Back to Contents
Accounting Policies
a) Basis of preparation of accounts
The accounts are prepared under the historical
cost convention and in accordance with applicable UK accounting and financial
reporting standards.
The accounts have been prepared in accordance with UK GAAP, which differs in certain respects from US GAAP. A summary of the results under US GAAP is shown in note 31 to the accounts and an explanation of the main
differences between UK and US GAAP is set out in note 32.
The preparation of accounts in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of
contingent assets and liabilities and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
The Group has adopted Urgent Issues Task Force (UITF) 38 ‘Accounting for ESOP trusts’ during the year. The impact of the adoption is shown in note 1.
The Group is following the transitional arrangements of Financial Reporting Standard (FRS) 17 ‘Retirement Benefits’. The required disclosures are shown in note 7.
b) Basis of consolidation
The
Group accounts include the accounts of the Company and all its subsidiary
undertakings (‘Group undertakings’),
together with the Group’s share of the results and net assets of its associate
and joint ventures (‘associated undertakings’), less any provision
for impairment. An associated undertaking is an entity in which the Group has
a participating interest and over which it exercises a significant influence.
The accounts of Group and associated undertakings used for consolidation are
generally made up to 31 March. However, where this has not been practical,
the
results of certain Group and associated undertakings have been based on their
accounts to 31 December.
The results of newly acquired Group and associated undertakings are included in the Group accounts from the date the Group acquires control or, in respect of associated undertakings, an equity interest which enables it to exercise a significant influence. The results of Group and associated undertakings are included in the Group accounts up to the date that control or the exercise of significant influence, as appropriate, is
relinquished.
In translating into sterling the Group’s share of the net assets and results of a joint venture operating in a hyper-inflationary economy for the years ended 31 March 2003 and 2004, adjustments have been made to
reflect current price levels. Such adjustments have been reflected through the Group profit and loss account or statement of total recognised gains and losses as appropriate. The Group’s share of the gain on net monetary liabilities has been
credited to the Group profit and loss account through ‘net interest’, and where the effect is material is shown as part of the Group’s exceptional financing costs (see note 4(c)).
The 21 October 2002 business combination of National Grid and Lattice met the merger accounting criteria under UK GAAP and the Companies Act 1985 and therefore the transaction was accounted for as a merger. The
consolidated accounts have been prepared as if National Grid and Lattice had always comprised the Group. The combined accounts were adjusted for the issue on Merger of 1,323m shares with a nominal value of £132m and for the elimination of
balances between the former groups.
c) Goodwill
Goodwill, representing the excess
of the fair value of the consideration given over the fair value of the identifiable
net assets acquired, is capitalised and amortised on a straight-line basis,
through the profit and loss account over its estimated useful economic life,
principally 20 years.
d) Foreign currencies
The
results of the Group’s
overseas operations are generally translated into sterling at weighted average
rates of exchange for the period the overseas operations are included within
the Group accounts. In certain limited circumstances, where the use of a
weighted
average rate would distort material transactions, those transactions are separately
translated at the rates of exchange relevant to the dates on which the transactions
occurred.
Exchange differences arising on the translation of the opening net assets of overseas operations, the re-translation of the retained earnings of overseas operations from average to closing rates of exchange and the
translation of foreign currency borrowings or derivatives taken to hedge overseas assets are taken directly to reserves. Tax charges or credits arising on such items are also taken directly to reserves.
Assets and liabilities in foreign currencies are generally translated at the rates of exchange ruling at the balance sheet date. In respect of certain assets or liabilities that are matched by an exact and directly
related forward exchange derivative, the relevant asset or liability is translated at the rate of exchange under the related derivative.
All other exchange differences and related tax charges or credits are taken to the profit and loss account and disclosed separately where deemed exceptional.
e) Tangible fixed assets and depreciation
Tangible fixed assets are included in the balance
sheet at their cost less accumulated depreciation. Cost includes payroll and
finance costs incurred which are directly attributable to the construction of
tangible fixed assets.
Tangible fixed assets include assets in which the Group’s interest comprises legally protected statutory or contractual rights of use.
|
Depreciation periods for categories of tangible fixed assets
|
Years
|
|
|
Plant and machinery
|
|
|
Electricity transmission plant
|
15 to 60
|
|
Electricity distribution plant
|
15 to 60
|
|
Interconnector plant
|
15 to 60
|
|
Gas plant – mains, services and regulating equipment
|
30 to 65
|
|
Gas plant – storage
|
40
|
|
Gas plant – meters
|
10 to 33
|
|
Freehold and leasehold buildings
|
up to 65
|
|
Motor vehicles and office equipment
|
up to 10
|
|
72 National
Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Accounting Policies
_continued
Additions represent the purchase or construction of new assets and extensions to or significant increases in the capacity of tangible fixed assets. Contributions received towards the cost of tangible fixed assets are
included in creditors as deferred income and credited on a straight-line basis to the profit and loss account over the estimated economic lives of the assets.
No depreciation is provided on freehold land and assets in the course of construction. Other tangible fixed assets are depreciated, principally on a straight-line basis, at rates estimated to write off their book
values over their estimated useful economic lives. In assessing estimated useful economic lives, which are reviewed on a regular basis, consideration is given to any contractual arrangements and operational requirements relating to particular
assets. Unless otherwise determined by operational requirements, the depreciation periods for the principal categories of tangible fixed assets are, in general, as shown on the previous page.
During 2004, the Group modified some depreciation periods to more accurately reflect the economic lives of the assets. There has not been any significant change to the depreciation charged in the year as a result of
the modification.
f) Impairment of fixed assets
Impairments of fixed assets are calculated as the difference between the carrying values of the net assets of income generating units, including, where appropriate, investments and goodwill, and their recoverable
amounts. Recoverable amount is defined as the higher of net realisable value or estimated value in use at the date the impairment review is undertaken. Net realisable value represents the net amount that can be generated through sale of the assets.
Value in use represents the present value of expected future cash flows discounted on a pre-tax basis, using the estimated cost of capital of the income generating unit.
Impairment reviews are carried out if there is some indication that an impairment may have occurred, or where otherwise required, to ensure that fixed assets are not carried above their estimated recoverable
amounts.
Impairments are recognised in the profit and loss account, and where material are disclosed as exceptional.
g) Replacement expenditure
Replacement
expenditure represents the cost of planned maintenance of the UK’s
gas mains and services assets by replacing or lining sections of pipe.
This expenditure
is principally undertaken to repair and to maintain the safety of the network
and is written off as incurred. Expenditure that enhances the performance
of the mains and services assets is treated as an addition to tangible
fixed assets.
h)
Deferred taxation and investment tax credits
Deferred taxation is provided in full on all material timing differences, with certain exceptions. No provision for deferred taxation is made for any timing differences on non-monetary assets arising from fair value
adjustments, except where there is a binding agreement to sell the assets concerned. However, no provision is made where it is more likely than not that any taxable gain will be rolled over into replacement assets.
Deferred tax assets are only recognised to the extent that they are considered recoverable.
Deferred tax balances have not been discounted.
Investment tax credits are amortised over the economic life of the asset giving rise to the credits.
i)
Stocks
Stocks are carried at cost less provision for deterioration and obsolescence.
j)
Regulatory
assets
The US Statement of Financial
Accounting Standards 71 ‘Accounting for the Effects of Certain Types of Regulation’ (SFAS
71) establishes US GAAP for utilities whose regulators have the power to
approve and/or regulate rates that may be charged to customers. Provided
that through the regulatory process the utility is substantially assured
of recovering its allowable costs by the collection of revenue from its customers,
such costs not yet recovered are
deferred as regulatory assets. Due to the different regulatory environment, no
equivalent accounting standard applies in the UK.
Under UK GAAP, regulatory assets established in accordance with the principles of SFAS 71 are recognised in debtors where they comprise rights or other access to future economic benefits which arise as a result of past
transactions or
events which have created an obligation to transfer economic benefit to a third party. Measurement of the past transaction or event and hence of the regulatory asset is determined in accordance with UK GAAP.
k)
Decommissioning and environmental costs
Decommissioning and environmental costs, based on discounted future estimated expenditures, are provided for in full and where appropriate a corresponding tangible fixed asset or regulatory asset is also recognised.
The unwinding of the discount is included within the profit and loss account as a financing charge net of the unwinding of the discount on any related regulatory asset.
l)
Turnover
Turnover primarily represents the amounts derived from the supply, transmission and distribution of energy and the provision of related services, including the recovery of stranded costs. Turnover includes an
assessment of energy and transportation services supplied to customers between the date of the last meter reading and the year end, excludes inter-business and inter-company transactions, and is stated net of value added tax and similar sales-based
taxes. Where revenues received or receivable exceed the maximum amount permitted by regulatory agreement and adjustments will be made to future prices to reflect this over-recovery, no liability is recognised.
m)
Pensions and other post-retirement benefits
The cost of providing pensions and other post-retirement benefits is charged to the profit and loss account on a systematic basis over the service lives of the employees in the schemes. Variations from the regular
pension cost are allocated over the estimated average remaining service lives of current employees, with the interest component of any variation being reflected in net interest and the other component reflected through staff costs.
n)
Leases
Operating lease payments are charged to the profit and loss account on a straight-line basis over the term of the lease.
Annual Report and Accounts 2003/04_
National
Grid Transco 72
Back to Contents
Accounting Policies
_continued
o)
Financial instruments
Derivative
financial instruments (‘derivatives’) are used by the Group mainly
for the management of its interest rate and foreign currency exposures and commodity
price risks in respect of expected energy usage. The principal derivatives used
include interest rate swaps, currency swaps, forward foreign currency agreements,
interest rate swaptions and indexed swap contracts relating to the purchase of
energy.
All transactions are undertaken with a view to, or maintained to, provide a commercial hedge of the interest, currency or commodity price risks associated with the Group’s underlying business activities and the
financing of those activities. Amounts payable or receivable in respect of interest rate swaps are recognised in the profit and loss account over the economic lives of the agreements or underlying position being hedged, either within net interest or
disclosed separately where deemed exceptional.
Termination payments made or received in respect of derivatives are spread over the shorter of the life of the original instrument or the life of the underlying exposure in cases where the underlying exposure continues
to exist. Where the underlying exposure ceases to exist, any termination payments are taken to the profit and loss account.
Those derivatives, relating both to interest rates and/or currency exchange, that are directly associated with a specific transaction and exactly match the underlying cash flows relating to the transaction are
accounted for on the basis of the combined economic result of the transaction including the related derivative.
All other currency swaps and forward currency agreements are translated at the rate of exchange prevailing at the balance sheet date with the corresponding exchange adjustment being dealt with in reserves or the profit
and loss account as appropriate.
Liabilities recognised in respect of index-linked swap contracts relating to the purchase of energy are measured on the basis of their estimated market value. In addition, a corresponding movement in the value of a
related regulatory asset is also recognised.
p)
Restructuring costs
Costs
arising from Group restructuring programmes primarily relate to redundancy costs.
Redundancy costs are charged to the profit and loss account in the period in
which the Group becomes irrevocably committed to incurring the costs and the
main features of the restructuring plan have been announced to affected employees.
Redundancy costs are classified as part of ‘other operating charges’ as
these costs do not relate to services provided by
employees for the year.
73 National Grid Transco
_Annual Report
and Accounts 2003/04
Back to Contents
Group Profit and Loss Account
for the years ended 31 March
|
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
Notes
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover, including share of joint ventures’
|
|
|
9,104
|
|
|
9,566
|
|
|
7,821
|
|
|
Less: share of joint ventures’ turnover – continuing operations
|
|
|
(71
|
)
|
|
(99
|
)
|
|
(141
|
)
|
|
Less: share of joint ventures’ turnover – discontinued operations
|
|
|
–
|
|
|
(67
|
)
|
|
(126
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Group turnover – continuing operations
|
|
|
8,875
|
|
|
8,833
|
|
|
7,078
|
|
|
Group turnover – discontinued operations
|
|
|
158
|
|
|
567
|
|
|
476
|
|
|
Group turnover
|
2
|
(a)
|
9,033
|
|
|
9,400
|
|
|
7,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs
|
3
|
|
(7,178
|
)
|
|
(7,788
|
)
|
|
(6,494
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit of Group undertakings – continuing operations
|
2
|
(b)
|
1,855
|
|
|
1,806
|
|
|
1,558
|
|
|
Operating loss of Group undertakings – discontinued operations
|
2
|
(b)
|
–
|
|
|
(194
|
)
|
|
(498
|
)
|
|
|
|
|
1,855
|
|
|
1,612
|
|
|
1,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of joint ventures’ operating profit/(loss) – continuing operations
|
2
|
(b)
|
7
|
|
|
15
|
|
|
(29
|
)
|
|
Share of joint ventures’ and
associate’s
operating profit/(loss) – discontinued
operations
|
2
|
(b)
|
–
|
|
|
109
|
|
|
(672
|
)
|
|
|
|
|
7
|
|
|
124
|
|
|
(701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
|
|
– Before exceptional items and goodwill amortisation
|
2
|
(b)
|
2,238
|
|
|
2,185
|
|
|
1,783
|
|
|
– Exceptional items – continuing operations
|
4
|
(a)
|
(277
|
)
|
|
(308
|
)
|
|
(285
|
)
|
|
– Exceptional items – discontinued operations
|
4
|
(a)
|
–
|
|
|
(39
|
)
|
|
(1,042
|
)
|
|
– Goodwill amortisation
|
|
|
(99
|
)
|
|
(102
|
)
|
|
(97
|
)
|
|
Total operating profit
|
2
|
(b)
|
1,862
|
|
|
1,736
|
|
|
359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on assets held for exchange – discontinued operations
|
4
|
(b)
|
226
|
|
|
–
|
|
|
–
|
|
|
Profit on disposal of tangible fixed assets – continuing operations
|
4
|
(b)
|
96
|
|
|
48
|
|
|
94
|
|
|
Loss on sale or termination of operations – discontinued operations
|
4
|
(b)
|
–
|
|
|
(68
|
)
|
|
–
|
|
|
Merger costs – continuing operations
|
4
|
(b)
|
–
|
|
|
(79
|
)
|
|
–
|
|
|
Gain on sale of shares by employee share plan – continuing operations
|
4
|
(b)
|
–
|
|
|
–
|
|
|
31
|
|
|
Profit on disposal of investments – discontinued operations
|
4
|
(b)
|
–
|
|
|
–
|
|
|
31
|
|
|
Net interest
|
|
|
|
|
|
|
|
|
|
|
|
– Excluding exceptional items
|
8
|
|
(822
|
)
|
|
(939
|
)
|
|
(657
|
)
|
|
– Exceptional items
|
4
|
(c),8
|
–
|
|
|
(31
|
)
|
|
(142
|
)
|
|
Total interest
|
8
|
|
(822
|
)
|
|
(970
|
)
|
|
(799
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) on ordinary activities before taxation
|
|
|
1,362
|
|
|
667
|
|
|
(284
|
)
|
|
Taxation
|
|
|
|
|
|
|
|
|
|
|
|
– Excluding exceptional items
|
9
|
|
(350
|
)
|
|
(373
|
)
|
|
(251
|
)
|
|
– Exceptional items
|
4
|
(d),9
|
89
|
|
|
128
|
|
|
166
|
|
|
Total taxation
|
9
|
|
(261
|
)
|
|
(245
|
)
|
|
(85
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) on ordinary activities after taxation
|
|
|
1,101
|
|
|
422
|
|
|
(369
|
)
|
|
Minority interests
|
|
|
|
|
|
|
|
|
|
|
|
– Excluding exceptional items
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
– Exceptional items
|
4
|
(e)
|
–
|
|
|
(28
|
)
|
|
50
|
|
|
Total minority interests
|
|
|
(2
|
)
|
|
(31
|
)
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year
|
|
|
|
|
|
|
|
|
|
|
|
– Before exceptional items and goodwill amortisation
|
|
|
1,064
|
|
|
870
|
|
|
873
|
|
|
– Exceptional items – operating
|
4
|
(a)
|
(277
|
)
|
|
(347
|
)
|
|
(1,327
|
)
|
|
– Exceptional items – non-operating
|
4
|
(b)
|
322
|
|
|
(99
|
)
|
|
156
|
|
|
– Exceptional items – financing
|
4
|
(c)
|
–
|
|
|
(31
|
)
|
|
(142
|
)
|
|
– Exceptional items – taxation
|
4
|
(d)
|
89
|
|
|
128
|
|
|
166
|
|
|
– Exceptional items – minority interests
|
4
|
(e)
|
–
|
|
|
(28
|
)
|
|
50
|
|
|
– Goodwill amortisation
|
|
|
(99
|
)
|
|
(102
|
)
|
|
(97
|
)
|
|
Profit/(loss) for the year
|
|
|
1,099
|
|
|
391
|
|
|
(321
|
)
|
|
Dividends
|
10
|
|
(609
|
)
|
|
(530
|
)
|
|
(580
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) transferred to/(from) profit and loss account reserve
|
24
|
|
490
|
|
|
(139
|
)
|
|
(901
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per ordinary share
|
|
|
|
|
|
|
|
|
|
|
|
– Basic, including exceptional items and goodwill amortisation
|
11
|
|
35.8
|
p
|
|
12.7
|
p
|
|
(11.3
|
)p
|
|
– Adjusted basic, excluding exceptional items and goodwill amortisation
|
11
|
|
34.7
|
p
|
|
28.3
|
p
|
|
30.8
|
p
|
|
– Diluted, including exceptional items and goodwill amortisation
|
11
|
|
35.7
|
p
|
|
12.8
|
p
|
|
(10.1
|
)p
|
|
– Adjusted diluted, excluding exceptional items and goodwill amortisation
|
11
|
|
34.6
|
p
|
|
27.9
|
p
|
|
30.2
|
p
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 77 to 128 form part of the Accounts.
Annual Report and Accounts 2003/04_
National
Grid Transco
74
Back to Contents
Balance Sheets
at 31 March
|
|
|
|
Group
|
|
|
Company
|
|
|
|
|
|
2004
|
|
|
2003
|
|
|
2004
|
|
|
2003
|
|
|
|
|
|
|
|
|
(restated)
|
|
|
|
|
|
|
|
|
|
Notes
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
12
|
|
1,537
|
|
|
1,893
|
|
|
–
|
|
|
–
|
|
|
Tangible assets
|
13
|
|
16,706
|
|
|
16,847
|
|
|
–
|
|
|
–
|
|
|
Investments in joint ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Share of gross assets
|
|
|
395
|
|
|
542
|
|
|
–
|
|
|
–
|
|
|
– Share of gross liabilities
|
|
|
(376
|
)
|
|
(498
|
)
|
|
–
|
|
|
–
|
|
|
– Share of net assets
|
|
|
19
|
|
|
44
|
|
|
–
|
|
|
–
|
|
|
Other investments
|
|
|
132
|
|
|
170
|
|
|
2,225
|
|
|
2,225
|
|
|
Total investments
|
14
|
|
151
|
|
|
214
|
|
|
2,225
|
|
|
2,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,394
|
|
|
18,954
|
|
|
2,225
|
|
|
2,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stocks
|
15
|
|
91
|
|
|
126
|
|
|
–
|
|
|
–
|
|
|
Debtors (amounts falling due within one year)
|
16
|
|
1,588
|
|
|
1,811
|
|
|
3,884
|
|
|
2,664
|
|
|
Debtors (amounts falling due after more than one year)
|
16
|
|
2,708
|
|
|
3,395
|
|
|
–
|
|
|
–
|
|
|
Assets held for exchange
|
17
|
|
–
|
|
|
17
|
|
|
–
|
|
|
–
|
|
|
Current asset investments
|
|
|
520
|
|
|
482
|
|
|
6
|
|
|
123
|
|
|
Cash at bank and in hand
|
|
|
96
|
|
|
119
|
|
|
–
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,003
|
|
|
5,950
|
|
|
3,890
|
|
|
2,788
|
|
|
Creditors (amounts falling due within one year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
(1,706
|
)
|
|
(2,246
|
)
|
|
(388
|
)
|
|
(557
|
)
|
|
Other creditors
|
|
|
(2,807
|
)
|
|
(2,800
|
)
|
|
(2,056
|
)
|
|
(1,764
|
)
|
|
|
18
|
|
(4,513
|
)
|
|
(5,046
|
)
|
|
(2,444
|
)
|
|
(2,321
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current assets
|
|
|
490
|
|
|
904
|
|
|
1,446
|
|
|
467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
18,884
|
|
|
19,858
|
|
|
3,671
|
|
|
2,692
|
|
|
Creditors (amounts falling due after more than one year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible bonds
|
|
|
–
|
|
|
(502
|
)
|
|
–
|
|
|
–
|
|
|
Other borrowings
|
|
|
(11,542
|
)
|
|
(11,731
|
)
|
|
(746
|
)
|
|
–
|
|
|
Other creditors
|
|
|
(1,922
|
)
|
|
(2,022
|
)
|
|
(13
|
)
|
|
–
|
|
|
|
19
|
|
(13,464
|
)
|
|
(14,255
|
)
|
|
(759
|
)
|
|
–
|
|
|
Provisions for liabilities and charges
|
22
|
|
(4,157
|
)
|
|
(4,406
|
)
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets employed
|
|
|
1,263
|
|
|
1,197
|
|
|
2,912
|
|
|
2,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital
|
23
|
|
309
|
|
|
308
|
|
|
309
|
|
|
308
|
|
|
Share premium account
|
24
|
|
1,280
|
|
|
1,247
|
|
|
1,280
|
|
|
1,247
|
|
|
Other reserves
|
24
|
|
(5,131
|
)
|
|
(5,131
|
)
|
|
2
|
|
|
2
|
|
|
Profit and loss account
|
24
|
|
4,755
|
|
|
4,689
|
|
|
1,321
|
|
|
1,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds
|
|
|
1,213
|
|
|
1,113
|
|
|
2,912
|
|
|
2,692
|
|
|
Minority interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
12
|
|
|
15
|
|
|
–
|
|
|
–
|
|
|
Non-equity
|
25
|
|
38
|
|
|
69
|
|
|
–
|
|
|
–
|
|
|
|
|
|
50
|
|
|
84
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,263
|
|
|
1,197
|
|
|
2,912
|
|
|
2,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies are shown in note 29.
The notes on pages 77 to 128 inclusive form part of the accounts which were approved by the Board of Directors on 19 May 2004 and were signed on its behalf by:
Sir John Parker
Chairman
Steve Lucas
Group Finance Director
75 National Grid Transco
_Annual Report
and Accounts 2003/04
Back to Contents
Group Cash Flow Statement
for the years ended 31 March
|
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
Notes
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities before exceptional items
|
27
|
(a)
|
3,058
|
|
|
3,154
|
|
|
2,394
|
|
|
Expenditure relating to exceptional items
|
|
|
(248
|
)
|
|
(328
|
)
|
|
(103
|
)
|
|
Net cash inflow from operating activities
|
|
|
2,810
|
|
|
2,826
|
|
|
2,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from joint ventures
|
|
|
8
|
|
|
11
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Returns on investments and servicing of finance
|
|
|
|
|
|
|
|
|
|
|
|
Interest received and similar income
|
|
|
137
|
|
|
56
|
|
|
88
|
|
|
Interest paid and similar charges
|
|
|
(823
|
)
|
|
(957
|
)
|
|
(784
|
)
|
|
Dividends paid to minority interests
|
|
|
(6
|
)
|
|
(11
|
)
|
|
(9
|
)
|
|
Net cash outflow for returns on investments and servicing of finance
|
|
|
(692
|
)
|
|
(912
|
)
|
|
(705
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
|
|
|
|
|
|
|
|
|
|
|
Net corporate tax paid
|
|
|
(18
|
)
|
|
(112
|
)
|
|
(212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure and financial investment
|
|
|
|
|
|
|
|
|
|
|
|
Net payments to acquire intangible and tangible fixed assets
|
|
|
(1,400
|
)
|
|
(1,518
|
)
|
|
(1,734
|
)
|
|
Receipts from disposals of tangible fixed assets
|
|
|
146
|
|
|
111
|
|
|
191
|
|
|
Receipts from disposals of shares by an employee share plan
|
|
|
–
|
|
|
–
|
|
|
50
|
|
|
Other
|
|
|
–
|
|
|
–
|
|
|
10
|
|
|
Net cash outflow for capital expenditure and financial investment
|
|
|
(1,254
|
)
|
|
(1,407
|
)
|
|
(1,483
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions and disposals
|
|
|
|
|
|
|
|
|
|
|
|
Payments to acquire investments
|
|
|
(26
|
)
|
|
(165
|
)
|
|
(56
|
)
|
|
Receipts from disposals of investments
|
27
|
(b)
|
33
|
|
|
328
|
|
|
37
|
|
|
Acquisition of Group undertaking
|
27
|
(c)
|
–
|
|
|
–
|
|
|
(950
|
)
|
|
Net cash inflow/(outflow) for acquisitions and disposals
|
|
|
7
|
|
|
163
|
|
|
(969
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity dividends paid
|
|
|
(560
|
)
|
|
(571
|
)
|
|
(478
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) before the management of liquid resources and financing
|
|
|
301
|
|
|
(2
|
)
|
|
(1,543
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management of liquid resources
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)/decrease in short-term deposits
|
|
|
(48
|
)
|
|
(138
|
)
|
|
347
|
|
|
Net cash (outflow)/inflow from the management of liquid resources
|
27
|
(d),(e)
|
(48
|
)
|
|
(138
|
)
|
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
|
|
|
|
|
|
Issue of ordinary shares
|
|
|
38
|
|
|
4
|
|
|
12
|
|
|
Payments to repurchase ordinary shares
|
|
|
–
|
|
|
(97
|
)
|
|
–
|
|
|
Termination of cross currency swaps
|
27
|
(d)
|
148
|
|
|
–
|
|
|
–
|
|
|
(Decrease)/increase in borrowings
|
27
|
(d),(e)
|
(426
|
)
|
|
267
|
|
|
1,206
|
|
|
Net cash (outflow)/inflow from financing
|
|
|
(240
|
)
|
|
174
|
|
|
1,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movement in cash and overdrafts
|
27
|
(d),(e)
|
13
|
|
|
34
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in the cash flows above are cash flows for discontinued operations as set out below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from operating activities
|
|
|
5
|
|
|
(70
|
)
|
|
53
|
|
|
Net cash outflow for returns on investments and servicing of finance
|
|
|
(2
|
)
|
|
(14
|
)
|
|
(3
|
)
|
|
Net cash (outflow)/inflow for taxation
|
|
|
–
|
|
|
(1
|
)
|
|
13
|
|
|
Net cash outflow for capital expenditure and financial investment
|
|
|
(1
|
)
|
|
(123
|
)
|
|
(344
|
)
|
|
Net cash outflow for acquisitions and disposals
|
|
|
–
|
|
|
(3
|
)
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) before the management of liquid resources and financing
|
|
|
2
|
|
|
(211
|
)
|
|
(293
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Liquid resources comprise money market deposits, equities and gilts.
Group Statement of Total Recognised Gains and Losses
for the years ended 31 March
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year
|
1,099
|
|
391
|
|
(321
|
)
|
|
Exchange adjustments
|
(417
|
)
|
(322
|
)
|
(58
|
)
|
|
Tax on exchange adjustments
|
(12
|
)
|
12
|
|
21
|
|
|
Reduction in revaluation reserve on reclassification of investment properties
|
–
|
|
–
|
|
(50
|
)
|
|
Unrealised gain on transfer of fixed assets to a joint venture (net of tax)
|
–
|
|
6
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognised gains and losses
|
670
|
|
87
|
|
(401
|
)
|
|
|
|
|
|
|
|
The notes on pages 77 to 128 form part of the Accounts.
Annual Report and Accounts 2003/04_
National
Grid Transco
76
Back to Contents
Notes to the Accounts
1. Adoption of UITF 38
During
the year, the Group adopted UITF 38 ‘Accounting for ESOP trusts’. The adoption of this standard constitutes a change in accounting policy. Therefore, the impact has been reflected as a prior year
adjustment in accordance with Financial Reporting Standard 3. At 31 March 2003, the Group reported £39m of own shares within fixed asset investments. On adoption of UITF 38, the own shares were reclassified from fixed asset investments and are
now reflected within the profit and loss account reserve. The adoption of UITF 38 has resulted in a decrease in net assets of £34m at 31 March 2004 and £39m
at 31 March 2003.
2. Segmental analysis
Segmental information is presented in
accordance with the management responsibilities and economic characteristics
of the Group’s business activities. Management responsibilities changed during the year ended 31
March 2004. Segmental reporting has been aligned to reflect the changes in responsibilities, resulting in a restatement of segmental results for the years ended 31 March 2003 and 31 March 2002. The principal effect of this is to reclassify the
results of the UK Interconnectors and LNG Storage businesses from ‘UK electricity and gas transmission’ to ‘Other activities’.
The US electricity distribution segment shown below includes the recovery of stranded costs.
‘Continuing operations – Other activities’ primarily relates to: gas metering activities; liquefied natural gas storage activities; the UK electricity interconnector business; Advantica – the energy
technology and systems solutions business; and Gridcom which provides telecommunications infrastructure to operators in the UK and the US.
Discontinued operations comprise activities formerly within Other activities. Discontinued operations primarily include EnMO for all years presented, The Leasing Group and 186k Limited for 2003 and 2002 in Group
undertakings, and telecom joint ventures and an associate in 2003 and 2002.
In the 2002 segmental analysis of turnover and operating profit, the repayment of £267m of surplus entry capacity auction revenue, that was rebated to shippers through distribution tariffs, has been reported
within the UK electricity and gas transmission segment.
a) Turnover
|
|
|
|
Sales
|
|
Sales
|
|
|
|
Sales
|
|
Sales
|
|
|
|
Sales
|
|
Sales
|
|
|
|
Total
|
|
between
|
|
to third
|
|
Total
|
|
between
|
|
to third
|
|
Total
|
|
between
|
|
to third
|
|
|
|
sales
|
|
businesses
|
|
parties
|
|
sales
|
|
businesses
|
|
parties
|
|
sales
|
|
businesses
|
|
parties
|
|
|
|
2004
|
|
2004
|
|
2004
|
|
2003
|
|
2003
|
|
2003
|
|
2002
|
|
2002
|
|
2002
|
|
|
|
|
|
|
|
|
|
(restated)
|
|
(restated)
|
|
(restated)
|
|
(restated)
|
|
(restated)
|
|
(restated)
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover, including share of joint ventures’
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– continuing operations
|
9,408
|
|
462
|
|
8,946
|
|
9,302
|
|
370
|
|
8,932
|
|
7,509
|
|
290
|
|
7,219
|
|
|
– discontinued operations
|
158
|
|
–
|
|
158
|
|
653
|
|
19
|
|
634
|
|
639
|
|
37
|
|
602
|
|
|
Less: share of joint ventures’ turnover
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– continuing operations
|
(71
|
)
|
–
|
|
(71
|
)
|
(99
|
)
|
–
|
|
(99
|
))
|
(141
|
)
|
–
|
|
(141
|
)
|
|
– discontinued operations
|
–
|
|
–
|
|
–
|
|
(67
|
)
|
–
|
|
(67
|
)
|
(126
|
)
|
–
|
|
(126
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group turnover
|
9,495
|
|
462
|
|
9,033
|
|
9,789
|
|
389
|
|
9,400
|
|
7,881
|
|
327
|
|
7,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK gas distribution
|
2,245
|
|
120
|
|
2,125
|
|
2,089
|
|
47
|
|
2,042
|
|
2,013
|
|
–
|
|
2,013
|
|
|
UK electricity and gas transmission
|
1,867
|
|
35
|
|
1,832
|
|
1,893
|
|
29
|
|
1,864
|
|
1,799
|
|
45
|
|
1,754
|
|
|
US electricity transmission
|
318
|
|
48
|
|
270
|
|
407
|
|
5
|
|
402
|
|
278
|
|
1
|
|
277
|
|
|
US electricity distribution
|
3,537
|
|
1
|
|
3,536
|
|
3,446
|
|
1
|
|
3,445
|
|
2,282
|
|
5
|
|
2,277
|
|
|
US gas distribution
|
464
|
|
–
|
|
464
|
|
446
|
|
–
|
|
446
|
|
104
|
|
–
|
|
104
|
|
|
Other activities
|
906
|
|
258
|
|
648
|
|
922
|
|
288
|
|
634
|
|
892
|
|
239
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,337
|
|
462
|
|
8,875
|
|
9,203
|
|
370
|
|
8,833
|
|
7,368
|
|
290
|
|
7,078
|
|
|
Discontinued operations
|
158
|
|
–
|
|
158
|
|
586
|
|
19
|
|
567
|
|
513
|
|
37
|
|
476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group turnover
|
9,495
|
|
462
|
|
9,033
|
|
9,789
|
|
389
|
|
9,400
|
|
7,881
|
|
327
|
|
7,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK
|
|
|
|
|
4,736
|
|
|
|
|
|
5,096
|
|
|
|
|
|
4,865
|
|
|
US
|
|
|
|
|
4,297
|
|
|
|
|
|
4,304
|
|
|
|
|
|
2,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,033
|
|
|
|
|
|
9,400
|
|
|
|
|
|
7,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The analysis of turnover by geographical area is on the basis of origin. Turnover on a destination basis would not be materially different. There is no turnover between the UK and US geographical areas.
Approximately 15% (2003: 16%) of the Group’s turnover for the year ended 31 March 2004 amounting to approximately £1.4bn (2003: £1.5bn) derives from a single customer, the Centrica Group. The majority
of this turnover is in the UK gas distribution segment with lesser amounts in other activities and the UK electricity and gas transmission segment.
77 National Grid Transco_
Annual Report
and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
2. Segmental analysis
(continued)
b) Operating
profit
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before exceptional
items
|
|
After exceptional
items
|
|
|
|
and goodwill amortisation
|
|
and goodwill amortisation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
(restated)
|
|
(restated)
|
|
|
|
(restated)
|
|
(restated)
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group undertakings – continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK gas distribution
|
|
729
|
|
554
|
|
548
|
|
640
|
|
443
|
|
504
|
|
|
UK electricity and gas transmission
|
|
769
|
|
820
|
|
756
|
|
755
|
|
774
|
|
713
|
|
|
US electricity transmission
|
|
133
|
|
128
|
|
87
|
|
105
|
|
103
|
|
64
|
|
|
US electricity distribution
|
|
449
|
|
513
|
|
266
|
|
294
|
|
413
|
|
149
|
|
|
US gas distribution
|
|
48
|
|
58
|
|
17
|
|
37
|
|
49
|
|
8
|
|
|
Other activities
|
|
103
|
|
143
|
|
206
|
|
24
|
|
24
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,231
|
|
2,216
|
|
1,880
|
|
1,855
|
|
1,806
|
|
1,558
|
|
|
Group undertakings – discontinued
operations
|
|
–
|
|
(26
|
)
|
(62
|
)
|
–
|
|
(194
|
)
|
(498
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit of Group undertakings
|
|
2,231
|
|
2,190
|
|
1,818
|
|
1,855
|
|
1,612
|
|
1,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint ventures and associate – continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity activities
|
|
7
|
|
15
|
|
36
|
|
7
|
|
15
|
|
36
|
|
|
Other activities
|
|
–
|
|
–
|
|
(17
|
)
|
–
|
|
–
|
|
(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
15
|
|
19
|
|
7
|
|
15
|
|
(29
|
)
|
|
Joint ventures and associate – discontinued
operations
|
|
–
|
|
(20
|
)
|
(54
|
)
|
–
|
|
109
|
|
(672
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) of joint ventures
and associate
|
|
7
|
|
(5
|
)
|
(35
|
)
|
7
|
|
124
|
|
(701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating profit
|
|
2,238
|
|
2,185
|
|
1,783
|
|
1,862
|
|
1,736
|
|
359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK
|
|
1,600
|
|
1,481
|
|
1,420
|
|
1,440
|
|
1,051
|
|
440
|
|
|
US
|
|
632
|
|
704
|
|
377
|
|
416
|
|
549
|
|
224
|
|
|
Latin America
|
|
–
|
|
(7
|
)
|
(19
|
)
|
–
|
|
128
|
|
(310
|
)
|
|
Rest of the World
|
|
6
|
|
7
|
|
5
|
|
6
|
|
8
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,238
|
|
2,185
|
|
1,783
|
|
1,862
|
|
1,736
|
|
359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
c) Total and net assets
|
|
|
Total assets
|
|
Net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
|
|
|
(restated)
|
|
|
|
(restated)
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Group undertakings – continuing operations
|
|
|
|
|
|
|
|
|
|
|
UK gas distribution
|
|
4,928
|
|
4,998
|
|
3,403
|
|
3,480
|
|
|
UK electricity and gas transmission
|
|
6,284
|
|
5,737
|
|
5,472
|
|
4,994
|
|
|
US electricity transmission
|
|
1,539
|
|
1,736
|
|
1,465
|
|
1,656
|
|
|
US electricity distribution
|
|
7,200
|
|
8,507
|
|
5,548
|
|
6,405
|
|
|
US gas distribution
|
|
821
|
|
930
|
|
734
|
|
778
|
|
|
Other activities
|
|
1,890
|
|
2,189
|
|
940
|
|
1,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,662
|
|
24,097
|
|
17,562
|
|
18,672
|
|
|
Group undertakings – discontinued
operations
|
|
–
|
|
109
|
|
(7
|
)
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Group undertakings
|
|
22,662
|
|
24,206
|
|
17,555
|
|
18,670
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint ventures – continuing operations
|
|
|
|
|
|
|
|
|
|
|
Electricity activities
|
|
19
|
|
42
|
|
19
|
|
42
|
|
|
Other activities
|
|
–
|
|
2
|
|
–
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint ventures
|
|
19
|
|
44
|
|
19
|
|
44
|
|
|
Unallocated
|
|
716
|
|
654
|
|
(16,311
|
)
|
(17,517
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,397
|
|
24,904
|
|
1,263
|
|
1,197
|
|
|
|
|
|
|
|
|
|
|
|
|
UK
|
|
12,846
|
|
12,974
|
|
9,565
|
|
9,774
|
|
|
US
|
|
9,679
|
|
11,209
|
|
7,854
|
|
8,873
|
|
|
Rest of the World
|
|
156
|
|
67
|
|
155
|
|
67
|
|
|
Unallocated
|
|
716
|
|
654
|
|
(16,311
|
)
|
(17,517
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,397
|
|
24,904
|
|
1,263
|
|
1,197
|
|
|
|
|
|
|
|
|
|
|
|
The analysis of total assets and net assets by business segment includes all attributable goodwill and excludes inter-business balances. Unallocated total assets include current asset investments, cash, taxation and
taxation related regulatory assets. Unallocated net liabilities include net borrowings, taxation, interest, dividends and taxation related regulatory assets.
Annual Report and Accounts 2003/04_
National
Grid Transco
78
Back to Contents
Notes to the Accounts
_continued
2.
Segmental
analysis
(continued)
d) Other
segmental information
|
|
|
Capital expenditure
|
|
Depreciation and
amortisation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
(restated)
|
|
(restated)
|
|
|
|
(restated)
|
|
(restated)
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group undertakings – continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK gas distribution
|
|
293
|
|
380
|
|
455
|
|
195
|
|
185
|
|
176
|
|
|
UK electricity and gas transmission
|
|
584
|
|
567
|
|
613
|
|
276
|
|
243
|
|
233
|
|
|
US electricity transmission
|
|
53
|
|
49
|
|
38
|
|
67
|
|
71
|
|
46
|
|
|
US electricity distribution
|
|
227
|
|
209
|
|
141
|
|
365
|
|
359
|
|
192
|
|
|
US gas distribution
|
|
50
|
|
40
|
|
3
|
|
32
|
|
34
|
|
6
|
|
|
Other activities
|
|
274
|
|
180
|
|
204
|
|
182
|
|
170
|
|
173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,481
|
|
1,425
|
|
1,454
|
|
1,117
|
|
1,062
|
|
826
|
|
|
Group undertakings – discontinued
operations
|
|
–
|
|
95
|
|
393
|
|
–
|
|
26
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group undertakings
|
|
1,481
|
|
1,520
|
|
1,847
|
|
1,117
|
|
1,088
|
|
876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK
|
|
1,071
|
|
1,172
|
|
1,638
|
|
644
|
|
613
|
|
619
|
|
|
US
|
|
332
|
|
298
|
|
203
|
|
473
|
|
475
|
|
257
|
|
|
Rest of the World
|
|
78
|
|
50
|
|
6
|
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,481
|
|
1,520
|
|
1,847
|
|
1,117
|
|
1,088
|
|
876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure comprises additions to tangible and intangible fixed assets (excluding goodwill) amounting to £1,479m (2003: £1,519m; 2002: £1,840m) and £2m (2003: £1m; 2002:
£7m) respectively.
