SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended 31 March 2014 | ||
OR | ||
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
¨ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report | ||
For the transition period from to |
Commission file number: 001-14958
NATIONAL GRID PLC
(Exact name of Registrant as specified in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
1-3 Strand, London WC2N 5EH, England
(Address of principal executive offices)
Alison Kay
011 44 20 7004 3000
Facsimile No. 011 44 20 7004 3004
Group General Counsel and Company Secretary
National Grid plc
1-3 Strand London WC2N 5EH, England
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class |
Name of each exchange on which registered |
|
Ordinary Shares of 11 17/43 pence each | The New York Stock Exchange* | |
American Depositary Shares, each representing five | The New York Stock Exchange | |
Ordinary Shares of 11 17/43 pence each | ||
6.625% Guaranteed Notes due 2018 | The New York Stock Exchange | |
6.30% Guaranteed Notes due 2016 | The New York Stock Exchange | |
Preferred Stock ($100 par value-cumulative): | ||
3.90% Series | The New York Stock Exchange | |
3.60% Series | The New York Stock Exchange |
* | Not for trading, but only in connection with the registration of American Depositary Shares representing Ordinary Shares pursuant to the requirements of the Securities and Exchange Commission. |
Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: None.
Securities for which there is a reporting obligation pursuant to Section15(d) of the Securities Exchange Act of 1934: None.
The number of outstanding shares of each of the issuers classes of capital or common stock as of 31 March 2014 was
Ordinary Shares of 11 17/43 pence each | 3,854,339,684 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes þ No ¨
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No þ
Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board þ Other ¨
If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ¨ Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
This constitutes the annual report on Form 20-F of National Grid plc (the Company) in accordance with the requirements of the US Securities and Exchange Commission (the SEC) for the year ended 31 March 2014 and is dated 5 June 2014. Details of events occurring subsequent to the approval of the annual report on 18 May 2014 are summarised in section Further Information which forms a part of this Form 20-F . The content of the Groups website (www.nationalgrid.com/uk) should not be considered to form part of this annual report on Form 20-F.
Form 20-F Cross Reference Table
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
1 |
Identity of directors, senior management and advisors |
Not applicable |
| |||||
2 |
Offer statistics and expected timetable |
Not applicable |
| |||||
3 |
Key Information |
|||||||
3A Selected financial data |
Additional InformationSummary consolidated financial information |
186-187 | ||||||
Strategic ReportFinancial review |
6-9 | |||||||
Financial StatementsUnaudited commentary on consolidated cash flow statementNet debt |
91 | |||||||
Additional InformationOther unaudited financial informationReconciliations of adjusted profit measures |
182 | |||||||
Additional InformationOther disclosuresExchange rates |
178 | |||||||
Exchange Rates |
|
Further
Information |
|
|||||
3B Capitalization and indebtedness |
Not applicable |
| ||||||
3C Reasons for the offer and use of proceeds |
Not applicable |
| ||||||
3D Risk Factors |
Additional InformationBusiness information in detailRisk factors |
167-169 | ||||||
4 |
Information on the company |
|||||||
4A History and development of the company |
Want more information or help? |
|
192-
Back cover |
|
||||
Additional InformationOther disclosuresKey milestones |
179 | |||||||
Strategic ReportChief Executives review |
4-5 | |||||||
Strategic ReportOur vision and strategy |
14-15 | |||||||
Strategic ReportOperating environment |
12-13 | |||||||
Additional InformationOther disclosuresArticles of Association |
176-177 | |||||||
Financial StatementsConsolidated statement of financial positionUnaudited commentary on consolidated statement of financial positionProperty, plant and equipment |
89 | |||||||
Financial StatementsConsolidated cash flow statementUnaudited commentary on consolidated cash flow statementNet capital expenditure |
91 | |||||||
Additional InformationOther unaudited financial informationCommentary on consolidated financial statements for the year ended 31 March 2013 |
183-185 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysis(c) Capital expenditure, depreciation and amortisation |
95 | |||||||
Strategic ReportHow our strategy creates value |
21 | |||||||
4B Business overview |
Additional InformationBusiness information in detailWhere we operate |
166 | ||||||
Strategic ReportOperating environment |
12-13 | |||||||
Strategic ReportOur vision and strategy; What we doElectricity; What we doGas; How we make money from our regulated assets; and How our strategy creates value |
14-21 |
i
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
Strategic ReportOur vision and strategyOur business model |
14 | |||||||
Strategic ReportPrincipal operations |
29-38 | |||||||
Strategic ReportNon-financial KPIs |
10-11 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysis and unaudited commentary on the results of our principal operations by segment |
93-96 | |||||||
Additional InformationBusiness information in detailRisk factorsInfrastructure and IT systemsWe may suffer a major network failure or interruption, or may not be able to carry out critical non network operations due to the failure of technology supporting our business-critical processes; Changes in law or regulation or decisions by governmental bodies or regulators could materially adversely affect us; and Customers and counterpartiesCustomers and counterparties may not perform their obligations |
|
167
168
169 |
|
|||||
Additional InformationBusiness information in detailUK regulation; US regulation; and Summary of US price controls and rate plans |
160-165 | |||||||
Strategic ReportHow we make money from our regulated assets |
20 | |||||||
4C Organizational structure |
Financial StatementsNotes to the consolidated financial statements32. Subsidiary undertakings, joint ventures and associatesPrincipal subsidiary undertakings |
146 | ||||||
4D Property, plants and equipment |
Additional InformationBusiness information in detailWhere we operate |
166 | ||||||
Strategic ReportWhat we doElectricity; What we doGas; and How we make money from our regulated assets |
16-20 | |||||||
Strategic ReportPrincipal operations |
29-38 | |||||||
Strategic ReportOur vision and strategyEmbed sustainability and Drive growth |
15 | |||||||
Strategic ReportOperating environmentChanging energy mix; Energy policy; Regulation; and Innovation and technology |
12-13 | |||||||
Financial StatementsConsolidated statement of financial positionUnaudited commentary on consolidated statement of financial positionProperty, plant and equipment |
89 | |||||||
Additional InformationOther disclosuresProperty, plant and equipment |
179 | |||||||
Financial StatementsNotes to the consolidated financial statements11. Property, plant and equipment |
111-112 | |||||||
Financial StatementsNotes to the consolidated financial statements19. Borrowings |
119-121 | |||||||
4A |
Unresolved staff comments |
Additional InformationOther disclosuresUnresolved SEC staff comments |
181 | |||||
ii
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
5 |
Operating and financial review and prospects |
|||||||
5A Operating results |
Strategic ReportFinancial review |
6-9 | ||||||
Strategic ReportOperating environment |
12-13 | |||||||
Additional InformationBusiness information in detailUK regulation; US regulation; and Summary of US price controls and rate plans |
160-165 | |||||||
Strategic ReportPrincipal operations |
29-38 | |||||||
Financial StatementsConsolidated income statementUnaudited commentary on the consolidated income statement |
85 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysisUnaudited commentary on the results of our principal operations by segment |
96 | |||||||
Additional InformationOther unaudited financial information |
182-185 | |||||||
Financial StatementsNotes to the consolidated financial statements30. Financial risk management(d) Currency risk |
140-141 | |||||||
5B Liquidity and capital resources |
Strategic ReportFinancial review |
6-9 | ||||||
Corporate GovernanceGoing concern |
52 | |||||||
Financial StatementsConsolidated cash flow statement |
90-91 | |||||||
Additional InformationBusiness information in detailRisk factorsFinancing and liquidityAn inability to access capital markets at commercially acceptable interest rates could affect how we maintain and grow our business |
169 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysisUnaudited commentary on the results of our principal operations by segment |
96 | |||||||
Financial StatementsNotes to the consolidated financial statements26. Net debt |
130-131 | |||||||
Financial StatementsNotes to the consolidated financial statements19. Borrowings |
119-121 | |||||||
Financial StatementsNotes to the consolidated financial statements15. Derivative financial instruments |
114-116 | |||||||
Additional InformationBusiness information in detailFederal Energy Regulatory CommissionShort-term borrowing extension |
164 | |||||||
Additional InformationDirectors Report disclosuresMaterial interests in shares |
174 | |||||||
Material Interests in Shares |
|
Further
Information |
|
|||||
5C Research and development, patents and licenses, etc. |
Additional InformationDirectors Report disclosuresResearch and development |
174 | ||||||
5D Trend information |
Strategic ReportFinancial review |
6-9 | ||||||
Strategic ReportPrincipal operations |
29-38 | |||||||
Strategic ReportOperating environment |
12-13 | |||||||
5E Off-balance sheet arrangements |
Financial StatementsUnaudited commentary on consolidated statement of financial conditionOff balance sheet items |
89 |
iii
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
5F Tabular disclosure of contractual obligations |
Financial StatementsNotes to the consolidated financial statements27. Commitments and contingencies |
132 | ||||||
5G Safe Harbor |
Important notice |
1 | ||||||
Want more information or help?Cautionary statement |
Back cover | |||||||
6 |
Directors, senior management and employees |
|||||||
6A Directors and senior management |
Corporate GovernanceOur Board |
43 | ||||||
Additional InformationDirectors Report disclosuresBoard biographies |
171-173 | |||||||
6B Compensation |
Corporate GovernanceRemuneration Report |
58-73 | ||||||
Financial StatementsNotes to the consolidated financial statements3. Operating costs(c) Key management compensation |
98 | |||||||
Financial StatementsNotes to the consolidated financial statements22. Pensions and other post-retirement benefits |
122-125 | |||||||
Financial StatementsNotes to the consolidated financial statements29. Actuarial information on pensions and other post-retirement benefits |
133-136 | |||||||
Share Ownership |
|
Further
Information |
|
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6C Board practices |
Corporate GovernanceOur Board |
43-48 | ||||||
Additional InformationDirectors Report disclosures |
171-175 | |||||||
Corporate GovernanceAudit Committee; Finance Committee; Safety, Environment and Health Committee; Nominations Committee; Executive Committee; and Management committees |
49-57 | |||||||
Corporate GovernanceRemuneration ReportAnnual statement from the Remuneration Committee chairman |
58-59 | |||||||
Corporate GovernanceRemuneration ReportFuture policy tableExecutive Directors |
60-63 | |||||||
Corporate GovernanceRemuneration ReportFuture policy tableNon-executive Directors (NEDs) |
63 | |||||||
Corporate GovernanceRemuneration ReportService contracts and policy on payment for loss of office and Dates of Directors service contracts/letters of appointment |
65 | |||||||
6D Employees |
Financial StatementsNotes to the consolidated financial statements3. Operating costs(b) Number of employees |
97 | ||||||
Additional InformationOther disclosuresEmployees |
178 | |||||||
6E Share ownership |
Corporate GovernanceRemuneration ReportShareholding requirement and Differences in remuneration policy for all employees |
64 | ||||||
Corporate GovernanceRemuneration ReportStatement of Directors shareholdings and share interests (audited information) |
70-71 |
iv
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
Corporate GovernanceRemuneration ReportAnnual report on remuneration |
67-73 | |||||||
Additional InformationOther disclosuresThe All-employee Share Plans |
181 | |||||||
Share ownership |
|
Further
Information |
|
|||||
7 |
Major shareholders and related party transactions |
|||||||
7A Major shareholders |
Additional InformationDirectors Report disclosuresMaterial interests in shares |
174 | ||||||
Material interests in shares |
|
Further
Information |
|
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7B Related party transactions |
Financial StatementsNotes to the consolidated financial statements28. Related party transactions |
133 | ||||||
7C Interests of experts and counsel |
Not applicable |
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8 |
Financial information |
|||||||
8A Consolidated statements and other financial information |
Financial StatementsReport of Independent Registered Public Accounting FirmAudit opinion for Form 20-F |
81 | ||||||
Financial StatementsBasis of preparation |
82-83 | |||||||
Financial StatementsRecent accounting developments |
83 | |||||||
Financial StatementsConsolidated income statement; Consolidated statement of comprehensive income; Consolidated statement of changes in equity; Consolidated statement of financial position; and Consolidated cash flow statement |
84-91 | |||||||
Financial StatementsNotes to the consolidated financial statements analysis of items in the primary statements |
92-131 | |||||||
Financial StatementsNotes to the consolidated financial statements supplementary information |
132-154 | |||||||
Strategic ReportChairmans statement |
2-3 | |||||||
8B Significant changes |
Subsequent Events |
|
Further
Information |
|
||||
9 |
The offer and listing |
|||||||
9A Offer and listing details |
Additional InformationOther disclosuresThe offer and listingPrice history |
