other activities Revenue in Other...

  • Page 201
    Additional Information Analysis of the statement of financial position for the year ended 31 March 2015 Goodwill and other intangible assets Goodwill and intangibles increased by £684 million to £5,947 million as at 31 March 2015. This increase primarily relates to foreign exchange movements of ...

  • Page 202
    ... of National Grid for the five financial years ended 31 March 2016. It should be read in conjunction with the consolidated financial statements and related notes, together with the Strategic Report. The information presented below for the years ended 31 March 2012, 2013, 2014, 2015 and 2016 has...

  • Page 203
    ... change in pensions and employee benefits accounting. The numbers included in the selected financial data above for the years 31 March 2012 and 2013 were restated to show the impact of IAS 19 (revised). National Grid Annual Report and Accounts 2015/16 Summary consolidated financial information...

  • Page 204
    ... year as reported to the Group's regulators or, where a reported rate base is not available, an estimate based on rate base calculations used in previous rate filings multiplied by the adjudicated equity portion in the regulatory capital structure. 202 National Grid Annual Report and Accounts 2015...

  • Page 205
    ... Limited. C called up share capital Shares (common stock) that have been issued and have been fully paid for. carrying value The amount at which an asset or a liability is recorded in the Group's statement of financial position and the Company's balance sheet. the Company, the Group, National Grid...

  • Page 206
    ...rate (IFR) The number of lost time injuries per 100,000 hours worked in a 12 month period. M MADPU The Massachusetts Department of Public Utilities. MSA The managed services agreement, under which the Company maintained and operated the electricity transmission and distribution system on Long Island...

  • Page 207
    ...the Company supplies electricity to communities and businesses across Long Island. R rate base The base investment on which the utility is authorised to earn a cash return. It includes the original cost of facilities, minus depreciation, an allowance for working capital and other accounts. rate plan...

  • Page 208
    ...) Updated guidance, issued by the Financial Reporting Council in September 2014, 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 from US GAAP. UK regulated return...

  • Page 209
    ...you as soon as new shareholder information is available to view online, including your electronic tax voucher, sign up for electronic communications. Simply go to the National Grid share portal www.nationalgridshareholders.com and once you have registered, click on the 'manage your account' link and...

  • Page 210
    ... of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to our financial condition, our results of operations and businesses, strategy, plans and objectives. Words such as 'anticipates', 'expects', 'should', 'intends...

  • Page 211
    ... independently certified according to the rules of the Forest Stewardship Council® (FSC). The manufacturing mill holds the ISO 14001 environmental certification and the EU Eco-label (EMAS). Printed by Pureprint Group, ISO 14001, FSC® certified and CarbonNeutral®. Designed and produced by Addison...

  • Page 212
    National Grid plc 1-3 Strand London WC2N 5EH United Kingdom www.nationalgrid.com