Depreciation and amortisation includes depreciation
of tangible fixed assets, amortisation of intangible fixed assets and amortisation
of regulatory assets.
3.
Operating
costs
|
|
Continuing operations
|
|
Discontinued operations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2004
|
|
2003
|
|
2002
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
|
|
7,020
|
|
7,027
|
|
5,521
|
|
158
|
|
780
|
|
1,011
|
|
7,178
|
|
7,807
|
|
6,532
|
|
|
Charged from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– continuing operations
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(1
|
)
|
–
|
|
–
|
|
(1
|
)
|
|
– discontinued operations
|
|
–
|
|
(19
|
)
|
(37
|
)
|
–
|
|
–
|
|
–
|
|
–
|
|
(19
|
)
|
(37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External operating costs
|
|
7,020
|
|
7,008
|
|
5,484
|
|
158
|
|
780
|
|
1,010
|
|
7,178
|
|
7,788
|
|
6,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
866
|
|
825
|
|
700
|
|
–
|
|
26
|
|
50
|
|
866
|
|
851
|
|
750
|
|
|
Payroll costs (note 5(a))
|
|
1,020
|
|
1,093
|
|
907
|
|
–
|
|
14
|
|
39
|
|
1,020
|
|
1,107
|
|
946
|
|
|
Other operating charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Purchases of electricity
|
|
1,998
|
|
1,901
|
|
1,410
|
|
–
|
|
–
|
|
–
|
|
1,998
|
|
1,901
|
|
1,410
|
|
|
– Purchases of gas
|
|
371
|
|
357
|
|
171
|
|
–
|
|
–
|
|
–
|
|
371
|
|
357
|
|
171
|
|
|
– Rates and property
taxes
|
|
516
|
|
537
|
|
422
|
|
–
|
|
–
|
|
2
|
|
516
|
|
537
|
|
424
|
|
|
– Electricity transmission
services scheme
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
direct
costs
|
|
277
|
|
252
|
|
204
|
|
–
|
|
–
|
|
–
|
|
277
|
|
252
|
|
204
|
|
|
– EnMO direct costs
|
|
–
|
|
–
|
|
–
|
|
158
|
|
530
|
|
395
|
|
158
|
|
530
|
|
395
|
|
|
– Replacement expenditure
|
|
388
|
|
405
|
|
368
|
|
–
|
|
–
|
|
–
|
|
388
|
|
405
|
|
368
|
|
|
– Exceptional operating
items (note 4)
|
|
277
|
|
308
|
|
237
|
|
–
|
|
168
|
|
436
|
|
277
|
|
476
|
|
673
|
|
|
– Other non-exceptional
operating charges
|
|
1,307
|
|
1,330
|
|
1,065
|
|
–
|
|
42
|
|
88
|
|
1,307
|
|
1,372
|
|
1,153
|
|
|
|
|
5,134
|
|
5,090
|
|
3,877
|
|
158
|
|
740
|
|
921
|
|
5,292
|
|
5,830
|
|
4,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,020
|
|
7,008
|
|
5,484
|
|
158
|
|
780
|
|
1,010
|
|
7,178
|
|
7,788
|
|
6,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs (except where
otherwise noted) include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
18
|
|
16
|
|
|
Operating lease rentals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Plant and machinery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
16
|
|
8
|
|
|
– Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
52
|
|
22
|
|
|
Amortisation of intangible fixed assets
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
105
|
|
91
|
|
|
Amortisation of regulatory assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
132
|
|
35
|
|
|
Auditors’ remuneration (ii)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory audit services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Annual audit (audit fee
for the Company was £8,700 (2003: £8,500; 2002: £8,000))
|
|
|
|
|
|
4
|
|
3
|
|
4
|
|
|
– Regulatory reporting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
1
|
|
1
|
|
|
Further audit related services (iii)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
3
|
|
2
|
|
|
Tax compliance and advisory services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
3
|
|
1
|
|
|
Other non-audit services (iv)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
3
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Includes the amortisation of goodwill amounting
to £99m (2003: £102m; 2002: £85m) and negative goodwill
of £nil (2003: £4m; 2002: £nil) but excludes the amortisation
of goodwill of £nil (2003: £nil; 2002: £12m) related to
joint ventures and associate.
|
|
(ii)
|
In addition to the fees included above,
fees of £nil (2003: £nil; 2002: £2m) incurred in respect
of acquisitions have been capitalised.
|
|
(iii)
|
£1.5m of assurance services were
provided in respect of the separation of UK-based distribution networks.
Also included are £nil (2003: £2m) of fees related to the Merger
which were reflected within non-operating exceptional items.
|
|
(iv)
|
Other non-audit services, in the current
year, related to vendor due diligence work associated with the potential
gas distribution network sales. For the years ended 31 March 2003 and 2002,
other non-audit services included £2m and £6m respectively in
relation to services provided by the consulting business unit of PricewaterhouseCoopers
which was sold to IBM United Kingdom Limited on 30 September 2002.
|
79 National Grid Transco_
Annual
Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
4.
Exceptional
items
The Group has categorised the following items as exceptional items under UK GAAP because, by either their size, incidence or because they are specifically prescribed, they need to be separately disclosed for the
accounts to show a true and fair view.
Paragraph 20 of FRS 3, requires that certain items should be disclosed after operating profit and are shown below as ‘non-operating exceptional items’. These items comprise: a) costs associated with a
fundamental reorganisation which in the case of the Group relate to the transaction costs relating to the Merger; b) profit on disposal of fixed assets (including the gain on sale of shares by an employee share plan, gain on assets held for exchange
and other fixed asset investments); and c) profit or loss on the sale or termination of operations.
Other exceptional items are shown below as
‘operating exceptional items’. The Directors believe these items require
separate disclosure, as permitted by FRS 3, within operating profit to show
a true and fair view. These items include: restructuring costs; costs arising
from the recognition of employee and property costs arising as a direct result
of the Merger; share of exceptional operating items of a joint venture; impairment
of business; impairment of investments in joint ventures and associate; impairment
of assets; and environmental provision which are all disclosed by virtue of
their size.
a) Operating
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
Restructuring costs (i)
|
249
|
|
203
|
|
187
|
|
|
Environmental provision (ii)
|
28
|
|
–
|
|
–
|
|
|
Impairment of assets (iii)
|
–
|
|
–
|
|
50
|
|
|
Merger costs (iv)
|
–
|
|
105
|
|
–
|
|
|
Share of exceptional operating items of
joint venture (v)
|
–
|
|
–
|
|
48
|
|
|
|
|
|
|
|
|
|
|
277
|
|
308
|
|
285
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
Restructuring costs (i)
|
–
|
|
6
|
|
–
|
|
|
Impairment of investments in joint ventures
and associate (vi)
|
–
|
|
(135
|
)
|
792
|
|
|
Impairment of business (vii)
|
–
|
|
168
|
|
250
|
|
|
|
|
|
|
|
|
|
|
–
|
|
39
|
|
1,042
|
|
|
|
|
|
|
|
|
|
Total operating exceptional items
|
277
|
|
347
|
|
1,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The 2004 restructuring costs consist of
£24m of costs associated with the proposed disposal of UK-based distribution
networks and other charges of £225m. The other charges primarily related
to planned cost reduction programmes in the UK and US businesses. The 2003
and 2002 charges primarily related to costs incurred in reorganisations
in the UK and US businesses (2004: £170m after tax; 2003: £165m
after tax; 2002: £130m after tax).
|
|
(ii)
|
Following completion of site investigations
in the UK, the environmental obligations in respect of those sites was adjusted
resulting in the recognition of an additional charge of £28m (£28m
after tax).
|
|
(iii)
|
The impairment charge for 2002 related
to a review of the carrying value of LNG storage assets, which resulted
in a charge to operating profit amounting to £50m (£35m after
tax). In the LNG review, future cash flows were determined based on a five-year
business plan projected out to 20 years and discounted at a pre-tax rate
of 6.25%.
|
|
(iv)
|
Represented employee and property costs
associated with the Merger (£76m after tax).
|
|
(v)
|
Share of exceptional operating items of
a joint venture in 2002 represented the Group’s share of the write-off
of an investment and the write-down of goodwill in a joint venture prior
to it becoming a wholly-owned subsidiary of the Group (£48m after
tax). The write-down of goodwill followed an impairment review which applied
a discount rate of 15%. The review used growth rates over a plan period
covering nine years. The assumptions of the plan were consistent with management’s
views of the market and the joint venture’s performance therein.
|
|
(vi)
|
The 2003 credits related to Intelig and
other telecoms joint ventures (£155m after tax). The exceptional credits
arising in 2003 substantially represented the reversal of the Group’s
share of retained losses incurred by these joint ventures during the period
from 1 April 2002 to the date of disposal or the date that equity accounting
ceased. £129m of the pre-tax exceptional credits were reflected in
‘Share of joint ventures’ and associate’s operating profit/(loss)
– discontinued operations’ . The 2002 exceptional charge of £792m
(£775m after tax) related to the write-down of the Group’s investment
in its joint ventures and associate. This charge comprised a write-down
of the carrying value of the investments of £606m (£589m after
tax) to their estimated recoverable amounts, and the recognition of related
liabilities of £186m (£186m after tax).
|
|
(vii)
|
In 2002 and 2003, following a review of
the carrying value of certain of the Group’s telecoms assets, the Group
incurred impairment charges that resulted in the write-down of those assets
to their estimated recoverable amounts and the recognition of other related
costs (2003: £143m after tax; 2002: £175m after tax).
|
b) Non-operating
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
Profit on disposal of tangible fixed assets
(viii)
|
(96
|
)
|
(48
|
)
|
(94
|
)
|
|
Merger costs (ix)
|
–
|
|
79
|
|
–
|
|
|
Gain on sale of shares by an employee share
plan (x)
|
–
|
|
–
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
(96
|
)
|
31
|
|
(125
|
)
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
Gain on assets held for exchange (xi)
|
(226
|
)
|
–
|
|
–
|
|
|
Loss on sale or termination of operations
(xii)
|
–
|
|
68
|
|
–
|
|
|
Profit on disposal of investments (xiii)
|
–
|
|
–
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
(226
|
)
|
68
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
Total non-operating exceptional items
|
(322
|
)
|
99
|
|
(156
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(viii)
|
The after tax profit on disposal of tangible
fixed assets was £96m (2003: £50m; 2002: £96m).
|
|
(ix)
|
The 2003 after tax transaction cost of
the Merger was £71m.
|
|
(x)
|
The 2002 after tax gain on sale of shares
by an employee share plan was £31m.
|
|
(xi)
|
The gain on assets held for exchange related
to the profit recognised on Energis shares delivered to Equity Plus Income
Convertible Securities (EPICs) bondholders on 6 May 2003 in settlement of
all EPICs outstanding at that date that had a carrying value of £243m.
This transaction represented the culmination of a deferred sale arrangement
entered into in February 1999. The after tax gain on assets held for exchange
was £226m.
|
|
(xii)
|
The charges for 2003 related to losses
on the sale of The Leasing Group of £45m and loss on closure of 186k
of £23m. The after tax loss relating to the 2003 sale and closure
amounted to £68m.
|
|
(xiii)
|
The after tax profit on disposal of investments
was £nil (2003: £nil; 2002: £31m).
|
Annual Report and Accounts 2003/04_
National
Grid Transco
80
Back to Contents
Notes to the Accounts
_continued
4.
Exceptional items
(continued)
c) Financing costs
For 2003 and 2002, the exceptional net interest
cost (2003: £31m; 2002: £142m) (2003: £31m after tax; 2002: £142m after tax) related to the Group’s share of foreign exchange losses incurred
on foreign currency borrowings by joint ventures (2003: £98m; 2002: £142m), partially offset by the Group’s share of a gain on net monetary liabilities (2003: £67m; 2002: £nil).
The gain on the net monetary liabilities related to Citelec, a joint venture
operating in Argentina, and reflected the net gain that arose on net monetary
liabilities that were financing the operation in a hyper-inflationary economy.
d) Taxation
The exceptional tax credit for 2004 of £89m included a net credit amounting to £10m
relating to investments disposed of in prior periods.
e) Minority interests
The 2003 exceptional minority interest charge
of £28m related to the Group’s share of the minority interest in the after taxation exceptional items of Citelec, a joint venture, and primarily reflected the
minority interest’s share of the gain on net monetary liabilities referred
to in note 4(c).
The 2002 exceptional minority interest credit of £50m related to the Group’s share of the minority interest in the after taxation exceptional items of Citelec, a joint venture, and primarily related to
foreign exchange losses incurred on foreign currency borrowings.
|
5.
Payroll
costs and employees
|
|
|
|
|
|
|
|
|
2004
|
2003
|
2002
|
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
a) Payroll costs
|
|
|
|
|
|
|
|
Wages and salaries
|
1,025
|
|
1,124
|
|
940
|
|
|
Social security costs
|
79
|
|
84
|
|
73
|
|
|
Other pension costs
|
150
|
|
117
|
|
90
|
|
|
|
|
|
|
|
|
|
|
1,254
|
|
1,325
|
|
1,103
|
|
|
Less: Amounts capitalised
|
(175
|
)
|
(158
|
)
|
(129
|
)
|
|
Payroll
costs included in replacement expenditure
|
(59
|
)
|
(60
|
)
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
1,020
|
|
1,107
|
|
946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March
|
|
Average
|
|
Average
|
|
Average
|
|
|
2004
|
2004
|
2003
|
2002
|
|
Number
|
Number
|
Number
|
Number
|
|
|
|
|
|
|
|
|
|
|
b) Number of employees
|
|
|
|
|
|
|
|
|
|
UK
|
15,498
|
|
16,241
|
|
18,399
|
|
19,227
|
|
|
US
|
9,018
|
|
9,402
|
|
10,120
|
|
5,094
|
|
|
Rest of the World
|
11
|
|
10
|
|
14
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
24,527
|
|
25,653
|
|
28,533
|
|
24,346
|
|
|
Discontinued operations
|
–
|
|
5
|
|
407
|
|
768
|
|
|
|
|
|
|
|
|
|
|
|
|
24,527
|
|
25,658
|
|
28,940
|
|
25,114
|
|
|
|
|
|
|
|
|
|
|
|
The vast majority
of employees in:
|
|
–
|
the UK are either directly
or indirectly employed in the transmission and distribution of gas or the
transmission of electricity.
|
|
–
|
the US are either directly
or indirectly employed in the transmission and distribution of electricity
or the distribution of gas.
|
|
|
|
In addition to
the payroll costs shown above, there were restructuring costs of £249m
(2003: £209m; 2002: £187m), primarily in respect of severance
costs, which have been included as part of restructuring costs within other
operating charges – exceptional items.
|
6.
Directors’ emoluments
Details of Directors’ emoluments are contained
in the auditable part of the Directors’ Remuneration Report on pages 58
to 67.
81
National Grid Transco
_Annual
Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
7.
Pensions and post-retirement benefits
UK post-retirement schemes
Substantially all the Group’s UK employees
are members of either the Electricity Supply Pension Scheme or the Lattice Group
Pension Scheme.
Electricity Supply Pension Scheme
The Electricity Supply Pension Scheme provides
final salary defined benefits on a funded basis. The assets of the scheme are
held in a separate trustee administered fund. The scheme is divided into sections,
one of
which is the Group’s section. It is subject to independent valuations at least every three years, on the basis of which the qualified actuary certifies the rate of employers’ contributions which, together with the specified contributions
payable by the employees and proceeds from the scheme’s assets, are expected to be sufficient to fund the benefits payable under the scheme. The latest full actuarial valuation of the Group’s section of the scheme was carried out by Bacon
& Woodrow, Consulting Actuaries (now Hewitt, Bacon and Woodrow), at 31 March
2001.
The projected unit method was used for the last
valuation of the pension scheme and for the purposes of accounting under Statement
of Standard Accounting Practice (SSAP) 24 ‘Accounting for Pension Costs’ and
the principal actuarial assumptions adopted were that the real annual rates of return on investments held in respect of pre-retirement members would average 4.5% and on investments held in respect of post-retirement members would average 3.5%; that
the annual rate of inflation would average 2.3%; that the real annual increase in salary would average 1.0%; and that pensions would increase at a real annual rate of 0.2%. The market value of the assets relating to the Group’s section of the
scheme at 31 March 2001 was £1,336m and the actuarial value of the assets represented approximately 118.3% of the actuarial value of the benefits that had accrued to members measured on a past service basis. The current agreed employers’
and employees’ contribution rates for the forthcoming year are 12% and 6%
respectively. These contribution rates will be reviewed when the next independent
actuarial valuation is completed based on the position at 31 March 2004. The
valuation is in the process of being carried out and therefore the outcome is
currently unknown.
Lattice Group Pension Scheme
The Lattice Group Pension Scheme provides final
salary defined benefits for employees who joined the Lattice Group prior to 31
March 2002. A defined contribution section was added to the scheme from 1 April
2002 for employees joining Lattice Group from that date. The scheme is funded
with assets held in a seperate trustee administered fund. It is subject to independent
valuations at least every three years, on the basis of which the qualified actuary
certifies
the rate of employers’ contributions which, together with the specified contributions payable by the employees and proceeds from the scheme’s
assets, are expected to be sufficient to fund the benefits payable under the
scheme.
The latest full actuarial valuation of the scheme was carried out by Watson Wyatt LLP at 31 March 2003. The projected unit method was used and the principal actuarial assumptions adopted were that the annual rate of
inflation would be 2.50% and that future real increases in pensionable earnings would be 1.5%. Investments held in respect of pensions before they become payable would average 4.9% real annual rate of return and investments held in respect of
pensions after they become payable would average 2.6% real annual rate of return and that pensions would increase at a real annual rate of 0.05%. The aggregate market value of the scheme’s assets was £10,141m and the value of the assets
represented approximately 92% of the actuarial value of benefits due to members calculated on the basis of pensionable earnings and service at 31 March 2003 on an ongoing basis and allowing for projected increases in pensionable earnings and
pensions.
The results of the actuarial valuation carried out at 31 March 2003 showed that based on long-term financial assumptions the contribution rate required to meet the future benefit accrual was 23.7% of pensionable
earnings (20.7% employers and 3% employees). Employers’ contributions were increased from 8.5% to 20.7% with effect from 1 April 2003. This contribution rate will be reviewed when the next independent actuarial valuation is carried out, which
will be no later than 31 March 2006. The ongoing contribution rate does not include an allowance for administration expenses. These contributions are reviewed annually. From 1 April 2003 the rate used for the recovery of administration costs was
1.4% of salary, from 1 April 2004 the rate was 1.6% of salary. Employers are currently, therefore, paying a total contribution rate of 22.3%. The actuarial valuation revealed a deficit of £879m gross (£615m net of tax) in the defined
benefit section on the basis of the assumptions adopted by the actuary. It has been agreed that no funding of the deficit identified in the 2003 actuarial valuation will need to be provided to the scheme until the outcome of the actuarial valuation
at 31 March 2007 is known. At this point, the Group will pay the gross amount of any deficit up to a maximum amount of £520m (£364m net of tax) into the scheme. For the period prior to these lump sum deficiency contributions being paid,
the Group has arranged for banks to provide the trustees of the Lattice Scheme with letters of credit. The main conditions under which these letters of credit could be drawn relate to events which would imperil the interests of the scheme, such as
Transco plc becoming insolvent or the Group failing to make agreed payments into the fund.
A further valuation was carried out at 31 March 2003, to calculate the charge in accordance with SSAP 24. The principal assumptions adopted were: price inflation of 2.5%; pension increases in payment of 2.55%; general
pensionable pay escalation of 3.5%; and a discount rate of 6%. The principal results of this valuation were the need to recognise a regular cost based on 21.4% of salary (excluding administration costs) and a deficit of £468m, which is being
spread over the average expected future service lives of employees in the Lattice scheme amounting to 14.1 years.
US post-retirement schemes
Pension
Substantially all the Group’s US
employees are members of defined benefit plans. The assets of the plans are held
in separate trustee administered funds. The latest full actuarial valuations
of these plans were carried out by Hewitt Associates LLC at 1 April 2003 and
these valuations were used to calculate the pension cost for the year ended 31
March 2004 (in compliance with SSAP 24). These valuations have been updated using
assumptions and market values
at 31 March 2004. The projected unit method was used for the updated valuations
and the principal actuarial assumptions adopted were: that the real annual rate
of return on investments would average 4.25%; that real annual increases in salary
would average nil for New York schemes and 1.45% for other US schemes; that
inflation would average 3.25% for New York schemes and 3.5% for other US schemes;
and that nominal increases in pensions would be nil. The market value of the
assets relating to
the Group’s US defined benefit plans at 31 March 2004 totalled US$1,945m
and the actuarial value of the assets represented 75% of the actuarial value
of the benefits that had accrued to members, after allowing for future salary
increases. There
are no formally agreed contribution rates for the US plans.
Healthcare and life insurance – retirees
In the US, the Group provides healthcare and life insurance to eligible retired US employees. Eligibility is based on certain age and length of service requirements and in some cases retirees must contribute to the
cost of their coverage. The latest full actuarial valuations were carried out at 1 April 2003. These valuations have been updated using assumptions and market values at 31 March 2004. The principal assumptions adopted were a discount rate of 5.75%
and that medical costs would increase by 10.0% per annum, decreasing to 5.0% by 2009 and remain at this rate thereafter.
The cost of providing healthcare and life insurance
to retired US employees for the year ended 31 March 2004 amounted to £31m
net of capitalised amounts (2003: £37m; 2002: £9m).
Annual Report and Accounts 2003/04_
National
Grid Transco
82
Back to Contents
Notes to the Accounts
_continued
7.
Pensions and post-retirement benefits
(continued)
Pension cost, prepayment and provisions for liabilities and charges
The pension cost charged to operating profit for
the year ended 31 March 2004 was £150m (2003: £117m; 2002: £90m). This represented defined contribution scheme costs of £2m (2003: £1m;
2002: £nil), defined benefit regular pension costs of £106m (2003: £136m; 2002: £127m) and a variation from the regular pension cost totalling £42m (2003: £20m credit; 2002: £37m credit), of which £2m
(2003: £2m; 2002: £2m) related to the partial release of a pension provision. In addition, net interest included a charge of £56m (2003: £3m credit; 2002: £30m
credit) in respect of the notional interest element of the variation from the
regular pension cost.
Included in debtors at 31 March 2004 was a pension prepayment of £19m (2003: £37m).
Included within provisions for liabilities and charges at 31 March 2004 was a pension and other post-retirement benefits provision of £464m (2003: £551m) – see note 22.
FRS 17 Retirement Benefits
On 20 November 2000, the Accounting Standards
Board introduced a new accounting standard, FRS 17 ‘Retirement Benefits’, replacing SSAP 24. FRS 17 is fully effective for periods beginning on or after 1 January
2005, though disclosures are required in the financial years prior to its full implementation. Disclosures showing the impact on the Group’s
profit and loss account and balance sheet, together with other disclosures required
by FRS 17, are set
out below.
The disclosures have been prepared by updating the results of the aforementioned valuations by independent qualified actuaries using the projected unit method of valuation on the basis of the following
assumptions:
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
|
US
|
|
|
US
|
|
|
|
Other post-
|
|
|
Other post-
|
|
|
Other post-
|
|
UK
|
US
|
retirement
|
UK
|
US
|
retirement
|
UK
|
US
|
retirement
|
|
Pensions
|
Pensions
|
benefits
|
Pensions
|
Pensions
|
benefits
|
Pensions
|
Pensions
|
benefits
|
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate of increase in salaries (i)
|
3.9
|
|
3.8
|
|
–
|
|
3.5
|
|
4.0
|
|
–
|
|
4.7
|
|
4.0
|
|
–
|
|
|
Rate of increase in pensions in payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and deferred pensions
|
3.0
|
|
–
|
|
–
|
|
2.6
|
|
–
|
|
–
|
|
2.8
|
|
–
|
|
–
|
|
|
Discount rate for liabilities
|
5.5
|
|
5.8
|
|
5.8
|
|
5.4
|
|
6.3
|
|
6.3
|
|
5.8
|
|
7.5
|
|
7.5
|
|
|
Rate of increase in Retail Price Index
or equivalent
|
2.9
|
|
3.3
|
|
–
|
|
2.5
|
|
3.2
|
|
–
|
|
2.8
|
|
3.5
|
|
–
|
|
|
Initial healthcare cost trend rate
|
–
|
|
–
|
|
10.0
|
|
–
|
|
–
|
|
10.0
|
|
–
|
|
–
|
|
10.0
|
|
|
Ultimate healthcare cost trend rate
|
–
|
|
–
|
|
5.0
|
|
–
|
|
–
|
|
5.0
|
|
–
|
|
–
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
A promotional age-related scale has also been used where appropriate.
|
An analysis of the assets held in the various
pension and other post-retirement benefit schemes and the expected rates of
return at 31 March 2004, 31 March 2003 and 31 March 2002 were as follows:
|
|
|
|
|
|
|
US Other
post-
|
|
|
|
|
UK Pensions
|
|
US Pensions
|
|
retirement
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
|
|
Long-term
|
|
|
|
Long-term
|
|
|
|
|
rate of return
|
|
rate of return
|
|
rate of return
|
|
|
expected at
|
Value at
|
expected at
|
Value at
|
expected at
|
Value at
|
|
31 March
|
31 March
|
31 March
|
31 March
|
31 March
|
31 March
|
|
2004
|
2004
|
2004
|
2004
|
2004
|
2004
|
|
%
|
£m
|
%
|
£m
|
%
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equities
|
|
8.0
|
|
5,260
|
|
10.8
|
|
685
|
|
10.8
|
|
309
|
|
|
Bonds
|
|
4.9
|
|
5,896
|
|
4.0
|
|
360
|
|
4.0
|
|
180
|
|
|
Property
|
|
6.5
|
|
913
|
|
8.0
|
|
6
|
|
–
|
|
–
|
|
|
Other
|
|
4.0
|
|
300
|
|
12.0
|
|
12
|
|
0.9
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total market value of assets
|
|
|
|
12,369
|
|
|
|
1,063
|
|
|
|
496
|
|
|
Present value of scheme liabilities
|
|
|
|
(13,790
|
)
|
|
|
(1,488
|
)
|
|
|
(1,002
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit in schemes
|
|
|
|
(1,421
|
)
|
|
|
(425
|
)
|
|
|
(506
|
)
|
|
Related deferred tax asset
|
|
|
|
426
|
|
|
|
166
|
|
|
|
197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liability
|
|
|
|
(995
|
)
|
|
|
(259
|
)
|
|
|
(309
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Other post-
|
|
|
|
|
UK Pensions
|
|
US Pensions
|
|
retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
|
|
Long-term
|
|
|
|
Long-term
|
|
|
|
|
rate of return
|
|
rate of return
|
|
rate of return
|
|
|
expected at
|
Value at
|
expected at
|
Value at
|
expected at
|
Value at
|
|
31 March
|
31 March
|
31 March
|
31 March
|
31 March
|
31 March
|
|
2003
|
2003
|
2003
|
2003
|
2003
|
2003
|
|
%
|
£m
|
%
|
£m
|
%
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equities
|
|
8.5
|
|
4,590
|
|
11.0
|
|
586
|
|
11.0
|
|
158
|
|
|
Bonds
|
|
4.6
|
|
5,436
|
|
5.1
|
|
395
|
|
5.0
|
|
157
|
|
|
Property
|
|
6.5
|
|
901
|
|
9.0
|
|
8
|
|
–
|
|
–
|
|
|
Other
|
|
4.0
|
|
171
|
|
6.8
|
|
28
|
|
3.5
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total market value of assets
|
|
|
|
11,098
|
|
|
|
1,017
|
|
|
|
373
|
|
|
Present value of scheme liabilities
|
|
|
|
(13,269
|
)
|
|
|
(1,617
|
)
|
|
|
(1,003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit in schemes
|
|
|
|
(2,171
|
)
|
|
|
(600
|
)
|
|
|
(630
|
)
|
|
Related deferred tax asset
|
|
|
|
651
|
|
|
|
238
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liability
|
|
|
|
(1,520
|
)
|
|
|
(362
|
)
|
|
|
(380
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
7.
Pensions and post-retirement benefits
(continued)
|
|
|
|
|
|
|
|
|
|
|
US – Other
post-
|
|
|
|
|
UK – Pensions
|
|
US – Pensions
|
|
retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
|
|
Long-term
|
|
|
|
Long-term
|
|
|
|
|
|
|
rate
of return
|
|
|
|
rate
of return
|
|
|
|
rate
of return
|
|
|
|
|
|
|
expected
at
|
|
Value
at
|
|
expected
at
|
|
Value
at
|
|
expected
at
|
|
Value
at
|
|
|
|
|
31
March
|
|
31
March
|
|
31
March
|
|
31
March
|
|
31
March
|
|
31
March
|
|
|
|
|
2002
|
|
2002
|
|
2002
|
|
2002
|
|
2002
|
|
2002
|
|
|
|
|
%
|
|
£m
|
|
%
|
|
£m
|
|
%
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equities
|
|
7.5
|
|
7,462
|
|
10.2
|
|
902
|
|
10.3
|
|
236
|
|
|
Bonds
|
|
5.4
|
|
4,115
|
|
6.4
|
|
476
|
|
5.0
|
|
160
|
|
|
Property
|
|
6.5
|
|
852
|
|
8.0
|
|
11
|
|
–
|
|
–
|
|
|
Other
|
|
4.4
|
|
520
|
|
5.6
|
|
48
|
|
5.9
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total market value of assets
|
|
|
|
12,949
|
|
|
|
1,437
|
|
|
|
397
|
|
|
Present value of scheme liabilities
|
|
|
|
(12,642
|
)
|
|
|
(1,623
|
)
|
|
|
(884
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset/(deficit) in schemes
|
|
|
|
307
|
|
|
|
(186
|
)
|
|
|
(487
|
)
|
|
Related deferred tax asset
|
|
|
|
(93
|
)
|
|
|
74
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset/(liability)
|
|
|
|
214
|
|
|
|
(112
|
)
|
|
|
(294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net liability for UK – Pensions comprises net pension liabilities relating to funded schemes in deficit of £976m (2003: £1,503m), and net pension liabilities relating to unfunded schemes of
£19m (2003: £17m).
The net liability for US – Pensions comprises net pension liabilities relating to funded schemes in deficit of £221m (2003: £319m), and net pension liabilities relating to unfunded schemes of
£38m (2003: £43m).
The net liability for US – Other post-retirement benefits relates to funded schemes for both years presented.
At 31 March 2004, an increase of 0.1% in the discount rate would decrease the present value of liabilities for all schemes by around £241m and decrease the liability net of deferred tax by £169m and vice
versa.
If the FRS 17 position had been recognised in the Group’s accounts, the Group’s net assets employed at 31 March would have been as follows:
|
|
2004
|
|
2003
|
|
|
|
|
|
(restated)
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Net assets employed excluding net SSAP 24 liabilities and related impact on regulatory assets
|
1,482
|
|
1,442
|
|
|
Net FRS 17 liabilities
|
(1,563
|
)
|
(2,262
|
)
|
|
|
|
|
|
|
Net liabilities including net FRS 17 liabilities
|
(81
|
)
|
(820
|
)
|
|
|
|
|
|
The impact of the implementation of FRS 17 on net assets employed, as shown above, would be reflected within the profit and loss account reserve.
The pension and other post-retirement deficit has moved during the year ended 31 March 2003 and 31 March 2004 as set out below:
|
|
2004
|
|
2003
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
At 1 April
|
(3,401
|
)
|
(366
|
)
|
|
Current service cost
|
(215
|
)
|
(171
|
)
|
|
Past service cost
|
(3
|
)
|
(8
|
)
|
|
Net loss on settlements or curtailments
|
(61
|
)
|
(118
|
)
|
|
Contributions
|
393
|
|
317
|
|
|
Other financial income
|
(43
|
)
|
89
|
|
|
Actuarial gains/(losses)
|
822
|
|
(3,208
|
)
|
|
Exchange adjustments
|
156
|
|
64
|
|
|
|
|
|
|
|
At 31 March
|
(2,352
|
)
|
(3,401
|
)
|
|
|
|
|
|
If FRS 17 had been implemented for the years ended 31 March 2003 or 31 March 2004, the following amounts would have been charged to the profit and loss account in respect of pensions and other post-retirement benefits
for the year.
|
|
2004
|
|
2003
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Operating charge
|
|
|
|
|
|
Current service cost
|
146
|
|
171
|
|
|
Past service cost
|
3
|
|
8
|
|
|
Net loss on settlements or curtailments
|
130
|
|
118
|
|
|
|
|
|
|
|
Total charge to operating profit
|
279
|
|
297
|
|
|
|
|
|
|
|
Other financial (income)/costs
|
|
|
|
|
|
Expected return on scheme assets
|
(806
|
)
|
(977
|
)
|
|
Interest on scheme liabilities
|
849
|
|
888
|
|
|
|
|
|
|
|
Impact on financial income
|
43
|
|
(89
|
)
|
|
|
|
|
|
|
Net profit and loss charge before taxation
|
322
|
|
208
|
|
|
|
|
|
|
As the Lattice scheme is a closed scheme, under the projected unit method of valuation, the current service cost will increase as the members of the scheme approach retirement.
If the Group were to prepare its accounts under FRS 17, the net loss on settlements or curtailments above would be reported as part of exceptional items. The net FRS 17 profit and loss account impact before tax
excluding these exceptional items amounted to £192m (2003: £90m) and compares with the current UK GAAP charge in respect of pensions and other post-retirement benefits amounting to £264m (2003: £151m). The FRS 17
pre-exceptional profit and loss account charge (pre-tax) would therefore be £72m lower (2003: £61m lower) than the SSAP 24 charge.
Annual Report and
Accounts 2003/04_
National
Grid Transco
84
Back to Contents
Notes to the Accounts
_continued
7.
Pensions and post-retirement benefits
(continued)
The following pre-tax amounts would have been recognised in the statement of total recognised gains and losses:
|
|
2004
|
|
|
2003
|
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
Difference between actual and expected return on scheme assets
|
1,310
|
|
|
(2,529
|
)
|
|
Experience gains arising on scheme liabilities
|
51
|
|
|
11
|
|
|
Changes in assumptions
|
(539
|
)
|
|
(690
|
)
|
|
|
|
|
|
|
|
Actuarial gains/(losses)
|
822
|
|
|
(3,208
|
)
|
|
Exchange adjustments
|
(156
|
)
|
|
64
|
|
|
|
|
|
|
|
|
Net credit/(charge) to the statement of total recognised gains and losses
|
666
|
|
|
(3,144
|
)
|
|
|
|
|
|
|
|
History of experience gains and losses that would be recognised on an FRS 17 basis is set out below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Difference between actual and expected return on scheme assets (£m)
|
1,310
|
|
|
(2,529
|
)
|
|
– percentage of scheme assets
|
9%
|
|
|
(20%
|
)
|
|
Experience gains arising on scheme liabilities (£m)
|
51
|
|
|
11
|
|
|
– percentage of present value of scheme liabilities
|
–
|
|
|
–
|
|
|
Actuarial gains/(losses) (£m)
|
822
|
|
|
(3,208
|
)
|
|
– percentage of present value of scheme liabilities
|
5%
|
|
|
(20%
|
)
|
|
|
|
|
|
|
|
8.
Net
interest
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
|
|
|
(restated)
|
|
|
(restated)
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans and overdrafts
|
51
|
|
|
36
|
|
|
63
|
|
|
Other
|
869
|
|
|
945
|
|
|
692
|
|
|
|
|
|
|
|
|
|
|
|
Interest payable and similar charges
|
920
|
|
|
981
|
|
|
755
|
|
|
Unwinding of discount on provisions
|
11
|
|
|
13
|
|
|
17
|
|
|
Interest capitalised
|
(55
|
)
|
|
(28
|
)
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
Interest payable and similar charges net of interest capitalised
|
876
|
|
|
966
|
|
|
734
|
|
|
Interest receivable and similar income
|
(58
|
)
|
|
(55
|
)
|
|
(123
|
)
|
|
|
|
|
|
|
|
|
|
|
|
818
|
|
|
911
|
|
|
611
|
|
Joint ventures (including exceptional net interest of £nil (2003: £31m; 2002: £142m),
net of interest capitalised £nil (2003: £1m; 2002: £10m))
|
4
|
|
|
59
|
|
|
172
|
|
|
Associate
|
–
|
|
|
–
|
|
|
16
|
|
|
|
4
|
|
|
59
|
|
|
188
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
|
822
|
|
|
970
|
|
|
799
|
|
|
|
|
|
|
|
|
|
|
|
Comprising:
|
|
|
|
|
|
|
|
|
|
Net interest, excluding exceptional net interest
|
822
|
|
|
939
|
|
|
657
|
|
|
Exceptional net interest (note 4(c))
|
–
|
|
|
31
|
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
Net interest, including exceptional net interest
|
822
|
|
|
970
|
|
|
799
|
|
|
|
|
|
|
|
|
|
|
Interest on the funding attributable to assets in the course of construction was capitalised during the year at a rate of 5.7% (2003: 5.9%; 2002: 6.2% to 7.0%).
Interest payable and similar charges includes £4m (2003: £12m; 2002: £3m) relating to the loss incurred on the repurchase of debt during the year.
The comparatives for prior years have been restated resulting in a reclassification of interest from bank loans and overdrafts to other amounting to £221m and £80m for 2003 and 2002 respectively.
|
9.
Taxation
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
|
|
|
|
|
|
|
Corporation tax at 30%
|
193
|
|
|
12
|
|
|
153
|
|
|
Adjustment in respect of prior years (i)
|
(35
|
)
|
|
–
|
|
|
(78
|
)
|
|
Deferred tax
|
(15
|
)
|
|
107
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
143
|
|
|
119
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
Overseas
|
|
|
|
|
|
|
|
|
|
Corporate tax
|
16
|
|
|
27
|
|
|
73
|
|
|
Adjustment in respect of prior years
|
–
|
|
|
–
|
|
|
1
|
|
|
Deferred tax
|
99
|
|
|
94
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
|
|
|
115
|
|
|
121
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
258
|
|
|
240
|
|
|
79
|
|
|
Joint ventures
|
3
|
|
|
5
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
261
|
|
|
245
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
|
Comprising:
|
|
|
|
|
|
|
|
|
|
Taxation – excluding exceptional items
|
350
|
|
|
373
|
|
|
251
|
|
|
Taxation – exceptional items (note 4(d))
|
(89
|
)
|
|
(128
|
)
|
|
(166
|
)
|
|
|
|
|
|
|
|
|
|
|
|
261
|
|
|
245
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The UK corporation tax adjustment in respect of prior years includes £29m (2003: £nil; 2002: £75m) that relate to exceptional items.
|
The comparatives have been re-presented to accord with the analysis of the current year tax charge.
85 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
9.