181 | ||||||
Price History |
|
Further
Information |
|
|||||
Additional InformationDirectors Report disclosuresShare price |
175 | |||||||
Exchange Rates |
|
Further
Information |
|
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9B Plan of distribution |
Not applicable |
|||||||
9C Markets |
Additional InformationDirectors Report disclosuresShare price |
175 | ||||||
9D Selling shareholders |
Not applicable |
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9E Dilution |
Not applicable |
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9F Expenses of the issue |
Not applicable |
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10 |
Additional information |
|||||||
10A Share capital |
Not applicable |
| ||||||
10B Memorandum and articles of association |
Additional InformationOther disclosuresArticles of Association and Corporate governance practices: differences from New York Stock Exchange (NYSE) listing standards |
176-177 |
v
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
Additional InformationDirectors Report disclosuresShare capital |
174-175 | |||||||
10C Material contracts |
Additional InformationOther disclosuresMaterial contracts |
179 | ||||||
10D Exchange controls |
Additional InformationOther disclosuresExchange controls |
178 | ||||||
10E Taxation |
Additional InformationOther disclosuresTaxation |
179-181 | ||||||
10F Dividends and paying agents |
Not applicable |
| ||||||
10G Statement by experts |
Not applicable |
| ||||||
10H Documents on display |
Additional InformationOther disclosuresDocuments on display |
178 | ||||||
10I Subsidiary information |
Not applicable |
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11 |
Quantitative and qualitative disclosures about market risk |
|||||||
11A Quantitative information about market risk |
Financial StatementsNotes to the consolidated financial statements15. Derivative financial instruments |
114-116 | ||||||
Financial StatementsNotes to the consolidated financial statements30. Financial risk management(a) Credit risk; (b) Liquidity risk; (c) Interest rate risk; (d) Currency risk; (e) Commodity risk; (f) Capital risk management; and (g) Fair value analysis |
137-144 | |||||||
Strategic ReportFinancial review |
6-9 | |||||||
11B Qualitative information about market risk |
Financial StatementsNotes to the consolidated financial statements15. Derivative financial instruments |
114-116 | ||||||
Financial StatementsNotes to the consolidated financial statements30. Financial risk management(a) Credit risk; (b) Liquidity risk; (c) Interest rate risk; (d) Currency risk; (e) Commodity risk; (f) Capital risk management; and (g) Fair value analysis |
137-144 | |||||||
Strategic ReportFinancial review |
6-9 | |||||||
Additional InformationRisk factors |
167-169 | |||||||
12 |
Description of securities other than equity securities |
|||||||
12A Debt securities |
Not applicable |
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12B Warrants and rights |
Not applicable |
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12C Other securities |
Not applicable |
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12D American depositary shares |
Additional InformationOther disclosuresDescription of securities other than equity securities: depositary fees and charges |
178 | ||||||
Additional InformationOther disclosuresDepositary payments to the Company |
177 | |||||||
Additional InformationDefinitions and glossary of terms |
188-191 | |||||||
13 |
Defaults, dividend arrearages and delinquencies |
Not applicable |
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14 |
Material modifications to the rights of security holders and use of proceeds |
Not applicable |
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15 |
Controls and procedures |
Additional InformationInternal control Disclosure controls and Internal control over financial reporting |
170 |
vi
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
16 |
16A Audit committee financial expert |
Corporate GovernanceAudit CommitteeExperience |
49 | |||||
16B Code of ethics |
Additional InformationOther disclosuresCode of Ethics |
177 | ||||||
16C Principal accountant fees and services |
Corporate GovernanceAudit CommitteeExternal audit |
51 | ||||||
Financial StatementsNotes to the consolidated financial statements3. Operating costs(e) Auditors remuneration |
98 | |||||||
16D Exemptions from the listing standards for audit committees |
Not applicable |
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16E Purchases of equity securities by the issuer and affiliated purchasers |
Not applicable |
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16F Change in registrants certifying accountant |
Not applicable |
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16G Corporate governance |
Additional InformationOther disclosuresCorporate governance practices: differences from New York Stock Exchange (NYSE) listing standards |
177 | ||||||
16H Mine safety disclosure |
Not applicable |
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17 |
Financial statements |
Not applicable |
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18 |
Financial statements |
Financial StatementsCompany accounting policies |
155 | |||||
Financial StatementsBasis of preparation |
82-83 | |||||||
Financial StatementsRecent accounting developments |
83 | |||||||
Financial StatementsConsolidated income statement; Consolidated statement of comprehensive income; Consolidated statement of changes in equity; Consolidated statement of financial position; and Consolidated cash flow statement |
84-91 | |||||||
Financial StatementsNotes to the consolidated financial statementsanalysis of items in the primary statements |
92-131 | |||||||
Financial StatementsNotes to the consolidated financial statementssupplementary information |
132-154 | |||||||
Financial StatementsReport of Independent Registered Public Accounting FirmAudit opinion for Form 20-F |
81 | |||||||
19 |
Exhibits |
Filed with the SEC |
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vii
Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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01
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Strategic Report pages 02 to 41
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02 |
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04 | Chief Executives review | |||
06 | Financial review | |||
10 | Non-financial KPIs | |||
12 | Operating environment | |||
14 | Our vision and strategy | |||
16 | What we do | |||
20 | How we make money from our regulated assets | |||
21 | How our strategy creates value | |||
22 | Internal control and risk management | |||
26 | How executive remuneration aligns to Company strategy | |||
29 | Principal operations | |||
40 |
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Corporate Governance pages 42 to 73
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The Corporate Governance Report, introduced by the Chairman, contains details about the activities of the Board and its committees during the year, including reports from the Audit, Nominations, Remuneration, Finance, and Safety, Environment and Health Committees, as well as details of our shareholder engagement activities.
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42 | Corporate Governance contents | |||
57 | Directors Report statutory and other disclosures | |||
58
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Financial Statements pages 74 to 159
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Including the independent auditors reports, consolidated financial statements prepared in accordance with IFRS and notes to the consolidated financial statements, as well as the Company financial statements prepared in accordance with UK GAAP.
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74 | Contents of financial statements | |||
75 | Introduction to the financial statements | |||
76 | Statement of Directors responsibilities | |||
77 | Independent auditors report | |||
81
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Report of Independent Registered Public Accounting Firm | |||
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Additional Information pages 160 to the inside back cover
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Additional disclosures and information, definitions and glossary of terms, summary consolidated financial information and other useful information for shareholders, including contact details for more information or help.
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160 | Contents of Additional Information | |||
188
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Definitions and glossary of terms | |||
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Glossary |
||||
We use a number of technical terms and abbreviations within this document. For brevity, we do not define terms or provide explanations every time they are used; please refer to the glossary on pages 188 to 191 for this information.
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02 National Grid Annual Report and Accounts 2013/14
|
statement |
Our vision statement Connecting you to your energy today, trusted to help you meet your energy needs tomorrow emphasises the importance of trust, which we earn not just by meeting our commitments, but by making sure that we do so in the right way. |
It has been an important and challenging year for National Grid and the energy sector in general on both sides of the Atlantic.
Although we did not experience any major storm-related outages in our service areas during 2013/14, severe winter weather conditions the polar vortex in the US and serious flooding in the UK continued to test the resilience of our networks. I am pleased to report these have performed well as a result of prudent investments in past years, as well as the commitment of our people.
Energy policies in both the UK and US strive to find an acceptable balance between affordability to the ultimate consumers, security of supply and sustainability considerations. Particularly since last September, the focus of UK media and political attention has been moving between each of these three factors, with no enduring consensus of what constitutes the optimum position.
In the UK, the eight year RIIO settlement we accepted in February 2013 incentivises us to be as efficient as possible while ensuring that savings we achieve can be shared with consumers. Through these incentives we can maximise our efforts to help hard-pressed consumers and deliver good returns to our shareholders.
Transparency In our continuing efforts to be fair, balanced and understandable in our reporting we are including additional information this year and explaining some technical matters in greater detail, so that we are as transparent as we can be.
In particular, I draw your attention to one aspect of our results. There have always been differences between IFRS reported results and underlying economic performance; however, one of the benefits of the RIIO price control regime is that it provides greater transparency of regulatory adjustments to |
revenue in our principal UK businesses. The commentary on timing differences and regulated revenue adjustments contained in the Financial review on page 08 aims to help understanding of this matter.
The Board has recommended an increase in the final dividend to 27.54p per ordinary share ($2.3107 per American Depositary Share). If approved, this will bring the full-year dividend to 42.03p per ordinary share ($3.4801 per American Depositary Share), an increase of 2.9% over the 40.85p per ordinary share in respect of the financial year ending 31 March 2013.
Effective governance We have developed a new remuneration policy to align more closely with RIIO, the continued evolution of our US business and shareholder value creation. The policy will be subject to shareholder approval at the AGM in July a requirement of recent legislation. You can read our full Remuneration Report, introduced by Jonathan Dawson, our new Remuneration Committee Chairman, on page 58.
As we describe on page 07, the high level of take-up of the scrip dividend in the last couple of years led to concerns about the potential dilutive effect of this option. This meant that we decided not to offer the scrip element for the 2013/14 interim dividend paid in January this year, as our forecast capital investment programme was already fully funded. I do appreciate, from the letters sent to me, that this caused some dissatisfaction. We have now identified a way of offering the scrip option for both the full-year and interim dividend, which balances shareholders appetite for the scrip dividend option with our cash requirements. At the AGM we are seeking approval for the allotment and buy-back authorities we need to do this. The scrip dividend option has been offered for the 2013/14 final dividend subject to shareholder approval of the relevant resolutions at the AGM. |
The Board is proposing
27.54p (2012/13: 26.36p) |
Strategic Report
|
Corporate Governance
|
Financial Statements
|
Additional Information
|
03
|
Nick Winser, Executive Director UK, will step down from the Board in July 2014 at the AGM. He will continue with his roles as President of the European Network of Transmission System Operators for Electricity (ENTSO-E) and as Chairman of National Grid Electricity Transmission (NGET) and National Grid Gas (NGG) through to July 2015 before leaving the Company. After July 2015, the role of President of ENTSO-E will no longer be undertaken within the Company, and arrangements for a smooth handover of Nicks other responsibilities will be announced in due course.
This year we have welcomed Therese Esperdy and John Pettigrew to our Board and we will be saying goodbye to Maria Richter following the AGM.
During Marias 10 years with the Company she has made a significant contribution to the Board and Finance Committee in particular and I would like to thank her for her commitment and wish her all the best in her future endeavours.
Therese, who will be taking over as chairman of the Finance Committee from Maria, brings a wealth of corporate finance and debt market experience to our Board. We have also appointed a new Executive Director, John Pettigrew. John joined National Grid as a graduate entrant in 1991 and has been a member of the Executive Committee for nearly two years.