Taxation
(continued)
A reconciliation of the UK corporation tax rate to the effective tax rate of the Group is as follows:
|
|
% of profit before taxation
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
|
|
|
UK corporation tax rate
|
30.0
|
|
30.0
|
|
30.0
|
|
|
Effect on tax charge of:
|
|
|
|
|
|
|
|
– Origination and reversal of timing differences
|
(8.1
|
)
|
(12.3
|
)
|
(4.6
|
)
|
|
– Permanent differences
|
(7.5
|
)
|
2.1
|
|
1.2
|
|
|
– Overseas income taxed at other than UK statutory rate
|
3.3
|
|
(2.5
|
)
|
(5.2
|
)
|
|
– Other
|
(0.1
|
)
|
0.3
|
|
2.6
|
|
|
|
|
|
|
|
|
|
Current tax charge
|
17.6
|
|
17.6
|
|
24.0
|
|
|
Deferred taxation
|
7.5
|
|
12.3
|
|
5.0
|
|
|
|
|
|
|
|
|
Effective tax rate before goodwill amortisation, prior year adjustments in respect of current tax
and exceptional items
|
25.1
|
|
29.9
|
|
29.0
|
|
|
Effect of goodwill amortisation
|
1.9
|
|
2.7
|
|
2.7
|
|
|
|
|
|
|
|
|
|
Effective tax rate before prior year adjustments in respect of current tax and exceptional items
|
27.0
|
|
32.6
|
|
31.7
|
|
|
Current tax adjustment in respect of prior years
|
(0.5
|
)
|
–
|
|
(7.3
|
)
|
|
|
|
|
|
|
|
|
Effective tax rate after adjustments in respect of prior years and before exceptional items
|
26.5
|
|
32.6
|
|
24.4
|
|
|
Exceptional items
|
(7.4
|
)
|
4.1
|
|
(54.3
|
)
|
|
|
|
|
|
|
|
|
Effective tax rate after exceptional items
|
19.1
|
|
36.7
|
|
(29.9
|
)
|
|
|
|
|
|
|
|
Factors that may affect future tax charges
The Group has brought forward non-trading debits
of £75m (2003: £75m; 2002: £75m), which may reduce taxable
profits in future years.
No provision has been made for deferred tax arising on gains recognised in respect of the sale of properties where potentially taxable gains have been rolled over into replacement assets. Such tax would become payable
only if the replacement assets were sold without it being possible to claim roll-over relief. The total amount unprovided for at 31 March 2004 was £58m (2003: £58m; 2002: £56m). At present, it is not envisaged that any tax on
amounts rolled over will become payable in the foreseeable future.
10. Dividends
The following table shows the dividends
paid or proposed by National Grid Transco for the year ended 31 March 2004:
|
|
2004
|
|
|
|
2003
|
|
|
|
|
|
pence
|
|
|
|
pence
|
|
|
|
|
|
(per
ordinary
|
|
2004
|
|
(per
ordinary
|
|
2003
|
|
|
|
share)
|
|
£m
|
|
share)
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
National Grid Transco
|
|
|
|
|
|
|
|
|
|
Ordinary dividends
|
|
|
|
|
|
|
|
|
|
Interim
|
7.91
|
|
243
|
|
6.86
|
|
213
|
|
|
Proposed final
|
11.87
|
|
366
|
|
10.34
|
|
317
|
|
|
|
|
|
|
|
|
|
|
|
|
19.78
|
|
609
|
|
17.20
|
|
530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following disclosures relate to National Grid and Lattice prior to the Merger:
|
|
|
|
|
|
|
|
2002
|
|
|
|
|
|
|
|
|
|
pence
|
|
|
|
|
|
|
|
|
|
(per ordinary
|
|
2002
|
|
|
|
|
|
|
|
share)
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
National Grid
|
|
|
|
|
|
|
|
|
|
Ordinary dividends
|
|
|
|
|
|
|
|
|
|
Interim
|
|
|
|
|
6.46
|
|
96
|
|
|
Final
|
|
|
|
|
9.58
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.04
|
|
265
|
|
|
|
|
|
|
|
|
|
|
|
Lattice
|
|
|
|
|
|
|
|
|
|
Ordinary dividends
|
|
|
|
|
|
|
|
|
|
Interim
|
|
|
|
|
3.60
|
|
126
|
|
|
Second interim
|
|
|
|
|
5.40
|
|
189
|
|
|
Final
|
|
|
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.00
|
|
315
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-Merger dividends
|
|
|
|
|
n/a
|
|
580
|
|
|
|
|
|
|
|
|
|
|
Annual Report and Accounts 2003/04_
National
Grid Transco
86
Back to Contents
Notes to the Accounts
_continued
11. Earnings per share and adjusted
profit on
ordinary activities before taxation
a) Earnings per share
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
(Loss)/
|
|
(Loss)/
|
|
Weighted
|
|
|
Earnings
|
|
Profit
|
|
average
|
|
Earnings
|
|
|
|
average
|
|
earnings
|
|
profit
|
|
average
|
|
|
per
|
|
for the
|
|
number
|
|
per
|
|
Profit for
|
|
number
|
|
per
|
|
for the
|
|
number
|
|
|
share
|
|
year
|
|
shares
|
|
share
|
|
the year
|
|
shares
|
|
share
|
|
year
|
|
shares
|
|
|
2004
|
|
2004
|
|
2004
|
|
2003
|
|
2003
|
|
2003
|
|
2002
|
|
2002
|
|
2002
|
|
|
pence
|
|
£m
|
|
million
|
|
pence
|
|
£m
|
|
million
|
|
pence
|
|
£m
|
|
million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic, including exceptional items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and goodwill amortisation
|
35.8
|
|
1,099
|
|
3,070
|
|
12.7
|
|
391
|
|
3,078
|
|
(11.3
|
)
|
(321
|
)
|
2,832
|
|
Exceptional operating items (note 4(a))
|
9.0
|
|
277
|
|
–
|
|
11.3
|
|
347
|
|
–
|
|
46.9
|
|
1,327
|
|
–
|
|
Exceptional non-operating items (note 4(b))
|
(10.4
|
)
|
(322
|
)
|
–
|
|
3.2
|
|
99
|
|
–
|
|
(5.5
|
)
|
(156
|
)
|
–
|
|
Exceptional financing charge (note 4(c))
|
–
|
|
–
|
|
–
|
|
1.0
|
|
31
|
|
–
|
|
5.0
|
|
142
|
|
–
|
|
Exceptional tax credit (note 4(d))
|
(2.9
|
)
|
(89
|
)
|
–
|
|
(4.1
|
)
|
(128
|
)
|
–
|
|
(5.9
|
)
|
(166
|
)
|
–
|
|
Exceptional minority interests (note 4(e))
|
–
|
|
–
|
|
–
|
|
0.9
|
|
28
|
|
–
|
|
(1.8
|
)
|
(50
|
)
|
–
|
|
Goodwill amortisation
|
3.2
|
|
99
|
|
–
|
|
3.3
|
|
102
|
|
–
|
|
3.4
|
|
97
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic, excluding exceptional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
items and goodwill amortisation
|
34.7
|
|
1,064
|
|
3,070
|
|
28.3
|
|
870
|
|
3,078
|
|
30.8
|
|
873
|
|
2,832
|
|
Dilutive impact of employee share options
|
(0.1
|
)
|
–
|
|
7
|
|
(0.1
|
)
|
–
|
|
10
|
|
(0.2
|
)
|
–
|
|
21
|
|
Dilutive impact of 4.25% Exchangeable Bonds
|
n/a
|
|
n/a
|
|
n/a
|
|
(0.3
|
)
|
22
|
|
110
|
|
(0.4
|
)
|
22
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted, excluding exceptional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
items and goodwill amortisation
|
34.6
|
|
1,064
|
|
3,077
|
|
27.9
|
|
892
|
|
3,198
|
|
30.2
|
|
895
|
|
2,963
|
|
Exceptional operating items (note 4(a))
|
(9.0
|
)
|
(277
|
)
|
–
|
|
(10.9
|
)
|
(347
|
)
|
–
|
|
(44.8
|
)
|
(1,327
|
)
|
–
|
|
Exceptional non-operating items (note 4(b))
|
10.4
|
|
322
|
|
–
|
|
(3.1
|
)
|
(99
|
)
|
–
|
|
5.3
|
|
156
|
|
–
|
|
Exceptional financing charge (note 4(c))
|
–
|
|
–
|
|
–
|
|
(1.0
|
)
|
(31
|
)
|
–
|
|
(4.8
|
)
|
(142
|
)
|
–
|
|
Exceptional tax credit (note 4(d))
|
2.9
|
|
89
|
|
–
|
|
4.0
|
|
128
|
|
–
|
|
5.6
|
|
166
|
|
–
|
|
Exceptional minority interests (note 4(e))
|
–
|
|
–
|
|
–
|
|
(0.9
|
)
|
(28
|
)
|
–
|
|
1.7
|
|
50
|
|
–
|
|
Goodwill amortisation
|
(3.2
|
)
|
(99
|
)
|
–
|
|
(3.2
|
)
|
(102
|
)
|
–
|
|
(3.3
|
)
|
(97
|
)
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted, including exceptional items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and goodwill amortisation
|
35.7
|
|
1,099
|
|
3,077
|
|
12.8
|
|
413
|
|
3,198
|
|
(10.1
|
)
|
(299
|
)
|
2,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share, excluding exceptional items and goodwill amortisation, are provided in order to reflect the underlying performance of the Group.
In respect of the years ended 31 March 2003 and 31 March 2002, the potential ordinary shares that related to the 4.25% Exchangeable Bonds were dilutive as they decreased earnings from continuing operations.
Consequently, the diluted earnings per share were higher than basic earnings per share for these years because of the effect of losses that arose from discontinued operations.
b) Adjusted profit on ordinary activities before
taxatio
The following table reconciles profit before taxation on ordinary activities to adjusted profit on ordinary activities before taxation. Adjusted profit on ordinary activities before taxation excludes exceptional items
and goodwill amortisation and is provided to reflect the underlying pre-tax performance of the Group.
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Profit/(loss) on ordinary activities before taxation
|
1,362
|
|
667
|
|
(284
|
)
|
|
Exceptional operating items (note 4(a))
|
277
|
|
347
|
|
1,327
|
|
|
Exceptional non-operating items (note 4(b))
|
(322
|
)
|
99
|
|
(156
|
)
|
|
Exceptional financing charge (note 4(c))
|
–
|
|
31
|
|
142
|
|
|
Goodwill amortisation
|
99
|
|
102
|
|
97
|
|
|
|
|
|
|
|
|
|
Adjusted profit on ordinary activities before taxation
|
1,416
|
|
1,246
|
|
1,126
|
|
|
|
|
|
|
|
|
87 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
12. Intangible fixed assets
|
Group
|
£m
|
|
|
|
|
|
Cost at 1 April 2003
|
2,146
|
|
|
Exchange adjustments
|
(292
|
)
|
|
Additions
|
3
|
|
|
|
|
|
Cost at 31 March 2004
|
1,857
|
|
|
|
|
|
Amortisation at 1 April 2003
|
253
|
|
|
Exchange adjustments
|
(46
|
)
|
|
Charge for the year
|
101
|
|
|
Impairment charge (i)
|
12
|
|
|
|
|
|
Amortisation at 31 March 2004
|
320
|
|
|
|
|
|
Net book value at 31 March 2004
|
1,537
|
|
|
|
|
|
Net book value at 31 March 2003
|
1,893
|
|
|
|
|
|
(i)
|
Impairment charge related to business restructuring activities.
|
Negative goodwill with a cost of £37m which was fully amortised at 31 March 2003, was written off during the year.
The net book value of intangible fixed assets at 31 March 2004 included £1m (2003: £3m) relating to telecoms licences and £nil (2003: £3m) relating to capitalised software. The remaining net
book value of intangible fixed assets related entirely to goodwill. The charge for the year relating to goodwill amortisation amounted to £99m (2003: £102m).
13. Tangible fixed assets
|
|
|
|
|
|
Assets
|
|
Motor
|
|
|
|
|
|
|
|
Plant
|
|
in the
|
|
vehicles
|
|
|
|
|
|
Land and
|
|
and
|
|
course of
|
|
and office
|
|
|
|
|
|
buildings
|
|
machinery
|
|
construction
|
|
equipment
|
|
Total
|
|
|
Group
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at 1 April 2003
|
1,037
|
|
22,665
|
|
1,035
|
|
870
|
|
25,607
|
|
|
Exchange adjustments
|
(67
|
)
|
(965
|
)
|
(17
|
)
|
(6
|
)
|
(1,055
|
)
|
|
Additions
|
13
|
|
345
|
|
1,020
|
|
101
|
|
1,479
|
|
|
Disposals
|
(128
|
)
|
(144
|
)
|
(2
|
)
|
(124
|
)
|
(398
|
)
|
|
Reclassifications
|
3
|
|
760
|
|
(907
|
)
|
144
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at 31 March 2004
|
858
|
|
22,661
|
|
1,129
|
|
985
|
|
25,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation at 1 April 2003
|
343
|
|
7,818
|
|
–
|
|
599
|
|
8,760
|
|
|
Exchange adjustments
|
(12
|
)
|
(358
|
)
|
–
|
|
(4
|
)
|
(374
|
)
|
|
Charge for the year
|
19
|
|
732
|
|
–
|
|
115
|
|
866
|
|
|
Impairment charge (i)
|
–
|
|
5
|
|
–
|
|
3
|
|
8
|
|
|
Disposals
|
(74
|
)
|
(140
|
)
|
–
|
|
(119
|
)
|
(333
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation at 31 March 2004
|
276
|
|
8,057
|
|
–
|
|
594
|
|
8,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 March 2004
|
582
|
|
14,604
|
|
1,129
|
|
391
|
|
16,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 March 2003
|
694
|
|
14,847
|
|
1,035
|
|
271
|
|
16,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Impairment charge related to business restructuring activities.
|
The net book value of land and buildings comprised:
|
|
2004
|
|
2003
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Freehold
|
564
|
|
653
|
|
|
Long leasehold (over 50 years)
|
4
|
|
32
|
|
|
Short leasehold (under 50 years)
|
14
|
|
9
|
|
|
|
|
|
|
|
|
582
|
|
694
|
|
|
|
|
|
|
The cost of tangible fixed assets at 31 March 2004 included £402m (2003: £347m) relating to interest capitalised.
Included within creditors (amounts falling due within one year) and creditors (amounts falling due after more than one year) at 31 March 2004 are contributions to the cost of tangible fixed assets amounting to
£46m (2003: £32m) and £1,130m (2003: £1,079m) respectively.
Annual Report and Accounts 2003/04_
National
Grid Transco
88
Back to Contents
Notes to the Accounts
_continued
|
14. Fixed asset investments
|
|
|
|
|
|
|
|
|
Group
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlisted joint ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
share of net
|
|
Own
|
|
Other
|
|
|
|
Group
|
|
|
|
|
assets
|
|
shares
|
|
investments
|
|
Total
|
|
undertakings
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2003 (as previously reported)
|
|
44
|
|
39
|
|
170
|
|
253
|
|
2,225
|
|
|
Prior year adjustment (note 1)
|
|
–
|
|
(39
|
)
|
–
|
|
(39
|
)
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2003 (restated)
|
|
44
|
|
–
|
|
170
|
|
214
|
|
2,225
|
|
|
Exchange adjustments
|
|
(5
|
)
|
–
|
|
(21
|
)
|
(26
|
)
|
–
|
|
|
Additions
|
|
1
|
|
–
|
|
5
|
|
6
|
|
–
|
|
|
Disposals
|
|
(17
|
)
|
–
|
|
(22
|
)
|
(39
|
)
|
–
|
|
|
Share of retained loss
|
|
(4
|
)
|
–
|
|
–
|
|
(4
|
)
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2004
|
|
19
|
|
–
|
|
132
|
|
151
|
|
2,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With the exception of investments in unlisted joint ventures, which are carried in the balance sheet at the Group’s share of their net assets, all investments are carried at cost.
The names of the principal Group undertakings and joint ventures are included in note 30.
|
15. Stocks
|
|
|
|
|
Group
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Raw materials and consumables
|
53
|
|
60
|
|
|
Work in progress
|
21
|
|
53
|
|
|
Fuel stocks
|
17
|
|
13
|
|
|
|
|
|
|
|
|
91
|
|
126
|
|
|
|
|
|
|
|
16. Debtors
|
|
|
|
|
|
|
Group
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year:
|
|
|
|
|
|
|
|
|
|
|
Trade debtors
|
|
496
|
|
628
|
|
–
|
|
–
|
|
|
Amounts owed by Group undertakings
|
|
–
|
|
–
|
|
3,883
|
|
2,652
|
|
|
Regulatory assets
|
|
472
|
|
406
|
|
–
|
|
–
|
|
|
Other debtors
|
|
158
|
|
381
|
|
–
|
|
12
|
|
|
Prepayments and accrued income
|
|
462
|
|
396
|
|
1
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,588
|
|
1,811
|
|
3,884
|
|
2,664
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due after more than one year:
|
|
|
|
|
|
|
|
|
|
|
Regulatory assets
|
|
2,639
|
|
3,337
|
|
–
|
|
–
|
|
|
Other debtors
|
|
69
|
|
58
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,708
|
|
3,395
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,296
|
|
5,206
|
|
3,884
|
|
2,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for doubtful debts
|
Group
|
|
|
£m
|
|
|
|
|
|
At 1 April 2003
|
116
|
|
|
Exchange adjustments
|
(13
|
)
|
|
Reinstatement of amounts previously written off
|
14
|
|
|
Charge for the year
|
50
|
|
|
Uncollectable amounts written off net of recoveries
|
(39
|
)
|
|
|
|
|
At 31 March 2004
|
128
|
|
|
|
|
Other debtors falling due within one year included tax recoverable of £nil (2003: £62m).
89 National Grid Transco
_Annual
Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
17. Assets held for exchange
The
assets held for exchange in 2003 of £17m represented the carrying value
of 74m shares of Energis plc which were held to satisfy obligations under the
6% Mandatorily Exchangeable Bonds 2003, as explained in note 20. The voting rights
in respect of 61m of these shares were vested in the bondholders.
|
18.
Creditors
(amounts
falling due within one year)
|
|
|
|
|
|
Group
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings (note 20)
|
|
1,706
|
|
2,246
|
|
388
|
|
557
|
|
|
Trade creditors and accruals
|
|
1,031
|
|
1,249
|
|
–
|
|
–
|
|
|
Amounts owed to Group undertakings
|
|
–
|
|
–
|
|
1,680
|
|
1,439
|
|
|
Purchased power obligations
|
|
57
|
|
68
|
|
–
|
|
–
|
|
|
Corporate tax
|
|
122
|
|
–
|
|
–
|
|
–
|
|
|
Social security and other taxes
|
|
191
|
|
203
|
|
–
|
|
–
|
|
|
Proposed dividend
|
|
366
|
|
317
|
|
366
|
|
317
|
|
|
Liability for index-linked swap contracts
|
|
100
|
|
121
|
|
–
|
|
–
|
|
|
Other creditors
|
|
606
|
|
589
|
|
6
|
|
8
|
|
|
Deferred income
|
|
334
|
|
253
|
|
4
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,513
|
|
5,046
|
|
2,444
|
|
2,321
|
|
|
|
|
|
|
|
|
|
|
|
Other creditors included interest payable of £286m (2003: £269m).
|
19. Creditors
(amounts
falling due after more than one year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings (note 20)
|
|
11,542
|
|
12,233
|
|
746
|
|
–
|
|
|
Purchased power obligations
|
|
149
|
|
253
|
|
–
|
|
–
|
|
|
Liability for index-linked swap contracts
|
|
291
|
|
381
|
|
–
|
|
–
|
|
|
Other creditors
|
|
289
|
|
309
|
|
–
|
|
–
|
|
|
Deferred income
|
|
1,193
|
|
1,079
|
|
13
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,464
|
|
14,255
|
|
759
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
Other creditors included £9m (2003: £nil)
of corporate tax
.
Purchased power obligations
As part of the sale of substantially all its non-nuclear
generating business, National Grid USA entered into purchased power transfer
agreements with the purchasers whereby the purchasers took over a number of long-term
contracts between National Grid USA and owners of various generating units. In
exchange, National Grid USA committed to make fixed monthly payments to the purchasers
towards the above-market cost of the contracts. The creditor relating to
purchased power obligations, which is also reflected in regulatory assets (note
16), represents the net present value of these monthly payments discounted at
3.3%. At 31 March 2004, amounts falling due after more than five years totalled £1m
(2003: £15m).
Liability for index-linked swap contracts
National Grid USA has entered into indexed swap contracts that expire in 2008. A further three swap contracts expired in June and September 2003. National Grid USA has recorded a liability in respect of these
contractual obligations and recorded a corresponding regulatory asset as losses on these instruments will be recovered from customers. The amount of the liability and regulatory asset will fluctuate over the remaining terms of the swaps as nominal
energy quantities are settled and may be adjusted as periodic assessments are made of energy prices.
Annual Report and Accounts 2003/04_
National
Grid Transco
90
Back to Contents
Notes to the Accounts
_continued
20. Borrowings
The following table analyses the Group’s
total borrowings after taking account of currency and interest rate swaps:
|
|
|
|
|
Group
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year:
|
|
|
|
|
|
|
|
|
|
|
Bank loans and overdrafts
|
|
314
|
|
484
|
|
33
|
|
–
|
|
|
Commercial paper
|
|
557
|
|
557
|
|
355
|
|
557
|
|
|
6% Mandatorily Exchangeable Bonds 2003
|
|
–
|
|
243
|
|
–
|
|
–
|
|
|
Other bonds
|
|
832
|
|
730
|
|
–
|
|
–
|
|
|
Other loans
|
|
3
|
|
232
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,706
|
|
2,246
|
|
388
|
|
557
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due after more than one year:
|
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
823
|
|
613
|
|
–
|
|
–
|
|
|
4.25% Exchangeable Bonds 2008
|
|
–
|
|
502
|
|
–
|
|
–
|
|
|
Other bonds
|
|
10,587
|
|
10,881
|
|
746
|
|
–
|
|
|
Other loans
|
|
132
|
|
237
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,542
|
|
12,233
|
|
746
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Total borrowings
|
|
13,248
|
|
14,479
|
|
1,134
|
|
557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total borrowings are repayable as follows:
|
|
|
|
|
|
|
|
|
|
|
In one year or less
|
|
1,706
|
|
2,246
|
|
388
|
|
557
|
|
|
In more than one year, but not more than two years
|
|
877
|
|
1,031
|
|
52
|
|
–
|
|
|
In more than two years, but not more than three years
|
|
2,043
|
|
834
|
|
–
|
|
–
|
|
|
In more than three years, but not more than four years
|
|
458
|
|
1,924
|
|
–
|
|
–
|
|
|
In more than four years, but not more than five years
|
|
1,575
|
|
882
|
|
308
|
|
–
|
|
|
In more than five years
|
|
|
|
|
|
|
|
|
|
|
– by instalments
|
|
35
|
|
46
|
|
–
|
|
–
|
|
|
– other than by instalments
|
|
6,554
|
|
7,516
|
|
386
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,248
|
|
14,479
|
|
1,134
|
|
557
|
|
|
|
|
|
|
|
|
|
|
|
Charges over property, plant and other assets of the Group were provided as collateral over borrowings totalling £925m at 31 March 2004 (2003: £1,415m).
In February 1999, National Grid Holdings One plc issued 14.7m Equity Plus Income Convertible Securities (‘EPICs’) in the form of 6% Mandatorily Exchangeable Bonds 2003 (‘exchangeable bonds’) in the
aggregate principal amount of US$401m. The EPICs were exchangeable, subject to certain exceptions, on or prior to 26 April 2003 at the option of the holder of the bonds (‘bondholders’) into ordinary shares of Energis plc, a company which
prior to 16 July 2002 was an associated undertaking. On 16 July 2002, trading in the shares of Energis plc was suspended and on 6 May 2003, five Energis shares for each EPICs were delivered by the Group to bondholders in satisfaction of the bonds
outstanding at that date.
The notional amount at maturity of the Group’s debt portfolio at 31 March 2004 was £14,164m (2003: £15,621m).
91 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
20. Borrowings
(continued)
The 4.25% Exchangeable Bonds 2008 (‘the Bonds’)
were redeemed in whole at the option of the Group on 29 September 2003. The Bonds
were redeemed at their principal amount, including the redemption premium, except
where the holder elected to exchange their Bonds for ordinary shares in the Company.
There was no gain or loss on redemption.
The principal items included within Other bonds are listed below. Unless otherwise indicated, these instruments were outstanding at both 31 March 2004 and 31 March 2003.
|
Issuer
|
Description of instrument (notional amount)
|
|
|
British Transco Finance (No5) Limited
|
GBP 115 million Floating Rate Instruments due 2006
|
|
British Transco Finance Inc.
|
USD 300 million 6.625% Fixed Rate Instruments due 2018
|
|
British Transco International Finance BV (i)
|
USD 500 million 6.125% Fixed Rate Instruments due 2003
|
|
British Transco International Finance BV (i)
|
ITL 150,000 million 10.75% Fixed Rate Instruments due 2003
|
|
British Transco International Finance BV (i)
|
USD 250 million 6.25% Fixed Rate Instruments due 2003
|
|
British Transco International Finance BV
|
USD 300 million 6.0% Fixed Rate Instruments due 2004
|
|
British Transco International Finance BV
|
USD 350 million 6.625% Fixed Rate Instruments due 2004
|
|
British Transco International Finance BV
|
ITL 250,000 million 5.25% Fixed Rate Instruments due 2005
|
|
British Transco International Finance BV
|
USD 350 million 7.0% Fixed Rate Instruments due 2006
|
|
British Transco International Finance BV
|
FRF 2,000 million 5.125% Fixed Rate Instruments due 2009
|
|
British Transco International Finance BV
|
USD 1,500 million Zero Coupon Bond due 2021
|
|
National Grid Company plc
|
GBP 240 million 8.0% Fixed Rate Instruments due 2006
|
|
National Grid Company plc (ii)
|
EUR 600 million 4.125% Fixed Rate Instruments due 2008
|
|
National Grid Company plc
|
GBP 250 million 4.75% Fixed Rate Instruments due 2010
|
|
National Grid Company plc
|
GBP 300 million 2.983% Guaranteed Retail Price Index-Linked Instruments due 2018
|
|
National Grid Company plc
|
GBP 220 million 3.806% Retail Price Index-Linked Instruments due 2020
|
|
National Grid Company plc
|
GBP 450 million 5.875% Fixed Rate Instruments due 2024
|
|
National Grid Company plc
|
GBP 360 million 6.5% Fixed Rate Instruments due 2028
|
|
National Grid Company plc
|
GBP 70 million 3.589% Limited Retail Price Index-Linked Instruments due 2030
|
|
National Grid Company plc
|
GBP 50 million 2.817% Guaranteed Limited Retail Price Index-Linked Instruments due 2032
|
|
National Grid Transco plc (ii)
|
EUR 500 million 3.75% Fixed Rate Instruments due 2008
|
|
National Grid Transco plc (ii)
|
EUR 600 million 5.0% Fixed Rate Instruments due 2018
|
|
New England Power Company
|
USD 135.85 million Tax-Exempt Pollution Control Revenue Bonds, Variable Rate due 2020
|
|
New England Power Company
|
USD 106.15 million Tax-Exempt Pollution Control Revenue Bonds, Variable Rate due 2022
|
|
NGG Finance plc
|
EUR 1,250 million 5.25% Fixed Rate Instruments due 2006
|
|
NGG Finance plc
|
EUR 750 million 6.125% Fixed Rate Instruments due 2011
|
|
Niagara Mohawk Power Corporation (i)
|
USD 400 million 7.375% Senior Notes due 2003
|
|
Niagara Mohawk Power Corporation (i)
|
USD 220 million 7.375% Taxable First Mortgage Bonds due 2003
|
|
Niagara Mohawk Power Corporation
|
USD 300 million 8.0% Taxable First Mortgage Bonds due 2004
|
|
Niagara Mohawk Power Corporation
|
USD 300 million 5.375% Senior Notes due 2004
|
|
Niagara Mohawk Power Corporation
|
USD 110 million 6.625% Taxable First Mortgage Bonds due 2005
|
|
Niagara Mohawk Power Corporation
|
USD 400 million 7.625% Senior Notes due 2005
|
|
Niagara Mohawk Power Corporation
|
USD 150 million 9.75% Taxable First Mortgage Bonds due 2005
|
|
Niagara Mohawk Power Corporation
|
USD 275 million 7.75% Taxable First Mortgage Bonds due 2006
|
|
Niagara Mohawk Power Corporation
|
USD 200 million 8.875% Senior Notes due 2007
|
|
Niagara Mohawk Power Corporation
|
USD 600 million 7.75% Senior Notes due 2008
|
|
Niagara Mohawk Power Corporation (iii)
|
USD 500 million 8.5% Senior Notes due 2010
|
|
Niagara Mohawk Power Corporation (iii)
|
USD 210 million 7.875% Taxable First Mortgage Bonds due 2024
|
|
Niagara Mohawk Power Corporation
|
USD 115.71 million 7.2% Tax-Exempt First Mortgage Bonds due 2029
|
|
Transco Holdings plc
|
GBP 503.078 million Floating Rate Instruments due 2009
|
|
Transco Holdings plc
|
GBP 503.078 million 4.1875% Index-Linked Instruments due 2022
|
|
Transco Holdings plc
|
GBP 503.078 million 7.0% Fixed Rate Instruments due 2024
|
|
Transco plc
|
EUR 650 million 5.25% Fixed Rate Instruments due 2006
|
|
Transco plc
|
GBP 250 million 6.125% Fixed Rate Instruments due 2006
|
|
Transco plc (iv)
|
GBP 250 million 5.625% Fixed Rate Instruments due 2007
|
|
Transco plc
|
GBP 250 million 8.875% Fixed Rate Instruments due 2008
|
|
Transco plc
|
AUD 500 million 7.0% Fixed Rate Instruments due 2008
|
|
Transco plc
|
GBP 300 million 5.375% Fixed Rate Instruments due 2009
|
|
Transco plc (iv)
|
GBP 300 million 6.0% Fixed Rate Instruments due 2017
|
|
Transco plc
|
GBP 275 million 8.75% Fixed Rate Instruments due 2025
|
|
Transco plc
|
GBP 50 million 6.2% Fixed Rate Instruments due 2028
|
|
|
(i)
|
Matured during the year ended 31 March 2004.
|
|
(ii)
|
Issued during the year ended 31 March 2004.
|
|
(iii)
|
Redeemed during the year ended 31 March 2004.
|
|
(iv)
|
Issue tapped during the year ended 31 March 2004.
|
Annual Report and Accounts 2003/04_
National
Grid Transco
92
Back to Contents
Notes to the Accounts
_continued
21. Financial instruments
The
Group’s treasury policy, described on
pages 43 to 46, includes details of the objectives, policies and strategies
of the Group associated with financial instruments with off balance sheet risk.
The Group’s counterparty exposure under foreign currency swaps and foreign exchange contracts at 31 March 2004 was £442m (2003: £443m) and under interest rate swaps was £115m (2003:
£170m).
The Group had no significant exposure to either individual counterparties or geographical groups of counterparties at 31 March 2004.
Where permitted by FRS 13 ‘Derivatives and other Financial Instruments: Disclosures’, short-term debtors and creditors have been excluded from the following disclosures. It is assumed that because of short
maturities, the fair value of short-term debtors and creditors approximates to their book value.
Currency and interest rate composition of financial liabilities
The
currency and interest rate composition of the Group’s financial liabilities
are shown in the table below after taking into account currency and interest
rate swaps:
|
|
|
|
|
|
Fixed rate liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
average
|
|
|
|
|
|
|
|
|
Weighted
|
period
|
|
|
|
|
|
|
|
|
average
|
for which
|
|
|
Total
|
|
Variable rate
|
|
Fixed rate
|
|
interest rate
|
rate is fixed
|
|
At 31 March 2004
|
£m
|
|
£m
|
|
£m
|
|
%
|
years
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterling
|
8,988
|
|
5,231
|
|
3,757
|
|
6.09
|
|
8.7
|
|
|
US dollars
|
4,260
|
|
1,376
|
|
2,884
|
|
7.03
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
13,248
|
|
6,607
|
|
6,641
|
|
6.50
|
|
7.1
|
|
|
Other financial liabilities (sterling)
|
40
|
|
40
|
|
–
|
|
–
|
|
–
|
|
|
Other financial liabilities (US dollars)
|
602
|
|
564
|
|
38
|
|
5.07
|
|
–
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,890
|
|
7,211
|
|
6,679
|
|
6.49
|
|
7.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterling
|
9,655
|
|
4,157
|
|
5,498
|
|
6.29
|
|
8.3
|
|
|
US dollars
|
4,824
|
|
965
|
|
3,859
|
|
7.09
|
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
14,479
|
|
5,122
|
|
9,357
|
|
6.62
|
|
7.3
|
|
|
Other financial liabilities (sterling)
|
76
|
|
60
|
|
16
|
|
5.34
|
|
2.7
|
|
|
Other financial liabilities (US dollars)
|
824
|
|
755
|
|
69
|
|
5.77
|
|
–
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,379
|
|
5,937
|
|
9,442
|
|
6.61
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Excludes non-equity minority interests of £38m (2003: £69m) with no final repayment date.
|
At 31 March 2004 the weighted average interest rate on short-term borrowings of £1,706m (2003: £2,246m) was 4.0% (2003: 5.8%).
Foreign exchange forward deals held to manage the currency mix of the Group’s borrowings portfolio comprising a £141m (2003: £165m) forward sale of US dollars have not been adjusted in the table
above.
Other US dollar financial liabilities comprised indexed-linked energy swap contracts of £391m (2003: £502m), purchased power obligations due after more than one year of £149m (2003: £253m),
non-equity minority interests of £38m (2003: £69m), and interest rate swaps of £24m (2003: £nil) which are shown at fair value as they are no longer considered a hedge.
Substantially all the variable rate borrowings are subject to interest rates which fluctuate with LIBOR for the appropriate currency at differing premiums or, in the case of certain US companies, are based on the
market rate for tax-exempt commercial paper.
In calculating the weighted average number of years for which interest rates are fixed, swaps which are cancellable at the option of the swap provider are assumed to have a life based on the earliest date at which they
can be cancelled.
93 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
21. Financial instruments
(continued)
Currency and interest rate composition of financial assets
The
currency and interest rate composition of the Group’s financial assets are
shown in the table below after taking into account currency and interest rate
swaps:
|
|
|
|
|
|
|
|
Fixed rate assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2004
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
average
|
|
|
|
|
|
Weighted
|
period
|
|
|
Non-interest
|
|
|
average
|
for which
|
|
Total
|
bearing
|
Variable rate
|
Fixed rate
|
interest rate
|
rate is fixed
|
|
£m
|
£m
|
£m
|
£m
|
%
|
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterling
|
428
|
|
–
|
|
428
|
|
–
|
|
–
|
|
–
|
|
|
US dollars
|
165
|
|
–
|
|
165
|
|
–
|
|
–
|
|
–
|
|
|
Other currencies
|
23
|
|
–
|
|
23
|
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and investments
|
616
|
|
–
|
|
616
|
|
–
|
|
–
|
|
–
|
|
|
Other financial assets (sterling)
|
45
|
|
–
|
|
–
|
|
45
|
|
11.50
|
|
5.1
|
|
|
Other financial assets (US dollars)
|
34
|
|
–
|
|
–
|
|
34
|
|
5.08
|
|
13.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
695
|
|
–
|
|
616
|
|
79
|
|
8.74
|
|
8.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterling
|
423
|
|
–
|
|
423
|
|
–
|
|
–
|
|
–
|
|
|
US dollars
|
147
|
|
–
|
|
147
|
|
–
|
|
–
|
|
–
|
|
|
Other currencies
|
31
|
|
–
|
|
31
|
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and investments
|
601
|
|
–
|
|
601
|
|
–
|
|
–
|
|
–
|
|
|
Other financial assets (sterling)
|
67
|
|
17
|
|
–
|
|
50
|
|
11.50
|
|
4.5
|
|
|
Other financial assets (US dollars)
|
34
|
|
–
|
|
1
|
|
33
|
|
4.77
|
|
10.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
702
|
|
17
|
|
602
|
|
83
|
|
8.85
|
|
7.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and investments earned interest at local prevailing rates for maturity periods generally not exceeding 12 months, and included listed investments with a cost of £241m (2003: £226m) and market value of
£241m (2003: £226m). Other financial assets at 31 March 2004 predominantly related to a net investment in a finance lease of £45m (2003: £50m), fixed asset investments of £34m (2003: £33m) and assets held for
exchange of £nil (2003: £17m). The non-interest bearing assets held for exchange were realised in May 2003, on redemption of the 6% Mandatorily Exchangeable Bonds 2003, as described in notes 17 and 20.
The maturity profile of the Group’s financial liabilities and assets are shown in the tables below after taking into account currency and interest rate swaps:
|
Maturity of financial liabilities at 31 March
|
2004
|
|
2003
|
|
|
£m
|
£m
|
|
|
|
|
|
|
In one year or less
|
1,848
|
|
2,380
|
|
|
In more than one year, but not more than two years
|
1,029
|
|
1,192
|
|
|
In more than two years, but not more than three years
|
2,189
|
|
1,005
|
|
|
In more than three years, but not more than four years
|
589
|
|
2,090
|
|
|
In more than four years, but not more than five years
|
1,598
|
|
1,040
|
|
|
In more than five years
|
6,637
|
|
7,672
|
|
|
|
|
|
|
|
|
13,890
|
|
15,379
|
|
|
|
|
|
|
|
Maturity of financial assets at 31 March
|
2004
|
|
2003
|
|
|
£m
|
£m
|
|
|
|
|
|
|
In one year or less
|
625
|
|
611
|
|
|
In more than one year, but not more than two years
|
11
|
|
8
|
|
|
In more than two years, but not more than three years
|
10
|
|
25
|
|
|
In more than three years, but not more than four years
|
11
|
|
10
|
|
|
In more than four years, but not more than five years
|
10
|
|
11
|
|
|
In more than five years
|
28
|
|
37
|
|
|
|
|
|
|
|
|
695
|
|
702
|
|
|
|
|
|
|
Annual Report and Accounts 2003/04_
National
Grid Transco
94
Back to Contents
Notes to the Accounts
_continued
21. Financial instruments
(continued)
Fair values of financial instruments at 31 March
|
|
|
2004
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value
|
|
Fair value
|
|
Book value
|
|
Fair value
|
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
6% Mandatorily Exchangeable Bonds 2003
|
|
–
|
|
–
|
|
(243
|
)
|
(17
|
)
|
|
Other short-term debt
|
|
(1,666
|
)
|
(1,678
|
)
|
(1,965
|
)
|
(1,973
|
)
|
|
4.25% Exchangeable Bonds 2008
|
|
–
|
|
–
|
|
(502
|
)
|
(510
|
)
|
|
Other long-term debt
|
|
(11,767
|
)
|
(12,800
|
)
|
(12,081
|
)
|
(13,042
|
)
|
|
Cash and investments
|
|
616
|
|
616
|
|
601
|
|
601
|
|
|
Other financial liabilities
|
|
(642
|
)
|
(641
|
)
|
(900
|
)
|
(871
|
)
|
|
Net investment in finance lease
|
|
45
|
|
45
|
|
50
|
|
50
|
|
|
Assets held for exchange
|
|
–
|
|
–
|
|
17
|
|
17
|
|
|
Other financial assets
|
|
34
|
|
36
|
|
34
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments held to manage interest rate and currency profiles:
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
–
|
|
(42
|
)
|
–
|
|
8
|
|
|
Forward foreign currency contracts and cross-currency swaps
|
|
185
|
|
331
|
|
312
|
|
533
|
|
|
|
|
|
|
|
|
|
|
|
Market values, where available, have been used to determine fair values. Where market values are not available, fair values have been calculated by discounting cash flows at prevailing interest rates.