The appointments of Therese and John have been part of a significant transition of the Board over the last three years through which we have secured a broad range of skills, experience, perspectives and challenge. Together with strong teamwork, I believe these qualities are contributing towards an effective Board, which will continue to set the right tone from the top, helping to meet the challenges ahead. |
contributed £1.4 billion in taxes in the UK alone. Additionally, we estimate we support more than 28,500 jobs in the first tier of our supply chain companies that are our suppliers across the globe.
We aim to develop and operate our business with an inclusive and diverse culture. You can read more about our approach to diversity on page 41, as well as our Board diversity policy on page 56.
Looking ahead Over the next 12 months the UK and US will see a dynamic political environment. In the UK, the Scottish independence referendum later this year and the general election in 2015 are likely to increase the focus on issues such as the affordability and security of energy supply, as will the proposed review of the energy industry by the Competition and Markets Authority.
In the US, the mid-term US Congressional elections are on the horizon, together with the gubernatorial elections (election of the state governor) in New York, Rhode Island and Massachusetts. We expect debate to continue on essential infrastructure, resilience and sustainability, including our Connect21 dialogue with stakeholders. You can read more about Connect21 on page 35.
Our people have a crucial role to play in meeting the opportunities ahead. I would like to thank our employees for their hard work and dedication over the past year. Rising to the challenges brought by severe weather and changes within the industry, they have continued to make National Grid a company we can be proud of. |
Governance pages 42 57
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Being a responsible business Our vision statement Connecting you to your energy today, trusted to help you meet your energy needs tomorrow emphasises the importance of trust, which we earn not just by meeting our commitments, but by making sure that we do so in the right way. That is why how we work is as important as what we do, and why doing the right thing is at the core of everything we do.
During 2013/14 we spent time reinforcing the standards we expect of our employees in terms of ethical behaviour. As part of this, we have sent our employees a refreshed copy of Doing the Right Thing, which is our guide to ethical business conduct.
We contribute to the communities in which we operate directly and indirectly in many ways. We maintain and operate the critical infrastructure needed to keep the lights on and the heating working across the UK and northeastern US; we employ more than 23,000 people; and in 2013/14 |
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We need to be even more flexible and agile as customer needs change, so we can respond faster and more efficiently. | |||||
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It has been a year of solid performance for National Grid against a backdrop of intense public focus on energy prices, as well as new regulatory frameworks in both the UK and US.
Safety is, as always, at the heart of the way we operate. In the UK we achieved an employee lost time injury frequency rate (IFR) of below 0.1. This is a world-class performance and I am incredibly proud of our teams who have worked so hard to get us to this significant milestone. You can read more about this achievement on page 10. The challenge now is to replicate this performance in the US, where we have more work to do. We will never let up on our relentless focus on safety.
Despite the freezing and protracted winter in the US and the wettest winter on record in the UK, we achieved one of our best years in terms of reliability, keeping the lights on and the gas flowing. The investment we made in bolstering our flood defences in the UK protected potentially vulnerable assets such as substations, even though in some cases the surrounding areas suffered considerable flooding.
In the US, our reliability performance was excellent as a result of continued targeted resiliency investment and management of our networks.
The introduction of RIIO in the UK has been an appropriate development for our industry. If we can outperform against the incentives it offers and find ways to reduce our costs, the benefits are shared with our customers. Getting ready for RIIO has been a significant challenge for the UK business, but I am delighted to say that we have made a good start.
There have also been significant Government and regulatory policy changes affecting our business in the UK, including the introduction of Electricity Market Reform (EMR) and the evolution of the system operator role in the long-term planning of the network. |
We have adapted our ways of working so we can meet the needs of our customers and stakeholders and deliver value under RIIO. For example, we used innovative techniques to protect a section of the pipeline that carries gas from the liquefied natural gas (LNG) importation terminal in west Wales, prior to the construction of a new road. This meant we were able to meet the timescales of the local authority building the road without disrupting gas supply to consumers.
In the US, it has been the first year of working under the new upstate New York and Rhode Island regulatory contracts and I am pleased that we have performed well in both cases. You can read more about developments in our US rate filings and regulatory environment on page 164.
We have introduced Connect21, our thinking on advancing the USAs natural gas and electricity infrastructure beyond its 20th century limitations (see page 35). Another priority in the US was the transition of the operation and maintenance of the Long Island Power Authoritys (LIPA) electric transmission and distribution system on Long Island to Public Service Electric and Gas Company Long Island (PSEG-LI). We successfully handed over the contract on 31 December 2013 and have entered into a transition services agreement with LIPA/PSEG-LI.
US enterprise resource planning system stabilisation continued, remedying the errors of poor implementation from the prior year. Over the course of the year, the US business made significant progress in the activities required to upgrade the system, with implementation expected in mid-2014. The focus is now on reducing the ongoing costs associated with the complex manual processes that are required to compensate for identified weaknesses in internal controls over financial reporting in the US. While these control weaknesses have not reduced the quality of financial statements |
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produced, they have necessitated significant additional cost.
Overall, the business remains on track to successfully conclude the programme during 2014, with expected costs unchanged from the guidance provided last year.
We have focused on improving our end-to-end operating processes throughout the year. This has involved using hard facts and data to identify and prioritise areas for improvement, as well as harnessing ideas to help find more efficient ways of working to meet our stakeholders needs.
An area we know we can improve is customer service. We saw some good results such as reduced complaints in the UK and our scores for UK Gas Transmission, as well as increases in three out of our four US customer satisfaction scores. However, we know that we are not fully meeting our customers expectations for our gas connections process in the UK and US. We will stay focused on getting this right.
In the US, we supply gas and electricity to customers who have chosen us as their supplier. Our regulatory agreements allow us to recover the costs we incur when we buy gas and electricity. During 2013/14 we saw an increase in complaints about higher energy bills a consequence of the colder weather affecting commodity costs during the winter.
Energy prices have been the subject of a continued high-profile debate in the UK. At National Grid, we believe transparency is crucial, explaining to customers the breakdown of the bill they receive. In the UK, we are investing significantly in our UK networks, but the impact of network costs on bills will remain flat in real terms over the RIIO period (2013/14 2020/21), based on the forecast revenues derived from Ofgems Final Proposals for RIIO.
In terms of our UK network upgrade plans, we are pleased with progress on the London Power Tunnels project and have now started site works on the HVDC link connecting Scotland and England. This joint venture with SP Transmission will support the export of low carbon Scottish generation.
In the US, our Brooklyn/Queens Interconnect project will connect our existing natural gas distribution systems in Brooklyn and Queens, which will ensure greater reliability and safety, provide additional capacity and meet future energy needs for customers. This is the first new gas pipeline to be installed in the area in 50 years.
We are determined to embed sustainability by seeking to combine innovation, engagement and efficiency an example of which was a trial in the UK, working with manufacturers, construction partners and our procurement teams to re-manufacture aluminium overhead line conductors. |
People I was really pleased to see that the results of our 2014 employee opinion survey, completed by 78% of our employees, included an engagement score of 71% an increase of eight percentage points over the previous survey and our highest engagement score since we started conducting Group-wide employee opinion surveys.
I was also pleased to attend a series of celebrations to mark 40 years service for more than 300 of our employees in both the UK and US. I am delighted that so many of our people have forged productive and committed careers at National Grid that have spanned such a long time. Yet at the same time, it serves as a reminder about the scale of the challenge we have in our industry to make sure we have enough people with the skills and experience we need in the future.
It is a significant challenge on both sides of the Atlantic. In the UK, for example, around 89,000 people are needed annually to meet demand in the UKs engineering sector over the next decade. Yet only around 51,000 are joining the profession each year. In the US, by 2018, STEM occupations will account for about 1.1 million new jobs and 1.3 million replacement positions due to STEM workers leaving the workforce.
To help address this shortage, National Grid is running, or is involved with, a number of programmes and initiatives in the UK and US aimed at encouraging young people to study STEM subjects you can read more about these initiatives on page 40.
Our priorities for next year Safety build on our strong UK performance and focus our efforts on delivering consistent world-class safety performance across the organisation; Customer-focused execution in the UK, continue our strong start to RIIO; underpin energy security through our interconnector and infrastructure investment strategy. In the US, complete stabilisation of our enterprise resource system; perform strongly against our current regulatory rate plans while shaping the future; and Stakeholders continue to engage with our stakeholders in the US, UK and EU to understand their changing energy needs and to shape energy policy.
Steve Holliday |
Principal operations pages 29 39
People pages 40 41
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We have delivered another year of solid financial performance with a good start under RIIO in the UK and consolidation of underlying improvements in the US.
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Our financial KPIs Adjusted earnings per share Adjusted operating profit Our adjusted operating profit has increased by £25 million (1%) to £3,664 million. Across our three UK businesses operating under the new RIIO framework, adjusted operating profit was up £34 million. Allowed revenues increased in Electricity Transmission and Gas Distribution and fell in Gas Transmission. The resultant increase in revenue was offset by higher controllable costs, higher depreciation as a result of continued investment and adverse movements in timing year on year.
Our US Regulated business was £129 million lower, reflecting a weaker dollar, the end of Niagara Mohawk deferral recoveries at March 2013, higher controllable costs due to inflation, and increased insurance costs following major storms last year. These were partially offset by the non-recurrence of the major storm costs incurred last year.
Other activities adjusted operating profit was £120 million higher, driven by higher profits in the French interconnector, non-recurrence of Superstorm Sandy costs in our insurance captive, and improved performance in our Metering business. These were partially offset by increased spend on the stabilisation of new US information systems.
Adjusted earnings Our adjusted net interest charge was slightly lower than 2012/13 at £1,108 million, reflecting the weaker dollar.
Our adjusted tax charge was £38 million lower at £581 million. This was mainly due to a 1% decrease in the UK statutory corporation tax rate in the year, a change in the UK/US profit mix and changes in tax provisions in respect of prior years. As a result of this, our effective tax rate for 2013/14 was 22.5% (2012/13: 24.4%).
The earnings performance described above has translated into adjusted EPS growth in 2013/14 of 2.6p (5%) (2012/13: 5.4p, 12%).
Adjusted EPS 1 pence
1. All comparatives restated for IAS 19 (revised). See note 1 on page 92.
In accordance with IAS 33, all EPS and adjusted EPS amounts for comparative periods have been restated as a result of shares issued via scrip dividends and the bonus element of the 2010 rights issue. |
Our revised financial KPIs page 09
Exchange rates page 85
Use of adjusted profit measures page 182
Reconciliations of adjusted profit measures page 182
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We have changed the way we present our financial information in the Strategic Report to remove duplication. As a result, the analysis here focuses on our KPIs and other performance measures we use to monitor our business performance. Analysis of our financial performance and position at 31 March 2014, including the performance of our principal operations, has been relocated to the financial statements, however this analysis still forms part of our Strategic Report financial review. See page 75 for further information. See pages 183 to 185 for commentary on our financial performance and position for the year ended 31 March 2013 compared with 2012.
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US regulated return on equity The US RoE has decreased 20bps to 9.0%, mainly driven by lower allowed rates in our KEDNY and Long Island Generation businesses following the introduction of new rate plans during the year.
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Interest cover The principal measure we use to monitor financial discipline is interest cover, which is a measure of the cash flows we generate compared with the net interest cost of servicing our borrowings. The table below shows our interest cover for the last three years.
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Business analysis 2013/14 %
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US return on equity %
Return on capital employed RoCE provides a performance comparison between our regulated UK and US businesses and is one of the measures that we use to make strategic and investment decisions about our portfolio of businesses. The table below shows the RoCE for our businesses over the last five years:
Return on capital employed %
The UK RoCE has decreased from 8.6% to 8.0% in 2013/14, reflecting the new RIIO regulatory allowances, including lower cost of debt allowance, higher gearing assumption in the gas businesses, and the inclusion of our share of exceptional costs. The decrease in the US RoCE from 7.1% to 6.4% is primarily due to the end of Niagara Mohawk deferral recoveries and controllable cost increases. Excluding the impact of major storm costs, the US RoCE would have been 7.7% in 2012/13.