The notional principal amounts relating to financial instruments held to manage interest rate and currency profiles for interest rate swaps and forward rate agreements, foreign currency contracts and cross-currency
swaps at 31 March 2004 amounted to £14,301m (2003: £6,363m) and £7,898m (2003: £5,017m) respectively.
|
Gains and losses on hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognised
|
|
Unrecognised
|
|
Unrecognised
|
|
Deferred
|
|
Deferred
|
|
Deferred
|
|
|
gains
|
losses
|
net gain
|
gains
|
losses
|
net (loss)/gain
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on hedges at 1 April 2003
|
458
|
|
(229
|
)
|
229
|
|
39
|
|
(88
|
)
|
(49
|
)
|
|
(Gains)/losses arising in previous years
recognised in the year
|
(50
|
)
|
18
|
|
(32
|
)
|
(12
|
)
|
12
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) arising in previous years
not recognised in the year
|
408
|
|
(211
|
)
|
197
|
|
27
|
|
(76
|
)
|
(49
|
)
|
|
Gains/(losses) arising in the year
|
22
|
|
(115
|
)
|
(93
|
)
|
104
|
|
(6
|
)
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on hedges at 31 March
2004
|
430
|
|
(326
|
)
|
104
|
|
131
|
|
(82
|
)
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) expected to be recognised
within one year
|
5
|
|
(21
|
)
|
(16
|
)
|
21
|
|
(13
|
)
|
8
|
|
|
Gains/(losses) expected to be recognised
after one year
|
425
|
|
(305
|
)
|
120
|
|
110
|
|
(69
|
)
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing facilities
At
31 March 2004, the Group had bilateral committed credit facilities of £1,823m (2003: £1,221m), of which £1,808m (2003: £1,221m) were undrawn. The Group also had committed credit facilities
from syndicates of banks of £1,313m at 31 March 2004 (2003: £1,880m), £1,201m (2003: £1,880m)
of which were undrawn, and an analysis of the maturity of these undrawn committed
facilities is shown below:
|
Undrawn committed borrowing facilities
|
|
|
|
|
|
|
2004
|
|
2003
|
|
|
£m
|
£m
|
|
|
|
|
|
|
Expiring:
|
|
|
|
|
|
In one year or less
|
2,269
|
|
1,155
|
|
|
In more than one year, but not more than two years
|
575
|
|
966
|
|
|
In more than two years
|
165
|
|
980
|
|
|
|
|
|
|
|
|
3,009
|
|
3,101
|
|
|
|
|
|
|
Of the unused facilities at 31 March 2004 £2,604m (2003: £2,135m) was held as back-up to commercial paper and similar borrowings. The remainder was available as additional back-up to commercial paper and
for other general corporate purposes.
95 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
|
22. Provisions for liabilities and charges
|
|
|
|
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement
|
|
|
|
Deferred
|
|
|
|
|
|
Total
|
|
|
|
Decommissioning
|
|
benefits
|
|
Environmental
|
|
taxation
|
|
Restructuring
|
|
Other
|
|
provisions
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2003
|
143
|
|
551
|
|
442
|
|
3,031
|
|
156
|
|
83
|
|
4,406
|
|
|
Exchange adjustments
|
(21
|
)
|
(59
|
)
|
(25
|
)
|
(148
|
)
|
–
|
|
–
|
|
(253
|
)
|
|
Additions
|
24
|
|
260
|
|
35
|
|
84
|
|
87
|
|
13
|
|
503
|
|
|
Unwinding of discount
|
7
|
|
–
|
|
22
|
|
–
|
|
–
|
|
–
|
|
29
|
|
|
Unused amounts reversed
|
–
|
|
–
|
|
(10
|
)
|
–
|
|
–
|
|
–
|
|
(10
|
)
|
|
Utilised
|
(22
|
)
|
(288
|
)
|
(36
|
)
|
–
|
|
(154
|
)
|
(3
|
)
|
(503
|
)
|
|
Other
|
–
|
|
–
|
|
–
|
|
(15
|
)
|
–
|
|
–
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2004
|
131
|
|
464
|
|
428
|
|
2,952
|
|
89
|
|
93
|
|
4,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decommissioning provision of £131m at 31 March 2004 represented the net present value of the estimated expenditure (discounted at a nominal rate of 4.25%) expected to be incurred in respect of the
decommissioning of certain nuclear generating units and other related provisions. Related regulatory assets were also recognised (note 16). Expenditure is expected to be incurred between 2005 and 2010. Additions in the year included £3m in
respect of the change in the discount rate.
The post-retirement benefits provision was in respect of pensions £273m (2003: £253m) and other post-retirement benefits (health care and life insurance) £191m (2003: £298m).
The environmental provision represented the estimated environmental restoration and remediation costs relating to a number of sites owned and managed by the Group.
At 31 March 2004, £252m (2003: £244m) of the environmental provision represented the net present value of the estimated statutory decontamination costs of old gas manufacturing sites in the UK (discounted
using a nominal rate of 5.25%). The anticipated timing of the cash flows for statutory decontamination cannot be predicted with certainty, but it is expected to be incurred over the period 2005 to 2057 with some 60% of the spend projected to be
spent over the next five years. During the year ended 31 March 2004, a project to survey all old gas work contaminated sites was completed. With this new information, a re-evaluation of the provision was made which also took into account the impact
of the recent changes to the regulations on waste disposal and resulted in an additional provision being made as an exceptional charge of £28m in the profit and loss account – see note 4a.
There are a number of uncertainties that affect the calculation of the provision for UK gas site decontamination, including the impact of regulation, the accuracy of the site surveys, unexpected contaminants,
transportation costs, the impact of alternative technologies and changes in the discount rate. The Group has made its best estimate of the financial effect of these uncertainties in the calculation of the provision, but future material changes in
any of the assumptions could materially impact on the calculation of the provision and hence the profit and loss account.
The undiscounted amount of the provision at 31 March 2004 relating to UK gas site decontamination was £341m, being the undiscounted best estimate of the liability having regard to the uncertainties referred to
above (excluding the impact of changes in discount rate). The Group believes that the best estimate of this liability lies in a range of between £260m and £420m.
The environmental provision at 31 March 2004 also included £165m (2003: £186m) which represented the net present value of estimated remediation expenditure in the US which has been discounted at a nominal
rate of 5.75%. This expenditure is expected to be incurred between 2005 and 2046. The uncertainties regarding the calculation of this provision are similar to those considered in respect of UK gas decontamination. However, unlike the UK, with the
exception of immaterial amounts of such costs, this expenditure is recoverable from rate payers under the terms of the Group’s various rate agreements in the US. As a consequence, any movement in the calculation of the best estimate of the
Group’s liability is matched by a corresponding movement in the value of regulatory assets (note 16). Therefore, there is no material impact on the Group’s profit and loss account arising from changes in the calculation of this
liability.
The undiscounted amount of environmental provision relating to the Group’s US based sites amounted to £233m at 31 March 2004. The Group does not have sufficient information to calculate a range of outcomes,
but it is expected that any outcome of the liability would be recovered from rate payers.
The remainder of the environmental provision of £11m related to the expected cost of remediation of certain other sites in the UK, is calculated on an undiscounted basis and is expected to be utilised within the
next five years.
The undiscounted amount of the total Group environmental provision at 31 March 2004 was £585m.
At 31 March 2004, £42m of the total restructuring provision (2003: £50m) consisted of provisions for the disposal of surplus leasehold interests and rates payable on surplus properties. The expected payment
dates for property restructuring costs remain uncertain. The remainder of the restructuring provision related to business reorganisation costs in the UK.
Other provisions at 31 March 2004 included £54m (2003: £49m) of estimated liabilities in respect of past events incurred by the Group’s insurance undertakings, including employer liability claims. In
accordance with insurance industry practice, these estimates were based on experience from previous years and there was, therefore, no identifiable payment date. Other provisions at 31 March 2004 also included £12m (2003: £12m) in
respect of obligations associated with the impairment of investments in joint ventures.
|
Deferred taxation comprised:
|
|
|
|
|
Provided
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated capital allowances
|
2,748
|
|
2,997
|
|
|
Other timing differences
|
204
|
|
34
|
|
|
|
|
|
|
|
|
2,952
|
|
3,031
|
|
|
|
|
|
|
A deferred tax asset in respect of substantial capital losses has not been recognised because their future recovery was uncertain. Final agreement of certain of these losses is outstanding, however, losses in excess of
£700m have been agreed with the relevant tax authorities as at 31 March 2004.
Annual Report and Accounts 2003/04_
National
Grid Transco
96
Back to Contents
Notes to the Accounts
_continued
23. Share capital
|
Group
|
Allotted, called
up and fully paid
|
|
|
|
|
|
|
millions
|
|
£m
|
|
|
|
|
|
|
|
At 31 March 2001 (i)
|
2,808
|
|
281
|
|
|
Issued during the year
|
292
|
|
29
|
|
|
|
|
|
|
|
At 31 March 2002
|
3,100
|
|
310
|
|
|
Issued during the year
|
1
|
|
–
|
|
|
Redeemed during the year
|
(24
|
)
|
(2
|
)
|
|
|
|
|
|
|
At 31 March 2003
|
3,077
|
|
308
|
|
|
Issued during the year
|
11
|
|
1
|
|
|
|
|
|
|
|
At 31 March 2004
|
3,088
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One £1 special rights non-voting redeemable preference share (2003 and 2002: one).
|
|
|
|
|
|
|
|
|
|
|
(i)
|
In accordance with
merger accounting principles, the shares issued in connection with the
Merger have been treated as if those shares were in issue throughout the year
ended 31 March 2003 and comparative periods.
|
The total consideration received by the Group and Company in respect of ordinary shares issued during the year ended 31 March 2004 was £34m
|
Company
|
Allotted and issued
|
|
Called up and partly paid
|
|
Called up and fully paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
number
|
|
£
|
|
number
|
|
£
|
|
millions
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2001
|
500,000
|
|
50,000
|
|
500,000
|
|
12,500
|
|
–
|
|
–
|
|
|
Cancelled during the year
|
(500,000
|
)
|
(50,000
|
)
|
(500,000
|
)
|
(12,500
|
)
|
–
|
|
–
|
|
|
Issued during the year
|
1,776,932,870
|
|
177,693,287
|
|
23,450
|
(i)
|
2,345
|
|
1,777
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2002
|
1,776,932,870
|
|
177,693,287
|
|
23,450
|
|
2,345
|
|
1,777
|
|
178
|
|
|
Issued during the year
|
1,324,195,509
|
|
132,419,551
|
|
–
|
|
–
|
|
1,324
|
|
132
|
|
|
Fully paid up during the year
|
–
|
|
–
|
|
(23,450
|
)
|
(2,345
|
)
|
–
|
|
–
|
|
|
Repurchased and cancelled during the year
|
(24,225,000
|
)
|
(2,422,500
|
)
|
–
|
|
–
|
|
(24
|
)
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2003
|
3,076,903,379
|
|
307,690,338
|
|
–
|
|
–
|
|
3,077
|
|
308
|
|
|
Issued during the year
|
10,700,377
|
|
1,070,038
|
|
–
|
|
–
|
|
11
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2004
|
3,087,603,756
|
|
308,760,376
|
|
–
|
|
–
|
|
3,088
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One £1 special rights non-voting redeemable preference share (2003: one; 2002: nil).
|
|
|
|
|
(i)
|
These shares were
nil paid at 31 March 2002. They represented shares issued to financial
institutions in order to purchase Niagara Mohawk which were not required to
form part of the final consideration and were sold on the open market
during the year ended 31 March 2003.
|
At 31 March 2001, the authorised share capital of the Company was £250m and the allotted and issued share capital of the Company was £50,000 (500,000 ordinary shares of 10 pence each), of which
£12,500 had been called up and paid.
At 31 March 2002, the authorised share capital of the Company was £250m (2,500m ordinary shares of 10 pence each and one £1 special rights non-voting redeemable preference share).
On 21 October 2002, the authorised share capital of the Company was increased to £500m (5,000m ordinary shares of 10 pence each and one £1 special rights non-voting redeemable preference share). This
remained unchanged at 31 March 2003 and 31 March 2004.
During the year ended 31 March 2003, the Group purchased for cancellation 24,225,000 of its ordinary shares at an average price per ordinary share of 401.59p.
The special rights non-voting redeemable preference share of £1 in National Grid Transco plc (‘the Special Share’), held on behalf of the Crown, was issued by National Grid to the Secretary of State for
Trade and Industry on 31 January 2002 as part of a scheme of arrangement. It was redeemed at par on 5 May 2004. The Special Share did not carry any rights to vote at general meetings but entitled the holder to receive notice of and to attend and
speak at such meetings. Certain matters, in particular the alteration of certain Articles of Association of the Company, required the prior written consent of the holder of the Special Share. The Special Share conferred no right to participate in
the capital or profits of the Company, except that on a winding-up the holder of the Special Share was entitled to repayment of £1 in priority to other shareholders. Prior to 31 January 2002, the Secretary of State for Trade and Industry held
a Special Share with equivalent rights in National Grid Holdings One plc. A similar special share in Lattice was held at 31 March 2002 by the Crown. This share was redeemed on 21 October 2002 as part of the Merger arrangements.
Share option schemes
The
Group operates two principal forms of share option scheme. They are an employee
sharesave scheme and an Executive Share Option Scheme (‘the Executive Scheme’).
The details given below relate to the schemes operated by the Group and the sharesave
scheme formerly operated by Lattice. Following the Merger, most Lattice scheme
options were converted into 0.375 National Grid Transco plc options. The remaining
Lattice scheme options lapsed on 29
April 2003.
In any 10-year period, the maximum number of shares that may be issued or issuable pursuant to the exercise of options under all of the Group’s share option schemes may not exceed the number of shares representing
10% of the issued ordinary share capital from time to time.
97 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
23. Share capital
(continued)
Share option schemes
(continued)
The sharesave scheme is savings related where, under normal circumstances, share options are exercisable on completion of a three or a five-year save-as-you-earn contract. The exercise price of options granted
represents 80% of the market price at the date the option was granted.
The Executive Scheme applies to senior executives, including Executive Directors. Options granted for the 1999/2000 financial year are subject to the achievement of performance targets related to earnings per share
growth over a three-year period and have now vested. Options granted for the 2000/01 financial year and thereafter are subject to the achievement of performance targets related to total shareholder returns over a three-year period and these have not
yet vested. The share options are generally exercisable between the third and tenth anniversaries of the date of grant if the relevant performance target is achieved.
Movement in options to subscribe for ordinary
shares under the Group’s various options schemes for the three years ended
31 March 2004 are shown below and include those options related to shares issued
to employee
benefit trusts:
|
|
|
Sharesave scheme
options
|
|
Executive share
scheme options
|
|
Total options
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
|
|
|
|
|
average price
|
average price
|
|
|
|
£
|
|
millions
|
|
£
|
|
millions
|
|
millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2001
|
|
2.54
|
|
13.1
|
|
4.31
|
|
6.9
|
|
20.0
|
|
|
Granted
|
|
4.57
|
|
2.4
|
|
5.50
|
|
2.6
|
|
5.0
|
|
|
Lapsed – forfeited
|
|
3.74
|
|
(0.7
|
)
|
–
|
|
–
|
|
(0.7
|
)
|
|
Lapsed – expired
|
|
–
|
|
–
|
|
4.17
|
|
(0.1
|
)
|
(0.1
|
)
|
|
Exercised
|
|
1.76
|
|
(5.0
|
)
|
3.05
|
|
(0.9
|
)
|
(5.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2002
|
|
3.33
|
|
9.8
|
|
4.81
|
|
8.5
|
|
18.3
|
|
|
Converted from Lattice sharesave scheme
|
|
3.18
|
|
26.7
|
|
–
|
|
–
|
|
26.7
|
|
|
Granted
|
|
3.62
|
|
9.9
|
|
4.78
|
|
5.1
|
|
15.0
|
|
|
Lapsed – forfeited
|
|
4.14
|
|
(3.7
|
)
|
5.10
|
|
–
|
|
(3.7
|
)
|
|
Lapsed – expired
|
|
3.68
|
|
(1.0
|
)
|
2.85
|
|
(0.1
|
)
|
(1.1
|
)
|
|
Exercised
|
|
2.39
|
|
(3.7
|
)
|
2.84
|
|
(0.4
|
)
|
(4.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2003
|
|
3.31
|
|
38.0
|
|
4.86
|
|
13.1
|
|
51.1
|
|
|
Granted
|
|
3.17
|
|
10.4
|
|
4.05
|
|
0.1
|
|
10.5
|
|
|
Lapsed – expired
|
|
3.52
|
|
(5.1
|
)
|
5.24
|
|
(0.9
|
)
|
(6.0
|
)
|
|
Exercised
|
|
3.16
|
|
(11.6
|
)
|
2.90
|
|
(0.3
|
)
|
(11.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2004
|
|
3.32
|
|
31.7
|
|
4.84
|
|
12.0
|
|
43.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within options outstanding at 31 March 2004 and 31 March 2003 were the following options which were exercisable:
|
At 31 March 2004
|
3.32
|
|
0.8
|
|
3.78
|
|
2.4
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2003
|
3.34
|
|
1.7
|
|
3.72
|
|
2.4
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average remaining contractual life of options in the employee sharesave scheme at 31 March 2004 was 2 years and 6 months. These options have exercise prices between £3.12 and £4.57.
Lattice sharesave scheme
|
|
Weighted
|
|
Sharesave
|
|
|
average price
|
scheme
|
|
£
|
millions
|
|
|
|
|
|
|
At 31 March 2001
|
1.18
|
|
71.0
|
|
|
Granted
|
1.29
|
|
11.0
|
|
|
Lapsed – forfeited
|
1.18
|
|
(2.8
|
)
|
|
|
|
|
|
|
At 31 March 2002
|
1.19
|
|
79.2
|
|
|
Lapsed – forfeited
|
1.21
|
|
(1.4
|
)
|
|
Lapsed – expired
|
1.20
|
|
(3.4
|
)
|
|
Exercised
|
1.19
|
|
(1.9
|
)
|
|
Converted to National Grid Transco options
|
1.19
|
|
(71.2
|
)
|
|
|
|
|
|
|
At 31 March 2003
|
1.20
|
|
1.3
|
|
|
Lapsed – expired
|
1.20
|
|
(1.3
|
)
|
|
|
|
|
|
|
At 31 March 2004
|
–
|
|
–
|
|
|
|
|
|
|
Following the merger of Lattice and National Grid, a number of employees did not convert their Lattice sharesave options into National Grid Transco options. These options lapsed on 29 April 2003 if they had not been
exercised by that date.
The National Grid Transco employee sharesave scheme is Inland Revenue approved and hence, as permitted by UITF abstract 17 (revised 2000) ‘Employee share shemes’, no charge has been made to the profit and
loss account.
Annual Report and Accounts 2003/04_
National
Grid Transco
98
Back to Contents
Notes to the Accounts
_continued
23. Share capital
(continued)
Share option schemes
(continued)
Executive options outstanding and exercisable and their weighted average exercise prices for the respective ranges of exercise prices and years at 31 March 2004 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
exercise price of
|
|
Number
|
|
exercise price of
|
|
Number
|
|
Exercise price
|
|
Normal dates
|
|
|
exercisable options
|
|
exercisable
|
|
outstanding options
|
|
outstanding
|
|
per share
|
|
of exercise
|
|
|
£
|
|
millions
|
|
£
|
|
millions
|
|
pence
|
|
Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive scheme
|
2.77
|
|
0.7
|
|
2.77
|
|
0.7
|
|
258.0 – 280.5
|
|
2001 – 2008
|
|
|
3.78
|
|
0.7
|
|
3.78
|
|
0.7
|
|
375.8 – 490.0
|
|
2002 – 2009
|
|
|
4.91
|
|
0.2
|
|
5.31
|
|
1.9
|
|
424.0 – 566.5
|
|
2003 – 2010
|
|
|
5.36
|
|
0.2
|
|
5.33
|
|
1.4
|
|
526.0 – 623.0
|
|
2004 – 2011
|
|
|
5.56
|
|
0.2
|
|
5.50
|
|
2.3
|
|
479.5 – 563.0
|
|
2005 – 2012
|
|
|
4.57
|
|
0.3
|
|
4.68
|
|
4.9
|
|
434.3 – 481.5
|
|
2006 – 2013
|
|
|
4.05
|
|
0.1
|
|
4.05
|
|
0.1
|
|
405.0
|
|
2007 – 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.78
|
|
2.4
|
|
4.84
|
|
12.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24. Reserves
|
|
|
Group
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
Share premium account
|
|
Revaluation reserve
|
|
Other reserves
|
|
Profit and loss account
|
|
Share premium account
|
|
Other reserve
|
|
Profit and loss account
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March
2001 (as previously reported)
|
|
–
|
|
50
|
|
(5,202
|
)
|
6,225
|
|
–
|
|
–
|
|
–
|
|
|
Prior
year adjustment
|
|
–
|
|
–
|
|
–
|
|
(26
|
)
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
31 March 2001 (restated)
|
|
–
|
|
50
|
|
(5,202
|
)
|
6,199
|
|
–
|
|
–
|
|
–
|
|
|
Exchange
adjustments
|
|
–
|
|
–
|
|
–
|
|
(58
|
)
|
–
|
|
–
|
|
–
|
|
|
Tax
on exchange adjustments
|
|
–
|
|
–
|
|
–
|
|
21
|
|
–
|
|
–
|
|
–
|
|
|
Ordinary
shares issued during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Share
option scheme
|
|
46
|
|
–
|
|
–
|
|
–
|
|
1
|
|
–
|
|
|
|
|
– Acquisition
|
|
1,242
|
|
–
|
|
–
|
|
–
|
|
1,242
|
|
–
|
|
–
|
|
|
Transfer on issue of certain shares
under share
option schemes
|
|
11
|
|
–
|
|
–
|
|
(11
|
)
|
–
|
|
–
|
|
–
|
|
|
Unrealised
gain on transfer of assets to a joint
venture (net of tax)
|
|
–
|
|
–
|
|
7
|
|
–
|
|
–
|
|
–
|
|
–
|
|
|
Reduction
in revaluation reserve
|
|
–
|
|
(50
|
)
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
|
Movement
in shares held by employee share
trusts
|
|
–
|
|
–
|
|
–
|
|
(27
|
)
|
–
|
|
–
|
|
–
|
|
|
Retained
(loss)/profit for the year
|
|
–
|
|
–
|
|
–
|
|
(901
|
)
|
–
|
|
–
|
|
498
|
|
|
Transfer
|
|
(56
|
)
|
–
|
|
56
|
|
–
|
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
31 March 2002 (restated)
|
|
1,243
|
|
–
|
|
(5,139
|
)
|
5,223
|
|
1,243
|
|
–
|
|
498
|
|
|
Exchange
adjustments
|
|
–
|
|
–
|
|
–
|
|
(322
|
)
|
–
|
|
–
|
|
–
|
|
|
Tax
on exchange adjustments
|
|
–
|
|
–
|
|
–
|
|
12
|
|
–
|
|
–
|
|
–
|
|
|
Ordinary
shares issued during the year
|
|
2
|
|
–
|
|
–
|
|
–
|
|
4
|
|
–
|
|
–
|
|
|
Repurchase
and cancellation of ordinary shares
|
|
–
|
|
–
|
|
2
|
|
(97
|
)
|
–
|
|
2
|
|
(97
|
)
|
|
Transfer
on issue of certain shares under share
option schemes
|
|
2
|
|
–
|
|
–
|
|
(2
|
)
|
–
|
|
–
|
|
–
|
|
|
Unrealised
gain on transfer of assets to a joint
venture (net of tax)
|
|
–
|
|
–
|
|
6
|
|
–
|
|
–
|
|
–
|
|
–
|
|
|
Movement
in shares held by employee share
trusts
|
|
–
|
|
–
|
|
–
|
|
14
|
|
–
|
|
–
|
|
–
|
|
|
Retained
(loss)/profit for the year
|
|
–
|
|
–
|
|
–
|
|
(139
|
)
|
–
|
|
–
|
|
734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
31 March 2003 (restated)
|
|
1,247
|
|
–
|
|
(5,131
|
)
|
4,689
|
|
1,247
|
|
2
|
|
1,135
|
|
|
Exchange
adjustments
|
|
–
|
|
–
|
|
–
|
|
(417
|
)
|
–
|
|
–
|
|
–
|
|
|
Tax
on exchange adjustments
|
|
–
|
|
–
|
|
–
|
|
(12
|
)
|
–
|
|
–
|
|
–
|
|
|
Ordinary
shares issued during the year
|
|
33
|
|
–
|
|
–
|
|
–
|
|
33
|
|
–
|
|
–
|
|
|
Movement
in shares held by employee share
trusts
|
|
–
|
|
–
|
|
–
|
|
5
|
|
–
|
|
–
|
|
–
|
|
|
Retained
profit for the year
|
|
–
|
|
–
|
|
–
|
|
490
|
|
–
|
|
–
|
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
31 March 2004
|
|
1,280
|
|
–
|
|
(5,131
|
)
|
4,755
|
|
1,280
|
|
2
|
|
1,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has not presented its own profit and loss account as permitted by section 230 of the Companies Act 1985. The Company’s profit after taxation was £795m (2003: £1,264m; 2002:
£667m).
Other reserves are non-distributable reserves. They primarily represent the difference between the carrying value of Group undertakings, investments and their respective capital structures following the Lattice
Demerger from BG Group plc and the 1999 Lattice Refinancing of £(5,745)m. The reserve also included the merger differences described below of £221m and £359m together with unrealised gains of £32m on transfer of fixed assets
to a former joint venture which subsequently became a Group undertaking.
The revaluation reserve brought forward as at 1 April 2001 related to investment properties. These properties were reclassified as other land and buildings in 2001 and are now reported at historical cost.
During the year ended 31 March 2002, the application of merger accounting principles to a group reconstruction which involved the creation of a new holding company gave rise to a difference of £359m. It was
accounted for as a merger difference and included within other reserves. In accordance with merger accounting principles, the shares issued in connection with the scheme of arrangement to acquire the former holding company of the Group (National
Grid Holdings One plc), as adjusted to reflect the issue of options were treated as if issued throughout the year ended 31 March 2002 and comparative period.
99 National
Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
24. Reserves
(continued)
During the year ended 31 March 2003, the application
of merger accounting principles to the Merger gave rise to a difference of £221m.
It was accounted for as a merger difference and included within other reserves.
The difference represented the excess of nominal share capital in issue by Lattice
at the date of the Merger over the National Grid Transco plc share capital issued
to Lattice shareholders. In accordance with merger accounting principles,
the shares issued in connection with the Merger were treated as if issued throughout
the year ended 31 March 2003 and comparative periods.
Own shares are included in the profit and loss account reserve at 31 March 2004 and related to 9m 10p ordinary shares in National Grid Transco plc, held by employee share trusts for the purpose of satisfying certain
obligations under various share option schemes operated by the Group. The carrying value of £34m (market value £43m) at 31 March 2004 represented the exercise amounts receivable in respect of those which were issued at market value by
the Company and the cost in respect of those shares purchased in the open market. These own shares were, in prior years, held in fixed assets investments, the adoption of UITF 38 as indicated in note 1 has resulted in these shares now being held
within the profit and loss account reserve, as a result the profit and loss account reserve for 31 March 2001, 31 March 2002 and 31 March 2003 were restated.
Funding is provided to the trusts by Group undertakings. The trusts have waived their rights to dividends on these shares.
Own shares at 31 March 2003 related to 10m 10p ordinary shares in National Grid Transco plc (book value £39m, market value £37m).
Own shares at 31 March 2002 related to 13m 10p
ordinary shares in National Grid (book value £46m, market value £61m)
and 33m 10p ordinary shares in Lattice (book value £7m, market value £57m),
prior to the Merger.
25. Non-equity minority interests
The non-equity minority interests of £38m (2003: £69m)
comprised cumulative preference stock issued by Group undertakings.
|
26. Reconciliation of movement in equity
shareholders’ funds
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
(restated)
|
|
(restated)
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year
|
1,099
|
|
391
|
|
(321
|
)
|
|
Dividends
|
(609
|
)
|
(530
|
)
|
(580
|
)
|
|
|
|
|
|
|
|
|
|
490
|
|
(139
|
)
|
(901
|
)
|
|
Issue of ordinary shares
|
34
|
|
2
|
|
1,317
|
|
|
Repurchase and cancellation of ordinary shares
|
–
|
|
(97
|
)
|
–
|
|
|
Exchange adjustments
|
(417
|
)
|
(322
|
)
|
(58
|
)
|
|
Tax on exchange adjustments
|
(12
|
)
|
12
|
|
21
|
|
|
Movement in shares held by employee share trust
|
5
|
|
14
|
|
(27
|
)
|
|
Unrealised gain on transfer of assets to a joint venture (net of tax)
|
–
|
|
6
|
|
7
|
|
|
Reduction in revaluation reserve on reclassification of investment properties
|
–
|
|
–
|
|
(50
|
)
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in equity shareholders’ funds
|
100
|
|
(524
|
)
|
309
|
|
|
Equity shareholders’ funds at start of year
|
1,113
|
|
1,637
|
|
1,328
|
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds at end of year
|
1,213
|
|
1,113
|
|
1,637
|
|
|
|
|
|
|
|
|
Annual
Report and Accounts 2003/04_
National
Grid Transco
100
Back to Contents
Notes to the Accounts
_continued
27. Group cash flow statement
a) Reconciliation of operating
profit
to net
cash inflow from operating activities before exceptional items
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Operating profit of Group undertakings
|
1,855
|
|
1,612
|
|
1,060
|
|
|
Group exceptional operating items
|
277
|
|
476
|
|
673
|
|
|
Depreciation and amortisation
|
1,117
|
|
1,088
|
|
876
|
|
|
Decrease/(increase) in stocks
|
31
|
|
(16
|
)
|
3
|
|
|
(Increase)/decrease in debtors
|
(121
|
)
|
(149
|
)
|
222
|
|
|
(Decrease)/increase in creditors
|
(6
|
)
|
159
|
|
(180
|
)
|
|
Decrease in provisions
|
(95
|
)
|
(16
|
)
|
(260
|
)
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities before exceptional items
|
3,058
|
|
3,154
|
|
2,394
|
|
|
|
|
|
|
|
|
|
b) Disposal of investments
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Cash consideration received
|
33
|
|
328
|
|
37
|
|
|
|
|
|
|
|
|
|
Comprises:
|
|
|
|
|
|
|
|
Disposal of Group undertakings
|
–
|
|
92
|
|
37
|
|
|
Disposal of other investments
|
33
|
|
236
|
|
–
|
|
|
|
|
|
|
|
|
|
|
33
|
|
328
|
|
37
|
|
|
|
|
|
|
|
|
|
c) Acquisition of Group undertakings
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Payments to acquire Group undertakings
|
–
|
|
–
|
|
(943
|
)
|
|
Overdraft of Group undertakings acquired
|
–
|
|
–
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
–
|
|
–
|
|
(950
|
)
|
|
|
|
|
|
|
|
|
d) Reconciliation of net cash flow
to movement
in net debt
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Movement in cash and overdrafts
|
13
|
|
34
|
|
22
|
|
|
Net cash outflow/(inflow) from the management of liquid resources
|
48
|
|
138
|
|
(347
|
)
|
|
Decrease/(increase) in borrowings
|
426
|
|
(267
|
)
|
(1,206
|
)
|
|
|
|
|
|
|
|
|
Change in net debt resulting from cash flows
|
487
|
|
(95
|
)
|
(1,531
|
)
|
|
Acquisition of Group undertakings
|
–
|
|
–
|
|
(3,678
|
)
|
|
Disposal of Group undertaking
|
–
|
|
(62
|
)
|
–
|
|
|
Exchange adjustments
|
534
|
|
593
|
|
20
|
|
|
Settlement of EPICs (see note 4(b))
|
243
|
|
–
|
|
–
|
|
|
Other non-cash movements
|
(18
|
)
|
(15
|
)
|
(5
|
)
|
|
|
|
|
|
|
|
|
Movement in net debt in the year
|
1,246
|
|
421
|
|
(5,194
|
)
|
|
Net debt at start of year
|
(13,878
|
)
|
(14,299
|
)
|
(9,105
|
)
|
|
|
|
|
|
|
|
|
Net debt at end of year
|
(12,632
|
)
|
(13,878
|
)
|
(14,299
|
)
|
|
|
|
|
|
|
|
During the year ended 31 March 2004 certain cross-currency swaps were terminated and £209m of cash was received. £61m of this cash flow was reported in the cash flow statement within the total of net cash
outflow for returns on investments and servicing of finance amounting to £(692)m, and £148m was reported within net cash inflow from financing. Termination of these cross-currency swaps also necessitated a re-translation of Euro
denominated debt at new swapped rates amounting to £(140)m, which was reported within the net exchange adjustments of £534m reported above.
101 National
Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
|
27. Group
cash flow statement
(continued)
e) Analysis of changes in
net debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
|
|
Other
|
|
|
At 1 April
|
Cash
|
of Group
|
Exchange
|
non-cash
|
At 31 March
|
|
2001
|
flow
|
undertakings
|
adjustments
|
movements
|
2002
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
28
|
|
82
|
|
–
|
|
–
|
|
–
|
|
110
|
|
|
Bank overdrafts
|
(24
|
)
|
(60
|
)
|
–
|
|
–
|
|
–
|
|
(84
|
)
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
Current asset investments
|
491
|
|
(347
|
)
|
215
|
|
(5
|
)
|
–
|
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings due after one year
|
(8,254
|
)
|
(1,830
|
)
|
(3,189
|
)
|
11
|
|
549
|
|
(12,713
|
)
|
|
Borrowings due within one year
|
(1,346
|
)
|
624
|
|
(704
|
)
|
14
|
|
(554
|
)
|
(1,966
|
)
|
|
|
|
|
(1,206
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,105
|
)
|
(1,531
|
)
|
(3,678
|
)
|
20
|
|
(5
|
)
|
(14,299
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposal
|
|
Other
|
|
|
At 1 April
|
Cash
|
of Group
|
Exchange
|
non-cash
|
At 31 March
|
|
2002
|
flow
|
undertakings
|
adjustments
|
movements
|
2003
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
110
|
|
12
|
|
–
|
|
(3
|
)
|
–
|
|
119
|
|
|
Bank overdrafts
|
(84
|
)
|
22
|
|
–
|
|
–
|
|
–
|
|
(62
|
)
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
Current asset investments
|
354
|
|
138
|
|
–
|
|
(10
|
)
|
–
|
|
482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings due after one year
|
(12,713
|
)
|
(1,226
|
)
|
(55
|
)
|
497
|
|
1,264
|
|
(12,233
|
)
|
|
Borrowings due within one year
|
(1,966
|
)
|
959
|
|
(7
|
)
|
109
|
|
(1,279
|
)
|
(2,184
|
)
|
|
|
|
|
(267
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,299
|
)
|
(95
|
)
|
(62
|
)
|
593
|
|
(15
|
)
|
(13,878
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
At 1 April
|
Cash
|
Exchange
|
Settlement
|
non-cash
|
At 31 March
|
|
2003
|
flow
|
adjustments
|
of EPICs
|
movements
|
2004
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
119
|
|
(21
|
)
|
(2
|
)
|
–
|
|
–
|
|
96
|
|
|
Bank overdrafts
|
(62
|
)
|
34
|
|
2
|
|
–
|
|
–
|
|
(26
|
)
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
Current asset investments
|
482
|
|
48
|
|
(10
|
)
|
–
|
|
–
|
|
520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings due after one year
|
(12,233
|
)
|
(1,117
|
)
|
448
|
|
–
|
|
1,360
|
|
(11,542
|
)
|
|
Borrowings due within one year
|
(2,184
|
)
|
1,543
|
|
96
|
|
243
|
|
(1,378
|
)
|
(1,680
|
)
|
|
|
|
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,878
|
)
|
487
|
|
534
|
|
243
|
|
(18
|
)
|
(12,632
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28. Related party transactions
Transactions with related parties were in the normal course of business and are summarised below. Transactions with subsidiaries or associated undertakings disposed of during the year are deemed to be related party
transactions from the date of disposal and have been included within the following table:
|
|
2004
|
|
2003
|
|
2002
|
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
Sales:
|
|
|
|
|
|
|
|
Services supplied
|
6
|
|
10
|
|
33
|
|
|
Finance lease rentals
|
–
|
|
11
|
|
9
|
|
|
Tangible fixed assets
|
–
|
|
–
|
|
28
|
|
|
|
|
|
|
|
|
|
|
Purchases:
|
|
|
|
|
|
|
|
Services received
|
25
|
|
59
|
|
55
|
|
|
Finance lease rentals
|
–
|
|
1
|
|
–
|
|
|
Tangible fixed assets
|
–
|
|
12
|
|
3
|
|
|
|
|
|
|
|
|
At 31 March 2004, the Group had amounts receivable and payable amounting to £1m and £1m respectively with related parties.
During 2002/03, amounts were paid to or in respect of joint ventures, arising from the Group’s obligations from its decision to exit from these investments. The payments made during that year amounted to
£153m, all of which had been provided for at 31 March 2002.
At 31 March 2003, amounts due to and from The
Leasing Group plc, a former subsidiary undertaking, amounted to £73m and
£79m respectively. In addition, at 31 March 2003 the Group had a net investment
in a finance lease with a related party amounting to £50m, of which £5m
fell due within one year. Rentals received and receivable relating to this lease
in 2003 amounted to £11m.
Annual Report and Accounts 2003/04_
National
Grid Transco
102
Back to Contents
Notes to the Accounts
_continued
29. Commitments and contingencies
a) Future capital expenditure
|
|
|
|
|
|
|
|
|
|
|
Group
|
|
|
|
Joint ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Contracted for but not
provided
|
|
448
|
|
664
|
|
–
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
b) Lease commitments
At
31 March 2004, the Group’s operating lease commitments for the financial year ending 31 March 2005 amounted to £59m (2003: £74m)
and are analysed by lease expiry date as follows:
|
|
|
|
Land and buildings
|
|
|
|
Other
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year
|
|
2
|
|
1
|
|
4
|
|
7
|
|
6
|
|
8
|
|
|
Between two and five years
|
|
5
|
|
4
|
|
15
|
|
20
|
|
20
|
|
24
|
|
|
After five years
|
|
21
|
|
26
|
|
12
|
|
16
|
|
33
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
31
|
|
31
|
|
43
|
|
59
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Group commitments under non-cancellable operating leases were as follows:
|
|
2004
|
|
2003
|
|
|
£m
|
£m
|
|
|
|
|
|
|
In one year or less
|
59
|
|
74
|
|
|
In more than one year, but not more than
two years
|
45
|
|
52
|
|
|
In more than two years, but not more than
three years
|
40
|
|
41
|
|
|
In more than three years, but not more
than four years
|
32
|
|
32
|
|
|
In more than four years, but not more than
five years
|
31
|
|
30
|
|
|
In more than five years
|
271
|
|
247
|
|
|
|
|
|
|
|
|
478
|
|
476
|
|
|
|
|
|
|
c) Power commitments
At 31 March 2004, the Group had obligations to purchase energy under long-term contracts. The following table analyses these commitments, excluding those purchased power obligations, the net present value of which is
already reflected in creditors (notes 18 and 19):
|
|
2004
|
|
2003
|
|
|
|
(restated)
|
|
£m
|
£m
|
|
|
|
|
|
|
In one year or less
|
1,065
|
|
1,320
|
|
|
In more than one year, but not more than
two years
|
629
|
|
1,016
|
|
|
In more than two years, but not more than
three years
|
592
|
|
679
|
|
|
In more than three years, but not more
than four years
|
575
|
|
662
|
|
|
In more than four years, but not more than
five years
|
559
|
|
624
|
|
|
In more than five years
|
2,135
|
|
2,374
|
|
|
|
|
|
|
|
|
5,555
|
|
6,675
|
|
|
|
|
|
|
At 31 March 2003, power commitments were shown
net of agreed forward contractual sales of £346m. In the current year
the commitments shown above are presented without the netting off of any related
contractual sales. As a result, the comparatives have been restated.
103
National Grid Transco_
Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
29. Commitments and contingencies
(continued)
d) Other commitments, contingencies
and guarantees
The value of other Group
commitments, contingencies and guarantees at 31 March 2004 amounted to £263m (2003: £221m), including guarantees amounting to £168m (2003: £134m). Included within these
amounts are outstanding BG Group related commitments and contingencies amounting to £13m (2003: £13m),
arising from the restructuring of BG Group in 1999.
|
Details of the guarantees entered
into by the Group at 31 March 2004 are shown below:
|
|
i)
|
performance guarantees of £24m relating
to certain property obligations of a group undertaking;
|
|
ii)
|
£50m guarantee of the obligations
of a Group undertaking to pay liabilities under a meter operating contract
for a duration expected to be 20-30 years;
|
|
iii)
|
a performance guarantee during construction
of the Victoria to Tasmania interconnector, that expires on commissioning,
of £41m;
|
|
iv)
|
a four-year guarantee relating to an interconnector
construction project amounting to £20m provided by the Company;
|
|
v)
|
guarantees in respect of a former associate
amounting to £14m; and
|
|
vi)
|
other guarantees amounting to £19m
arising in the normal course of business and entered into on normal commercial
terms.
|
The Company has also guaranteed the lease obligations of a former associate to a Group undertaking, amounting to £45m (2003: £50m).
e) Parent Company loan guarantees on
behalf of Group undertakings
The
Company has guaranteed the repayment of principal sums, any associated premium
and interest on specific loans due from certain Group undertakings to third
parties. At 31 March 2004, the sterling equivalent amounted
to £1,892m (2003: £1,845m). The guarantees are for varying terms
between four and 10 years.
f) Larkhall prosecution
Following a fatal accident in Larkhall, Lanarkshire
in December 1999 in which four people died, Transco faces charges alleging
breaches of sections 3 and 33 of the Health & Safety at Work Act 1974.