Net debt We expect our net debt to continue to grow for the next few years as we fund our capital investment programmes and enhance our networks. We continue to borrow at attractive rates when needed and believe that the level of net debt remains appropriate for our business. Our five year net debt trend is shown on page 91. |
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Interest cover | 4.1 | 3.9 | 3.9 | |||||||||||||||||||
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The increase in interest cover in 2013/14 reflects flat finance costs year on year. Our target long-term range for interest cover is in excess of 3 times. Further details on our capital management and credit ratings can be found in note 30 (f) and on the debt investors section of our website.
Timing and regulated revenue adjustments As described on page 20, our allowed revenues are set in accordance with our regulatory price controls or rate plans. We calculate the tariffs we charge our customers based on the estimated volume of energy we expect will be delivered during the coming period. The actual volumes delivered will differ from this estimate. Therefore, our total actual revenue will be different from our total allowed revenue. These differences are commonly referred to as timing differences.
If we collect more than the allowed level of revenue, the balance must be returned to customers in subsequent periods, and if we collect less than the allowed level of revenue we may recover the balance from customers in subsequent periods. In the US, a substantial portion of our costs are pass-through costs (including commodity and energy efficiency costs) and are fully recoverable from our customers. Timing differences between costs of this type being incurred and their recovery through revenue are also included in timing.
The amounts calculated as timing differences are estimates and subject to change until the variables that determine allowed revenue are final.
Our operating profit for the year includes a total estimated in-year under-collection of £42 million (2012/13: £16 million over-collection). Our closing balance at 31 March 2014 was £60 million over-recovered.
In the UK, there was a cumulative under-recovery of £57 million at 31 March 2014 (2013: under-recovery of £5 million). All other things being equal, the majority of that balance will normally be recoverable from customers starting in the year ending 31 March 2016. |
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In the US, cumulative timing over-recoveries at 31 March 2014 were £117 million (2013: £110 million). The majority of that balance will be returned to customers next year.
In addition to the timing adjustments described above, following the start of the RIIO price controls in the UK, outperformance against allowances as a result of the totex incentive mechanism, together with changes in output-related allowances included in the original price control, will almost always be adjusted in future revenue recoveries, typically starting in two years time.
Our current IFRS revenues and earnings include the amounts that will need to be repaid but exclude amounts that will be recovered in future periods. Such adjustments will form an important part of the continuing difference between reported IFRS results and underlying economic performance based on our regulatory obligations.
For our UK regulated businesses as a whole, regulated revenue adjustments totalled £106 million in the year. This is based on our estimates of: work carried out in line with allowances; in expectation of future allowances; or work avoided altogether either as a result of us finding innovative solutions or of the need being permanently removed. |
In the US, accumulated regulatory entitlements to future revenue net of over- or under-recoveries amounted to £1,027 million at 31 March 2014 (2013: £1,311 million). These entitlements cover a range of different areas, with the most significant being environmental remediation and pension assets, as well as deferred storm costs.
All regulatory entitlements are recoverable (or repayable) over different periods, which are agreed with the regulators to match the expected payment profile for the liabilities. As at 31 March 2014, these extend until 2059.
Major storms Despite the very cold winter across much of the US, there were no major storms in 2013/14. In 2012/13, two major storms in the US, Superstorm Sandy and Storm Nemo, as well as a number of smaller storms, had a material effect on the results of National Grid, reducing operating profit by £136 million.
The table below shows adjusted operating profit and operating profit for the past three years, excluding the impact of timing differences and major storms.
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Our vision and strategy pages 14 15
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Non-financial KPIs are often leading indicators of future financial performance. Improvements in these measures build our competitive advantage. |
Employee lost time injury frequency rate (IFR) per 100,000 hours worked |
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Definition Number of employee lost time injuries per 100,000 hours worked in a 12 month period.
Goal Zero
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Our ambition is to achieve a world-class safety performance by 2015, featuring an IFR of below 0.1, with a target for 2013/14 of 0.15. We intend to achieve this through a relentless leadership focus, robust safety management systems and tactical actions focused on our main risks, which may vary between regions and business areas.
Our IFR for 2013/14 was 0.14, better than our target for the year. This is compared with 0.17 in 2012/13, illustrating positive progress towards our world-class target. Our IFR for the UK was 0.06 and for the US it was 0.19. |
Strategic element Deliver operational excellence
UK Principal operations pages 29 33
US Principal operations pages 35 37
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Network reliability
Definition Various definitions appropriate to the relevant business area. |
We aim to deliver reliability by: planning our capital investments to meet challenging demand and supply patterns; designing and building robust networks; risk-based maintenance and replacement programmes; and detailed and tested incident response plans. |
Strategic element Deliver operational excellence
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Employee engagement index % |
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Definition Employee engagement index calculated using responses to our employee survey.
Target To increase
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We measure employee engagement through our employee opinion survey. The results of our 2014 survey, which was completed by 78% of our employees, have helped us identify specific areas where we are performing well and those areas we need to improve.
Our engagement index has risen by eight points to 71%, our highest engagement score since we started conducting Group-wide employee opinion surveys.
Managers receive a scorecard that aims to create greater leadership accountability and we produce survey reports and action plans at Company, regional, business unit, function and team levels. |
Strategic element Engage our people
People pages 40 41
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Greenhouse gas emissions % reduction against 1990 baseline
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Definition Percentage reduction in greenhouse gas emissions against our 1990 baseline.
Target 45% reduction by 2020 and 80% reduction by 2050
Our total Scope 1 and Scope 2 greenhouse gas emissions (excluding electricity transmission and distribution line losses) for 2013/14 were around 7.4 million tonnes carbon dioxide equivalent (Scope 1 was 7.2 and Scope 2 was 0.2). This is equivalent to an intensity of 501 tonnes carbon dioxide equivalent per £million of revenue for 2013/14.
The 2013/14 emissions quantity represents a 62% reduction from our 1990 baseline and a 9% reduction from our 2012/13 emissions. Although our outturn is better than our 2020 target, we will need to innovate if we are to meet the target for 2050.
We have remained focused on greenhouse gas emissions reduction programmes to achieve our corporate commitment targets of 45% and 80% reduction in Scope 1 and 2 emissions by 2020 and 2050 respectively from our 1990 baseline. |
We continue to look for innovations and efficiencies that will help us achieve these targets. In 2013 we significantly improved our scores in the CDP Global 500 ratings and were admitted for the first time to the Global Leaders Index for carbon disclosure.
We measure and report our greenhouse gas emissions in accordance with the WRI/WBCSD Greenhouse Gas Protocol: Corporate Accounting and Reporting Standard (Revised Edition) for all six Kyoto gases, using the operational control approach for emissions accounting.
These Scope 1 and 2 emissions are independently assured against the international standard ISO 14064-3 Greenhouse Gas assurance protocol. A copy of this statement of assurance is available on our website.
In the UK we have experienced a mild year, which has been beneficial to the overall emissions of many of our business units. In the UK activities at Grain LNG have led to a 60% reduction of energy consumption of on-site nitrogen production. Our Electricity Transmission business has reduced SF 6 leak rates to 1.2% in 2013/14 compared with 1.7% in the previous year and our Property function has delivered a 2% year-on-year reduction in electricity-related emissions across occupied sites.
In the US we have completed power plant turbine efficiency upgrades in Long Island and continued to focus on efficiency-related maintenance programmes. This has contributed towards outperforming our LIPA contractual efficiency target. Our US and UK Gas Distribution businesses have continued to deliver significant reductions in emissions in line with forecasts. |
Strategic element Embed sustainability
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Impact
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UK policy changes are in place to attract investment
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National Grid has been asked to play a key delivery role |
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In the UK, energy policy continues to evolve from the Climate Change Act 2008, which commits the UK Government to reducing UK greenhouse gas emissions to at least 80% lower than a 1990 baseline by 2050. The Energy Act 2013 implements the main aspects of Electricity Market Reform (EMR), and puts in place measures to attract the investment needed to replace current generating capacity and upgrade the grid by 2020, and to cope with a rising demand for electricity.
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In the UK, National Grid has been asked to play a major role as the delivery body for EMR, to be conferred on National Grid by Government in secondary legislation. | |||||||
US policy is evolving to meet environmental and energy diversity goals
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Options for increased renewable and distributed generation are being explored |
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In the US, many federal level developments have been through federal agency regulations and Presidential executive orders. At a state level, energy policy continues to evolve in the northeastern US, driven by interest in promoting energy efficiency, maintaining reliability and deploying renewable technologies that help meet environmental and energy diversity goals.
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In the US, the impact on natural gas dependency has resulted in an evaluation of the best way of increasing fuel diversity through renewable and distributed generation resources. We continue to support movement towards a clean energy economy; and support additional measures to increase Americas energy productivity. | |||||||
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Infrastructure investment needs must be balanced with affordability
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We must accommodate customers cost concerns and also provide safe, up-to-date systems
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Regulators acknowledge that there is a significant need for infrastructure investment. However, affordability continues to be a primary concern.
Cast iron gas mains still in use can be more than 100 years old, becoming riskier to use and contributing to greenhouse gas emissions through leaks. Severe weather in recent years has also highlighted the potential need for additional investment in network resilience. Regulators and policymakers are beginning to ask utilities to put plans in place to strengthen their networks ability to withstand the effects of severe weather.
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We must accommodate our customers affordability concerns while fulfilling our obligations to provide safe and reliable services and upgrading our systems. Investment is required for new connections, to meet the challenges of changing supply and demand patterns, and to replace ageing infrastructure in the UK and US. | |||||||
UK regulators want greater efficiency and innovation
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This is driving them to favour more market competition |
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In the UK, the regulatory focus during the year has been on the new RIIO price controls which give greater focus to incentives and innovation than the previous regulatory regime.
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In the UK, competition is already in place for offshore development and Ofgem has stated its intent to retain the option of using greater competition for certain large onshore projects. | |||||||
The projected increase in offshore wind generation and interconnection has created a debate on the regulatory approach to electricity transmission investment a debate we continue to be fully engaged in.
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For more information about network efficiency and innovation, see pages 30, 31 and 33. | |||||||
US policymakers are focused on grid modernization
In the US, we are actively involved in the New York Energy Highway initiative to examine new ways of delivering infrastructure in the state. In Massachusetts, we are working with regulators and policymakers on a new grid modernisation policy. This is ongoing but is likely to affect our investments in smart grid and metering, and cost recovery of electric infrastructure investments. |
This will present opportunities to address customers needs more effectively
In the US, developments like the New York Energy Highway initiative, the Reforming Energy Vision initiative announced by the Governor of New York, the Massachusetts Grid Modernization regulatory proceeding and our Connect21 dialogue with stakeholders, will help present new opportunities to respond to customers needs and build the necessary infrastructure to address them.
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Technology developments have the potential to reshape our market
There is continued significant technological development in the energy sector as new technologies take shape and approach commercial viability.
HVDC technology could play an important part in the development of a more integrated electricity grid, particularly the extension of offshore links. |
This influences demand and helps us to manage supply
While carbon-based generation is likely to remain a significant part of the global energy mix, carbon capture and storage technologies may become critical to governments achieving their climate change targets. Technologies such as energy storage, electric transportation and distributed generation all have the potential to affect our networks significantly. New consumer products, such as alternative fuelled vehicles and distributed generation, will increase demand and require new infrastructure.
Smart grids will change the way loads are balanced across the distribution network, allowing our customers to make smarter energy choices and increasing network flexibility. Our infrastructure needs the flexibility to respond innovatively to emerging developments, potentially by being managed differently rather than by creating new infrastructure to meet supply and demand changes.
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Electricity |
The electricity industry connects generation sources to homes and businesses through transmission and distribution networks. Electricity is sold to consumers by companies that have bought it from generators and that pay to use the networks across which it is transmitted. |
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System operator As system operator (SO) for England and Wales, we coordinate and direct electricity flows onto and over the transmission system, balancing generation supply and user demand. Where necessary, we pay sources of supply and demand to increase or decrease their generation or usage. |
We have the same role for the two high voltage electricity transmission networks in Scotland and we have been appointed as system operator for the offshore electricity transmission regime.
Our charges for SO services in the UK are subject to a price control approved by Ofgem. System users pay us for connection, for using the system and balancing services.
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As electricity transmission system operator, our price control includes incentives to minimise the costs and associated risks of balancing the system through buying and selling energy, as well as procuring balancing services from industry participants.
In the US, similar services are provided by independent system operators. |
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What we do Gas |
The gas industry connects producers, processors, storage, transmission and distribution network operators, as well as suppliers to industrial, commercial and domestic users. |
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System operator As system operator we are responsible for the high pressure gas National Transmission System (NTS) in Great Britain. We have responsibility for the residual balancing activities on the NTS and for keeping the physical system within safe operating limits.
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Our price control, set by Ofgem, includes incentives that aim to maintain and improve our daily operational efficiency and are subject to renegotiation at set intervals. |
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money from our regulated assets |
Our transmission and distribution businesses
so that we provide value for money while
maintaining safe and reliable networks,
and deliver good customer service. |
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In the UK we have one regulator for our businesses, Ofgem. In the US, different services and locations are regulated by different bodies. For the areas in which we operate, these are the relevant state regulators and FERC.
Each of our regulatory agreements can include differences in structure, terms and values, which we summarise below. You can find more details about regulatory agreements on pages 160 to 165.
The value of our regulated assets is calculated based on the terms of our regulatory agreements. In the UK, the value of regulated assets is also indexed for inflation.
Our regulatory agreements also determine the amount we are allowed to charge customers, commonly referred to as our allowed revenues. Allowed revenue is calculated based on a number of factors:
Depreciation of regulated assets the value of regulated assets is depreciated over an anticipated lifespan. The amount of depreciation is included in our allowed revenue, which represents the repayment of the amount we have invested in the asset.
Return on equity and cost of debt regulated assets are funded through debt or equity. Regulatory agreements set this ratio. The equity portion earns a return on equity. This represents the profit we can earn on our investment in regulated assets. The debt portion earns an allowance based on the cost of debt (interest costs).
Some regulatory agreements allow us to charge customers based on the interest we pay; others use an external benchmark interest rate to incentivise us to raise debt efficiently. The benchmark interest method also provides an opportunity to outperform our regulatory allowance.
Cost of service in establishing our regulatory agreements, our regulators consider what costs an efficiently run company would incur to operate and maintain our networks. They vary and examples can include costs relating to employees, office rental, IT systems and taxes.
The regulators have different approaches to determining what is considered an efficient or prudent cost and this may be different to the actual costs we incur. |
Investment in network assets in the UK we are given a cost allowance to make necessary investments in the networks. These investment costs allowed by the regulator are linked to the outputs delivered by the networks.
Performance against incentives our regulatory agreements, mainly in the UK, include incentives that are designed to encourage specific actions, such as reducing greenhouse gas emissions.
Outperforming against incentive targets can increase our allowed revenues in the current year or a future year. Failing to achieve certain minimum targets may lead to a reduction in our allowed revenue.
A further incentive mechanism enables customers and shareholders to share the difference between allowed and actual costs via adjustments to revenue.
Commodity costs in the US, we supply gas and electricity to customers who have chosen us as their supplier. Most of our regulatory agreements include mechanisms known as trackers that allow us to recover the costs we incur when we buy gas and electricity.
Deferrals the costs we incur may not be included in the calculation of allowed revenue in the same year. Instead, these are deferred for regulatory purposes and we can normally recover them in future years. See pages 08 and 09 of the Financial review.
For example, in the US we incur costs restoring power to customers immediately after a major storm. However, these costs will generally be included in allowed revenue over a number of years and may not start until the relevant regulator has approved a request. This can be some time after the storm and may not cover all the costs.
Timing our regulated revenue entitlements are set based on our regulatory price controls. We use forecast energy volumes that we expect to deliver to set the billing tariff. Where there is a difference between the actual and estimated energy volumes, the amount of revenue we collect will be different. Differences arising from volume and revenue entitlement changes are typically collectable in the following year for the US. For information about timing in the UK, see pages 08 and 09. |
Financial review pages 06 09
UK regulation pages 160 162
US regulation pages 162 165
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Internal control and risk management continued |
Strategic objective
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Risk description
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Example of mitigations
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Deliver operational excellence |
Failure to achieve levels of financial performance required to meet regulatory requirements.
The Group operates under a number of regulatory regimes and we must maintain the performance levels required. Failure to achieve the agreed returns could damage our reputation and threaten future growth opportunities and regulatory arrangements. |
We have a US strategy focused on safety and reliability, customer responsiveness, stewardship and cost competitiveness. Performance measures are tracked and reported monthly. US jurisdictional presidents continue to develop strong relationships with local regulators and communities. A process excellence initiative was launched to deliver sustainable and innovative performance improvements with initial focus on six core end-to-end processes. The UK operating model implemented in 2013 to support our performance under RIIO is now established and we continue to roll out our performance excellence framework across the business. We monitor network reliability and customer satisfaction as KPIs, as described on page 10.
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Failure to deliver appropriate information systems and data integrity.
The Company is increasingly reliant on technology to support and maintain our business-critical processes. We must be able to rely on the performance of these systems and the underlying data to demonstrate the value of our business to our shareholders, and to meet our obligations under our regulatory agreements, and comply with agreements with bond holders and other providers of finance. |
In November 2012, our new US back office system went live. A business improvement team has been established to ensure that a comprehensive and integrated approach is applied to the execution of system changes (such as enablement of the LIPA MSA transition) and enhancements to drive business value (such as payroll, supply chain and finance process improvements). We are undertaking a programme to strengthen identified weaknesses in US controls over financial reporting. We are implementing a global information management framework focusing on data integrity and security. We have completed a data assurance programme, and we are developing actions to improve our data quality and integrity processes based on the results.
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We experience a catastrophic/major cyber security breach.
Due to the nature of our business we recognise that our critical national infrastructure systems may be a potential target for cyber threats. We must protect our business assets and infrastructure and be prepared for any malicious attack. |
We use industry best practices as part of our cyber security policies, processes and technologies. We continually invest in cyber strategies that are commensurate with the changing nature of the security landscape. This includes collaborative working with DECC and the Centre for Protection of National Infrastructure (CPNI) on key cyber risks and development of an enhanced critical national infrastructure (CNI) security strategy and our involvement in the US with developing the National Institute of Standards and Technology (NIST) Cyberspace Security Framework.
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Failure to prevent a significant process safety event.
The nature of our day-to-day operations is such that safety incidents can occur. The safety of our employees, contractors, suppliers, and the communities in which we operate is critical. We must operate within local laws and regulations relating to health, safety and the environment. |
We have established safety and occupational health plans, programmes and procedures that are aimed at continuous improvements in safety performance. We supplement Company-wide initiatives with specific regional safety programmes. These are aimed at addressing specific areas so that safety is at the forefront of every employees mind. We also benchmark against other industry groups to seek and implement best practice. We continue to focus on process safety, aimed at preventing major incidents. A baseline assessment has been completed and a 10 year plan is under development. We monitor employee IFR as a KPI as described on page 10.
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Our internal control process We have a number of processes to support our internal control environment. These processes are managed by dedicated specialist teams, as described in the box on the right. Oversight of these activities is provided through regular review and reporting to the appropriate Board committees as outlined in the Corporate Governance section on pages 44 to 57.
Reviewing the effectiveness of our internal control Each year the Board reviews the effectiveness of our internal control process, including financial reporting, to make sure it remains robust. The latest review covered the financial year to 31 March 2014 and the period to the approval of this Annual Report and Accounts. It included:
the Certificate of Assurance for noting following approval by the Audit Committee to provide overall assurance around the effectiveness of National Grids risk management and internal controls systems; where appropriate, assurance from our committees, with particular reference to the reports received from the Audit, and Safety, Environment and Health Committees on reviews undertaken at their meetings; and assurances about the certifications required under Sarbanes-Oxley as a result of our US reporting obligations.
Our risk management and internal control processes comply with the Turnbull guidance on internal control and the requirements of the UK Corporate Governance Code. They are also the basis of our compliance with obligations set by the Sarbanes-Oxley Act 2002 and other internal assurance activities.
Internal control over financial reporting We have specific internal mechanisms to govern the financial reporting process and the preparation of the Annual Report and Accounts. Our financial controls guidance sets out the fundamentals of internal control over financial reporting, which are applied across the Company.
Our financial processes include a range of system, transactional and management oversight controls. In addition, our businesses prepare detailed monthly management reports that include analysis of their results along with comparisons to relevant budgets, forecasts and prior year results. These are presented to and reviewed by senior management within our Finance function. |
These reviews are supplemented by quarterly performance reviews, attended by the Chief Executive and Finance Director which consider historical results and expected future performance and involve senior management from both operational and financial areas of the business.
Each month the Finance Director presents a consolidated financial report to the Board.
As part of our assessment of financial controls, we have identified a number of weaknesses in our US financial control framework. Plans are in place to remediate these. For more information, including our opinion on internal control over financial reporting, see page 170.
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Our internal control environment
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Our specialist teams that manage the processes supporting our internal control environment are described below.
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Risk management: works with the Board to determine risk appetite and establish and implement risk management policies; is responsible for the independent review and challenge of risk information throughout the business, compilation and analysis of risk profiles and monitoring risk management processes within the Company; and regularly reports on risks to the regional level and Board level oversight committees.
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Ethics and compliance management: maintains our standards of ethical business conduct; promotes ethical behaviour and monitors compliance with external legal and regulatory requirements; and operates our whistle-blower helplines and supports activities to prevent and detect bribery.
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Corporate audit: develops and executes a risk-based audit plan; and provides independent, objective assurance to the Audit Committee, SEH Committee and the Executive Committee on the extent to which control and governance frameworks are operating effectively.
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Safety, environment and health: develops policy recommendations for the Board; monitors safety, environment and health performance; and works with process owners to deliver our safety, environment and health objectives.
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Internal controls: works with process owners to identify, document and test the design and operation of internal control over financial reporting; and helps refine and improve controls where required.
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remuneration aligns
to Company strategy
The Remuneration Committee determines remuneration policy and practices through which we aim to promote the success of the Company by attracting, motivating and retaining high-calibre Executive Directors and other senior employees to deliver value for our shareholders, customers and the communities in which we operate.
Our strategy To be a recognised leader in the development and operation of safe, reliable and sustainable energy infrastructure, to meet the needs of our customers and communities and to generate value for our investors.
Our strategic objectives |
The Committee believes that the changes will further enhance the long-term alignment between executive remuneration and the delivery of the corporate strategy.
The information set out below describes current rather than future policy.
Alignment to strategy Annual Performance Plan (APP) Our APP aims to incentivise and reward the achievement of annual financial and strategic business measures, and the delivery of annual individual objectives. Performance metrics, including corporate financial measures and individual objectives, are agreed at the start of each performance year and are aligned with the strategic business priorities for that year.
The table below shows the financial measures and their relative weightings that were included within the APP for the Executive Directors for 2013/14:
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Our vision and strategy pages 14 15
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pages 58 73
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Deliver operational excellence
Engage our people
Stimulate innovation
Engage externally
Embed sustainability
Drive growth |
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Andrew Bonfield and Steve Holliday |
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Tom King | Nick Winser | |||||||||||||||
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Adjusted EPS | 24% | 24% | 24% | |||||||||||||
Cash flow (Group or regional) | 38% | 28% | 43% | |||||||||||||
UK RoE |
14% |
n/a |
33% |
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US RoE | 14% | 24% | n/a | |||||||||||||
US capital plan delivery
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10% |
24% |
n/a |
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Financial measures together represent 70% of the APP.