The case is currently listed for trial in Edinburgh commencing on 27 September
2004. The maximum penalty for breach of either of the above sections is an
unlimited fine.
g) Sale of Millstone 3
In
November 1999, New England Power (NEP), a subsidiary of National Grid USA,
entered into an agreement with Northeast Utilities (NU) to settle claims
made by NEP in relation to the operation of the Millstone 3 nuclear unit.
As part of this agreement, NU agreed to include NEP’s 16.2% share in an auction of NU’s share in that unit, at a guaranteed price, irrespective of the price actually received at auction. On 31 March 2001, the Millstone 3 sale was
completed and proceeds of US$28m (£20m) were received by NEP. Millstone 3 was subsequently sold to Dominion Resources Inc. for a total of approximately US$855m (£602m).
Regulatory authorities from Rhode Island, New Hampshire and Massachusetts have expressed an intent to challenge the reasonableness of the settlement agreement as NEP would have received approximately US$140m of sale
proceeds without the agreement. Any dispute will be resolved by the Federal Energy Regulatory Commission (FERC). The Group believes that it acted prudently since the amount received under the settlement agreement was the highest sale price for a
nuclear unit at the time the agreement was reached.
h) Environmental related litigation
On 10 January 2002, New York State filed a civil action against Niagara Mohawk in US District Court in Buffalo, New York, for alleged violations of the federal Clean Air Act, related state environmental laws and the
common law at the Huntley and Dunkirk power plants, which Niagara Mohawk sold in 1999 to affiliates of NRG Energy, Inc. (collectively with its affiliates, NRG). The State alleged, among other things, that between 1982 and 1999, Niagara Mohawk
modified the two plants 55 times without obtaining proper preconstruction permits and implementing proper pollution equipment controls.
On 27 March 2003, the court issued an order granting in part Niagara Mohawk’s motion to dismiss, which had been filed in 2002. Based on applicable statutes of limitations, the court reduced the number of projects
allegedly requiring preconstruction permits under the Clean Air Act from 55 to nine.
On 31 December 2003, the court granted the State’s motion to amend the complaint, allowing it to assert operating permit violations against Niagara Mohawk and NRG, though still barring monetary penalties for
actions outside the statute of limitations period. Niagara Mohawk answered the amended complaint on 2 March 2004 and filed a counterclaim against the State in response to its common law public nuisance claim, seeking contribution for the
company’s portion of any alleged harm caused by emissions from facilities that the State owns or to which it has given permits.
Prior to the commencement of the enforcement
action, NRG took the position that Niagara Mohawk would be at least partly responsible
for the costs of pollution control equipment and post-sale fines and penalties,
notwithstanding contrary language in the agreement governing the sale of the
plants to NRG. As a result, on 13 July 2001, Niagara Mohawk sued NRG in New
York State Supreme Court (Onondaga County), seeking a declaratory ruling that
under the agreement, NRG is responsible for the costs of pollution controls
and mitigation, as well as post-sale fines and penalties, that may result from
the State’s enforcement action. The parties are awaiting a decision on
NRG’s partial summary judgment motion, which was argued on 15 January 2004.
The court’s decision has been delayed pending the hearing judge’s
determination of whether to recuse himself due to a perceived conflict of interest.
Annual
Report and Accounts 2003/04_
National
Grid Transco
104
Back to Contents
Notes to the Accounts
_continued
30.
Group undertakings and joint ventures
Principal Group undertakings
The principal Group undertakings included in the Group accounts at 31 March 2004 are listed below. These undertakings are wholly-owned and, unless otherwise indicated, are incorporated in Great Britain.
|
|
Principal activity
|
|
|
Transco plc (i)
|
Gas transportation
|
|
National Grid Company plc (i)
|
Transmission of electricity in England and Wales
|
|
New England Power Company (Incorporated in the US) (i)
|
Transmission and generation of electricity
|
|
Massachusetts Electric Company (Incorporated in the US) (i)
|
Distribution of electricity
|
|
The Narragansett Electric Company (Incorporated in the US) (i)
|
Distribution of electricity
|
|
Niagara Mohawk Power Corporation (Incorporated in the US) (i)
|
Distribution and transmission of electricity and gas
|
|
GridAmerica LLC (formed in the US) (i)
|
Management of electricity transmission assets
|
|
Gridcom (UK) Limited (i)
|
Telecommunications infrastructure
|
|
NGG Finance plc (ii)
|
Financing
|
|
British Transco International Finance B.V. (Incorporated in The Netherlands) (i)
|
Financing
|
|
SecondSite Property Portfolio Limited (i)
|
Property
|
|
National Grid Holdings One plc (ii)
|
Holding company
|
|
Lattice Group plc (ii)
|
Holding company
|
|
National Grid USA (Incorporated in the US) (i)
|
Holding company
|
|
Niagara Mohawk Holdings Inc. (Incorporated in the US) (i)
|
Holding company
|
|
Lattice Group Holdings Limited (i)
|
Holding company
|
|
Transco Holdings plc (i)
|
Holding company
|
|
National Grid (US) Holdings Limited (ii)
|
Holding company
|
|
National Grid Holdings Limited (i)
|
Holding company
|
|
|
(i)
|
Issued ordinary share capital held by Group undertakings.
|
|
(ii)
|
Issued ordinary share capital held by National Grid Transco plc.
|
|
Principal joint ventures
|
|
|
|
|
|
|
(at 31 March 2004)
|
|
|
|
|
|
|
|
|
|
Country of
|
|
|
|
|
|
|
incorporation
|
|
|
|
|
Group holding
|
|
and operation
|
|
Principal activity
|
|
|
Compañia Inversora En Transmicion
|
|
|
|
|
|
|
Electrica CITELEC S.A. (i)
|
42.5% ordinary shares
|
|
Argentina
|
|
Transmission of electricity
|
|
Copperbelt Energy Corporation Plc. (i)
|
38.5% ordinary shares
|
|
Zambia
|
|
Transmission, distribution and
supply of electricity
|
|
|
(i)
|
31 December year end.
|
The investments in joint ventures are held by Group undertakings.
A full list of all Group and associated undertakings is available from the Group Company Secretary.
31.
Summary
US GAAP income statement, balance sheet,
notes and associated reconciliations
The Group prepares its consolidated accounts in accordance with United Kingdom Generally Accepted Accounting Principles (UK GAAP), which differ in certain respects from United States Generally Accepted Accounting
Principles (US GAAP).
The most significant difference between UK and US GAAP is that, under UK GAAP, the combination of National Grid and Lattice was accounted for as a merger (pooling of interests), while under US GAAP this transaction was
accounted for as an acquisition (purchase accounting) of Lattice by National Grid. Consequently, under UK GAAP, the accounts represent the combined accounts of National Grid and Lattice on an historical cost basis for all periods presented. Under US
GAAP, the accounts presented prior to the Merger are those of National Grid only.
The income statement and balance sheet shown on the following pages are presented in a US GAAP format. The balance sheets at 31 March 2003 and 31 March 2004 include the impact of the fair value of the acquired assets
and liabilities of Lattice prepared under US GAAP at the date of acquisition. A summary of the principal differences between UK and US GAAP is shown in note 32.
The comparative figures for discontinued operations and continuing operations have been restated for 2001/02 for US GAAP reporting purposes. This restatement does not affect UK GAAP reported figures. This restatement
arose because the results of operations relating to the joint ventures and the associate, from which the Group has now exited and were treated as discontinued operations under UK GAAP, were reported as part of discontinued operations under US GAAP.
This treatment is not permitted under US GAAP as these results should have been reported as part of the interest in equity accounted affiliates. The net loss for the Group reported under US GAAP for 2001/02 is not affected by this
restatement.
The effect of this restatement was to reclassify amounts of net loss amounting to £857m for 2001/02 from discontinued operations to continuing operations through a restatement of the interest in equity accounted
affiliates. Earnings per share for continuing and discontinued operations has similarly been restated.
105 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
31. Summary US GAAP income statement,
balance
sheet, notes and associated reconciliations
(continued)
Summary US GAAP income statement
|
|
|
|
2004
|
|
|
|
|
|
2004
|
|
|
|
National
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
|
2004
|
|
|
Grid
|
|
|
|
Transco
|
|
|
US GAAP
|
|
|
Transco
|
|
|
|
(UK GAAP)
|
|
|
adjustments
|
|
|
(US GAAP)
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
9,033
|
|
|
(167
|
)
|
|
8,866
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
Depreciation
|
(866
|
)
|
|
(298
|
)
|
|
(1,164
|
)
|
|
Payroll and severance costs
|
(1,020
|
)
|
|
(277
|
)
|
|
(1,297
|
)
|
|
Purchases of electricity
|
(1,998
|
)
|
|
–
|
|
|
(1,998
|
)
|
|
Purchases of gas
|
(371
|
)
|
|
–
|
|
|
(371
|
)
|
|
Rates and property taxes
|
(516
|
)
|
|
–
|
|
|
(516
|
)
|
|
Electricity transmission services scheme direct costs
|
(277
|
)
|
|
–
|
|
|
(277
|
)
|
|
EnMO direct costs
|
(158
|
)
|
|
158
|
|
|
–
|
|
|
Replacement expenditure
|
(388
|
)
|
|
388
|
|
|
–
|
|
|
Provision for doubtful debts
|
(50
|
)
|
|
–
|
|
|
(50
|
)
|
|
Other operating charges
|
(1,534
|
)
|
|
263
|
|
|
(1,271
|
)
|
|
|
(7,178
|
)
|
|
234
|
|
|
(6,944
|
)
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
1,855
|
|
|
67
|
|
|
1,922
|
|
|
Share of joint ventures’ operating profit
|
7
|
|
|
(7
|
)
|
|
–
|
|
|
Non-operating items
|
322
|
|
|
(290
|
)
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest and taxation
|
2,184
|
|
|
(230
|
)
|
|
1,954
|
|
|
Net interest
|
(822
|
)
|
|
150
|
|
|
(672
|
)
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation
|
1,362
|
|
|
(80
|
)
|
|
1,282
|
|
|
Taxation
|
(261
|
)
|
|
(21
|
)
|
|
(282
|
)
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities after taxation
|
1,101
|
|
|
(101
|
)
|
|
1,000
|
|
|
Minority interests
|
(2
|
)
|
|
–
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
1,099
|
|
|
(101
|
)
|
|
998
|
|
|
Net loss from discontinued operations (net of taxation of £nil)
|
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year
|
1,099
|
|
|
(101
|
)
|
|
998
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
32.5
|
p
|
|
Diluted earnings per share under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
32.4
|
p
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per ADS under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
162.5
|
p
|
|
Diluted earnings per ADS under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
162.0
|
p
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share under US GAAP (pence) – total Group
|
|
|
|
|
|
|
32.5
|
p
|
|
Diluted earnings per share under US GAAP (pence) – total Group
|
|
|
|
|
|
|
32.4
|
p
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per ADS under US GAAP (pence) – total Group
|
|
|
|
|
|
|
162.5
|
p
|
|
Diluted earnings per ADS under US GAAP (pence) – total Group
|
|
|
|
|
|
|
162.0
|
p
|
|
|
|
|
|
|
|
|
|
|
There was no dilution of net income under US GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares in issue (million) – for basic EPS
|
|
|
|
|
|
|
3,070
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares in issue (million) – for diluted EPS
|
|
|
|
|
|
|
3,077
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share and per ADS for discontinued operations under US GAAP were 0.0p.
Consolidated statement of comprehensive income and changes in shareholders’ equity under US GAAP
|
|
2004
|
|
|
|
£m
|
|
|
|
|
|
Net income
|
998
|
|
|
Additional minimum pension liability (net of tax of £188m)
|
415
|
|
|
Exchange adjustments (including tax of £12m)
|
(438
|
)
|
|
Mark to market of financial instruments (net of tax credit of £26m)
|
(84
|
)
|
|
|
|
|
Comprehensive net income
|
891
|
|
|
Dividends
|
(560
|
)
|
|
Shares issued
|
34
|
|
|
Share options granted
|
25
|
|
|
Movement in treasury stock
|
5
|
|
|
Shareholders’ equity at 1 April 2003
|
9,426
|
|
|
|
|
|
Shareholders’ equity at 31 March 2004
|
9,821
|
|
|
|
|
Annual Report and Accounts 2003/04_
National
Grid Transco
106
Back to Contents
Notes to the Accounts
_continued
31.
Summary
US GAAP income statement, balance sheet,
notes and associated reconciliations
(continued)
Summary US GAAP income statement
(continued)
|
|
|
|
|
|
|
US GAAP
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
National
|
|
|
2003
|
|
|
2003
|
|
|
National
|
|
|
|
Grid
|
|
|
Lattice pre-
|
|
|
Other
|
|
|
Grid
|
|
|
|
Transco
|
|
|
acquisition
|
|
|
US GAAP
|
|
|
Transco
|
|
|
|
(UK GAAP)
|
|
|
(UK GAAP)
|
|
|
adjustments
|
|
|
(US GAAP)
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
9,400
|
|
|
(1,470
|
)
|
|
(529
|
)
|
|
7,401
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
(851
|
)
|
|
249
|
|
|
(129
|
)
|
|
(731
|
)
|
|
Payroll and severance costs
|
(1,107
|
)
|
|
308
|
|
|
(305
|
)
|
|
(1,104
|
)
|
|
Purchases of electricity
|
(1,901
|
)
|
|
–
|
|
|
–
|
|
|
(1,901
|
)
|
|
Purchases of gas
|
(357
|
)
|
|
53
|
|
|
–
|
|
|
(304
|
)
|
|
Rates and property taxes
|
(537
|
)
|
|
130
|
|
|
–
|
|
|
(407
|
)
|
|
Electricity transmission services scheme direct costs
|
(252
|
)
|
|
–
|
|
|
–
|
|
|
(252
|
)
|
|
EnMO direct costs
|
(530
|
)
|
|
–
|
|
|
530
|
|
|
–
|
|
|
Replacement expenditure
|
(405
|
)
|
|
239
|
|
|
166
|
|
|
–
|
|
|
Provision for doubtful debts
|
(24
|
)
|
|
1
|
|
|
–
|
|
|
(23
|
)
|
|
Other operating charges
|
(1,824
|
)
|
|
542
|
|
|
320
|
|
|
(962
|
)
|
|
|
(7,788
|
)
|
|
1,522
|
|
|
582
|
|
|
(5,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
1,612
|
|
|
52
|
|
|
53
|
|
|
1,717
|
|
|
Share of joint ventures’ operating profit/(loss)
|
124
|
|
|
1
|
|
|
(125
|
)
|
|
–
|
|
|
Non-operating expenses
|
(99
|
)
|
|
67
|
|
|
27
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest and taxation
|
1,637
|
|
|
120
|
|
|
(45
|
)
|
|
1,712
|
|
|
Net interest
|
(970
|
)
|
|
203
|
|
|
103
|
|
|
(664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation
|
667
|
|
|
323
|
|
|
58
|
|
|
1,048
|
|
|
Taxation
|
(245
|
)
|
|
(29
|
)
|
|
16
|
|
|
(258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities after taxation
|
422
|
|
|
294
|
|
|
74
|
|
|
790
|
|
|
Minority interests
|
(31
|
)
|
|
(1
|
)
|
|
29
|
|
|
(3
|
)
|
|
Interest in equity accounted affiliates
(net of tax of £5m)
|
|
|
|
|
|
|
3
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
391
|
|
|
293
|
|
|
106
|
|
|
790
|
|
|
Net loss from discontinued operations (net of tax of £nil)
|
|
|
|
|
|
|
(39
|
)
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year
|
391
|
|
|
293
|
|
|
67
|
|
|
751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
|
|
|
33.6
|
p
|
|
Diluted earnings per share under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
|
|
|
32.9
|
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per ADS under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
|
|
|
168.0
|
p
|
|
Diluted earnings per ADS under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
|
|
|
164.5
|
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share under US GAAP (pence) – total Group
|
|
|
|
|
|
|
|
|
|
31.9
|
p
|
|
Diluted earnings per share under US GAAP (pence) – total Group
|
|
|
|
|
|
|
|
|
|
31.3
|
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per ADS under US GAAP (pence) – total Group
|
|
|
|
|
|
|
|
|
|
159.5
|
p
|
|
Diluted earnings per ADS under US GAAP (pence) – total Group
|
|
|
|
|
|
|
|
|
|
156.5
|
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
|
Net income under US GAAP after £22m
dilutive impact of 4.25% Exchangeable Bonds 2008
|
|
|
|
|
|
|
|
|
|
773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares in issue (million) – for basic EPS
|
|
|
|
|
|
|
|
|
|
2,348
|
|
|
Weighted average number of shares in issue (million) – for diluted EPS
|
|
|
|
|
|
|
|
|
|
2,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share and per ADS for discontinued operations under US GAAP was (1.7)p and (8.5)p respectively. Diluted loss per share and per ADS for discontinued operations under US GAAP was (1.6)p and (8.0)p
respectively.
Under UK GAAP, the weighted average number of shares in issue for basic EPS for the year ended 31 March 2003 was 3,078m compared with 2,348m under US GAAP. The difference related to shares issued on the combination of
National Grid and Lattice. As this transaction was accounted for as a merger (pooling of interests) under UK GAAP, shares issued were included in the weighted average share capital as if they were in issue throughout the year. Under US GAAP, they
are included from the date of issue (21 October 2002). This difference impacted 2003 and earlier periods but will not affect future accounting periods.
Consolidated statement of comprehensive income and changes in shareholders’ equity under US GAAP
(continued)
|
|
2003
|
|
|
|
£m
|
|
|
|
|
|
Net income
|
751
|
|
|
Additional minimum pension liability (net of tax credit of £417m)
|
(886
|
)
|
|
Exchange adjustments (net of tax credit of £12m)
|
(322
|
)
|
|
Share of joint ventures’ other comprehensive loss
|
(10
|
)
|
|
Other
|
9
|
|
|
|
|
|
Comprehensive loss
|
(458
|
)
|
|
Dividends
|
(382
|
)
|
|
Shares issued to purchase Lattice
|
6,566
|
|
|
Other shares issued
|
2
|
|
|
Share options granted
|
29
|
|
|
Repurchase of shares
|
(97
|
)
|
|
Movement in treasury stock
|
7
|
|
|
Shareholders’ equity at 1 April 2002
|
3,759
|
|
|
|
|
|
Shareholders’ equity at 31 March 2003
|
9,426
|
|
|
|
|
107 National Grid Transco_
Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
31. Summary US GAAP income
statement, balance sheet, notes and associated reconciliations
(continued)
Summary US GAAP income statement
(continued)
|
|
|
|
|
|
|
US GAAP adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002
|
|
|
|
|
|
|
|
|
2002
|
|
|
National
|
2002
|
2002
|
National
|
|
Grid
|
Lattice pre-
|
Other
|
Grid
|
|
Transco
|
acquisition
|
US GAAP
|
Transco
|
|
(UK GAAP
)
|
(UK GAAP)
|
adjustments
|
(US GAAP)
|
|
|
|
(restated)
|
(restated)
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
7,554
|
|
|
(3,153
|
)
|
|
(397
|
)
|
|
4,004
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
(750
|
)
|
|
431
|
|
|
3
|
|
|
(316
|
)
|
|
Payroll and severance costs
|
(946
|
)
|
|
581
|
|
|
(52
|
)
|
|
(417
|
)
|
|
Purchases of electricity
|
(1,410
|
)
|
|
–
|
|
|
–
|
|
|
(1,410
|
)
|
|
Purchases of gas
|
(171
|
)
|
|
113
|
|
|
–
|
|
|
(58
|
)
|
|
Rates and property taxes
|
(424
|
)
|
|
227
|
|
|
–
|
|
|
(197
|
)
|
|
Electricity transmission services scheme direct costs
|
(204
|
)
|
|
–
|
|
|
–
|
|
|
(204
|
)
|
|
EnMO direct costs
|
(395
|
)
|
|
–
|
|
|
395
|
|
|
–
|
|
|
Replacement expenditure
|
(368
|
)
|
|
368
|
|
|
–
|
|
|
–
|
|
|
Provision for doubtful debts
|
(23
|
)
|
|
(3
|
)
|
|
–
|
|
|
(26
|
)
|
|
Other operating charges
|
(1,803
|
)
|
|
883
|
|
|
411
|
|
|
(509
|
)
|
|
|
(6,494
|
)
|
|
2,600
|
|
|
757
|
|
|
(3,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
1,060
|
|
|
(553
|
)
|
|
360
|
|
|
867
|
|
|
Share of joint ventures’ and associate’s operating profit/(loss)
|
(701
|
)
|
|
65
|
|
|
636
|
|
|
–
|
|
|
Non-operating income
|
156
|
|
|
(104
|
)
|
|
(30
|
)
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest and taxation
|
515
|
|
|
(592
|
)
|
|
966
|
|
|
889
|
|
|
Net interest
|
(799
|
)
|
|
364
|
|
|
309
|
|
|
(126
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation
|
(284
|
)
|
|
(228
|
)
|
|
1,275
|
|
|
763
|
|
|
Taxation
|
(85
|
)
|
|
60
|
|
|
12
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities after taxation
|
(369
|
)
|
|
(168
|
)
|
|
1,287
|
|
|
750
|
|
|
Minority interests
|
48
|
|
|
(4
|
)
|
|
(46
|
)
|
|
(2
|
)
|
|
Interest in equity accounted affiliates (note 32)
|
|
|
|
|
|
|
(900
|
)
|
|
(900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
(321
|
)
|
|
(172
|
)
|
|
341
|
|
|
(152
|
)
|
|
Net loss from discontinued operations (net of tax credit of £1m)
|
|
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before cumulative effects of changes in accounting principles
|
(321
|
)
|
|
(172
|
)
|
|
340
|
|
|
(153
|
)
|
|
Cumulative effects of changes in accounting principles (FAS 133 transitional adjustment)
|
|
|
|
|
|
|
(14
|
)
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
(321
|
)
|
|
(172
|
)
|
|
326
|
|
|
(167
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
|
|
|
(10.0
|
)p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per ADS under US GAAP (pence) – continuing operations
|
|
|
|
|
|
|
|
|
|
(50.0
|
)p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share under US GAAP (pence) – total Group
|
|
|
|
|
|
|
|
|
|
(10.9
|
)p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per ADS under US GAAP (pence) – total Group
|
|
|
|
|
|
|
|
|
|
(54.5
|
)p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares in issue (million) – for basic EPS
|
|
|
|
|
|
|
|
|
|
1,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group’s 4.25% Exchangeable Bonds 2008 were antidilutive under US GAAP. Therefore no dilutive earnings per share information has been shown.
The cumulative effect of changes in accounting principles (FAS 133 transitional adjustment) increased basic loss per share and per ADS for the Group by 0.9p and 4.5p respectively.
Basic loss per share and per ADS for discontinued operations under US GAAP was 0.0p.
Consolidated statement of comprehensive income and changes in shareholders’ equity under US GAAP
(continued)
|
|
2002
|
|
|
£m
|
|
|
|
|
Net loss
|
(167
|
)
|
|
Exchange adjustments (net of tax credit of £7m)
|
(2
|
)
|
|
Share of associate’s other comprehensive loss
|
(5
|
)
|
|
Other
|
(4
|
)
|
|
|
|
|
Comprehensive loss
|
(178
|
)
|
|
Dividends
|
(229
|
)
|
|
Other shares issued
|
1,305
|
|
|
Share options granted
|
5
|
|
|
Movement in treasury stock
|
(36
|
)
|
|
Share of associate’s capital transactions
|
(33
|
)
|
|
Other
|
5
|
|
|
Shareholders’ equity at 1 April 2001
|
2,920
|
|
|
|
|
|
Shareholders’ equity at 31 March 2002
|
3,759
|
|
|
|
|
Annual Report and Accounts 2003/04_
National
Grid Transco
108
Back to Contents
Notes to the Accounts
_continued
31. Summary US GAAP income statement,
balance sheet, notes and associated reconciliations
(continued)
Summary US GAAP balance sheet
|
|
|
|
2004
|
|
|
2003
|
(i)
|
|
£m
|
£m
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
528
|
|
|
570
|
|
|
Marketable securities
|
102
|
|
|
48
|
|
|
Accounts and notes receivable
|
496
|
|
|
628
|
|
|
Inventories
|
91
|
|
|
126
|
|
|
Regulatory assets
|
512
|
|
|
461
|
|
|
Prepaid expenses and other current assets
|
596
|
|
|
705
|
|
|
|
|
|
|
|
|
Total current assets
|
2,325
|
|
|
2,538
|
|
|
Property, plant and equipment – cost
|
32,216
|
|
|
31,987
|
|
|
Property, plant and equipment – accumulated depreciation
|
(9,091
|
)
|
|
(8,603
|
)
|
|
|
23,125
|
|
|
23,384
|
|
|
Goodwill – cost
|
5,698
|
|
|
5,971
|
|
|
Goodwill – accumulated amortisation and impairments
|
(93
|
)
|
|
(71
|
)
|
|
|
5,605
|
|
|
5,900
|
|
|
Intangible assets
|
50
|
|
|
74
|
|
|
Investments
|
155
|
|
|
210
|
|
|
Regulatory assets
|
3,136
|
|
|
3,998
|
|
|
Other debtors
|
951
|
|
|
843
|
|
|
|
|
|
|
|
|
Total assets
|
35,347
|
|
|
36,947
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Bank overdrafts
|
26
|
|
|
62
|
|
|
Accounts payable
|
1,036
|
|
|
1,266
|
|
|
Short-term borrowings
|
1,644
|
|
|
1,973
|
|
|
Accrued income taxes
|
122
|
|
|
–
|
|
|
Purchased power obligations
|
57
|
|
|
68
|
|
|
Liability for index-linked swap contracts
|
100
|
|
|
121
|
|
|
Other accrued liabilities
|
1,402
|
|
|
1,121
|
|
|
|
|
|
|
|
|
Total current liabilities
|
4,387
|
|
|
4,611
|
|
|
Long-term borrowings
|
12,256
|
|
|
13,058
|
|
|
Purchased power obligations
|
149
|
|
|
253
|
|
|
Liability for index-linked swap contracts
|
291
|
|
|
381
|
|
|
Post-retirement benefits
|
1,681
|
|
|
2,283
|
|
|
Deferred income taxes
|
4,867
|
|
|
4,687
|
|
|
Other liabilities
|
1,841
|
|
|
2,159
|
|
|
|
|
|
|
|
|
Total liabilities
|
25,472
|
|
|
27,432
|
|
|
|
|
|
|
|
|
Minority interest – equity
|
12
|
|
|
15
|
|
|
Cumulative preference stock issued by Group undertakings
|
42
|
|
|
74
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
Common stock (par value £0.10 per share; shares authorised 5,000m; shares issued 2004: 3,088m; 2003: 3,077m)
|
309
|
|
|
308
|
|
|
Additional paid in capital
|
7,768
|
|
|
7,710
|
|
|
Other reserves
|
359
|
|
|
359
|
|
|
Retained earnings
|
2,701
|
|
|
2,263
|
|
|
Other comprehensive loss
|
(1,282
|
)
|
|
(1,175
|
)
|
|
Treasury stock
|
(34
|
)
|
|
(39
|
)
|
|
|
|
|
|
|
|
Equity shareholders’ funds
|
9,821
|
|
|
9,426
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
35,347
|
|
|
36,947
|
|
|
|
|
|
|
|
|
(i)
|
Certain amounts have been reclassified for consistency with current year presentation.
|
Other comprehensive loss can be analysed as follows:
|
|
2004
|
|
2003
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Foreign exchange losses
|
(821
|
)
|
(365
|
)
|
|
Additional minimum pension liability
|
(672
|
)
|
(1,305
|
)
|
|
Mark to market of financial instruments
|
(88
|
)
|
22
|
|
|
Taxation
|
295
|
|
469
|
|
|
Other
|
4
|
|
4
|
|
|
|
|
|
|
|
|
(1,282
|
)
|
(1,175
|
)
|
|
|
|
|
|
109 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
31. Summary US GAAP income
statement, balance sheet, notes and associated reconciliations
(continued)
Segmental information under US GAAP
|
|
|
|
2004
|
|
2003
|
(i)
|
2002
|
(i)
|
|
£m
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Turnover by business segment
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
UK gas distribution
|
2,229
|
|
1,239
|
|
–
|
|
|
UK electricity and gas transmission
|
1,875
|
|
1,615
|
|
1,283
|
|
|
US electricity transmission
|
318
|
|
400
|
|
278
|
|
|
US electricity distribution
|
3,536
|
|
3,446
|
|
2,278
|
|
|
US gas distribution
|
464
|
|
446
|
|
104
|
|
|
Other
|
906
|
|
462
|
|
113
|
|
|
Sales between businesses
|
(462
|
)
|
(207
|
)
|
(52
|
)
|
|
|
|
|
|
|
|
|
Group turnover – continuing operations
|
8,866
|
|
7,401
|
|
4,004
|
|
|
|
|
|
|
|
|
|
Operating profit by business segment
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
UK gas distribution
|
758
|
|
567
|
|
–
|
|
|
UK electricity and gas transmission
|
676
|
|
573
|
|
520
|
|
|
US electricity transmission
|
124
|
|
116
|
|
95
|
|
|
US electricity distribution
|
333
|
|
446
|
|
240
|
|
|
US gas distribution
|
39
|
|
52
|
|
17
|
|
|
Other
|
(8
|
)
|
(37
|
)
|
(5
|
)
|
|
|
|
|
|
|
|
|
Group undertakings – continuing operations
|
1,922
|
|
1,717
|
|
867
|
|
|
|
|
|
|
|
|
Turnover and operating profit in the other segment relates primarily to the UK.
|
(i)
|
Prior year comparatives have been amended to reflect changes in business segments (see note 2).
|
|
|
Tangible fixed assets
|
|
|
|
|
|
|
2004
|
|
2003
|
(i)
|
|
£m
|
£m
|
|
|
|
|
|
|
|
Analysis by business segment
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
UK gas distribution
|
10,233
|
|
10,153
|
|
|
UK electricity and gas transmission
|
6,442
|
|
6,135
|
|
|
US electricity transmission
|
1,174
|
|
1,348
|
|
|
US electricity distribution
|
2,819
|
|
3,167
|
|
|
US gas distribution
|
615
|
|
680
|
|
|
Other
|
1,842
|
|
1,898
|
|
|
|
|
|
|
|
|
23,125
|
|
23,381
|
|
|
Discontinued operations
|
–
|
|
3
|
|
|
|
|
|
|
|
|
23,125
|
|
23,384
|
|
|
|
|
|
|
|
Analysis by geographical region
|
|
|
|
|
|
UK
|
18,335
|
|
18,131
|
|
|
US
|
4,652
|
|
5,194
|
|
|
Rest of the World
|
138
|
|
59
|
|
|
|
|
|
|
|
|
23,125
|
|
23,384
|
|
|
|
|
|
|
|
(i)
|
Prior year comparatives have been amended to reflect changes in business segments (see note 2) and balance sheet reclassifications.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK electricity
|
|
|
|
|
|
|
|
|
|
|
|
|
UK gas
|
and gas
|
US electricity
|
US electricity
|
US gas
|
|
|
|
distribution
|
transmission
|
transmission
|
distribution
|
distribution
|
Other
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 April 2002
|
–
|
|
–
|
|
438
|
|
1,558
|
|
141
|
|
86
|
|
2,223
|
|
|
Exchange adjustments
|
–
|
|
–
|
|
(44
|
)
|
(161
|
)
|
(14
|
)
|
(9
|
)
|
(228
|
)
|
|
Additions
|
3,040
|
|
753
|
|
–
|
|
–
|
|
–
|
|
20
|
|
3,813
|
|
|
Adjustments to provisional fair value
|
–
|
|
–
|
|
9
|
|
36
|
|
8
|
|
39
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 April 2003
|
3,040
|
|
753
|
|
403
|
|
1,433
|
|
135
|
|
136
|
|
5,900
|
|
|
Exchange adjustments
|
–
|
|
–
|
|
(55
|
)
|
(195
|
)
|
(19
|
)
|
(18
|
)
|
(287
|
)
|
|
Additions
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
1
|
|
1
|
|
|
Impairment
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(20
|
)
|
(20
|
)
|
|
Adjustments to provisional fair value
|
(50
|
)
|
3
|
|
–
|
|
–
|
|
–
|
|
58
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March 2004
|
2,990
|
|
756
|
|
348
|
|
1,238
|
|
116
|
|
157
|
|
5,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Report and Accounts 2003/04_
National
Grid Transco
110
Back to Contents
Notes to the Accounts
_continued
31. Summary US GAAP income statement, balance sheet, notes and associated reconciliations
(continued)
Reconciliation of net income from UK to US GAAP
The following is a summary of the material adjustments to net income which would have been required if US GAAP had been applied instead of UK GAAP:
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) under UK GAAP
|
1,099
|
|
|
391
|
|
|
(321
|
)
|
|
Adjustments to conform with US GAAP
|
|
|
|
|
|
|
|
|
|
Elimination of Lattice pre-acquisition results, measured under UK GAAP
|
–
|
|
|
293
|
|
|
(172
|
)
|
|
Merger costs
|
–
|
|
|
32
|
|
|
–
|
|
|
Deferred taxation
|
(24
|
)
|
|
7
|
|
|
7
|
|
|
Pensions
|
7
|
|
|
35
|
|
|
29
|
|
|
Share option schemes
|
(25
|
)
|
|
(29
|
)
|
|
(5
|
)
|
|
Fixed assets – purchase of Lattice
|
(364
|
)
|
|
(169
|
)
|
|
–
|
|
|
Impairment of Advantica – goodwill and other intangible assets
|
(31
|
)
|
|
–
|
|
|
–
|
|
|
Replacement expenditure (net of depreciation)
|
383
|
|
|
166
|
|
|
–
|
|
|
Financial instruments
|
82
|
|
|
40
|
|
|
(69
|
)
|
|
Cumulative effect of changes in accounting principles (FAS 133 transitional adjustment)
|
–
|
|
|
–
|
|
|
(14
|
)
|
|
Carrying value of EPICs liability
|
(226
|
)
|
|
2
|
|
|
203
|
|
|
Severance and integration costs
|
–
|
|
|
(110
|
)
|
|
67
|
|
|
Recognition of income
|
(9
|
)
|
|
2
|
|
|
(4
|
)
|
|
Goodwill
|
99
|
|
|
70
|
|
|
78
|
|
|
Restructuring – purchase of Lattice
|
2
|
|
|
46
|
|
|
–
|
|
|
Share of joint ventures’ and associate’s adjustments
|
–
|
|
|
(27
|
)
|
|
37
|
|
|
Other
|
5
|
|
|
2
|
|
|
(3
|
)
|
|
|
(101
|
)
|
|
360
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) under US GAAP
|
998
|
|
|
751
|
|
|
(167
|
)
|
|
|
|
|
|
|
|
|
|
Reconciliation of equity shareholders’ funds from UK to US GAAP
The following is a summary of the material adjustments
to equity shareholders’ funds which would have been required if US GAAP
had been applied instead of UK GAAP:
|
|
2004
|
|
|
2003
|
|
|
|
|
|
|
(restated)
|
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds under UK GAAP
|
1,213
|
|
|
1,113
|
|
|
Adjustments to conform with US GAAP
|
|
|
|
|
|
|
Deferred taxation
|
(1,868
|
)
|
|
(1,593
|
)
|
|
Pensions
|
(1,069
|
)
|
|
(1,800
|
)
|
|
Ordinary dividends
|
366
|
|
|
317
|
|
|
Tangible fixed assets – reversal of partial release of impairment provision
|
(32
|
)
|
|
(35
|
)
|
|
Fixed assets – impact of Lattice purchase accounting and replacement expenditure – gross
|
7,776
|
|
|
7,385
|
|
|
Fixed assets – impact of Lattice purchase accounting and replacement expenditure – accumulated depreciation
|
(458
|
)
|
|
(142
|
)
|
|
Financial instruments
|
(285
|
)
|
|
(253
|
)
|
|
Carrying value of EPICs liability
|
–
|
|
|
243
|
|
|
Severance liabilities
|
3
|
|
|
3
|
|
|
Recognition of income
|
(35
|
)
|
|
(27
|
)
|
|
Regulatory assets
|
128
|
|
|
241
|
|
|
Goodwill – purchase of Lattice
|
3,820
|
|
|
3,829
|
|
|
Goodwill – other acquisitions
|
245
|
|
|
179
|
|
|
Restructuring – purchase of Lattice
|
(4
|
)
|
|
(6
|
)
|
|
Share of joint ventures’ adjustments
|
–
|
|
|
(17
|
)
|
|
Other
|
21
|
|
|
(11
|
)
|
|
|
8,608
|
|
|
8,313
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds under US GAAP
|
9,821
|
|
|
9,426
|
|
|
|
|
|
|
|
111 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
31. Summary US GAAP income statement, balance sheet, notes and associated reconciliations
(continued)
Group cash flow statement
The Group accounts include a cash flow statement
prepared in accordance with UK Financial Reporting Standard 1 (Revised 1996) ‘Cash Flow Statements’ (‘FRS 1 (revised)’), the objectives and
principles of which are substantially the same as US Statement of Financial Accounting Standard 95 ‘Statement of Cash Flows’ (‘SFAS 95’)
under US GAAP. The principal differences between FRS 1 (revised) and SFAS 95
relate to the classification of items within the cash flow statement and the
definition of cash and cash equivalents. Under UK GAAP, cash flows are classified
under nine standard headings whereas US GAAP only requires presentation of cash
flows from three
activities, being operating activities, investing activities and financing activities.
Under US GAAP, in contrast to UK GAAP, cash and cash equivalents do not include bank overdrafts but do include investments with original maturities of three months or less.
Set out below is a summary of the Group cash flow statement under US GAAP:
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities (i)
|
2,500
|
|
|
2,000
|
|
|
902
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Payments to acquire tangible fixed assets
|
(1,788
|
)
|
|
(1,170
|
)
|
|
(500
|
)
|
|
Acquisition of Group undertakings (net of cash acquired)
|
–
|
|
|
338
|
|
|
(934
|
)
|
|
Payments to acquire investments
|
–
|
|
|
(163
|
)
|
|
(50
|
)
|
|
Receipts from disposal of tangible fixed assets
|
146
|
|
|
53
|
|
|
28
|
|
|
Receipts from disposal of investments
|
7
|
|
|
328
|
|
|
37
|
|
|
Net movement in investments with an original maturity date of more than three months
|
(65
|
)
|
|
–
|
|
|
193
|
|
|
Other
|
–
|
|
|
(22
|
)
|
|
26
|
|
|
Net cash used in investing activities (ii)
|
(1,700
|
)
|
|
(636
|
)
|
|
(1,200
|
)
|
|
Net cash (used in)/provided by financing activities (iii)
|
(828
|
)
|
|
(962
|
)
|
|
222
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
(28
|
)
|
|
402
|
|
|
(76
|
)
|
|
Cash and cash equivalents at beginning of year
|
570
|
|
|
178
|
|
|
259
|
|
|
Exchange adjustments
|
(14
|
)
|
|
(10
|
)
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
528
|
|
|
570
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
Set out below is an explanation of the reconciliation from US GAAP to UK GAAP cash flow headings:
|
(i)
|
Net cash provided by operating activities
comprised net cash inflow from operating activities (excluding payments
in respect of replacement expenditure), dividends from joint ventures,
returns on investments and servicing of finance, excluding costs relating
to the issue of debt and taxation.
|
|
(ii)
|
Net cash used in investing activities comprised
capital expenditure, payments in respect of replacement expenditure (included
in operating activities under UK GAAP), acquisitions and disposals and
the component of the management of liquid resources which comprised deposits
with an original maturity of more than three months
|
|
(iii)
|
Net cash (used in)/provided by financing
activities comprised equity dividends paid, financing, including costs
relating to the issue of debt and movements in bank overdrafts.
|
32. Principal differences between UK and US accounting principles
The principal differences between UK and US GAAP, as applied in preparing the Group accounts under US GAAP, are set out below:
Acquisition (purchase) accounting adjustments (including elimination of merger costs)
In order to determine the allocation of purchase
price relating to the acquired assets and liabilities of Lattice under US GAAP
purchase accounting, the cost of acquisition was calculated using the market
value of the shares issued, the fair value of vested options exchanged and direct
external acquisition costs and these amounts were allocated to the fair value
of net assets acquired. As a result of the fair value exercise, increases in
the value of
Lattice’s tangible fixed assets, financial instruments, pension obligations
and restructuring provisions were recognised and market values were attributed
to its intangible fixed assets, mainly product licences, patents and trademarks,
together with the recognition of appropriate deferred taxation effects. The difference
between the cost of acquisition and the fair value of the separable assets and
liabilities of Lattice was recorded as goodwill. Additional depreciation in respect
of the
fair value of tangible fixed assets will be recorded over their respective economic
useful lives.