Individual performance objectives in the APP reflect 30% of the plan and are defined in terms of target and stretch performance requirements. The performance objectives change each year, depending upon business priorities. Examples of individual objectives include those relating to safety, stakeholder relations, employee engagement and capability, and the development of Group and financial strategy.
In order to provide balance for all our stakeholders, at the end of the year the Remuneration Committee has discretion to reduce APP awards to take account of any safety, customer, service-related, environmental or governance issues that may have occurred.
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The Remuneration Committee aligns the remuneration policy to our Company strategy and main business objectives. Performance-based incentives are earned through achieving demanding targets for short-term business and individual performance, as well as creating long-term value for our shareholders, customers and the communities in which we operate.
Remuneration Committee review of remuneration During the year, the Remuneration Committee undertook a detailed review of the remuneration arrangements for Executive Directors, with the aim of achieving further alignment between executive reward and long-term shareholder value.
As a result of this review, the Committee is proposing some significant changes to the arrangements for the 2014/15 financial year, and these are set out in detail on pages 58 to 73. Shareholders are being asked to approve these changes at the AGM on 28 July 2014. |
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Principal operations continued |
UK Electricity Transmission
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What we do We own the electricity transmission system in England and Wales. Our networks comprise approximately 7,200 kilometres (4,470 miles) of overhead line, 1,400 kilometres (870 miles) of underground cable and 335 substations.
We are also the national electricity transmission system operator, responsible for both the England and Wales transmission system, and the two high voltage transmission networks in Scotland, which we do not own.
Day-to-day operation of the system involves the continuous real-time matching of demand and generation output. We are also designated as system operator for the new offshore electricity transmission regime.
Where we are heading Although demand for electricity is generally increasing around the world, in the UK it is expected to remain broadly flat over the next five to 10 years.
Changes in the sources and characteristics of generation connecting to our network mean we need to develop the way we balance and operate our network to accommodate these sources, including wind, new and large-scale nuclear generation, and many embedded sources that are connected to local networks and not our transmission grid.
Industry forecasts indicate there will be a tightening of the margin between the available supply of electricity and the demand for it over the next few years. We have a central role in developing the reform of the electricity market, which is designed to incentivise new generation to be built. We have also developed two new balancing services allowing the market to provide us with additional tools to balance the network if required.
Over the last 12 months some generators have delayed their connection dates to the network and this means our future investment profile for electricity transmission is flatter than in previous years. But we are ready to respond to connection dates when we need to. We will continue to renew our network to deliver the network reliability our customers require as efficiently as possible.
What weve achieved during 2013/14 We made significant progress with our network upgrade plans. We are pleased with our progress on the London Power Tunnels project and have now started site works on the first 600 kV subsea HVDC link in the world. Connecting Scotland and England, this link will support the export of low carbon Scottish generation. In March 2014, the new Transmission National Control Centre in Warwick became operational. This will help our focus on the future complexities of network security, energy management and streamlining our operational and safety switching |
activities, increasing the potential for access to the transmission system. We improved our asset maintenance policy, which will provide greater efficiency for our maintenance programme. We are implementing the policy throughout 2014 to minimise disruption to customers and planned work. We worked closely with DECC and Ofgem to help inform and manage security of supply through a period of significant change in the UK energy market. We have carried out analysis to help inform the Governments decisions on energy policy as well as administering key parts of the enduring regime. We have developed two new balancing services that could be used to provide additional reserves to support the operation of the electricity transmission system if margins continue to tighten towards the middle of this decade. These new services, known as the Demand Side Balancing Reserve and the Supplemental Balancing Reserve, were approved by Ofgem in December 2013, and the associated funding arrangements approved in April 2014. We will tender for these services if they are needed for the forthcoming winters.
Priorities for the year ahead Work with our contract partners to continue improving safety performance. Engage with customers and stakeholders while we progress our major infrastructure projects through the planning process. Continue the roll-out of our new performance excellence way of working across Electricity Transmission. Develop new, innovative ways to deliver the network reliability our customers require, at minimum cost. Build on the analysis results that informed the first EMR delivery plan and successfully implement and operate the Capacity Market and Contracts for Difference Feed-in Tariff regime, as part of the Governments EMR project. This will support a sustainable, affordable and secure electricity market into the future, in addition to the procurement of balancing services to support mid-decade capacity margins. Shape development in the UK and EU energy industry by continuing the development of network codes to support the completion of a European Internal Energy Market in 2014. |
30% UK Electricity Transmission adjusted operating profit of Group total |
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UK Gas Transmission
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What we do We own and operate the gas national transmission system in Great Britain, with day-to-day responsibility for balancing demand. Our network comprises approximately 7,660 kilometres (4,760 miles) of high pressure pipe and 23 compressor stations.
Where we are heading The UKs sources of gas are changing as gas from the UK continental shelf is being depleted, we are becoming increasingly reliant on imports from Europe and elsewhere. This also means that the traditional flow of gas from the North to the South is changing.
To ensure we continue delivering a safe, reliable and secure gas supply as we develop our asset replacement programmes, we need to make sure we consider the future operational needs of the network.
We will continue to work closely with our customers and stakeholders to adapt our network and our services so we can meet their needs economically and efficiently.
What weve achieved in 2013/14 We delivered our strongest-ever safety performance across all areas, achieving 12 months without a single lost time injury to either our employees or contractors and without experiencing any serious process safety incidents. We delivered multiple innovation projects using the Network Innovation Allowance funding mechanism, including 3D models that allow for more efficient and cost-effective construction. We have adapted our ways of working so we can meet the needs of our customers and stakeholders and deliver value under RIIO. For example, we used innovative techniques to protect a section of the pipeline that carries gas from the LNG importation terminal in west Wales, prior to the construction of a new road. This meant we were able to meet the timescales of the local authority building the road without disrupting gas supply to consumers. We have delivered record levels of compressor availability in our network, peaking at 98%, after investing in our fleet of compressors in the summer of 2013 and by introducing improvements to our maintenance and repair methods. |
Priorities for the year ahead Continue to improve safety performance by completing the roll-out of the visual safety leadership culture programme to every employee in our Gas Transmission business and implementing new safe control of operations working procedures. Work with our customers and stakeholders to develop an enduring compressor replacement strategy that makes sure we comply with environmental legislation and meets future system needs. Complete the deployment of our new performance excellence way of working across all teams in our Gas Transmission business after the successful implementation at two of our compressor sites in 2013/14. Support our customers in the transition to new commercial frameworks managing future capacity and connection arrangements to the gas transmission system. Shape developments in the UK and EU energy market by making sure that the new European codes governing the operation of the gas market in the UK are successfully introduced for our customers. |
11% UK Gas Transmission adjusted operating profit of Group total |
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Principal operations continued |
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Principal operations continued |
US Regulated business
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What we do We own and operate electricity distribution networks in upstate New York, Massachusetts, and Rhode Island. Through these networks we serve approximately 3.4 million electricity consumers in New England and upstate New York.
Our US gas distribution networks provide services to around 3.6 million consumers across the northeastern US, located in service territories in upstate New York, New York City, Long Island, Massachusetts and Rhode Island. We added 31,145 new gas heating customers in these areas in 2013/14.
We own and operate an electricity transmission system of approximately 14,328 kilometres (8,903 miles) spanning upstate New York, Massachusetts, Rhode Island, New Hampshire and Vermont, operating 169 kilometres (105 miles) of underground cable and 521 substations, with a further 12 planned.
We also own and operate 50 fossil fuel-powered units on Long Island that together provide approximately 3,800 MW of power under contract to LIPA. A 15 year Power Supply Agreement (PSA) with LIPA was renewed in May 2013 for 3,634 MW of capacity, comprising eight dual fuel (gas/oil-fired) steam units at three sites, 11 dual fuel combustion turbine units, and 27 oil-fired combustion turbine/ diesel units. Under a separate contract with LIPA, four dual fuel combustion turbine units provide an additional 160 MW of capacity.
We are responsible for billing, customer service and supply services. We forecast, plan for and procure approximately 15 billion standard cubic metres of gas and 32 TWh of electricity annually across three states.
Where we are heading We have introduced Connect21, our thinking on advancing Americas natural gas and electricity infrastructure beyond its 20th century limitations, and creating a more customer-centric, resilient, agile, efficient and environmentally sound energy network.
Our approach is threefold:
Build a resilient backbone for our energy system that can provide reliable, flexible electric and gas service to all customers and integrate clean energy wherever it is located on the grid. Inform customers about choices available to them to meet their energy needs and educate them on how to manage their use in the most cost-effective way. Offer customised solutions to customers who want different levels of service. |
Connect21 will help develop Americas economic and environmental health in three very important ways:
Drive economic growth: invest in our networks in ways that enhance state and local economies and encourage innovation, while simultaneously reducing the stress currently being exerted on our environment and public health. Promote cleaner energy: work with the industry to find new ways to deliver cleaner energy, and more importantly encourage consumers to use energy more efficiently. We are already making progress on cleaner sources of energy, such as natural gas. The amount of energy generated by natural gas in the US is expected to double between 1990 and 2040, making gas the leading fuel for electricity generation. Advance innovative technologies: harness existing technologies to put energy information and usage control in the hands of customers, which will help drive improvements in our consumption behaviours. Leverage technology to build smarter, more resilient electric and natural gas networks that can withstand the extreme weather.
Principal risks Our regional risk profile describes the main risks our US business faces. The current risk themes for the US are:
our ability to manage data and systems improvements required to deliver core business processes and regulatory requirements; our ability to recover costs through existing rate- making mechanisms and to influence the development of the future US utility business model; and safety performance and network reliability, security and resilience.
What weve achieved Within each of our jurisdictions we have focused on Elevate 2015, our journey towards operational excellence. This focus has encompassed our end-to-end business processes, including: delivery; maintenance and operation of electric and gas assets; supply chain management; meter to cash; and emergency response.
Four main principles govern our business improvement strategy: safety and reliability; stewardship; customer responsiveness; and cost competitiveness. |
31%
US
Regulated
|
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US Regulated business
All jurisdictions have benefited from emergency response improvements. This has been a focus for the US business in response to the major storms we have experienced in recent years, such as Superstorm Sandy in 2012. Our Emergency Management Policy reinforces our commitment to our customers and the communities we serve. We strive to use effective emergency management principles and protocols that enhance our ability to provide safe and reliable energy services.
We have continued to strengthen resilience by assessing vulnerabilities throughout our system, flood-proofing critical equipment, readying more restoration crews, repair equipment and fuel supplies, reducing the risk of downed power lines from fallen trees and branches, and enhancing communications with our customers and stakeholders. During 2013/14 we introduced some new tools and initiatives:
Weather predictive tool: allows us to use data from past storm events to learn and predict future potential damage, which will help our storm response planning. Expanded contractor relationships: expanding contractor relationships that cover a wider geographic area to increase flexibility and responsiveness in any type of storm. Enhanced damage assessment: by using technology now available to us (mobile devices such as tablets) we have introduced an enhanced damage assessment process that helps us to gather information from the field more quickly. Coupled with data from existing outage reporting systems, this allows us to determine where to send crews more quickly and accurately. This, in turn, will help us to determine and execute restoration times faster for customers and communities.
US enterprise resource planning system stabilisation continued, remedying the errors of poor implementation from the prior year. Over the course of the year, the US business made significant progress in the activities required to upgrade the system, with implementation expected in mid-2014. The focus is now on reducing the ongoing costs associated with the complex manual processes that are required to compensate for identified weaknesses in internal controls over financial reporting in the US. While these control weaknesses have not reduced the quality of financial statements produced, they have necessitated significant additional cost.
Overall, the business remains on track to successfully conclude the programme during 2014, with expected costs unchanged from the guidance provided last year.
Safety: we continue to make improvements on last year, including decreases in OSHA recordable incidents, road traffic collisions and lost time incidents. Still, we have much to accomplish to |
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reach our goal of zero injuries every day. Some of our initiatives during 2013/14 include the development and implementation of a safe motor vehicle operation policy, Smith System driver training, a soft tissue injury prevention programme, and slippery surface simulator training. Also, in a continued effort to promote safety awareness and improvement, we have shared incident reports and lessons learned briefings with all employees, on a daily basis.
Network reliability: we met all our reliability targets in Rhode Island and New York. In Massachusetts, we missed two of our electricity circuit level metrics and avoided a financial penalty due to earned offsets for good performance on our system metrics.
Customer satisfaction: we use independent customer research studies and other measures to supplement the four J.D. Power and Associates customer satisfaction studies. We saw improvements in three of the four overall J.D. Power customer satisfaction quartile results see page 10 for details.
In terms of our achievements during 2013/14, here are some highlights from each of our jurisdictions:
Massachusetts Infrastructure investment: we invested $510 million to enhance the resilience, efficiency and safety of our infrastructure $212 million in electric and $298 million in natural gas.
Energy efficiency: we introduced Smart Energy Solutions, a programme rolled out to 15,000 customers. The programme uses grid modernisation solutions, including advanced meters and communications systems and offers our customers better data about their energy usage, which helps them to make more informed decisions.
Gas expansion: we installed 32 miles of new gas mains, replaced 162 miles of gas mains and added more than 9,700 new natural gas customers. |
National Grid teams maintain and repair the gas distribution networks across Rhode Island, where we deliver gas to 252,000 customers. The team in this picture is creating a solid base to reinstate the ground after some works on Rhode Islands gas network. |
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Economic development: we installed 15 miles of new electric circuit in Cape Ann, and reconfigured existing circuits to release additional capacity (more than $15 million investment).
New York Infrastructure investment: we invested $1,008 million to enhance the resilience, efficiency and safety of our infrastructure $471 million in electric and $537 million in natural gas. In partnership with the New York City Department of Environmental Protection, we launched the Newtown Creek Renewable Gas Demonstration project in Brooklyn. As part of our commitment to sustainable energy solutions, Newtown Creek is the first project in the US that directly injects renewable gas into a local distribution system by converting effluent from a wastewater treatment plant into biogas.
Energy efficiency: we are working with 13 institutions and 50 public and private companies within the Buffalo Niagara Medical Campus to enhance power quality and reliability, as well as address other energy and transportation challenges related to the expansion and development of the campus.
Gas expansion: we completed the largest oil to natural gas conversion on Long Island, saving the Northport VA Hospital nearly $3 million a year, displacing 1.5 million gallons of oil annually, and reducing carbon emissions by more than 5,000 tonnes a year.
Economic development: we provided the State University of New York at Canton (SUNY Canton) with a $750,000 Renewable Energy and Economic Development incentive to help with the completion of an on-campus wind turbine project.
Rhode Island Infrastructure investment: we are planning to build the underground infrastructure to provide electricity to newly created land parcels following relocation of route I-195 in Providence ($3 million investment). |
electricity efficiency and more than $44 million in benefits from natural gas efficiency).
FERC Clean Line energy investment: Clean Line Energy Partners is developing several long-haul HVDC transmission lines to connect the best renewable energy resources to communities. Five projects are currently in development which span across states in the Midwest and Southwest US. We are an equity partner in these projects and the first utility to invest with Clean Line.
DeepWater Wind: the 30 MW DeepWater Offshore Wind Farm, located off the coast of Block Island, Rhode Island is in development and could become the first offshore wind farm in the US.
We are designing and constructing the approximately 20 mile submarine transmission cable from Narragansett, Rhode Island to Block Island, Rhode Island. The transmission cable will allow the energy generated by the wind farm to access the mainland Rhode Island customers and connect Block Island Power Company (BIPCo), which will become a new wholesale customer of National Grid, to the mainland electric system. While the wind farm will provide Rhode Island customers with a sustainable source of generation, the transmission cable will allow BIPCo to reduce its dependence on diesel generation which will result in significantly lower energy prices and emissions for the residents of Block Island.
Priorities for the year ahead Deliver a step change in safety to ensure zero injuries each day. Develop our people and build their capabilities for today and the future. Put the customer first to meet all our obligations by working towards process excellence and successfully completing our US Foundation Program (USFP). Drive regulatory performance through each jurisdiction and lead the delivery of future energy networks. |
National Grid US field operations crew leader Mark Harris. |
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Energy efficiency: Rhode Island energy efficiency programmes will result in savings of more than 1.6 million MWh of electricity and 4.37 million Dth of natural gas over the lifetime of installed measures. The resulting reduction in carbon emissions is equivalent to taking more than 186,700 motor vehicles off the road for one year.
Gas expansion: the Rhode Island Public Utilities Commission (RIPUC) approved a $3 million gas expansion pilot programme to be included in the FY2014 Gas Infrastructure, Safety and Reliability (ISR) Plan.
Economic development: energy efficiency programmes resulted in more than 540 full-time equivalent jobs and should generate economic benefits of more than $237 million over the life of the installed measures (with more than $190 million from |
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Grain LNG Grain LNG is one of three LNG importation facilities in the UK. It was constructed in three phases, becoming operational in 2005, 2008 and 2010 respectively. It operates under long-term contracts with customers and provides importation services, storage and send out capacity on to the national transmission system. We are exploring with customers a number of developments to the Grain site to enhance its revenue earning capability.
Interconnectors The England-France interconnector is a 2,000 MW HVDC link between the French and British transmission systems with ownership shared between National Grid and Réseau de Transport dElectricité (RTE). The interconnector is approximately 70 kilometres (43 miles) in length, with 45 kilometres (27 miles) of subsea cable. Following a significant valve replacement programme, the availability of the interconnector continues to show marked improvement and the 2013/14 average was at 83.84%. A substantial proportion of the flow continues to be in the import direction, from France to Great Britain.
BritNed is a joint venture between National Grid and TenneT, the Dutch transmission system operator. It built, and now owns and operates a 1,000 MW subsea electricity link between the UK and the Netherlands, which is approximately 260 kilometres (162 miles) in length. BritNed, which entered commercial operations on 1 April 2011, is a merchant interconnector that sells its capacity via a range of explicit and implicit auction products.
Metering National Grid Metering (NGM) provides installation and maintenance services to energy suppliers in the regulated market in Great Britain. It maintains an asset base of around 15 million domestic, industrial and commercial meters.
Through Ofgems Review of Metering Arrangements, National Grid has been appointed National Metering Manager (NMM) to facilitate the transition to smart metering in the domestic sector. To support this, NGM has also undertaken a pricing consultation to define the tariff caps to apply to traditional domestic gas metering. This took effect on 1 April 2014 and will last until the end of the transition to smart metering.
In addition, NGM has been further developing its contracts and services in the industrial and commercial market.
NGM has achieved its highest customer satisfaction scores for the last six years for both its Domestic and Industrial & Commercial businesses. |
UK Property National Grid Property is responsible in the UK for the management, clean-up and disposal of surplus sites, most of which are former gas works. During 2013/14 we have sold 45 sites, exchanged on several high-profile land disposal agreements with JV partners and embarked on a new programme of holder demolitions. We have been embedding our estate management outsourcing agreement with Capita and our new tender framework for the clean-up of contaminated land is progressing well.
Xoserve Xoserve delivers transactional services on behalf of all the major gas network transportation companies in Great Britain, including National Grid. Xoserve is jointly owned by National Grid, as majority shareholder, and the other gas distribution network companies.
US non-regulated businesses Some of our US businesses are not subject to state or federal rate-making authority. These include interests in some of our LNG road transportation, some gas transmission pipelines and certain commercial services relating to solar installations, fuel cells and other new technologies.
Corporate activities Corporate activities comprise central overheads, Group insurance and expenditure incurred on business development.
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3%
Other activities adjusted operating profit of Group total |
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Volunteering Our employees continue to support our local communities, sharing their time and expertise on a range of skills-based volunteering and fundraising activities. This year in the UK we continued supporting Special Olympics GB by sponsoring the National Summer Games, launched our first-ever employee chosen charity partnership with Macmillan Cancer Support and joined forces with two initiatives Step up to Serve and TeachFirst.
In the US, our Power to Serve programme is evolving as we focus on volunteering efforts that make National Grid a great place to work, and our communities great places to live. Power to Serve supports our Elevate 2015 Stewardship principle and seeks to acknowledge existing community service, as well as to create new volunteer opportunities for employees.
Health and wellbeing Our health and wellbeing programmes for 2013/14 have included encouraging employees to improve their levels of activity and quality of nutrition, as well as supporting employees mental wellbeing and musculoskeletal conditions. With our major cancer charities (Macmillan Cancer Support in the UK and The American Cancer Society in the US) we have raised money and awareness. Our employee opinion survey results continue to show that employees have a growing awareness of our wellbeing programmes.
Promoting an inclusive and diverse workforce We aim to develop and operate our business with an inclusive and diverse culture, with equal opportunity to all in recruitment, career development, training and reward. This applies to all employees regardless of race, gender, nationality, age, disability, sexual orientation, gender identity, religion and background. Where existing employees become disabled, our policy is to provide continued employment and training wherever practical. Our policies support the attraction and retention of the best people, improve effectiveness, deliver superior performance and enhance our success.
During 2013/14, Race for Opportunity and Opportunity Now each awarded us with their Gold standard and recognised us as one of the top 10 private sector employers in terms of their benchmark criteria. We were also once again selected as one of the Times Top 50 Employers for Women.
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The Strategic Report was approved by the Board of Directors on 18 May 2014 and signed on its behalf by: |
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Alison Kay Group General Counsel & Company Secretary |
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18 May 2014
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Non-financial KPIs pages 10 11
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Board diversity page 56
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42 National Grid Annual Report and Accounts 2013/14
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Corporate | ||||||||
Governance
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Contents | ||||||||
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44 44 44 45 45 46 46 46 48 48 49 53 54 55 56 56 57 58 |
Director induction and development Board and committee evaluation Non-executive Director independence Safety, Environment and Health Committee Board diversity and the Davies Review |
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Chairmans foreword An effective Board is vital to the sound foundations of good corporate governance. Our Board has undergone a significant change over the last three years to refresh membership and replace long-serving Non-executive Directors. As part of this planned transition, this year we have welcomed Therese Esperdy and John Pettigrew to our Board and, following the AGM, Maria Richter will be stepping down from the Board. We will also be saying goodbye to Nick Winser, who will not be standing for re-election to the Board at the AGM, but will continue in his role as President of ENTSO-E and Chairman of NGET and NGG until July 2015 when he will be leaving the Company.
Through the progressive refresh of the Board we have successfully renewed the membership and key roles to bring a diverse range of skills and experience to our Board. I am pleased to report that the results of the Board evaluation this year were positive, showing that our regenerated Board is functioning well, although there is always room for improvement. See page 46 for examples of the actions we have identified for the coming year.
All our new Board members undertake a thorough induction programme to get them up to speed on our businesses. The induction programme is tailored to the new Director to take account of previous experience and their specific role on the Board. I am confident that the programmes designed for Therese and John, which are detailed on page 45, will provide a good basis to enable them both to make a valuable early contribution to our Board.
As a Board we continue to support constructive challenge, encourage robust debate and recognise the value of different thinking styles. During the year we held a development session for the Board on thinking styles, see page 45 for details.