The adjustments to the assets and liabilities of Lattice to reflect the fair values and allocation of the excess purchase consideration over the fair values of net assets acquired, based on management’s best
estimates of fair value, are discussed below. The fair value adjustments to UK gas transmission and distribution and other fixed assets, pensions, restructuring provision and the related deferred tax thereon were revised during the year ended 31
March 2004. The adjustments are detailed in the table on page 113.
|
a)
|
The total purchase consideration was calculated
by multiplying the number of National Grid shares issued to Lattice shareholders
for all outstanding Lattice shares
by the average fair value of National Grid shares. The average fair value
of National Grid shares was calculated over a
period of five business days, including two days prior to and two days
subsequent to the announcement of the Merger on 22 April 2002.
|
|
|
|
|
|
The total purchase consideration, which
included merger costs of £32m that were expensed under UK GAAP,
also included the fair value of Lattice
vested options exchanged for vested options in National Grid Transco.
|
|
|
|
|
|
The total number of Lattice vested options was multiplied by the respective fair value of each of the ordinary shares determined at 22 April 2002.
|
|
|
|
|
b)
|
The increase in the fair value of tangible
fixed assets primarily related to UK gas transmission and distribution.
This was determined by calculating
the value in use of these businesses. Value in use represented the present
value of expected future cash flows discounted on a pre-tax
basis, using the estimated cost of capital. Future cash flows were based
on a five-year plan projected out to perpetuity. The fair value of other
tangible fixed assets, largely gas metering assets, was determined using
their depreciated replacement costs, based on the current cost of
replacing meters and expected remaining useful economic lives.
|
|
|
|
|
c)
|
The fair value attributed to pension obligations
reflected the recognition of previously unrecognised actuarial gains and
losses, prior service costs and
transition amounts. The amounts recognised were based on actuarial assessments
at the acquisition date.
|
Annual Report and Accounts 2003/04_
National
Grid Transco
112
Back to Contents
Notes to the Accounts
_continued
32. Principal differences between UK
and US accounting principles
(continued)
Acquisition (purchase) accounting
adjustments
(including elimination of merger costs)
(continued)
|
|
d)
|
The fair value attributed to
intangible fixed assets related to licences, patents and trade marks and
was determined based on discounted future cash flows.
|
|
|
|
|
e)
|
Restructuring costs (£60m) represented
the costs incurred in respect of the integration of activities within
the newly merged Group and related primarily to redundancy and property
relocation costs.
|
|
|
|
|
f)
|
Deferred taxes were computed on the excess of the fair value over book value, other than for goodwill, using the applicable statutory UK corporation tax rate.
|
|
|
|
|
g)
|
Goodwill represented the remainder of unallocated purchase consideration.
|
The fair value of consideration, assets and
liabilities and the resulting goodwill is set out in the table below:
|
Assets
|
Provisional
|
|
Final
|
|
|
|
|
fair value
|
fair value
|
Final
|
|
at acquisition
|
adjustments
|
fair value
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
Total current assets
|
1,336
|
|
–
|
|
1,336
|
|
|
Property, plant and equipment
|
14,148
|
|
67
|
(i)
|
14,215
|
|
|
Intangible assets
|
20
|
|
–
|
|
20
|
|
|
Other assets
|
6
|
|
–
|
|
6
|
|
|
|
|
|
|
|
|
|
Total assets
|
15,510
|
|
67
|
|
15,577
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Total current liabilities
|
2,656
|
|
–
|
|
2,656
|
|
|
Long-term borrowings
|
5,935
|
|
–
|
|
5,935
|
|
|
Pensions
|
535
|
|
–
|
|
535
|
|
|
Other liabilities
|
470
|
|
–
|
|
470
|
|
|
Deferred income taxes
|
3,129
|
|
78
|
(i)(ii)
|
3,207
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
12,725
|
|
78
|
|
12,803
|
|
|
|
|
|
|
|
|
|
Net assets
|
2,785
|
|
(11
|
)
|
2,774
|
|
|
|
|
|
|
|
|
|
Consideration
|
6,598
|
|
–
|
|
6,598
|
|
|
|
|
|
|
|
|
|
Goodwill
|
3,813
|
|
11
|
|
3,824
|
|
|
|
|
|
|
|
|
|
|
|
|
Final fair value adjustments related to:
|
|
(i)
|
A revision to the fair values
attributed to UK gas transmission and distribution property, plant and
equipment due to improved estimates of future cash flows following finalisation
of the latest available business plans (£67m increase in property,
plant and equipment carrying values; £20m deferred tax impact).
|
|
(ii)
|
The recognition of a deferred tax liability
on gains relating to the sale of properties where taxable gains were rolled
over into replacement assets (£58m). There is no deferred tax recognised
for this under UK GAAP.
|
Acquisitions – pro forma results
The following unaudited pro forma summary gives effect to the acquisitions of Lattice and Niagara Mohawk, as if the acquisitions had taken place on 1 April 2001. The pro forma summary combines the actual consolidated
results of the Group (excluding the effect of the acquisitions in the actual period that they took place) and the results of Lattice and Niagara Mohawk after giving effect to certain adjustments. These adjustments include estimates of the effect of
adopting the final fair value adjustments for both acquisitions, and the increased net interest expense, together with the associated tax effects, as a result of financing the acquisition of Niagara Mohawk. In addition, the earnings per share
calculation has been adjusted as if the shares issued to acquire Lattice and Niagara Mohawk were issued on the assumed date of acquisition for the purposes of preparing the pro forma summary. The pro forma summary does not necessarily reflect the
results of operations as they would have been if the Group (excluding the acquisitions) and the acquisitions had constituted a single entity during the periods presented.
Continuing operations
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Turnover
|
8,802
|
|
7,486
|
|
|
Net income before cumulative effects of changes in accounting principles
|
580
|
|
115
|
|
|
Net income after cumulative effects of changes in accounting principles
|
580
|
|
101
|
|
|
|
|
|
|
|
|
pence
|
|
pence
|
|
|
Earnings per share
|
18.9
|
|
3.3
|
|
|
Earnings per ADS
|
94.5
|
|
16.5
|
|
|
|
|
|
|
Deferred taxation
Under UK GAAP, deferred taxation is provided in
full on all material timing differences with certain exceptions, as outlined
in ‘Accounting Policies –Deferred taxation and investment tax credits’.
Under US GAAP, deferred tax is provided in full, using the liability method,
and requires the recognition of deferred taxation on all timing differences except
for non tax deductible goodwill.
The deferred taxation adjustment principally reflects the tax effect of the other differences between UK and US GAAP.
113
National Grid Transco
_Annual
Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
32.
Principal
differences between UK and US accounting principles
(continued)
Deferred taxation
(continued)
The deferred tax liability under US GAAP is analysed
as follows:
|
|
2004
|
|
2003
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Deferred taxation liabilities:
|
|
|
|
|
|
Excess of book value over taxation value
of fixed assets
|
4,943
|
|
4,955
|
|
|
Other temporary differences
|
1,169
|
|
1,229
|
|
|
|
|
|
|
|
|
6,112
|
|
6,184
|
|
|
Deferred taxation assets:
|
|
|
|
|
|
Other temporary differences (i)
|
(1,245
|
)
|
(1,497
|
)
|
|
|
|
|
|
|
|
4,867
|
|
4,687
|
|
|
|
|
|
|
|
Analysed as follows:
|
|
|
|
|
|
Current
|
63
|
|
31
|
|
|
Non-current
|
4,804
|
|
4,656
|
|
|
|
|
|
|
|
|
4,867
|
|
4,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Deferred taxation assets at 31 March 2004
were stated net of a £210m valuation allowance adjustment associated
with certain capital losses (31 March 2003: £nil).
|
Pensions
Under UK GAAP, pension costs have been accounted
for in accordance with UK Statement of Standard Accounting Practice (SSAP) 24
and disclosures have been provided in accordance with SSAP 24 and FRS 17.
Under US GAAP, pension costs are determined in accordance with the requirements of US Statements of Financial Accounting Standards (SFAS) 87 and 88 and pension disclosures are presented in accordance with SFAS 132.
Differences between UK GAAP and US GAAP figures arise from the requirement to use different actuarial methods and assumptions and a different method of amortising certain surpluses and deficits. Under US GAAP, the Company has estimated the effect on
net income and shareholders’ equity assuming the adoption and application of SFAS 87 ‘Employers’ Accounting for Pensions’ as of 1 April 1996, as the adoption of SFAS 87 on the actual effective date of 1 April 1989 was not
feasible. The unrecognised transition asset at 1 April 1989, using the financial assumptions at 1 April 1996, amounted to £172m and is being amortised over 15 years commencing 1 April 1989.
Under UK GAAP, as explained in note 7, net interest includes a charge of £52m (2003: £3m credit; 2002: £30m credit) in respect of the notional interest element of the variation from the regular
pension cost. Under US GAAP, this cost is not recognised.
The net periodic charge/(credit) for pensions and other post-retirement benefits is as follows:
|
|
Pensions
|
|
Other post-retirement
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
143
|
|
78
|
|
30
|
|
10
|
|
8
|
|
5
|
|
|
Interest cost
|
|
799
|
|
456
|
|
125
|
|
59
|
|
59
|
|
29
|
|
|
Settlements
|
|
14
|
|
19
|
|
(12
|
)
|
10
|
|
–
|
|
–
|
|
|
Expected return on assets
|
|
(814
|
)
|
(490
|
)
|
(160
|
)
|
(36
|
)
|
(32
|
)
|
(21
|
)
|
|
Amortisation of prior service cost
|
|
5
|
|
5
|
|
4
|
|
–
|
|
–
|
|
–
|
|
|
Amortisation of previously unrecognised
losses
|
|
39
|
|
4
|
|
–
|
|
21
|
|
2
|
|
–
|
|
|
Amortisation of transitional asset
|
|
(11
|
)
|
(11
|
)
|
(11
|
)
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175
|
|
61
|
|
(24
|
)
|
64
|
|
37
|
|
13
|
|
|
Release of pension provision
|
|
(2
|
)
|
(2
|
)
|
(2
|
)
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173
|
|
59
|
|
(26
|
)
|
64
|
|
37
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The additional cost incurred in respect of severance cases computed in accordance with SFAS 88 ‘Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits’ is as follows:
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Cost of termination benefits and curtailments
|
129
|
|
119
|
|
46
|
|
|
|
|
|
|
|
|
The principal financial assumptions used for the SFAS 87 calculations of net periodic charge/(credit), based on a measurement date of 31 March 2003 in respect of the US and UK defined benefit schemes are shown
below:
|
|
|
US
|
|
UK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
6.3
|
|
7.5
|
|
7.3
|
|
5.4
|
|
6.0
|
|
5.5
|
|
|
Return on assets
|
|
8.5
|
|
8.5
|
|
7.5-9.0
|
|
6.3-6.9
|
|
6.3-7.1
|
|
7.0
|
|
|
General salary increases
|
|
3.3-5.3
|
|
3.3-4.5
|
|
4.0
|
|
3.5
|
|
3.8
|
|
3.3
|
|
|
Pension increases
|
|
nil
|
|
nil
|
|
nil
|
|
2.6
|
|
2.9
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In respect of US schemes, the estimated rate of return for various passive asset classes is based both on analysis of historical rates of return and forward-looking analysis of risk premiums and yields. Current market
conditions, such as inflation and interest rates, are evaluated in connection with the setting of our long-term assumption. A small premium is added for active management of both equity and fixed income. The rates of return for each asset class are
then weighted in accordance with our target asset allocation, and the resulting long-term return on asset rate is then applied to the market-related value of assets.
Annual Report and Accounts 2003/04_
National
Grid Transco
114
Back to Contents
Notes to the Accounts
_continued
32. Principal differences between UK
and US accounting principles
(continued)
Pensions
(continued)
In respect of UK schemes, the expected long-term
rate of return on assets has been set reflecting the price inflation expectation,
the expected real return on each major asset class and the long-term asset allocation
strategy adopted for each plan. The expected real returns on specific asset
classes reflect historical returns, investment yields on the measurement date
and general future return expectations, and have been set after taking advice
from the plans’ actuaries.
The assumptions used for other post-retirement costs relate solely to US schemes. These assumptions were that the discount rate used would be 5.75% (2003: 6.25%; 2002: 7.5%) and that medical costs would increase by 10%
(2003: 10%; 2002: 10%), decreasing to 5% (2003: 5%; 2002: 5%) by 2009 and remain at 5% (2003: 5%; 2002: 5%) thereafter.
A reconciliation of the funded status of the Group pension and other post-retirement schemes to the net accrued benefit liability that were included in the Group’s balance sheet prepared under US GAAP is as
follows:
|
|
|
|
|
|
|
Other post-retirement
|
|
|
|
|
Pensions
|
|
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
|
|
(15,394
|
)
|
(15,030
|
)
|
(1,002
|
)
|
(1,004
|
)
|
|
Fair value of plan assets
|
|
13,432
|
|
12,115
|
|
496
|
|
373
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess of projected benefit obligation
over plan assets
|
|
(1,962
|
)
|
(2,915
|
)
|
(506
|
)
|
(631
|
)
|
|
Unrecognised transition asset
|
|
–
|
|
(11
|
)
|
–
|
|
–
|
|
|
Unrecognised net loss
|
|
1,493
|
|
2,508
|
|
328
|
|
336
|
|
|
Unrecognised prior service cost/(credit)
|
|
48
|
|
57
|
|
(5
|
)
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net accrued benefit liability – before
minimum liability adjustment
|
|
(421
|
)
|
(361
|
)
|
(183
|
)
|
(296
|
)
|
|
Additional minimum liability adjustment
|
|
(840
|
)
|
(1,583
|
)
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Net accrued benefit liability
|
|
(1,261
|
)
|
(1,944
|
)
|
(183
|
)
|
(296
|
)
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2004, as required under SFAS 87, an intangible asset of £48m (2003: £57m) was recognised in relation to the additional minimum liability, being equal to the unrecognised prior service cost. A
regulatory asset of £120m (2003: £221m) was also created. The remaining additional minimum liability of £672m (2003: £1,303m) has been included in other comprehensive income.
The net accrued benefit liabiity above is shown net of a prepaid cost of £174m in respect of one group scheme.
The principal financial assumptions used for the SFAS 87 calculations of the projected benefit obligation, based on a measurement date of 31 March 2004, in respect of the US and UK defined benefit schemes are shown
below:
|
|
|
US
|
|
UK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
5.8
|
|
6.3
|
|
7.5
|
|
5.5
|
|
5.4
|
|
6.0
|
|
|
General salary increases
|
|
3.3-5.3
|
|
3.3-5.3
|
|
3.3-4.5
|
|
3.9
|
|
3.5
|
|
3.8
|
|
|
Pension increases
|
|
nil
|
|
nil
|
|
nil
|
|
3.0
|
|
2.6
|
|
2.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All pension schemes had an additional minimum liability adjustment except the Lattice Group Pension Scheme. The accumulated benefit obligation for pensions was £14,507m at 31 March 2004 (2003: £14,059m).
The Group has followed approach two of Emerging Issues Task Force (EITF) Abstract 88-1 in calculating the accumulated benefit obligation. Changes in the projected benefit obligation and changes in the fair value of plan assets are shown
below:
|
|
|
|
|
|
|
Other post-retirement
|
|
|
|
|
Pensions
|
|
benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
at start of year
|
|
15,030
|
|
2,953
|
|
1,004
|
|
884
|
|
|
Service cost
|
|
143
|
|
78
|
|
10
|
|
8
|
|
|
Interest cost
|
|
799
|
|
456
|
|
59
|
|
59
|
|
|
Plan participants’ contributions
|
|
18
|
|
10
|
|
–
|
|
–
|
|
|
Plan amendment –
prior service cost
|
|
–
|
|
8
|
|
(5
|
)
|
–
|
|
|
Terminations
|
|
129
|
|
58
|
|
5
|
|
–
|
|
|
Curtailments
|
|
(2
|
)
|
42
|
|
10
|
|
–
|
|
|
Settlements
|
|
(80
|
)
|
(109
|
)
|
–
|
|
–
|
|
|
Actuarial loss
|
|
322
|
|
1,212
|
|
119
|
|
195
|
|
|
Benefits paid
|
|
(736
|
)
|
(423
|
)
|
(51
|
)
|
(54
|
)
|
|
Acquisition of Group
undertakings
|
|
–
|
|
10,908
|
|
–
|
|
–
|
|
|
Transfers
|
|
–
|
|
(1
|
)
|
–
|
|
–
|
|
|
Exchange adjustments
|
|
(229
|
)
|
(162
|
)
|
(149
|
)
|
(88
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
at end of year
|
|
15,394
|
|
15,030
|
|
1,002
|
|
1,004
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets
at start of year
|
|
12,115
|
|
2,698
|
|
373
|
|
397
|
|
|
Actual return on assets
|
|
2,023
|
|
(437
|
)
|
92
|
|
(35
|
)
|
|
Employer contributions
|
|
244
|
|
150
|
|
123
|
|
68
|
|
|
Plan participants’ contributions
|
|
18
|
|
10
|
|
–
|
|
–
|
|
|
Benefits paid
|
|
(736
|
)
|
(423
|
)
|
(24
|
)
|
(18
|
)
|
|
Acquisition of Group undertakings
|
|
–
|
|
10,373
|
|
–
|
|
–
|
|
|
Settlements
|
|
(80
|
)
|
(109
|
)
|
–
|
|
–
|
|
|
Exchange adjustments
|
|
(152
|
)
|
(147
|
)
|
(68
|
)
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets
at end of year
|
|
13,432
|
|
12,115
|
|
496
|
|
373
|
|
|
|
|
|
|
|
|
|
|
|
It is estimated that a 1% change in the assumed healthcare cost trends would have increased or decreased the accumulated post-retirement benefit obligation at 31 March 2004 by £106m (2003: £106m; 2002:
£91m) and £96m (2003: £96m; 2002: £82m) respectively. The net periodic cost for the year ended 31 March 2004 would have increased or decreased by £7m and £8m respectively (2003: £8m and £7m
respectively).
Estimated contributions for the year ending 31 March 2005 are £164m.
115
National Grid Transco_
Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
32. Principal differences between UK
and US accounting principles
(continued)
Pensions
(continued)
In the UK, the trustees for each plan are responsible
for setting the long-term strategy after consultation with the Group and professional
advisers. The trustees’ objectives are to invest in assets of appropriate
liquidity, which together with future contributions from employers and members,
will generate income and capital growth to meet the cost of benefits from the
plans; to limit the risk and to minimise long-term cost. In the US, the Group
manages its pension plan investments to minimise the long-term cost of operating
the plan, with a reasonable level of risk.
Risk tolerance is determined as a result of periodic asset/liability studies which analyse plan liabilities and funded status and results in the determination of the allocation of assets.
Equity investments, fixed income and index-linked portfolios are broadly diversified. Investments are also held in property, private equity and timber with the objective of enhancing long-term returns whilst improving
diversification. Investment risk and return are reviewed by investment committees on a quarterly basis.
Share option schemes
As permitted under UK GAAP, no cost is accrued
for share options awarded under the sharesave scheme where the exercise price
of the options is below the market value at the date of grant. In respect of
the grant of options under the Executive scheme, no cost is accrued under UK
GAAP as the exercise price is equivalent to the market value at the date of
grant.
Under US GAAP, a charge is made against net income based on the fair value of grants in accordance with SFAS 123 ‘Accounting for Stock Based Compensation’. Disclosures are provided in accordance with SFAS 123
and SFAS 148 ‘Accounting for Stock Based Compensation – Transition and Disclosure – an amendment of FAS No. 123’.
The average exercise price of the options granted during each of the three financial years ended 31 March are as follows:
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
|
|
|
Where the exercise price is less than the
market price at the date of grant
|
317.0p
|
|
362.0p
|
|
457.0p
|
|
|
Where the exercise price is equal to the
market price at the date of grant
|
405.0p
|
|
478.0p
|
|
550.0p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The average fair value of the
options granted during each of the three financial years ended 31 March
are estimated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
|
|
|
Where the exercise price is less than the
market price at the date of grant
|
152.8p
|
|
123.0p
|
|
158.0p
|
|
|
Where the exercise price is equal to the
market price at the date of grant
|
73.6p
|
|
50.0p
|
|
62.0p
|
|
|
|
|
|
|
|
|
The fair value of the options granted are estimated using the Black-Scholes European option pricing model using the following principal assumptions:
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
|
|
|
Dividend yield (%)
|
7.0
|
|
3.5
|
|
3.5
|
|
|
Volatility (%)
|
20.4
|
|
35.0
|
|
30.0
|
|
|
Risk-free investment rate (%)
|
4.6
|
|
4.4
|
|
5.4
|
|
|
Average life (years)
|
3.4
|
|
4.0
|
|
4.2
|
|
|
|
|
|
|
|
|
The compensation cost charged for the year ended 31 March 2004 amounted to £25m (2003: £29m; 2002: £5m).
Further details of the Group’s share-based plans are given in note 23, pages 97 to 99.
Ordinary dividends
Under UK GAAP, final ordinary dividends
are provided for in the year in respect of which they are proposed by the Board
of Directors for approval by the shareholders. Under US GAAP, dividends are
not provided until declared.
Tangible fixed assets – reversal of
partial release of impairment provision
During the financial year ended 31
March 1990, an impairment provision was recorded in respect of certain tangible
fixed assets. Part of this impairment provision was subsequently released and
shareholders’ equity credited. Under US GAAP, this partial release would
not be permitted.
Fixed assets – impact of Lattice purchase
accounting and replacement expenditure
Under UK GAAP, the combination of
National Grid and Lattice was accounted for as a merger (pooling of interests),
while under US GAAP this transaction was accounted for as an acquisition (purchase
accounting) of Lattice by National Grid. Consequently, under US GAAP the tangible
fixed assets of Lattice have been recorded at their fair value at the date of
purchase, and depreciation subsequent to acquisition has been calculated on
that fair value.
In addition, under UK GAAP the Group charges to the profit and loss account replacement expenditure on certain components of plant and equipment, which is principally undertaken to repair and to maintain the safety of
the pipeline system. Under US GAAP, such expenditure is capitalised and depreciated over the assets’ expected useful economic lives.
Financial instruments
Under UK GAAP, derivative financial instruments
that qualify for hedge accounting are recorded at their historical cost, if
any, and are not remeasured. Any related monetary assets or liabilities, including
foreign currency borrowings, are translated at the hedged rate. In addition,
under UK GAAP, it is permissible to hedge account for the net assets of overseas
operations with hedging instruments denominated in currencies other than the
functional currencies of the overseas operations.
Under US GAAP, as required by SFAS 133 ‘Accounting for Derivative Instruments and Hedging Activities’, all derivative financial instruments, including derivatives embedded within other contracts, are required
to be recognised in the balance sheet as either assets or liabilities and measured at fair value. SFAS 133 only permits hedge accounting in specific circumstances, where the hedge is identified as one of three types: fair value; cash flow; or
foreign currency exposures of net investments in foreign operations. Provided that it can be demonstrated that the hedge is highly effective and the relevant hedging criteria have been met, then in respect of fair value hedges, both the change in
fair value of the derivative and hedged item are reflected in net income in the period of the change. For cash flow hedges and hedges of foreign currency exposures of net investments in foreign operations, changes in fair value are reflected through
other comprehensive income. In the event that the conditions for hedge accounting are not met, changes in the fair value of derivatives are reflected in net income.
Annual Report and Accounts 2003/04_
National
Grid Transc
o
116
Back to Contents
Notes to the Accounts
_continued
32. Principal differences between UK and
US accounting principles
(continued)
Financial instruments
(continued)
The primary differences that arise between
UK GAAP and US GAAP result from the different criteria that are applied under
UK GAAP and US GAAP to permit the use of hedge accounting, and the application
of different measurement criteria.
Equity Plus Income Convertible Securities
(EPICs)
Under UK GAAP, EPICs were carried
in the balance sheet at the gross proceeds of the issue. This resulted in a
gain being recognised on disposal during 2004. The related issue costs were
written off in the year of issue. Under US GAAP, the issue costs were deferred
and written off over the period to the date of redemption of the EPICs on 6
May 2003.
US GAAP required that the carrying value of
the EPICs be adjusted to the settlement amount of the debt, which was linked
to the Energis plc share price and therefore no gain was recorded on the
disposal – see note 20.
Regulatory assets
SFAS 71 ‘Accounting for Certain
Types of Regulation’ establishes US GAAP for utilities whose regulators
have the power to approve and/or regulate rates that may be charged to customers.
Provided that through the regulatory process the utility is substantially assured
of recovering its allowable costs by the collection of revenue from its customers,
such costs not yet recovered are deferred as regulatory assets. Due to the
different regulatory environment, no equivalent accounting standard applies
in the UK.
Under UK GAAP, regulatory assets established
in accordance with the principles of SFAS 71 are recognised where they comprise
rights or other access to future economic benefits which arise as a result
of past transactions or events which have created an obligation to transfer
economic benefit to a third party. Measurement of the past transaction or
event and hence of the regulatory asset is determined in accordance with
UK GAAP. Where the application of UK GAAP results in the non or partial recognition
of an obligation compared with US GAAP, any related regulatory asset is either
not or partially recognised. Under UK GAAP, in certain circumstances, regulatory
assets may be reported net of related regulatory liabilities. Such amounts
are shown gross in the US GAAP balance sheet.
Recognition of income
Under US GAAP, income is recognised
in the period that the service is provided up to the maximum revenue allowed
under the terms of the relevant regulatory regime. Under UK GAAP, any income
received or receivable in excess of the maximum revenue allowed for the period,
under the terms of the relevant regulatory regime, is recognised as income,
even where prices will be reduced in a future period.
Severance and integration costs
Under UK GAAP, severance costs are
provided for in the accounts if it is determined that a constructive or legal
obligation has arisen from a restructuring programme where it is probable that
it will result in the outflow of economic benefits and the costs involved can
be estimated with reasonable accuracy. Under US GAAP, severance costs are recognised
when the employees accept the severance offer. In addition, where the number
of employees leaving results in a significant reduction in the accrual of pension
benefits for employees’ future service (a curtailment under US GAAP),
the effects are reflected as part of the cost of such termination benefits.
Accordingly, timing differences between UK and US GAAP arise on the recognition
of such costs.
Goodwill – purchase of Lattice
Under UK GAAP, the combination of
National Grid and Lattice has been accounted for as a merger (pooling of interests)
while under US GAAP this transaction was accounted for as an acquisition (purchase
accounting) of Lattice by National Grid. In accordance with US GAAP, goodwill
arising on the purchase has been capitalised, but is not amortised.
Goodwill – other
Under US GAAP, the fair value of
net assets acquired is calculated in accordance with US GAAP principles which
differ in certain respects from UK GAAP principles. As a result, the US GAAP
fair value of net assets of Group undertakings acquired differs from the fair
value of net assets as determined under UK GAAP principles.
Under UK GAAP, goodwill is amortised over
its expected useful economic life, principally 20 years. Under US GAAP, goodwill
is not amortised but is reviewed periodically for impairment. An impairment
assessment has been carried out during 2004 and it resulted in an impairment
of goodwill being recorded in respect of Advantica, which was acquired by
the Group as part of the Lattice acquisition.
Restructuring – purchase of Lattice
Under US GAAP, certain reorganisation
costs relating to an acquired entity are included in liabilities in determining
the fair value of net assets acquired. Under UK GAAP, such costs are not recognised
as liabilities of the acquired entity at the date of acquisition and are treated
as post-acquisition costs.
Share of joint ventures’ and associate’s
adjustments
The Group’s share of the associated
undertaking’s results and net assets, which also impact on the exceptional
profit on disposal of investments and assets held for exchange, have been adjusted
to conform with US GAAP.
On 16 July 2002, Energis plc (‘Energis’)
went into administration. As a direct result of this event, Energis ceased
to be an associate of the Group from that date. The results for 2002/03 have
not been affected by this change in status, because the Group investment
in Energis had been fully written down during 2001/02 and Energis had not
publicly declared any results since reporting its results for the six months
ended 30 September 2001.
The Group ceased equity accounting for Intelig,
its Brazilian telecoms joint venture, with effect from 30 September 2002.
This arose as a result of the Group’s share of net assets falling to
zero and the Group declaring its intention not to fund this business any
further while pursuing a withdrawal strategy.
The Group’s interest in Manquehue net
and Silica Networks were disposed of in October 2002 and September 2002 respectively.
The Group ceased equity accounting for Manquehue net and Silica Networks
from the date of disposal. In the case of Energis Polska, the interest reduced
to a level where the Group has no significant influence on the activities
of this business as of November 2002. As a result, these entities are no
longer equity accounted for, and any losses arising from the disposal or
reduction in interest have previously been reflected in the income statement.
The tables on pages 118 and 119 provide summarised
information of the Group’s equity in the loss or income for 31 March
2001 and 2002 and also summarised balance sheet information as at 31 March
2002.
117
National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
32. Principal differences between UK and
US accounting principles
(continued)
Summary financial information for
equity investments
The following information is provided to enable
the reader to see the impact on the US GAAP results of equity accounted affiliates
for the years ended 31 March 2001 and 31 March 2002 and to allow further understanding
of the impact of these investments on the financial condition of the Group
at those dates.
The following table summarises the underlying
results of all material equity accounted investments included within the
Group accounts for the year ended 31 March 2002:
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
|
Silica
|
(ii)
|
Manquehue
|
(ii)
|
Energis
|
(ii)
|
|
(ii)
|
|
Energis
|
Intelig
|
Networks
|
net
|
Polska
|
Citelec
|
|
£m
|
|
£m
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
482
|
|
300
|
|
–
|
|
28
|
|
1
|
|
149
|
|
|
Total expenses
|
(582
|
)
|
(408
|
)
|
(13
|
)
|
(46
|
)
|
(8
|
)
|
(301
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and minority
interests
|
(100
|
)
|
(108
|
)
|
(13
|
)
|
(18
|
)
|
(7
|
)
|
(152
|
)
|
|
Taxation
|
2
|
|
–
|
|
–
|
|
2
|
|
–
|
|
(14
|
)
|
|
Minority interests
|
1
|
|
–
|
|
–
|
|
–
|
|
–
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
(97
|
)
|
(108
|
)
|
(13
|
)
|
(16
|
)
|
(7
|
)
|
(108
|
)
|
|
Group’s % ownership in investee
|
36.9%
|
|
50.0%
|
|
50.0%
|
|
30.0%
|
|
48.8%
|
|
42.5%
|
|
|
Group’s equity in net loss of investee
under US GAAP
|
(36
|
)
|
(54
|
)
|
(6
|
)
|
(5
|
)
|
(3
|
)
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the Group’s
equity in the net (loss)/income of equity accounted investees to the Group’s
reported interest in equity accounted affiliates as measured under US GAAP,
including consolidation adjustments, for the year ended 31 March 2002:
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
|
Silica
|
(ii)
|
Manquehue
|
(ii)
|
Energis
|
(ii)
|
|
(ii)
|
|
|
|
|
|
Energis
|
Intelig
|
Networks
|
net
|
Polska
|
Citelec
|
Other
|
Total
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group’s
equity in net (loss)/income of investee under US GAAP
|
(36
|
)
|
(54
|
)
|
(6
|
)
|
(5
|
)
|
(3
|
)
|
(46
|
)
|
7
|
|
(143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairments – write
down carrying value
|
(392
|
)
|
(116
|
)
|
(41
|
)
|
(37
|
)
|
(20
|
)
|
–
|
|
–
|
|
(606
|
)
|
|
Provisions for related liabilities
|
–
|
|
(83
|
)
|
(11
|
)
|
(2
|
)
|
(90
|
)
|
–
|
|
–
|
|
(186
|
)
|
|
Other
|
25
|
(iii)
|
2
|
|
–
|
|
2
|
|
(2
|
)
|
(3
|
)
|
11
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group’s equity
in net (loss)/income under
US
GAAP including consolidation adjustments
|
(403
|
)
|
(251
|
)
|
(58
|
)
|
(42
|
)
|
(115
|
)
|
(49
|
)
|
18
|
|
(900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Only includes six months’ results
to September 2001. No results are available after this date, as a consequence
of Energis being placed in administration.
|
|
(ii)
|
Results included in the Group accounts
for Silica Networks, Manquehue net, Energis Polska and Citelec are based
on their results reported for the year ended 31 December 2001.
|
|
(iii)
|
Represents a profit on a deemed disposal
of Energis shares, arising from a dilution of the Group's equity interest.
|
The following table summarises the balance
sheet of all material equity accounted investments:
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silica
|
|
Manquehue
|
|
Energis
|
|
|
|
Energis
£m
|
Intelig
£m
|
Networks
£m
|
(i)
|
net
£m
|
(i)
|
Polska
£m
|
(i)
|
Citelec
£m
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
342
|
|
117
|
|
11
|
|
28
|
|
47
|
|
25
|
|
|
Non-current assets
|
2,276
|
|
525
|
|
77
|
|
156
|
|
89
|
|
366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
2,618
|
|
642
|
|
88
|
|
184
|
|
136
|
|
391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
389
|
|
551
|
|
23
|
|
24
|
|
93
|
|
151
|
|
|
Non-current liabilities
|
1,151
|
|
4
|
|
–
|
|
63
|
|
–
|
|
207
|
|
|
Minority interests
|
3
|
|
–
|
|
–
|
|
–
|
|
–
|
|
17
|
|
|
Shareholders’ equity
|
1,075
|
|
87
|
|
65
|
|
97
|
|
43
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
2,618
|
|
642
|
|
88
|
|
184
|
|
136
|
|
391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the Group’s
investment in equity accounted affiliates, under US GAAP, as at 31 March
2002:
|
|
|
|
|
|
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silica
|
(i)
|
Manquehue
|
(i)
|
Energis
|
(i)
|
|
(i)
|
|
|
|
|
|
Energis
|
Intelig
|
Networks
|
net
|
Polska
|
Citelec
|
Other
|
Total
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group’s
investment in and advances to equity investees plus equity in undistributed
earnings since acquisition:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before impairment
|
392
|
|
126
|
|
43
|
|
41
|
|
20
|
|
7
|
|
57
|
|
686
|
)
|
|
Impairment
|
(392
|
)
|
(126
|
)
|
(43
|
)
|
(41
|
)
|
(20
|
)
|
(7
|
)
|
-
|
|
(629
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After impairment
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
57
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group’s % ownership in investee at
end of year
|
36.8%
|
|
50.0%
|
|
50.0%
|
|
30.0%
|
|
48.8%
|
|
42.5%
|
|
various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The balance sheets shown for Silica Networks,
Manquehue net, Energis Polska and Citelec are as at 31 December 2001.
The amounts included within the Group’s investment carrying value
at 31 March 2002 are based on these balance sheets.
|
Annual
Report and Accounts 2003/04_
National
Grid Transco
118
Back to Contents
Notes to the Accounts
_continued
32. Principal differences between UK and
US accounting principles
(continued)
Summary financial information for equity
investments
(continued)
The following table summarises the results
of all material equity accounted investments included within the Group accounts
for the year ended 31
March 2001:
|
|
|
|
|
|
2001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silica
|
(i)
|
Manquehue
|
(i)
|
Energis
|
(i)
|
|
(i)
|
|
Energis
|
Intelig
|
Networks
|
net
|
Polska
|
Citelec
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
812
|
|
192
|
|
–
|
|
28
|
|
–
|
|
152
|
|
|
Total expenses
|
(936
|
)
|
(416
|
)
|
(3
|
)
|
(28
|
)
|
(4
|
)
|
(117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income before
income taxes and minority interests
|
(124
|
)
|
(224
|
)
|
(3
|
)
|
–
|
|
(4
|
)
|
35
|
|
|
Tax
|
(21
|
)
|
–
|
|
–
|
|
–
|
|
–
|
|
(11
|
)
|
|
Minority interests
|
2
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income
|
(143
|
)
|
(224
|
)
|
(3
|
)
|
–
|
|
(4
|
)
|
15
|
|
|
Group’s % ownership in investee
|
37.6%
|
|
50.0%
|
|
50.0%
|
|
30.0%
|
|
23.8%
|
|
42.5%
|
|
|
Group’s equity
in net (loss)/income of investee under US GAAP
|
(53
|
)
|
(112
|
)
|
(1
|
)
|
–
|
|
(1
|
)
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the Group’s
equity in the net (loss)/income of equity accounted investees to the Group’s
reported interest in equity accounted affiliates as measured under US GAAP,
including consolidation adjustments, for the year ended 31 March 2001:
|
|
2001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silica
|
(i)
|
Manquehue
|
(i)
|
Energis
|
(i)
|
|
(i)
|
|
|
|
|
|
Energis
|
Intelig
|
Networks
|
net
|
Polska
|
Citelec
|
Other
|
Total
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group’s
equity in net (loss)/income of investee under US GAAP
|
(53
|
)
|
(112
|
)
|
(1
|
)
|
–
|
|
(1
|
)
|
6
|
|
9
|
|
(152
|
)
|
|
Consolidation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill amortisation
|
–
|
|
–
|
|
–
|
|
(1
|
)
|
–
|
|
–
|
|
–
|
|
(1
|
)
|
|
Other
|
534
|
(ii)
|
–
|
|
–
|
|
–
|
|
–
|
|
(1
|
)
|
–
|
|
533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group’s equity
in net income/(loss) under
US
GAAP including consolidation adjustments
|
481
|
|
(112
|
)
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
5
|
|
9
|
|
380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Results for Silica Networks,
Manquehue net, Energis Polska and Citelec are for the year ended 31 December
2000.
|
|
(ii)
|
The ‘Other’ consolidation
adjustment comprises:
|
|
|
–
|
a gain of £288m on a deemed disposal
of Energis shares, caused by a dilution of the Group's interest as a
result of Energis issuing additional shares to third party investors;
|
|
|
–
|
a tax credit of £230m from the release
of tax liabilities relating to profits on disposal of fixed assets in
earlier years, as a result of the realisation in 2001 of capital losses
arising from a group reorganisation; and
|
|
|
–
|
sundry other consolidation adjustments
amounting to £16m.
|
Non-GAAP measures
In preparing the accounts in accordance
with the Companies Act and UK GAAP, certain information is presented that would
be viewed as ‘non-GAAP’ under regulations issued by the SEC. The
Group has described such items and provided disclosure of the effects and reasons
for presentation along with a condensed US GAAP income statement using the
format prescribed by the SEC. The disclosure of each of the exceptional items
would be prohibited within the Form 20-F if such exceptional items were not
expressly permitted by FRS 3.
Management uses ‘adjusted’ profit
measures in considering the performance of the Group’s operating segments
and businesses. References to ‘adjusted operating profit’, ‘adjusted
profit before taxation’, ‘adjusted earnings’ and ‘adjusted
earnings per share’ are stated before exceptional items and goodwill
amortisation.
The Directors believe that the use of these
adjusted measures better indicates the underlying business performance of
the Group than the unadjusted measures because the exclusion of these items
provides a clearer comparison of results from year to year for each of the
years presented. This is because this method of presentation removes the
distorting impact of exceptional items and removes the impact of goodwill
amortisation in order to enhance comparability with the reporting practices
of other UK companies.
Exceptional items, which are adjusted for
in the adjusted measures referred to above, are defined as material items
that derive from events that fall within the ordinary activities of the Group,
but that require separate disclosure on the grounds of size or incidence
for the accounts to give a true and fair view. Such exceptional items include,
for example, material restructuring costs and impairments. Note 4 on pages
80 and 81 contains a discussion of the nature of these exceptional items
for each period.
Other differences between UK and US GAAP
UK GAAP requires the investors’ share
of operating profit or loss, interest and taxation relating to associates and
joint ventures to be accounted for and disclosed separately from those of Group
undertakings. Under US GAAP, the investors’ share of the after tax profits
and losses of joint ventures and associates is included within the income statement
as a single line item. UK GAAP requires the investors’ share of gross
assets and gross liabilities of joint ventures to be shown on the face of the
balance sheet. Under US GAAP, the net investment in joint ventures is shown
as a single line item.
Under UK GAAP, the impact of discontinued
operations on turnover, operating costs and operating profit is required
to be accounted for and disclosed separately from continuing operations.
Under US GAAP, the net income/(loss) arising from discontinued operations
of Group undertakings is required to be separately accounted for and disclosed
as a single line item.
The Group reviews all long-lived assets for
potential impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Under UK GAAP,
recognition and measurement of impairment is determined on the basis of discounted
cash flows attributable to income generating units. Under US GAAP, impairments
on long-lived assets are determined in accordance with SFAS 144 ‘Accounting
for the Impairment or Disposal of Long-Lived Assets’ and are recognised
on the basis of undiscounted future cash flows and measured on the basis
of discounted future cash flows. For the year ended 31 March 2004, there
was an additional £11m impairment of intangible fixed assets relating
to Advantica under US GAAP over the impairment under UK GAAP. This difference
has no effect on the Group accounts for the years ended 31 March 2003 and
31 March 2002.
Under UK GAAP, assets in the balance sheet
are presented in ascending order of liquidity and the balance sheet is analysed
between net assets and shareholders’ funds. Under US GAAP, assets are
presented in descending order of liquidity and the balance sheet is analysed
between total assets and liabilities and shareholders’ funds – see
note 31.
119
National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
32. Principal differences
between UK and US accounting principles
(continued)
New US Accounting Standards adopted
during 2003/04
During 2003/04, the Group adopted the following
US GAAP accounting standards to the extent necessary to comply with their
reporting obligations in respect of these accounts:
|
|
SFAS 143 ‘Accounting
for Asset Retirement Obligations’ (‘FAS 143’);
|
|
SFAS 132 ‘Employers’ Disclosures
about Pensions and Other Post-Retirement Benefits – an amendment
of FASB Statements No 87, 88 and 106’ (‘FAS 132’);
|
|
FIN 46 ‘Consolidation of Variable
Interest Entities, an interpretation of Accounting Research Bulletin
(ARB) 51’; and
|
|
SFAS 150 ‘Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity’ (‘FAS
150’).
|
FAS 143 prescribes the accounting for retirement
obligations associated with tangible long-lived assets, including the timing
of liability recognition and initial measurement of the liability. FAS 143
requires that an asset retirement cost should be capitalised as part of the
cost of the related long-lived asset and subsequently allocated to expense
using a systematic and rational method. The adoption of FAS 143 has had no
material impact on the results or the financial position of the Group. However,
in accordance with industry-wide guidance received from the Securities and
Exchange Commission in February 2004, costs of removal totalling £266m
at 31 March 2004, which were previously classified as accumulated depreciation,
have been reclassified as liabilities. Prior period numbers have also been
reclassified by £297m at 31 March 2003. There has been no impact on
net assets.
FAS 132 (Revised 2003) requires entities to
make additional disclosures about pensions and other post-retirement obligations.
The Group has complied with these disclosure requirements to the extent necessary
at 31 March 2004.
In January 2003, the Financial Accounting
Standards Board (FASB) issued FIN 46 ‘Consolidation of Variable Interest
Entities, an interpretation of Accounting Research Bulletin (ARB) 51’.
FIN 46 addresses the consolidation of entities for which control is achieved
through means other than through voting rights (‘variable interest entities’ or ‘VIE’)
by clarifying the application of ARB 51 ‘Consolidated Financial Statements’ to
certain entities in which equity investors do not have the characteristics
of a controlling financial interest or do not have sufficient equity at risk
for the entity to finance its own activities without additional subordinated
financial support from other parties. FIN 46 provides guidance on how to
determine when and which business enterprise (the ‘primary beneficiary’)
should consolidate the VIE. In addition, FIN 46 requires that both the primary
beneficiary and all other enterprises with a significant variable interest
in a VIE make additional disclosures.
The disclosure provisions of FIN 46 are effective
in all financial statements initially issued after 31 January 2003. FIN 46
is required to be immediately applied by all entities with a variable interest
in a VIE created after 31 January 2003. A public foreign private issuer with
a variable interest in a VIE created before 1 February 2003 is required to
apply FIN 46 to that entity from 1 April 2004.
There have been no entities created since
31 January 2003 which fall within the scope of FIN 46 and therefore the application
of FIN 46 has not had any material impact on the results or the financial
condition of the Group. The impact of FIN 46 on future results is still being
assessed in respect of the as yet unapplied provisions of the standard.
In May 2003, the FASB issued FAS 150. This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that certain obligations that could be settled by issuance
of an entity’s equity but lack other characteristics of equity be reported
as liabilities. Some provisions of this statement are consistent with the
FASB’s proposal to revise the definition of liabilities in FASB Concepts
Statement 6 ‘Elements of Financial Statements’. This statement
was effective beginning 1 July 2003. On 7 November 2003, FASB Staff Position
(FSP) FAS 150-3 was issued deferring the effective date for the measurement
provisions of paragraphs 9 and 10 of FAS 150, as they apply to mandatorily
redeemable non-controlling interests (eg minority interest in finite-lived
entities). The FSP indicated, however, that the disclosure requirements of
FAS 150 continue to apply. The Group has adopted the effective provisions
of FAS 150 in the current year without material impact on results of operations
or financial position.
Recent US pronouncements
In
January 2004, the FASB issued FSP FAS 106-1 ‘Accounting
and Disclosure Requirements Related to Medicare Prescription Drug, Improvement
and Modernization Act of 2003 (the ‘Act’)’. This FSP addresses
the accounting implications of the newly issued Act to an entity that sponsors
a post-retirement healthcare plan that provides prescription drug benefits.
This Act, signed into law in December 2003 in the US, introduces a prescription
drug benefit under Medicare as well as a Federal subsidy to sponsors of certain
retiree healthcare benefit plans. The FSP includes an election to defer accounting
for the implications of this new law until specific authoritative guidance
to address the accounting treatment has been issued. As such, as a result
of the lack of the existence of such guidance, any measures included in these
accounts of the accumulated post-retirement benefit obligation (APBO) or
net periodic post-retirement benefit cost in the accounts or accompanying
notes do not reflect the effect of the Act on the plan. Authoritative guidance,
when issued, could require a change in previously reported information.
33. Transco plc additional US GAAP disclosures
The
following condensed consolidating financial information, comprising income
statements, balance sheets and cash flow statements,
is given in respect of Transco plc (‘Subsidiary Guarantor’), which
became joint full and unconditional guarantor on 11 May 2004 with National
Grid Transco plc (‘Parent Guarantor’) of the 6.625% Guaranteed
Notes due 2018 issued in June 1998 by British Transco Finance Inc. (then
known as British Gas Finance Inc.) (‘Issuer of notes’). Transco
plc and British Transco Finance Inc. are wholly-owned subsidiaries of National
Grid Transco Group.
The following financial information for National
Grid Transco plc, Transco plc and British Transco Finance Inc. on a condensed
consolidating basis is intended to provide investors with meaningful and
comparable financial information and is provided pursuant to Rule 3-10 of
Regulation S-X in lieu of the separate financial statements of each subsidiary
issuer of public debt securities.
Summary income statements are presented, on
a consolidating basis, for the three years ended 31 March 2004. Summary income
statements of National Grid Transco plc and Transco plc are presented under
UK and US GAAP measurement principles, as modified by the inclusion of the
results of subsidiary undertakings on the basis of equity accounting principles.
The summary balance sheets of National Grid
Transco plc and Transco plc include the investments in subsidiaries recorded
under the equity method for the purposes of presenting condensed consolidating
financial information under UK and US GAAP. The UK GAAP balance sheet presents
these investments as ‘Net assets of subsidiaries (equity accounted)’.
The US GAAP summary balance sheet presents these investments within ‘Investments’.
The consolidation adjustments column includes
the necessary amounts to eliminate the inter-company balances and transactions
between National Grid Transco plc, Transco plc, British Transco Finance Inc.
and other subsidiaries.
Transco plc and British Transco Finance Inc.
were treated as acquired (as part of the Lattice acquisition) under US GAAP.
As a consequence, under US GAAP, their results only feature in the following
tables for the period after acquisition on 21 October 2002. There are no
results under US GAAP for these or other Lattice entities reflected in the
following tables for the year ended 31 March 2002; where appropriate this
is indicated by ‘n/a’. In contrast, under UK GAAP, results are
presented for these entities for all periods as these entities have been
accounted for under merger accounting principles.
Annual
Report and Accounts 2003/04_
National
Grid Transco
120
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Summary
income statement for the twelve months to 31 March 2004 – UK GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
notes
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
British
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
Grid
|
Transco
|
|
Other
|
Consolidation
|
Grid Transco
|
|
Transco plc
|
Finance Inc.
|
Transco plc
|
subsidiaries
|
adjustments
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
–
|
|
|
–
|
|
|
3,194
|
|
|
6,310
|
|
|
(471
|
)
|
|
9,033
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
–
|
|
|
–
|
|
|
(423
|
)
|
|
(443
|
)
|
|
–
|
|
|
(866
|
)
|
|
Payroll costs
|
–
|
|
|
–
|
|
|
(392
|
)
|
|
(628
|
)
|
|
–
|
|
|
(1,020
|
)
|
|
Purchases of electricity
|
–
|
|
|
–
|
|
|
–
|
|
|
(1,998
|
)
|
|
–
|
|
|
(1,998
|
)
|
|
Purchases of gas
|
–
|
|
|
–
|
|
|
(86
|
)
|
|
(285
|
)
|
|
–
|
|
|
(371
|
)
|
|
Rates and property taxes
|
–
|
|
|
–
|
|
|
(238
|
)
|
|
(278
|
)
|
|
–
|
|
|
(516
|
)
|
|
Electricity transmission services scheme
direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(277
|
)
|
|
–
|
|
|
(277
|
)
|
|
EnMO direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(158
|
)
|
|
–
|
|
|
(158
|
)
|
|
Replacement expenditure
|
–
|
|
|
–
|
|
|
(388
|
)
|
|
–
|
|
|
–
|
|
|
(388
|
)
|
|
Provisions for doubtful debts
|
–
|
|
|
–
|
|
|
2
|
|
|
(64
|
)
|
|
–
|
|
|
(62
|
)
|
|
Other operating charges (including exceptional
items)
|
(13
|
)
|
|
–
|
|
|
(634
|
)
|
|
(1,343
|
)
|
|
468
|
|
|
(1,522
|
)
|
|
|
(13
|
)
|
|
–
|
|
|
(2,159
|
)
|
|
(5,474
|
)
|
|
468
|
|
|
(7,178
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
(13
|
)
|
|
–
|
|
|
1,035
|
|
|
836
|
|
|
(3
|
)
|
|
1,855
|
|
|
Share of joint ventures’ operating
profit
|
–
|
|
|
–
|
|
|
–
|
|
|
7
|
|
|
–
|
|
|
7
|
|
|
Non-operating exceptional items
|
–
|
|
|
–
|
|
|
–
|
|
|
322
|
|
|
–
|
|
|
322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest and taxation
|
(13
|
)
|
|
–
|
|
|
1,035
|
|
|
1,165
|
|
|
(3
|
)
|
|
2,184
|
|
|
Net interest
|
(17
|
)
|
|
–
|
|
|
(304
|
)
|
|
(501
|
)
|
|
–
|
|
|
(822
|
)
|
|
Dividends receivable
|
–
|
|
|
–
|
|
|
–
|
|
|
70
|
|
|
(70
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation
|
(30
|
)
|
|
–
|
|
|
731
|
|
|
734
|
|
|
(73
|
)
|
|
1,362
|
|
|
Taxation
|
13
|
|
|
–
|
|
|
(184
|
)
|
|
(90
|
)
|
|
–
|
|
|
(261
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities after taxation
|
(17
|
)
|
|
–
|
|
|
547
|
|
|
644
|
|
|
(73
|
)
|
|
1,101
|
|
|
Minority interests
|
–
|
|
|
–
|
|
|
–
|
|
|
(2
|
)
|
|
–
|
|
|
(2
|
)
|
|
Interest in group undertakings on an equity
accounted basis
|
1,116
|
|
|
–
|
|
|
11
|
|
|
–
|
|
|
(1,127
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year
|
1,099
|
|
|
–
|
(i)
|
|
558
|
|
|
642
|
|
|
(1,200
|
)
|
|
1,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary income statement for the twelve
months to 31 March 2004 – US GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
notes
|
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
British
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
|
Transco
|
|
|
|
|
|
Other
|
|
|
Consolidation
|
|
|
Grid Transco
|
|
|
|
Transco plc
|
|
|
Finance Inc.
|
|
|
Transco plc
|
|
|
subsidiaries
|
|
|
adjustments
|
|
|
Group
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
–
|
|
|
–
|
|
|
3,186
|
|
|
6,151
|
|
|
(471
|
)
|
|
8,866
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
–
|
|
|
–
|
|
|
(726
|
)
|
|
(438
|
)
|
|
–
|
|
|
(1,164
|
)
|
|
Payroll and severance
costs
|
–
|
|
|
–
|
|
|
(484
|
)
|
|
(813
|
)
|
|
–
|
|
|
(1,297
|
)
|
|
Purchases of electricity
|
–
|
|
|
–
|
|
|
–
|
|
|
(1,998
|
)
|
|
–
|
|
|
(1,998
|
)
|
|
Purchases of gas
|
–
|
|
|
–
|
|
|
(86
|
)
|
|
(285
|
)
|
|
–
|
|
|
(371
|
)
|
|
Rates and property taxes
|
–
|
|
|
–
|
|
|
(238
|
)
|
|
(278
|
)
|
|
–
|
|
|
(516
|
)
|
|
Electricity transmission
services scheme direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(277
|
)
|
|
–
|
|
|
(277
|
)
|
|
Provision for doubtful debts
|
–
|
|
|
–
|
|
|
2
|
|
|
(64
|
)
|
|
–
|
|
|
(62
|
)
|
|
Other operating charges
|
(13
|
)
|
|
–
|
|
|
(553
|
)
|
|
(1,161
|
)
|
|
468
|
|
|
(1,259
|
)
|
|
|
(13
|
)
|
|
–
|
|
|
(2,085
|
)
|
|
(5,314
|
)
|
|
468
|
|
|
(6,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
(13
|
)
|
|
–
|
|
|
1,101
|
|
|
837
|
|
|
(3
|
)
|
|
1,922
|
|
|
Non-operating expenses
|
–
|
|
|
–
|
|
|
–
|
|
|
32
|
|
|
–
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest
and taxation
|
(13
|
)
|
|
–
|
|
|
1,101
|
|
|
869
|
|
|
(3
|
)
|
|
1,954
|
|
|
Net interest
|
(34
|
)
|
|
–
|
|
|
(365
|
)
|
|
(273
|
)
|
|
–
|
|
|
(672
|
)
|
|
Dividends receivable
|
–
|
|
|
–
|
|
|
–
|
|
|
70
|
|
|
(70
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
before taxation
|
(47
|
)
|
|
–
|
|
|
736
|
|
|
666
|
|
|
(73
|
)
|
|
1,282
|
|
|
Taxation
|
18
|
|
|
–
|
|
|
(189
|
)
|
|
(111
|
)
|
|
–
|
|
|
(282
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
after taxation
|
(29
|
)
|
|
–
|
|
|
547
|
|
|
555
|
|
|
(73
|
)
|
|
1,000
|
|
|
Minority interests
|
–
|
|
|
–
|
|
|
–
|
|
|
(2
|
)
|
|
–
|
|
|
(2
|
)
|
|
Interest in equity accounted
affiliates
|
1,027
|
|
|
–
|
|
|
64
|
|
|
–
|
|
|
(1,091
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing
operations
|
998
|
|
|
–
|
|
|
611
|
|
|
553
|
|
|
(1,164
|
)
|
|
998
|
|
|
Net loss from discontinued operations
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the
year
|
998
|
|
|
–
|
(i)
|
|
611
|
|
|
553
|
|
|
(1,164
|
)
|
|
998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net income for the year for
British Gas Transco Finance Inc. is £nil as interest payable to
external bondholders is offset by interest receivable on loans to Transco
plc.
|
121 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Summary
income statement for the twelve months to 31 March 2003 – UK GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
notes
|
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
British
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
|
Transco
|
|
|
|
|
|
Other
|
|
|
Consolidation
|
|
|
Grid Transco
|
|
|
|
Transco plc
|
|
|
Finance Inc.
|
|
|
Transco plc
|
|
|
subsidiaries
|
|
|
adjustments
|
|
|
Group
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
–
|
|
|
–
|
|
|
3,083
|
|
|
6,764
|
|
|
(447
|
)
|
|
9,400
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
–
|
|
|
–
|
|
|
(385
|
)
|
|
(466
|
)
|
|
–
|
|
|
(851
|
)
|
|
Payroll costs
|
–
|
|
|
–
|
|
|
(432
|
)
|
|
(675
|
)
|
|
–
|
|
|
(1,107
|
)
|
|
Purchases of electricity
|
–
|
|
|
–
|
|
|
–
|
|
|
(1,901
|
)
|
|
–
|
|
|
(1,901
|
)
|
|
Purchases of gas
|
–
|
|
|
–
|
|
|
(108
|
)
|
|
(249
|
)
|
|
–
|
|
|
(357
|
)
|
|
Rates and property taxes
|
–
|
|
|
–
|
|
|
(235
|
)
|
|
(302
|
)
|
|
–
|
|
|
(537
|
)
|
|
Electricity transmission
services scheme direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(252
|
)
|
|
–
|
|
|
(252
|
)
|
|
EnMO direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(530
|
)
|
|
–
|
|
|
(530
|
)
|
|
Replacement expenditure
|
–
|
|
|
–
|
|
|
(405
|
)
|
|
–
|
|
|
–
|
|
|
(405
|
)
|
|
Provision for doubtful debts
|
–
|
|
|
–
|
|
|
(4
|
)
|
|
(20
|
)
|
|
–
|
|
|
(24
|
)
|
|
Other operating charges
(including exceptional items)
|
(21
|
)
|
|
–
|
|
|
(735
|
)
|
|
(1,518
|
)
|
|
450
|
|
|
(1,824
|
)
|
|
|
(21
|
)
|
|
–
|
|
|
(2,304
|
)
|
|
(5,913
|
)
|
|
450
|
|
|
(7,788
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
(21
|
)
|
|
–
|
|
|
779
|
|
|
851
|
|
|
3
|
|
|
1,612
|
|
|
Share of joint ventures’ operating
profit
|
–
|
|
|
–
|
|
|
–
|
|
|
124
|
|
|
–
|
|
|
124
|
|
|
Non-operating exceptional
items
|
(32
|
)
|
|
–
|
|
|
(12
|
)
|
|
(51
|
)
|
|
(4
|
)
|
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest
and taxation
|
(53
|
)
|
|
–
|
|
|
767
|
|
|
924
|
|
|
(1
|
)
|
|
1,637
|
|
|
Net interest
|
21
|
|
|
–
|
|
|
(343
|
)
|
|
(648
|
)
|
|
–
|
|
|
(970
|
)
|
|
Dividends receivable
|
–
|
|
|
–
|
|
|
–
|
|
|
244
|
|
|
(244
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
before taxation
|
(32
|
)
|
|
–
|
|
|
424
|
|
|
520
|
|
|
(245
|
)
|
|
667
|
|
|
Taxation
|
(5
|
)
|
|
–
|
|
|
(140
|
)
|
|
(100
|
)
|
|
–
|
|
|
(245
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
after taxation
|
(37
|
)
|
|
–
|
|
|
284
|
|
|
420
|
|
|
(245
|
)
|
|
422
|
|
|
Minority interests
|
–
|
|
|
–
|
|
|
–
|
|
|
(31
|
)
|
|
–
|
|
|
(31
|
)
|
|
Interest in group undertakings
on an equity accounted basis
|
428
|
|
|
–
|
|
|
23
|
|
|
–
|
|
|
(451
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the
year
|
391
|
|
|
–
|
(i)
|
|
307
|
|
|
389
|
|
|
(696
|
)
|
|
391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary income statement for the twelve
months to 31 March 2003 – US GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
notes
|
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
British
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
|
Transco
|
|
|
|
|
|
Other
|
|
|
Consolidation
|
|
|
Grid Transco
|
|
|
|
Transco plc
|
|
|
Finance Inc.
|
|
|
Transco plc
|
|
|
subsidiaries
|
|
|
adjustments
|
|
|
Group
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
–
|
|
|
–
|
|
|
1,673
|
|
|
5,945
|
|
|
(217
|
)
|
|
7,401
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
–
|
|
|
–
|
|
|
(311
|
)
|
|
(420
|
)
|
|
–
|
|
|
(731
|
)
|
|
Payroll and severance
costs
|
–
|
|
|
–
|
|
|
(191
|
)
|
|
(913
|
)
|
|
–
|
|
|
(1,104
|
)
|
|
Purchases of electricity
|
–
|
|
|
–
|
|
|
–
|
|
|
(1,901
|
)
|
|
–
|
|
|
(1,901
|
)
|
|
Purchases of gas
|
–
|
|
|
–
|
|
|
(56
|
)
|
|
(248
|
)
|
|
–
|
|
|
(304
|
)
|
|
Rates and property taxes
|
–
|
|
|
–
|
|
|
(105
|
)
|
|
(302
|
)
|
|
–
|
|
|
(407
|
)
|
|
Electricity transmission
services scheme direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(252
|
)
|
|
–
|
|
|
(252
|
)
|
|
Provision for doubtful debts
|
–
|
|
|
–
|
|
|
(3
|
)
|
|
(20
|
)
|
|
–
|
|
|
(23
|
)
|
|
Other operating charges
|
(21
|
)
|
|
–
|
|
|
(298
|
)
|
|
(864
|
)
|
|
221
|
|
|
(962
|
)
|
|
|
(21
|
)
|
|
–
|
|
|
(964
|
)
|
|
(4,920
|
)
|
|
221
|
|
|
(5,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
(21
|
)
|
|
–
|
|
|
709
|
|
|
1,025
|
|
|
4
|
|
|
1,717
|
|
|
Non-operating expenses
|
(32
|
)
|
|
–
|
|
|
(10
|
)
|
|
37
|
|
|
–
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest
and taxation
|
(53
|
)
|
|
–
|
|
|
699
|
|
|
1,062
|
|
|
4
|
|
|
1,712
|
|
|
Net interest
|
21
|
|
|
–
|
|
|
(97
|
)
|
|
(588
|
)
|
|
–
|
|
|
(664
|
)
|
|
Dividends receivable
|
–
|
|
|
–
|
|
|
–
|
|
|
120
|
|
|
(120
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
before taxation
|
(32
|
)
|
|
–
|
|
|
602
|
|
|
594
|
|
|
(116
|
)
|
|
1,048
|
|
|
Taxation
|
(5
|
)
|
|
–
|
|
|
(193
|
)
|
|
(60
|
)
|
|
–
|
|
|
(258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
after taxation
|
(37
|
)
|
|
–
|
|
|
409
|
|
|
534
|
|
|
(116
|
)
|
|
790
|
|
|
Minority interests
|
–
|
|
|
–
|
|
|
–
|
|
|
(3
|
)
|
|
–
|
|
|
(3
|
)
|
|
Interest in equity accounted
affiliates
|
788
|
|
|
–
|
|
|
17
|
|
|
3
|
|
|
(805
|
)
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing
operations
|
751
|
|
|
–
|
|
|
426
|
|
|
534
|
|
|
(921
|
)
|
|
790
|
|
|
Net loss from discontinued operations
|
–
|
|
|
–
|
|
|
–
|
|
|
(39
|
)
|
|
–
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the
year
|
751
|
|
|
–
|
(i)
|
|
426
|
|
|
495
|
|
|
(921
|
)
|
|
751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net income for the year for
British Gas Transco Finance Inc. is £nil as interest payable to
external bondholders is offset by interest receivable on loans to Transco
plc.
|
Annual
Report and Accounts 2003/04_
National
Grid Transco
122
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Summary
income statement for the twelve months to 31 March 2002 – UK GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
notes
|
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
British
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
|
Transco
|
|
|
|
|
|
Other
|
|
|
Consolidation
|
|
|
Grid Transco
|
|
|
|
Transco plc
|
|
|
Finance Inc.
|
|
|
Transco plc
|
|
|
subsidiaries
|
|
|
adjustments
|
|
|
Group
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
–
|
|
|
–
|
|
|
2,994
|
|
|
4,800
|
|
|
(240
|
)
|
|
7,554
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
–
|
|
|
–
|
|
|
(371
|
)
|
|
(379
|
)
|
|
–
|
|
|
(750
|
)
|
|
Payroll costs
|
–
|
|
|
–
|
|
|
(466
|
)
|
|
(480
|
)
|
|
–
|
|
|
(946
|
)
|
|
Purchases of electricity
|
–
|
|
|
–
|
|
|
–
|
|
|
(1,410
|
)
|
|
–
|
|
|
(1,410
|
)
|
|
Purchases of gas
|
–
|
|
|
–
|
|
|
(112
|
)
|
|
(59
|
)
|
|
–
|
|
|
(171
|
)
|
|
Rates and property taxes
|
–
|
|
|
–
|
|
|
(231
|
)
|
|
(193
|
)
|
|
–
|
|
|
(424
|
)
|
|
Electricity transmission services scheme direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(204
|
)
|
|
–
|
|
|
(204
|
)
|
|
EnMO direct costs
|
–
|
|
|
–
|
|
|
–
|
|
|
(395
|
)
|
|
–
|
|
|
(395
|
)
|
|
Replacement expenditure
|
–
|
|
|
–
|
|
|
(368
|
)
|
|
–
|
|
|
–
|
|
|
(368
|
)
|
|
Provision for doubtful debts
|
–
|
|
|
–
|
|
|
3
|
|
|
(26
|
)
|
|
–
|
|
|
(23
|
)
|
|
Other operating charges (including exceptional items)
|
(78
|
)
|
|
–
|
|
|
(610
|
)
|
|
(1,351
|
)
|
|
236
|
|
|
(1,803
|
)
|
|
|
(78
|
)
|
|
–
|
|
|
(2,155
|
)
|
|
(4,497
|
)
|
|
236
|
|
|
(6,494
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
(78
|
)
|
|
–
|
|
|
839
|
|
|
303
|
|
|
(4
|
)
|
|
1,060
|
|
|
Share of joint ventures’ and associate’s operating profit/(loss)
|
–
|
|
|
–
|
|
|
–
|
|
|
(701
|
)
|
|
–
|
|
|
(701
|
)
|
|
Non-operating exceptional items
|
–
|
|
|
–
|
|
|
11
|
|
|
128
|
|
|
17
|
|
|
156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest and taxation
|
(78
|
)
|
|
–
|
|
|
850
|
|
|
(270
|
)
|
|
13
|
|
|
515
|
|
|
Net interest
|
(8
|
)
|
|
–
|
|
|
(355
|
)
|
|
(436
|
)
|
|
–
|
|
|
(799
|
)
|
|
Dividends receivable
|
–
|
|
|
–
|
|
|
–
|
|
|
352
|
|
|
(352
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation
|
(86
|
)
|
|
–
|
|
|
495
|
|
|
(354
|
)
|
|
(339
|
)
|
|
(284
|
)
|
|
Taxation
|
3
|
|
|
–
|
|
|
(149
|
)
|
|
61
|
|
|
–
|
|
|
(85
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities after taxation
|
(83
|
)
|
|
–
|
|
|
346
|
|
|
(293
|
)
|
|
(339
|
)
|
|
(369
|
)
|
|
Minority interests
|
–
|
|
|
–
|
|
|
–
|
|
|
48
|
|
|
–
|
|
|
48
|
|
|
Interest in group undertakings on an equity accounted basis
|
(238
|
)
|
|
–
|
|
|
15
|
|
|
–
|
|
|
223
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
(321
|
)
|
|
–
|
(i)
|
361
|
|
|
(245
|
)
|
|
(116
|
)
|
|
(321
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net income for the year for British Gas Transco Finance Inc. is £nil as interest payable to external bondholders is offset by interest receivable on loans to Transco plc.
|
Summary income statement for the twelve months to 31 March 2002 – US GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
notes
|
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
British
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
|
Transco
|
|
|
|
|
|
Other
|
|
|
Consolidation
|
|
|
Grid Transco
|
|
|
|
Transco plc
|
|
|
Finance Inc.
|
|
|
Transco plc
|
|
|
subsidiaries
|
|
|
adjustments
|
|
|
Group
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
4,004
|
|
|
–
|
|
|
4,004
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(316
|
)
|
|
–
|
|
|
(316
|
)
|
|
Payroll and severance costs
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(417
|
)
|
|
–
|
|
|
(417
|
)
|
|
Purchases of electricity
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(1,410
|
)
|
|
–
|
|
|
(1,410
|
)
|
|
Purchases of gas
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(58
|
)
|
|
–
|
|
|
(58
|
)
|
|
Rates and property taxes
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(197
|
)
|
|
–
|
|
|
(197
|
)
|
|
Electricity transmission services scheme direct costs
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(204
|
)
|
|
–
|
|
|
(204
|
)
|
|
Provision for doubtful debts
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(26
|
)
|
|
–
|
|
|
(26
|
)
|
|
Other operating charges
|
(78
|
)
|
|
n/a
|
|
|
n/a
|
|
|
(431
|
)
|
|
–
|
|
|
(509
|
)
|
|
|
(78
|
)
|
|
n/a
|
|
|
n/a
|
|
|
(3,059
|
)
|
|
–
|
|
|
(3,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
(78
|
)
|
|
n/a
|
|
|
n/a
|
|
|
945
|
|
|
–
|
|
|
867
|
|
|
Non-operating expenses
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
22
|
|
|
–
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before interest and taxation
|
(78
|
)
|
|
n/a
|
|
|
n/a
|
|
|
967
|
|
|
–
|
|
|
889
|
|
|
Net interest
|
(8
|
)
|
|
n/a
|
|
|
n/a
|
|
|
(118
|
)
|
|
–
|
|
|
(126
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation
|
(86
|
)
|
|
n/a
|
|
|
n/a
|
|
|
849
|
|
|
–
|
|
|
763
|
|
|
Taxation
|
3
|
|
|
n/a
|
|
|
n/a
|
|
|
(16
|
)
|
|
–
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities after taxation
|
(83
|
)
|
|
n/a
|
|
|
n/a
|
|
|
833
|
|
|
–
|
|
|
750
|
|
|
Minority interests
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(2
|
)
|
|
–
|
|
|
(2
|
)
|
|
Interest in equity accounted affiliates
|
(84
|
)
|
|
n/a
|
|
|
n/a
|
|
|
(900
|
)
|
|
84
|
|
|
(900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
(167
|
)
|
|
n/a
|
|
|
n/a
|
|
|
(69
|
)
|
|
84
|
|
|
(152
|
)
|
|
Net loss from discontinued operations
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(1
|
)
|
|
–
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before cumulative effects of changes in accounting principles
|
(167
|
)
|
|
n/a
|
|
|
n/a
|
|
|
(70
|
)
|
|
84
|
|
|
(153
|
)
|
Cumulative effects of changes in accounting principles (FAS 133
transitional adjustment)
|
–
|
|
|
n/a
|
|
|
n/a
|
|
|
(14
|
)
|
|
–
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
(167
|
)
|
|
n/a
|
|
|
n/a
|
|
|
(84
|
)
|
|
84
|
|
|
(167
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Balance
sheet as at 31 March 2004 – UK
GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
notes
|
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
British
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
|
Transco
|
|
|
|
|
|
Other
|
|
|
Consolidation
|
|
|
Grid Transco
|
|
|
|
Transco plc
|
|
|
Finance Inc.
|
|
|
Transco plc
|
|
|
subsidiaries
|
|
|
adjustments
|
|
|
Group
|
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
–
|
|
|
–
|
|
|
–
|
|
|
1,537
|
|
|
–
|
|
|
1,537
|
|
|
Tangible assets
|
–
|
|
|
–
|
|
|
7,880
|
|
|
8,829
|
|
|
(3
|
)
|
|
16,706
|
|
|
Investments
|
–
|
|
|
–
|
|
|
–
|
|
|
7,303
|
|
|
(7,152
|
)
|
|
151
|
|
|
Net assets of subsidiaries (equity accounted)
|
526
|
|
|
–
|
|
|
22
|
|
|
–
|
|
|
(548
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
526
|
|
|
–
|
|
|
7,902
|
|
|
17,669
|
|
|
(7,703
|
)
|
|
18,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stocks
|
–
|
|
|
–
|
|
|
32
|
|
|
59
|
|
|
–
|
|
|
91
|
|
|
Debtors (amounts falling due within one year)
|
3,884
|
|
|
–
|
|
|
292
|
|
|
4,291
|
|
|
(6,879
|
)
|
|
1,588
|
|
|
Debtors (amounts falling due after one year)
|
–
|
|
|
168
|
|
|
2,544
|
|
|
3,792
|
|
|
(3,796
|
)
|
|
2,708
|
|
|
Current asset investments
|
6
|
|
|
–
|
|
|
264
|
|
|
440
|
|
|
(190
|
)
|
|
520
|
|
|
Cash at bank and in hand
|
–
|
|
|
1
|
|
|
–
|
|
|
95
|
|
|
–
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,890
|
|
|
169
|
|
|
3,132
|
|
|
8,677
|
|
|
(10,865
|
)
|
|
5,003
|
|
|
Creditors (amounts falling due within one year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
(388
|
)
|
|
–
|
|
|
(861
|
)
|
|
(947
|
)
|
|
490
|
|
|
(1,706
|
)
|
|
Other creditors
|
(2,056
|
)
|
|
(4
|
)
|
|
(1,801
|
)
|
|
(5,286
|
)
|
|
6,340
|
|
|
(2,807
|
)
|
|
|
(2,444
|
)
|
|
(4
|
)
|
|
(2,662
|
)
|
|
(6,233
|
)
|
|
6,830
|
|
|
(4,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current assets/(liabilities)
|
1,446
|
|
|
165
|
|
|
470
|
|
|
2,444
|
|
|
(4,035
|
)
|
|
490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
1,972
|
|
|
165
|
|
|
8,372
|
|
|
20,113
|
|
|
(11,738
|
)
|
|
18,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors (amounts falling due after more than one year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
(746
|
)
|
|
(165
|
)
|
|
(2,768
|
)
|
|
(8,103
|
)
|
|
240
|
|
|
(11,542
|
)
|
|
Other creditors
|
(13
|
)
|
|
–
|
|
|
(2,111
|
)
|
|
(3,593
|
)
|
|
3,795
|
|
|
(1,922
|
)
|
|
|
(759
|
)
|
|
(165
|
)
|
|
(4,879
|
)
|
|
(11,696
|
)
|
|
4,035
|
|
|
(13,464
|
)
|
|
Provisions for liabilities and charges
|
–
|
|
|
–
|
|
|
(1,356
|
)
|
|
(2,801
|
)
|
|
–
|
|
|
(4,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets employed
|
1,213
|
|
|
–
|
|
|
2,137
|
|
|
5,616
|
|
|
(7,703
|
)
|
|
1,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital
|
309
|
|
|
–
|
|
|
45
|
|
|
540
|
|
|
(585
|
)
|
|
309
|
|
|
Share premium account
|
1,280
|
|
|
–
|
|
|
204
|
|
|
1,557
|
|
|
(1,761
|
)
|
|
1,280
|
|
|
Other reserves
|
(5,131
|
)
|
|
–
|
|
|
1,332
|
|
|
(181
|
)
|
|
(1,151
|
)
|
|
(5,131
|
)
|
|
Profit and loss account
|
4,755
|
|
|
–
|
|
|
556
|
|
|
3,650
|
|
|
(4,206
|
)
|
|
4,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds
|
1,213
|
|
|
–
|
|
|
2,137
|
|
|
5,566
|
|
|
(7,703
|
)
|
|
1,213
|
|
|
Minority interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
–
|
|
|
–
|
|
|
–
|
|
|
12
|
|
|
–
|
|
|
12
|
|
|
Non–equity
|
–
|
|
|
–
|
|
|
–
|
|
|
38
|
|
|
–
|
|
|
38
|
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
50
|
|
|
–
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,213
|
|
|
–
|
|
|
2,137
|
|
|
5,616
|
|
|
(7,703
|
)
|
|
1,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Report and Accounts 2003/04_
National
Grid Transco
124
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Balance
sheet as at 31 March 2004 – US GAAP
|
|
Parent
|
|
Issuer of
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
notes
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
British
|
|
|
|
|
|
|
|
National
|
|
|
|
Grid
|
|
Transco
|
|
|
|
Other
|
|
Consolidation
|
|
Grid Transco
|
|
|
|
Transco plc
|
|
Finance Inc.
|
|
Transco plc
|
|
subsidiaries
|
|
adjustments
|
|
Group
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
6
|
|
1
|
|
264
|
|
447
|
|
(190
|
)
|
528
|
|
|
Marketable securities
|
–
|
|
–
|
|
–
|
|
102
|
|
–
|
|
102
|
|
|
Accounts and notes receivable
|
–
|
|
–
|
|
16
|
|
480
|
|
–
|
|
496
|
|
|
Inventories
|
–
|
|
–
|
|
32
|
|
59
|
|
–
|
|
91
|
|
|
Amounts owed by Group undertakings
|
3,883
|
|
–
|
|
22
|
|
2,430
|
|
(6,335
|
)
|
–
|
|
|
Regulatory assets
|
–
|
|
–
|
|
–
|
|
512
|
|
–
|
|
512
|
|
|
Prepaid expenses and other current assets
|
1
|
|
–
|
|
254
|
|
395
|
|
(54
|
)
|
596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
3,890
|
|
1
|
|
588
|
|
4,425
|
|
(6,579
|
)
|
2,325
|
|
|
Property, plant and equipment
|
–
|
|
–
|
|
13,785
|
|
9,343
|
|
(3
|
)
|
23,125
|
|
|
Goodwill
|
–
|
|
–
|
|
3,746
|
|
1,859
|
|
–
|
|
5,605
|
|
|
Intangible assets
|
–
|
|
–
|
|
–
|
|
50
|
|
–
|
|
50
|
|
|
Investments
|
8,851
|
|
–
|
|
(94
|
)
|
9,881
|
|
(18,483
|
)
|
155
|
|
|
Amounts owed by Group undertakings
|
–
|
|
161
|
|
2,544
|
|
1,084
|
|
(3,789
|
)
|
–
|
|
|
Regulatory assets
|
–
|
|
–
|
|
–
|
|
3,136
|
|
–
|
|
3,136
|
|
|
Other debtors
|
161
|
|
–
|
|
196
|
|
629
|
|
(35
|
)
|
951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
12,902
|
|
162
|
|
20,765
|
|
30,407
|
|
(28,889
|
)
|
35,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
–
|
|
–
|
|
6
|
|
20
|
|
–
|
|
26
|
|
|
Accounts payable
|
–
|
|
–
|
|
406
|
|
630
|
|
–
|
|
1,036
|
|
|
Short-term borrowings
|
389
|
|
–
|
|
856
|
|
399
|
|
–
|
|
1,644
|
|
|
Accrued income taxes
|
–
|
|
–
|
|
176
|
|
–
|
|
(54
|
)
|
122
|
|
|
Purchased power obligations
|
–
|
|
–
|
|
–
|
|
57
|
|
–
|
|
57
|
|
|
Liability for index-linked swap contracts
|
–
|
|
–
|
|
–
|
|
100
|
|
–
|
|
100
|
|
|
Amounts owed to Group undertakings
|
1,680
|
|
–
|
|
750
|
|
3,856
|
|
(6,286
|
)
|
–
|
|
|
Other accrued liabilities
|
127
|
|
4
|
|
561
|
|
787
|
|
(77
|
)
|
1,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
2,196
|
|
4
|
|
2,755
|
|
5,849
|
|
(6,417
|
)
|
4,387
|
|
|
Long-term borrowings
|
872
|
|
158
|
|
2,894
|
|
8,572
|
|
(240
|
)
|
12,256
|
|
|
Amounts owed to Group undertakings
|
–
|
|
–
|
|
1,084
|
|
2,705
|
|
(3,789
|
)
|
–
|
|
|
Purchased power obligations
|
–
|
|
–
|
|
–
|
|
149
|
|
–
|
|
149
|
|
|
Liability for index-linked swap contracts
|
–
|
|
–
|
|
–
|
|
291
|
|
–
|
|
291
|
|
|
Post-retirement benefits
|
–
|
|
–
|
|
–
|
|
1,681
|
|
–
|
|
1,681
|
|
|
Deferred income taxes
|
–
|
|
–
|
|
3,312
|
|
1,590
|
|
(35
|
)
|
4,867
|
|
|
Other liabilities
|
13
|
|
–
|
|
148
|
|
1,680
|
|
–
|
|
1,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
3,081
|
|
162
|
|
10,193
|
|
22,517
|
|
(10,481
|
)
|
25,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest – equity
|
–
|
|
–
|
|
–
|
|
12
|
|
–
|
|
12
|
|
|
Cumulative preference stock issued by Group undertakings
|
–
|
|
–
|
|
–
|
|
42
|
|
–
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
309
|
|
–
|
|
45
|
|
540
|
|
(585
|
)
|
309
|
|
|
Additional paid in capital
|
7,768
|
|
–
|
|
9,680
|
|
7,799
|
|
(17,479
|
)
|
7,768
|
|
|
Other reserves
|
359
|
|
–
|
|
–
|
|
–
|
|
–
|
|
359
|
|
|
Retained earnings
|
2,701
|
|
–
|
|
847
|
|
712
|
|
(1,559
|
)
|
2,701
|
|
|
Other comprehensive loss
|
(1,282
|
)
|
–
|
|
–
|
|
(1,181
|
)
|
1,181
|
|
(1,282
|
)
|
|
Treasury stock
|
(34
|
)
|
–
|
|
–
|
|
(34
|
)
|
34
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds
|
9,821
|
|
–
|
|
10,572
|
|
7,836
|
|
(18,408
|
)
|
9,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
12,902
|
|
162
|
|
20,765
|
|
30,407
|
|
(28,889
|
)
|
35,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125 National Grid Transco
_Annual
Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Balance sheet as at 31 March 2003 – UK
GAAP
|
|
Parent
|
|
|
Issuer of
|
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
notes
|
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National
|
|
British
|
|
|
|
|
|
|
|
National
|
|
Grid
|
|
Transco
|
|
|
|
Other
|
|
Consolidation
|
|
Grid Transco
|
|
Transco plc
|
|
Finance Inc
.
|
|
Transco plc
|
|
subsidiaries
|
|
adjustments
|
|
Group
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
–
|
|
|
–
|
|
|
–
|
|
|
1,893
|
|
|
–
|
|
|
1,893
|
|
|
Tangible assets
|
–
|
|
|
–
|
|
|
7,785
|
|
|
9,062
|
|
|
–
|
|
|
16,847
|
|
|
Investments
|
–
|
|
|
–
|
|
|
–
|
|
|
7,371
|
|
|
(7,157
|
)
|
|
214
|
|
|
Net assets of subsidiaries (equity accounted)
|
646
|
|
|
–
|
|
|
13
|
|
|
–
|
|
|
(659
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
646
|
|
|
–
|
|
|
7,798
|
|
|
18,326
|
|
|
(7,816
|
)
|
|
18,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stocks
|
–
|
|
|
–
|
|
|
31
|
|
|
95
|
|
|
–
|
|
|
126
|
|
|
Debtors (amounts falling due within one
year)
|
2,664
|
|
|
4
|
|
|
298
|
|
|
4,089
|
|
|
(5,244
|
)
|
|
1,811
|
|
|
Debtors (amounts falling due after one
year)
|
–
|
|
|
190
|
|
|
2,241
|
|
|
5,032
|
|
|
(4,068
|
)
|
|
3,395
|
|
|
Assets held for exchange
|
–
|
|
|
–
|
|
|
–
|
|
|
17
|
|
|
–
|
|
|
17
|
|
|
Current asset investments
|
123
|
|
|
–
|
|
|
206
|
|
|
355
|
|
|
(202
|
)
|
|
482
|
|
|
Cash at bank and in hand
|
1
|
|
|
–
|
|
|
–
|
|
|
118
|
|
|
–
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,788
|
|
|
194
|
|
|
2,776
|
|
|
9,706
|
|
|
(9,514
|
)
|
|
5,950
|
|
|
Creditors (amounts falling due within
one year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
(557
|
)
|
|
–
|
|
|
(580
|
)
|
|
(1,458
|
)
|
|
349
|
|
|
(2,246
|
)
|
|
Other creditors
|
(1,764
|
)
|
|
(4
|
)
|
|
(1,633
|
)
|
|
(4,294
|
)
|
|
4,895
|
|
|
(2,800
|
)
|
|
|
(2,321
|
)
|
|
(4
|
)
|
|
(2,213
|
)
|
|
(5,752
|
)
|
|
5,244
|
|
|
(5,046
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current assets/(liabilities)
|
467
|
|
|
190
|
|
|
563
|
|
|
3,954
|
|
|
(4,270
|
)
|
|
904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
1,113
|
|
|
190
|
|
|
8,361
|
|
|
22,280
|
|
|
(12,086
|
)
|
|
19,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors
(amounts falling due after more than one year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
–
|
|
|
(190
|
)
|
|
(2,838
|
)
|
|
(9,407
|
)
|
|
202
|
|
|
(12,233
|
)
|
|
Other creditors
|
–
|
|
|
–
|
|
|
(2,424
|
)
|
|
(3,666
|
)
|
|
4,068
|
|
|
(2,022
|
)
|
|
|
–
|
|
|
(190
|
)
|
|
(5,262
|
)
|
|
(13,073
|
)
|
|
4,270
|
|
|
(14,255
|
)
|
|
Provisions for liabilities and charges
|
–
|
|
|
–
|
|
|
(1,450
|
)
|
|
(2,956
|
)
|
|
–
|
|
|
(4,406
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets employed
|
1,113
|
|
|
–
|
|
|
1,649
|
|
|
6,251
|
|
|
(7,816
|
)
|
|
1,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital
|
308
|
|
|
–
|
|
|
45
|
|
|
540
|
|
|
(585
|
)
|
|
308
|
|
|
Share premium account
|
1,247
|
|
|
–
|
|
|
204
|
|
|
1,557
|
|
|
(1,761
|
)
|
|
1,247
|
|
|
Other reserves
|
(5,131
|
)
|
|
–
|
|
|
1,332
|
|
|
(181
|
)
|
|
(1,151
|
)
|
|
(5,131
|
)
|
|
Profit and loss account
|
4,689
|
|
|
–
|
|
|
68
|
|
|
4,251
|
|
|
(4,319
|
)
|
|
4,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds
|
1,113
|
|
|
–
|
|
|
1,649
|
|
|
6,167
|
|
|
(7,816
|
)
|
|
1,113
|
|
|
Minority interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
–
|
|
|
–
|
|
|
–
|
|
|
15
|
|
|
–
|
|
|
15
|
|
|
Non-equity
|
–
|
|
|
–
|
|
|
–
|
|
|
69
|
|
|
–
|
|
|
69
|
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
84
|
|
|
–
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,113
|
|
|
–
|
|
|
1,649
|
|
|
6,251
|
|
|
(7,816
|
)
|
|
1,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Report and Accounts 2003/04_
National
Grid Transco
126
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Balance sheet as at 31 March 2003 – US
GAAP
|
|
Parent
|
|
Issuer of
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
Guarantor
|
notes
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
National
|
British
|
|
|
|
National
|
|
Grid
|
Transco
|
|
Other
|
Consolidation
|
Grid Transco
|
|
Transco plc
|
Finance Inc.
|
Transco plc
|
subsidiaries
|
adjustments
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
124
|
|
–
|
|
206
|
|
442
|
|
(202
|
)
|
570
|
|
|
Marketable securities
|
–
|
|
–
|
|
–
|
|
48
|
|
–
|
|
48
|
|
|
Accounts and notes receivable
|
–
|
|
–
|
|
27
|
|
601
|
|
–
|
|
628
|
|
|
Inventories
|
–
|
|
–
|
|
31
|
|
95
|
|
–
|
|
126
|
|
|
Amounts owed by Group undertakings
|
2,652
|
|
4
|
|
4
|
|
2,584
|
|
(5,244
|
)
|
–
|
|
|
Regulatory assets
|
–
|
|
–
|
|
–
|
|
461
|
|
–
|
|
461
|
|
|
Prepaid expenses and other current assets
|
12
|
|
–
|
|
559
|
|
134
|
|
–
|
|
705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
2,788
|
|
4
|
|
827
|
|
4,365
|
|
(5,446
|
)
|
2,538
|
|
|
Property, plant and equipment
|
–
|
|
–
|
|
13,584
|
|
9,800
|
|
–
|
|
23,384
|
|
|
Goodwill
|
–
|
|
–
|
|
3,793
|
|
2,107
|
|
–
|
|
5,900
|
|
|
Intangible assets
|
–
|
|
–
|
|
–
|
|
74
|
|
–
|
|
74
|
|
|
Investments
|
8,642
|
|
–
|
|
(156
|
)
|
9,935
|
|
(18,211
|
)
|
210
|
|
|
Amounts owed by Group undertakings
|
–
|
|
182
|
|
2,241
|
|
1,645
|
|
(4,068
|
)
|
–
|
|
|
Regulatory assets
|
–
|
|
–
|
|
–
|
|
3,998
|
|
–
|
|
3,998
|
|
|
Other debtors
|
–
|
|
–
|
|
–
|
|
843
|
|
–
|
|
843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
11,430
|
|
186
|
|
20,289
|
|
32,767
|
|
(27,725
|
)
|
36,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
–
|
|
–
|
|
13
|
|
49
|
|
–
|
|
62
|
|
|
Accounts payable
|
–
|
|
–
|
|
341
|
|
925
|
|
–
|
|
1,266
|
|
|
Short-term borrowings
|
557
|
|
–
|
|
567
|
|
1,198
|
|
(349
|
)
|
1,973
|
|
|
Purchased power obligations
|
–
|
|
–
|
|
–
|
|
68
|
|
–
|
|
68
|
|
|
Liability for index-linked swap contracts
|
–
|
|
–
|
|
–
|
|
121
|
|
–
|
|
121
|
|
|
Amounts owed to Group undertakings
|
1,439
|
|
–
|
|
796
|
|
2,660
|
|
(4,895
|
)
|
–
|
|
|
Other accrued liabilities
|
8
|
|
4
|
|
626
|
|
535
|
|
(52
|
)
|
1,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
2,004
|
|
4
|
|
2,343
|
|
5,556
|
|
(5,296
|
)
|
4,611
|
|
|
Long-term borrowings
|
–
|
|
182
|
|
3,004
|
|
10,074
|
|
(202
|
)
|
13,058
|
|
|
Amounts owed to Group undertakings
|
–
|
|
–
|
|
1,447
|
|
2,621
|
|
(4,068
|
)
|
–
|
|
|
Purchased power obligations
|
–
|
|
–
|
|
–
|
|
253
|
|
–
|
|
253
|
|
|
Liability for index-linked swap contracts
|
–
|
|
–
|
|
–
|
|
381
|
|
–
|
|
381
|
|
|
Post-retirement benefits
|
–
|
|
–
|
|
–
|
|
2,283
|
|
–
|
|
2,283
|
|
|
Deferred income taxes
|
–
|
|
–
|
|
3,329
|
|
1,358
|
|
–
|
|
4,687
|
|
|
Other liabilities
|
–
|
|
–
|
|
135
|
|
2,024
|
|
–
|
|
2,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
2,004
|
|
186
|
|
10,258
|
|
24,550
|
|
(9,566
|
)
|
27,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest – equity
|
–
|
|
–
|
|
–
|
|
15
|
|
–
|
|
15
|
|
|
Cumulative preference stock issued by
Group undertakings
|
–
|
|
–
|
|
–
|
|
74
|
|
–
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
308
|
|
–
|
|
45
|
|
540
|
|
(585
|
)
|
308
|
|
|
Additional paid in capital
|
7,710
|
|
–
|
|
9,680
|
|
7,799
|
|
(17,479
|
)
|
7,710
|
|
|
Other reserves
|
359
|
|
–
|
|
–
|
|
–
|
|
–
|
|
359
|
|
|
Retained earnings
|
2,263
|
|
–
|
|
306
|
|
1,003
|
|
(1,309
|
)
|
2,263
|
|
|
Other comprehensive loss
|
(1,175
|
)
|
–
|
|
–
|
|
(1,175
|
)
|
1,175
|
|
(1,175
|
)
|
|
Treasury stock
|
(39
|
)
|
–
|
|
–
|
|
(39
|
)
|
39
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders’ funds
|
9,426
|
|
–
|
|
10,031
|
|
8,128
|
|
(18,159
|
)
|
9,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
11,430
|
|
186
|
|
20,289
|
|
32,767
|
|
(27,725
|
)
|
36,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127 National Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Notes to the Accounts
_continued
33. Transco plc additional US GAAP disclosures
(continued)
Cash flow statements
|
|
Parent
|
|
Issuer of
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
Guarantor
|
notes
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
National
|
British
|
|
|
|
National
|
|
Grid
|
Transco
|
|
Other
|
Consolidation
|
Grid Transco
|
|
Transco plc
|
Finance Inc.
|
Transco plc
|
subsidiaries
|
adjustments
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK GAAP cash flow statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months to 31 March 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities
|
(7
|
)
|
–
|
|
1,397
|
|
1,420
|
|
–
|
|
2,810
|
|
|
Dividends from subsidiary undertakings
and joint ventures
|
352
|
|
–
|
|
2
|
|
78
|
|
(424
|
)
|
8
|
|
|
Returns on investments and servicing of
finance
|
8
|
|
–
|
|
(243
|
)
|
(457
|
)
|
–
|
|
(692
|
)
|
|
Taxation
|
–
|
|
–
|
|
(61
|
)
|
43
|
|
–
|
|
(18
|
)
|
|
Capital expenditure and financial investment
|
–
|
|
–
|
|
(497
|
)
|
(757
|
)
|
–
|
|
(1,254
|
)
|
|
Acquisitions and disposals
|
–
|
|
–
|
|
–
|
|
7
|
|
–
|
|
7
|
|
|
Equity dividends paid
|
(560
|
)
|
–
|
|
(70
|
)
|
(354
|
)
|
424
|
|
(560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (outflow)/inflow before management
of liquid resources
|
(207
|
)
|
–
|
|
528
|
|
(20
|
)
|
–
|
|
301
|
|
|
Management of liquid resources
|
117
|
|
–
|
|
(56
|
)
|
(109
|
)
|
–
|
|
(48
|
)
|
|
Financing
|
90
|
|
–
|
|
(465
|
)
|
135
|
|
–
|
|
(240
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash in the year
|
–
|
|
–
|
|
7
|
|
6
|
|
–
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months to 31 March 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities
|
(53
|
)
|
–
|
|
1,291
|
|
1,588
|
|
–
|
|
2,826
|
|
|
Dividends from subsidiary undertakings
and joint ventures
|
1,301
|
|
–
|
|
28
|
|
348
|
|
(1,666
|
)
|
11
|
|
|
Returns on investments and servicing of
finance
|
14
|
|
–
|
|
(335
|
)
|
(591
|
)
|
–
|
|
(912
|
)
|
|
Taxation
|
–
|
|
–
|
|
(50
|
)
|
(62
|
)
|
–
|
|
(112
|
)
|
|
Capital expenditure and financial investment
|
–
|
|
–
|
|
(605
|
)
|
(802
|
)
|
–
|
|
(1,407
|
)
|
|
Acquisitions and disposals
|
(90
|
)
|
–
|
|
860
|
|
240
|
|
(847
|
)
|
163
|
|
|
Equity dividends paid
|
(382
|
)
|
–
|
|
(337
|
)
|
(2,365
|
)
|
2,513
|
|
(571
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) before management
of liquid resources
|
790
|
|
–
|
|
852
|
|
(1,644
|
)
|
–
|
|
(2
|
)
|
|
Management of liquid resources
|
(123
|
)
|
–
|
|
2
|
|
(17
|
)
|
–
|
|
(138
|
)
|
|
Financing
|
(670
|
)
|
–
|
|
(833
|
)
|
1,677
|
|
–
|
|
174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash in the year
|
(3
|
)
|
–
|
|
21
|
|
16
|
|
–
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months to 31 March 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities
|
(1
|
)
|
–
|
|
1,253
|
|
1,039
|
|
–
|
|
2,291
|
|
|
Dividends from subsidiary undertakings
and joint ventures
|
750
|
|
–
|
|
4
|
|
374
|
|
(1,115
|
)
|
13
|
|
|
Returns on investments and servicing of
finance
|
(10
|
)
|
–
|
|
(335
|
)
|
(360
|
)
|
–
|
|
(705
|
)
|
|
Taxation
|
3
|
|
–
|
|
(204
|
)
|
(11
|
)
|
–
|
|
(212
|
)
|
|
Capital expenditure and financial investment
|
–
|
|
–
|
|
(754
|
)
|
(729
|
)
|
–
|
|
(1,483
|
)
|
|
Acquisitions and disposals
|
(660
|
)
|
–
|
|
(860
|
)
|
(969
|
)
|
1,520
|
|
(969
|
)
|
|
Equity dividends paid
|
–
|
|
–
|
|
(361
|
)
|
(1,232
|
)
|
1,115
|
|
(478
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) before management
of liquid resources
|
82
|
|
–
|
|
(1,257
|
)
|
(1,888
|
)
|
1,520
|
|
(1,543
|
)
|
|
Management of liquid resources
|
–
|
|
–
|
|
1
|
|
346
|
|
–
|
|
347
|
|
|
Financing
|
(78
|
)
|
–
|
|
1,239
|
|
1,577
|
|
(1,520
|
)
|
1,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(decrease) in cash in the year
|
4
|
|
–
|
|
(17
|
)
|
35
|
|
–
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer of
|
|
Subsidiary
|
|
|
|
|
|
|
|
|
Guarantor
|
notes
|
Guarantor
|
|
|
|
|
|
|
|
|
|
|
National
|
British
|
|
|
|
National
|
|
Grid
|
Transco
|
|
Other
|
Consolidation
|
Grid Transco
|
|
Transco plc
|
Finance Inc.
|
Transco plc
|
subsidiaries
|
adjustments
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US GAAP cash flow statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months to 31 March 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
353
|
|
–
|
|
1,463
|
|
1,106
|
|
(422
|
)
|
2,500
|
|
|
Net cash used in investing activities
|
117
|
|
–
|
|
(921
|
)
|
(896
|
)
|
–
|
|
(1,700
|
)
|
|
Net cash (used in)/provided
by financing activities
|
(470
|
)
|
–
|
|
(535
|
)
|
(245
|
)
|
422
|
|
(828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease)
in cash and cash equivalents
|
–
|
|
–
|
|
7
|
|
(35
|
)
|
–
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months to 31 March 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
1,262
|
|
–
|
|
1,060
|
|
979
|
|
(1,301
|
)
|
2,000
|
|
|
Net cash used in investing activities
|
(90
|
)
|
–
|
|
(438
|
)
|
(108
|
)
|
–
|
|
(636
|
)
|
|
Net cash (used in)/provided
by financing activities
|
(1,175
|
)
|
–
|
|
(601
|
)
|
(487
|
)
|
1,301
|
|
(962
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase
in cash and cash equivalents
|
(3
|
)
|
–
|
|
21
|
|
384
|
|
–
|
|
402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months to 31 March 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
742
|
|
n/a
|
|
n/a
|
|
910
|
|
(750
|
)
|
902
|
|
|
Net cash used in investing activities
|
(660
|
)
|
n/a
|
|
n/a
|
|
(1,200
|
)
|
660
|
|
(1,200
|
)
|
|
Net cash (used in)/provided by financing
activities
|
(78
|
)
|
n/a
|
|
n/a
|
|
210
|
|
90
|
|
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
4
|
|
n/a
|
|
n/a
|
|
(80
|
)
|
–
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Report and Accounts 2003/04_
National
Grid Transco
128
Back to Contents
Summary Group Financial Information
Financial summary (unaudited)
The financial summary set out below has been derived
from the audited consolidated accounts of National Grid Transco for the four
financial years ended 31 March 2004. It should be read in conjunction with the
Group accounts and related notes, together with the Operating and Financial Review.
It is not practicable to derive the information for the year ended 31 March 2000
as the former Lattice Group had a different year end and Lattice Group was still
part of
BG Group plc at 31 March 2000. The balance sheets for 2001 to 2003 have been
restated for the adoption of UITF 38. At 31 March 2002, net income for US GAAP
includes the FAS 133 transitional adjustment of £14m.
|
|
31 March
|
|
|
31 March
|
|
|
31 March
|
|
|
31 March
|
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
2001
|
|
|
|
|
|
|
(restated)
|
|
|
(restated)
|
|
|
(restated)
|
|
|
Summary profit and loss account
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group turnover
|
9,033
|
|
|
9,400
|
|
|
7,554
|
|
|
6,891
|
|
|
Operating costs
|
(7,178
|
)
|
|
(7,788
|
)
|
|
(6,494
|
)
|
|
(5,179
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit of Group
undertakings
|
1,855
|
|
|
1,612
|
|
|
1,060
|
|
|
1,712
|
|
|
Share of joint ventures’ and associate’s
operating profit/(loss)
|
7
|
|
|
124
|
|
|
(701
|
)
|
|
(105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
–
Before exceptional items and goodwill amortisation
|
2,238
|
|
|
2,185
|
|
|
1,783
|
|
|
1,780
|
|
|
– Exceptional items
|
(277
|
)
|
|
(347
|
)
|
|
(1,327
|
)
|
|
(88
|
)
|
|
–
Goodwill amortisation
|
(99
|
)
|
|
(102
|
)
|
|
(97
|
)
|
|
(85
|
)
|
|
|
1,862
|
|
|
1,736
|
|
|
359
|
|
|
1,607
|
|
|
Non-operating exceptional
items
|
322
|
|
|
(99
|
)
|
|
156
|
|
|
306
|
|
|
Net interest
|
|
|
|
|
|
|
|
|
|
|
|
|
– Excluding exceptional
items
|
(822
|
)
|
|
(939
|
)
|
|
(657
|
)
|
|
(635
|
)
|
|
–
Exceptional items
|
–
|
|
|
(31
|
)
|
|
(142
|
)
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) on ordinary
activities before taxation
|
1,362
|
|
|
667
|
|
|
(284
|
)
|
|
1,278
|
|
|
Tax on profit on ordinary activities –
excluding exceptional items
|
(350
|
)
|
|
(373
|
)
|
|
(251
|
)
|
|
(390
|
)
|
|
Tax on profit on ordinary
activities – exceptional items
|
89
|
|
|
128
|
|
|
166
|
|
|
243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) on ordinary
activities after taxation
|
1,101
|
|
|
422
|
|
|
(369
|
)
|
|
1,131
|
|
|
Minority interests including exceptional
items
|
(2
|
)
|
|
(31
|
)
|
|
48
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for
the year
|
1,099
|
|
|
391
|
|
|
(321
|
)
|
|
1,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary statement of net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets
|
18,394
|
|
|
18,954
|
|
|
19,582
|
|
|
15,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
5,003
|
|
|
5,950
|
|
|
6,568
|
|
|
2,960
|
|
|
Creditors: amounts falling due within one
year
|
(4,513
|
)
|
|
(5,046
|
)
|
|
(4,888
|
)
|
|
(4,034
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current assets/(liabilities)
|
490
|
|
|
904
|
|
|
1,680
|
|
|
(1,074
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
18,884
|
|
|
19,858
|
|
|
21,262
|
|
|
14,596
|
|
|
Creditors: amounts falling due after more
than one year
|
(13,464
|
)
|
|
(14,255
|
)
|
|
(14,868
|
)
|
|
(9,793
|
)
|
|
Provisions for liabilities and charges
|
(4,157
|
)
|
|
(4,406
|
)
|
|
(4,663
|
)
|
|
(3,434
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
1,263
|
|
|
1,197
|
|
|
1,731
|
|
|
1,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary cash flow statement
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from
operating activities before exceptional items
|
3,058
|
|
|
3,154
|
|
|
2,394
|
|
|
2,482
|
|
|
Expenditure relating to exceptional items
|
(248
|
)
|
|
(328
|
)
|
|
(103
|
)
|
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from
operating activities
|
2,810
|
|
|
2,826
|
|
|
2,291
|
|
|
2,353
|
|
|
Dividends from joint ventures
|
8
|
|
|
11
|
|
|
13
|
|
|
20
|
|
|
Net cash outflow for
returns on investments and servicing of finance
|
(692
|
)
|
|
(912
|
)
|
|
(705
|
)
|
|
(691
|
)
|
|
Net cash outflow for taxation
|
(18
|
)
|
|
(112
|
)
|
|
(212
|
)
|
|
(350
|
)
|
|
Net cash outflow for
capital expenditure and financial investment
|
(1,254
|
)
|
|
(1,407
|
)
|
|
(1,483
|
)
|
|
(1,179
|
)
|
|
Net cash inflow/(outflow) for acquisitions
and disposals
|
7
|
|
|
163
|
|
|
(969
|
)
|
|
(587
|
)
|
|
Equity dividends paid
|
(560
|
)
|
|
(571
|
)
|
|
(478
|
)
|
|
(336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow)
before the management of liquid resources and financing activities
|
301
|
|
|
(2
|
)
|
|
(1,543
|
)
|
|
(770
|
)
|
|
Net cash (outflow)/inflow for the management
of liquid resources
|
(48
|
)
|
|
(138
|
)
|
|
347
|
|
|
696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow)
before financing activities
|
253
|
|
|
(140
|
)
|
|
(1,196
|
)
|
|
(74
|
)
|
|
Net cash (outflow)/inflow from financing
activities
|
(240
|
)
|
|
174
|
|
|
1,218
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease)
in cash in the year
|
13
|
|
|
34
|
|
|
22
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March
|
|
31 March
|
|
31 March
|
|
31 March
|
|
31 March
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2001
|
|
2000
|
|
|
Amounts in accordance with US GAAP
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group turnover
|
8,866
|
|
7,401
|
|
4,004
|
|
3,583
|
|
1,545
|
|
|
Net income/(loss)
|
998
|
|
751
|
|
(167
|
)
|
810
|
|
1,010
|
|
|
Earnings/(loss) per ADS
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
162.5
|
p
|
159.5
|
p
|
(54.5
|
)p
|
274.5
|
p
|
342.8
|
p
|
|
Diluted
|
162.0
|
p
|
156.5
|
p
|
(44.0
|
)p
|
260.0
|
p
|
323.4
|
p
|
|
Total assets
|
35,347
|
|
36,947
|
|
17,727
|
|
10,392
|
|
9,106
|
|
|
Net assets employed/total shareholders’
funds
|
9,875
|
|
9,515
|
|
3,862
|
|
2,962
|
|
2,381
|
|
|
Equity shareholders’ funds
|
9,821
|
|
9,426
|
|
3,759
|
|
2,920
|
|
2,346
|
|
|
|
|
|
|
|
|
|
|
|
|
129 National
Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Glossary of Terms
|
Term used in Annual Report
|
US equivalent or brief description
|
|
Accounts
|
Financial statements
|
|
Acquisition accounting
|
Purchase accounting
|
|
Allotted
|
Issued
|
|
Associate
|
Equity investment
|
|
Borrowings
|
Debt
|
|
Called up share capital
|
Common stock issued and fully paid
|
|
Capital allowances
|
Tax term equivalent to US tax depreciation
|
|
|
allowances
|
|
Creditors
|
Accounts payable (or payables)
|
|
Debtors
|
Accounts receivable (or receivables)
|
|
Equity shareholders’ funds
|
Shareholders’ equity
|
|
Finance lease
|
Capital lease
|
|
Financial year
|
Fiscal year
|
|
Fixed asset investments
|
Non-current investments
|
|
Freehold
|
Ownership with absolute rights in perpetuity
|
|
Freehold land
|
Land owned
|
|
Group accounts
|
Consolidated financial statements
|
|
Interest payable
|
Interest expense
|
|
Interest receivable
|
Interest income
|
|
Joint venture
|
Equity investment
|
|
Merger accounting
|
Pooling of interests
|
|
Net asset value
|
Book value
|
|
Operating profit
|
Net operating income
|
|
Pension scheme
|
Pension plan
|
|
Profit
|
Income (or earnings)
|
|
Profit and loss account
|
Income statement
|
|
Profit and loss account reserve
|
Retained earnings
|
|
Profit for the year
|
Net income
|
|
Provision for doubtful debts
|
Allowance for bad and doubtful accounts
receivable
|
|
Provisions
|
Long-term liabilities other than debt and
specific
|
|
|
accounts payable
|
|
Reconciliation of movements in equity shareholders’
funds
|
Statement of changes in stockholders’
equity
|
|
Reserves
|
Stockholders’ equity other than common
stock
|
|
Share capital
|
Ordinary shares, capital stock or common
stock
|
|
|
issued and fully paid
|
|
Share premium account
|
Additional paid-in capital relating to
proceeds of
|
|
|
sale of stock in excess of par value or
paid-in
|
|
|
surplus (not distributable)
|
|
Stocks
|
Inventories
|
|
Tangible fixed assets
|
Property, plant and equipment
|
|
Turnover
|
Revenues (or sales)
|
Annual
Report and Accounts 2003/04_
National
Grid Transco
130
Back to Contents
Definitions
ADRs
American Depositary Receipts, negotiable certificates representing holdings in ADSs.
ADSs
American Depositary Shares, each of which represents the right to receive five ordinary shares.
AGM
Annual General Meeting.
bcm
Billion cubic metres.
Company or National Grid Transco
National Grid Transco plc.
Corporate Centre
Core Group functions operating from the Group’s
head office.
DC
Direct current.
Demerger
The demerger of Lattice from BG Group plc which became effective on 23 October 2000.
EMFs
The electric and magnetic fields produced by all electrical equipment and appliances.
FERC
Federal Energy Regulatory Commission.
GAAP
Generally accepted accounting principles.
GridAmerica
The
Group’s business that manages electricity transmission operations for other
utilities in the US.
Gridcom
The Group’s communications infrastructure
business.
Group
National Grid Transco and/or its subsidiary undertakings or any of them as the context requires.
GW
Gigawatt, 10
9
watts.
GWh
Gigawatt hours.
HSE
Health and Safety Executive.
kV
Kilovolt, 10
3
volts.
kW
Kilowatt, 10
3
watts.
kWh
Kilowatt hours.
Lattice or Lattice Group
Lattice Group plc and/or its subsidiary undertakings or any of them as the context requires immediately prior to the completion of the Merger.
LNG
Liquefied natural gas.
LTI
Lost Time Injury. A work-related injury that caused the person to be away from work for at least one normal shift after the shift on which the injury occurred, because he/she is unfit to perform his/her duties.
mcm
Million cubic metres.
Merger
The merger of Lattice and National Grid which became effective on 21 October 2002.
MJ/cuM
Megajoules per cubic metre.
MW
Megawatt, 10
6
watts.
MWh
Megawatt hours.
National Grid or National Grid Group
National Grid Group plc and/or its subsidiary undertakings or any of them as the context requires immediately prior to the completion of the Merger.
National Grid Company or NGC
National Grid Company plc.
National Grid Transco or the Company
National Grid Transco plc.
National Grid USA
The holding company which owns the Group’s
electricity, gas and other interests in the US.
Niagara Mohawk
Niagara Mohawk Holdings Inc., the US utility
acquired by National Grid on 31 January 2002.
NTS or National Transmission System
The UK national gas transmission system owned and operated by Transco.
Ofgem
The Office of Gas and Electricity Markets which on 16 June 1999 became the new name for the combined Office of Electricity Regulation and Office of Gas Supply.
ordinary shares
Ordinary shares of 10 pence each in the capital of National Grid Transco.
pence or p
United Kingdom (UK) currency.
pound(s) sterling or £
United Kingdom (UK) currency.
PUHCA
Public Utility Holding Company Act of 1935.
SEC
United States Securities and Exchange Commission.
tonnes CO
2
equivalent
Measure of greenhouse gas emissions in relation to the impact of carbon dioxide.
TW
Terawatt, 10
12
watts.
TWh
Terawatt hours.
Transco
Transco plc.
US dollars, US$ or $
United States (US) currency.
131 National
Grid Transco
_Annual Report and Accounts 2003/04
Back to Contents
Certain Disclosures Required by Form 20-F and Related Information
Exchange rates
The following table sets out the $ to £ exchange
rates as indicated:
|
As at 19 May 2004
|
|
|
|
|
|
|
|
|
high
|
|
low
|
|
|
|
|
|
|
|
|
May 2004*
|
|
1.79
|
|
1.75
|
|
|
|
|
|
|
|
|
April 2004
|
|
1.86
|
|
1.77
|
|
|
|
|
|
|
|
|
March 2004
|
|
1.87
|
|
1.79
|
|
|
|
|
|
|
|
|
February 2004
|
|
1.90
|
|
1.82
|
|
|
|
|
|
|
|
|
January 2004
|
|
1.85
|
|
1.79
|
|
|
|
|
|
|
|
|
December 2003
|
|
1.78
|
|
1.72
|
|
|
|
|
|
|
|
|
November 2003
|
|
1.72
|
|
1.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average**
|
|
|
|
|
|
|
|
|
|
|
2003/04
|
|
1.70
|
|
|
|
|
|
|
|
|
|
|
2002/03
|
|
1.55
|
|
|
|
|
|
|
|
|
|
|
2001/02
|
|
1.44
|
|
|
|
|
|
|
|
|
|
|
2000/01
|
|
1.47
|
|
|
|
|
|
|
|
|
|
|
1999/2000
|
|
1.61
|
|
|
|
|
|
|
|
|
|
|
*
|
for the period to 19 May 2004
|
|
**
|
the average for each period is calculated
by using the average of the exchange rates on the last day of each month
during the period
|
Trading markets for ordinary shares
National Grid Transco’s ordinary shares have been listed on the London Stock Exchange since 11 December 1995. National Grid Transco’s
ADRs have had a full listing on the New York Stock Exchange since 7
October 1999.
Documents on display
National Grid Transco is subject to the filing
requirements of the US Securities Exchange Act of 1934. In accordance with these
requirements, National Grid Transco files reports and other information with
the US Securities and Exchange Commission (SEC). These materials, including this
document, may be inspected during normal business hours at National Grid Transco’s registered office at 1-3 Strand, London WC2N 5EH or at the SEC’s Public Reference
Room at 450 Fifth Street, NW, Washington, DC 20549. For further information about the Public Reference Room, please call the SEC on 1-800-SEC-0330. Some of National Grid Transco’s filings are also available on the SEC’s
website at
www.sec.gov.
Analysis of shareholdings
The following analysis of shareholdings is at 19 May 2004:
|
size of shareholding
|
|
number of holders
|
|
number of shares held
|
|
% of issued share capital
|
|
|
|
|
|
|
|
|
|
|
1-100
|
|
667,142
|
|
39,465,751
|
|
1.28
|
|
|
|
|
|
|
|
|
|
|
101-500
|
|
649,818
|
|
135,119,732
|
|
4.38
|
|
|
|
|
|
|
|
|
|
|
501-1,000
|
|
65,696
|
|
45,368,169
|
|
1.47
|
|
|
|
|
|
|
|
|
|
|
1,001-5,000
|
|
45,850
|
|
90,821,622
|
|
2.94
|
|
|
|
|
|
|
|
|
|
|
5,001-10,000
|
|
3,276
|
|
22,222,095
|
|
0.72
|
|
|
|
|
|
|
|
|
|
|
10,001-50,000
|
|
1,535
|
|
30,436,324
|
|
0.99
|
|
|
|
|
|
|
|
|
|
|
50,001-100,000
|
|
285
|
|
20,471,089
|
|
0.66
|
|
|
|
|
|
|
|
|
|
|
100,001-500,000
|
|
566
|
|
133,753,489
|
|
4.33
|
|
|
|
|
|
|
|
|
|
|
500,001-1,000,000
|
|
175
|
|
125,106,504
|
|
4.05
|
|
|
|
|
|
|
|
|
|
|
1,000,001 and above
|
|
298
|
|
2,445,112,781
|
|
79.18
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1,434,641
|
|
3,087,877,556
|
|
100.00
|
|
|
|
|
|
|
|
|
|
In addition to the number of ordinary shareholders shown, there are approximately 19,000 beneficial and 26,300 registered holders of ADSs. These ADSs represent approximately 2.92% of the issued ordinary share
capital.
Market prices
The following table sets out the highest and lowest market prices for National Grid Transco ordinary shares and ADSs for the periods indicated:
|
|
|
ordinary share (p)
|
|
ADS ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
high
|
|
low
|
|
high
|
|
low
|
|
|
|
|
|
|
|
|
|
|
|
|
2003/04
|
|
438.00
|
|
374.75
|
|
41.450
|
|
30.190
|
|
|
|
|
|
|
|
|
|
|
|
|
2002/03
|
|
511.50
|
|
365.75
|
|
37.400
|
|
26.690
|
|
|
|
|
|
|
|
|
|
|
|
|
2001/02
|
|
581.00
|
|
417.25
|
|
41.750
|
|
30.400
|
|
|
|
|
|
|
|
|
|
|
|
|
2000/01
|
|
646.00
|
|
479.50
|
|
47.875
|
|
37.000
|
|
|
|
|
|
|
|
|
|
|
|
|
1999/2000
|
|
597.00
|
|
388.50
|
|
48.125
|
|
31.875
|
|
|
|
|
|
|
|
|
|
|
|
|
2003/04
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
421.00
|
|
394.00
|
|
34.980
|
|
31.060
|
|
|
Q2
|
|
406.75
|
|
374.75
|
|
34.120
|
|
30.190
|
|
|
Q3
|
|
406.25
|
|
376.25
|
|
36.250
|
|
32.000
|
|
|
Q4
|
|
438.00
|
|
385.00
|
|
41.450
|
|
35.590
|
|
|
|
|
|
|
|
|
|
|
|
|
2002/03
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
511.50
|
|
459.00
|
|
37.400
|
|
32.870
|
|
|
Q2
|
|
472.25
|
|
402.25
|
|
36.500
|
|
31.400
|
|
|
Q3
|
|
480.00
|
|
418.00
|
|
37.140
|
|
32.800
|
|
|
Q4
|
|
448.00
|
|
365.75
|
|
35.920
|
|
29.690
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2004*
|
|
433.50
|
|
421.25
|
|
39.340
|
|
37.590
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2004
|
|
436.25
|
|
422.50
|
|
40.550
|
|
38.390
|
|
|
|
|
|
|
|
|
|
|
|
|
March 2004
|
|
438.00
|
|
418.00
|
|
41.450
|
|
38.000
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2004
|
|
431.00
|
|
397.00
|
|
40.600
|
|
36.830
|
|
|
|
|
|
|
|
|
|
|
|
|
January 2004
|
|
404.75
|
|
385.00
|
|
37.560
|
|
35.590
|
|
|
|
|
|
|
|
|
|
|
|
|
December 2003
|
|
400.25
|
|
379.25
|
|
36.250
|
|
33.750
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2003
|
|
406.25
|
|
377.25
|
|
34.810
|
|
32.100
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
for the period to 19 May 2004
|
Annual Report and Accounts 2003/04_
National
Grid Transco
134