It is my strong belief that our ongoing emphasis on a positive and collegiate boardroom environment is helping the dynamics of the relationship between our Executive and Non-executive Directors. Because of this, we are able to increase the individual contribution of Directors and use their diverse backgrounds and expertise in enriching the quality of boardroom debates and discussions.
The behaviours and dynamics of the Board will be an ongoing focus for us as we strive to continually improve our effectiveness and performance.
Sir Peter Gershon Chairman |
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Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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43
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Our Board
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44 National Grid Annual Report and Accounts 2013/14
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Corporate Governance continued |
Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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45
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46 National Grid Annual Report and Accounts 2013/14
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Corporate Governance continued |
Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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47
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Area
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Actions from last years review
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Commentary
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Mechanics |
Chief Executive to meet with Executive Directors immediately after each Board meeting to discuss how the Board operated as a team and contributions from Directors, and reflect on any learning. Feedback from these meetings to be shared as appropriate with the Chairman.
Responsibility: Chief Executive
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This was implemented from January 2013 and will be continued as it has proved helpful in making sure that the right discussions are had at Board meetings. |
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Review and build on the one page executive summary for non-standard papers introduced in July 2012 and consider its effectiveness in providing the Board with key information and clarity around requested contribution or action.
Responsibility: Chairman and Chief Executive
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An updated template summary sheet was introduced in September 2013. The revised template includes details of links to the risk register, financial impact and additional information on the lead presenter. |
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All committees, except the Nominations Committee and Executive Committee, to get together immediately before or after their meetings to discuss papers, presenters contribution and any matters they wish to consider without management present.
Responsibility: Committee chairmen
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This initiative has been implemented and meetings included on the forward business schedules as appropriate by each of the committees. |
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Thinking styles of candidates to the Board and Executive Committee to be taken into consideration once skills set and experience confirmed.
Responsibility: Nominations Committee
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Diversity of thinking styles was a factor in the recruitment process for a successor to Maria Richter and in the appointment of John Pettigrew. |
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Dynamics |
Schedule a development session for the Board which may include thinking styles, inclusive leadership and exploring positive challenge through questioning techniques.
Responsibility: Chairman and Group General Counsel & Company Secretary
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A thinking styles session for the Board was held in February 2014. See page 45 for more information. |
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Review the following months agenda and communicate to the Executive Directors the areas that presenters are to focus on.
Responsibility: Chairman and Chief Executive |
The draft agenda for forthcoming Board meetings are noted by the Executive Committee. The Chairman also holds separate pre-Board meetings with the Chief Executive and the Group General Counsel & Company Secretary to discuss and review the business of the next meeting.
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Specifics |
Facilitate increased interaction between Non-executive Directors and high-potential employees during site visits and presentations at Board meetings.
Responsibility: Executive Directors
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High-potential employees have been invited to Board dinners in the UK and US. A schedule of proposed site visits has been provided to the Non-executive Directors. |
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Appoint a taskforce to review gender diversity and employee turnover.
Responsibility: Chief Executive |
Following a detailed review in August 2013 by the Chairman and Chief Executive it was decided not to proceed with the taskforce at that time. Good progress continues to be made on gender diversity and employee turnover.
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Implement an inclusion and diversity scorecard and review progress with the Board.
Responsibility: Executive Committee
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The Executive Committee receives a quarterly inclusion and diversity scorecard and updates are provided to the Board. An inclusion and diversity session for the Board was held in April 2013. |
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48 National Grid Annual Report and Accounts 2013/14
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Corporate Governance continued |
Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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49
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Role Oversees the Companys financial reporting, and internal controls and their effectiveness, together with the procedures for identifying, assessing and reporting risks. It also oversees the services provided by the external auditors and their remuneration.
Review of the year My first eight months as chairman have been busy but enjoyable. Last July we said goodbye to George Rose and this July Maria Richter will be stepping down from the Board. I would like to thank them both for their contribution to the Committee. In particular to George for his guidance and support during his handover to me.
As a committee we have held six meetings during the year, two of which were held in the US, providing all members with the opportunity to meet our US teams. Following last years committee performance evaluation, we now also meet privately after some of our longer meetings. We use this time to review the meeting and discuss how we can evolve and make our meetings more effective.
The Committees main focus has been the US finance function and ongoing improvement of the new enterprise resource system. The Committee has received regular reports throughout the year from the Finance Director and US Chief Financial Officer.
The UK finance team has provided valuable support to the US team and I visited the US with the Finance Director and Group Financial Controller in January to review progress and priorities for 2014. The work on stabilisation of the systems also coincided with the LIPA MSA transition. This was an important milestone in the overall US financial control program.
With the start of RIIO, the Committee received a paper from the UK finance team on the accounting implications of this new arrangement and its impact on the financial control environment. We also reviewed the disclosures within this Annual Report to ensure they provide a fair, balanced and understandable view in the context of current accounting standards.
Next year is also looking busy with an ongoing focus on the enterprise resource system and continual improvement in processes and controls around these systems.
Mark Williamson Committee chairman |
Significant issues Some of the significant issues the Audit Committee considered in relation to the financial statements during the year set out below are explained in more detail later in the report:
US financial controls program; LIPA MSA transition contract accounting; presentation of exceptional items; and fair, balanced and understandable assessment.
Other matters reviewed Examples of other matters the Audit Committee reviewed:
accounting for RIIO; the enhanced disclosures required by International Auditing Standard (UK and Ireland) 700; the Companys refreshed approach to going concern following the publication of the Sharman Report; the increased work involved to support the LIPA MSA transition; the revised Certificate of Assurance process; Sarbanes-Oxley Act 2002 testing and attestations; external reporting obligations and the programme to improve the Company-wide framework; a revised ethical business conduct process for Directors and executive members; and a proposed revised approach to risk reporting.
Committee membership and attendance Committee membership during the year and attendance at meetings is set out below. Attendance is expressed as the number of meetings attended out of the number possible or applicable for the individual Director during the year to 31 March 2014. Biographical details and experience of Committee members are set out on pages 171 to 173.
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Attendance
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Mark Williamson (chairman) 1 |
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6 of 6 |
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Philip Aiken |
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5 of 6 |
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Ruth Kelly |
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6 of 6 |
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Maria Richter
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6 of 6 |
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George Rose 2
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2 of 2 |
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1. Chairman from July 2013. |
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2. George Rose stepped down from the Board with effect from 29 July 2013.
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Experience |
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Mark Williamson took over as chairman of the Audit Committee following the 2013 AGM. The Board has determined that Mark:
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has recent and relevant financial experience; is a suitably qualified audit committee financial expert within the meaning of the SEC requirements; and is independent within the meaning of the New York Stock Exchange listing rules. |
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50 National Grid Annual Report and Accounts 2013/14
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Corporate Governance continued |
Financial reporting The Committee monitors the integrity of the Companys financial information and other formal documents relating to its financial performance. It makes appropriate recommendations to the Board before publication.
An important factor in the integrity of financial statements is making sure that suitable and compliant accounting policies are adopted and applied consistently on a year-on-year basis and across the Company. In this respect, the Committee also considered the estimates and judgements made by management when accounting for non-standard transactions, the treatment of exceptional items and in provision calculations.
These considerations are supported by input from other assurance providers such as the group controls, risk management and ethics and compliance teams, business separation compliance officer, internal (corporate) audit and the SEH Committee, as well as our external auditors. In addition, the Committee also considers reports of the Disclosure Committee. See page 57 for more information.
The Committee reviews and approves the external audit plan annually (see Audit quality below) and, as part of this, considers the significant risks upon which the external auditors will focus their year-end audit. The independent auditors report (pages 77 to 80) highlights these risks, some of which led to significant issues that the Committee discussed during the year. These were:
US financial controls program (including quality of reconciliation process, US plant accounting and user access controls); LIPA MSA transition contract accounting; and presentation of exceptional items.
Other risks, including the accuracy and valuation of treasury derivative transactions, and management override of internal control, were not considered in detail by the Committee during the year as nothing significant arose that warranted Committee attention.
Summarised below are the issues that attracted the most focus, and time, of the Committee in relation to the financial statements during the year.
US financial controls program: the primary focus of the Committee during the year has been the work to make sure of the integrity of the new financial system in the US. This included the measures taken to remediate US financial control deficiencies and those highlighted as a result of the implementation of the new enterprise resource system.
Over the course of the year, the Committee requested and reviewed a number of reports in order to understand the detail of the issues. These issues include the timeliness and quality of certain balance sheet account reconciliations, and the process and systems to ensure appropriate capitalisation of labour costs.
The Committee has also challenged and reviewed managements remediation plans and the design of compensating controls, including enhanced analytical reviews to make sure the Company maintains an effective internal control environment over financial reporting.
Given the significance of this work, Mark Williamson visited the US and held detailed meetings with senior management in January 2014 to confirm remediation plans were progressing as expected.
LIPA MSA transition contract accounting: on 31 December 2013, our US business moved the MSA with LIPA to a third party. This transition was particularly complex. It involved many areas of our US business and required us to manage the transition of more than 2,000 employees, including more than 40 finance |
professionals, as well as to provide a new enterprise resource system to LIPA.
The Committee reviewed the accounting treatment of costs incurred as part of the transition and agreed that the judgements made by management were reasonable.
Presentation of exceptional items : at the half year and year end, the Committee discussed and challenged a detailed analysis of items to be classified as exceptional to make sure the items did not include income or costs relating to the underlying business.
In particular, the Committee considered the treatment of the provision at the half year for gas holder demolition, as well as LIPA MSA transition and pension costs (described above). The Committee agreed that the classification of these items is appropriate.
Fair, balanced and understandable assessment: the Committee has considered the requirement of the Code to ensure that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable.
In reaching this conclusion the Committee reviewed, among other things, the impact of the introduction of the RIIO price control regime in the UK on the Groups IFRS reported results, see pages 08 and 09 for more information.
Confidential reporting procedures and whistleblowing The integrity of the financial statements is further supported by the confidential reporting and whistleblowing procedures we have in place. The Committee reviews these procedures once a year to make sure that complaints are treated confidentially and that a proportionate, independent investigation is carried out in all cases.
Internal (Corporate) Audit The Corporate Audit function provides independent, objective assurance to the Audit, SEH and Executive Committees.
Audit work is delivered by a combination of internal resources employees who typically have either a finance or operational business background and external sources, where specific specialist skills are required.
The audit plan contains a mix of risk-based and cyclical reviews together with a small amount of work that is mandated, typically by US regulators. A number of focus areas are identified, such as financial, regulatory and asset management processes. Appropriate coverage is provided across each of these areas.
Inputs to the plan include risk registers, corporate priorities, external research of emerging risks and trends and discussions with senior management. A tool that captures all auditable areas, prior coverage and inherent process risk is also used to inform of audits that should be undertaken on a cyclical basis.
The plan is reviewed and approved by the Audit Committee in March each year, with focus given to not only the areas which are being covered but also those that are not, so we can make sure that the plan aligns with the Committees view of risk.
Corporate Audit provides a twice-yearly report to the Audit Committee. The report summarises common control themes arising and progress with implementing management action plans, and also presents information on specific audits as appropriate.
Where specific control issues are identified, senior leaders are invited to attend the Audit Committee to provide a commentary around the actions they are taking to improve the control environment within their area of responsibility.
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Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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51
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External audit The Committee is responsible for overseeing relations with the external auditors, including the approval of fees, and makes recommendations to the Board on their appointment and reappointment. Details of total remuneration to auditors for the year, including audit services, audit-related services and other non-audit services, can be found in note 3 (e) of the consolidated financial statements on page 98.
Auditor independence and objectivity The independence of the external auditors is essential to the provision of an objective opinion on the true and fair view presented in the financial statements.
Auditor independence and objectivity is safeguarded by a number of control measures, including limiting the nature and value of non-audit services performed by the external auditors, ensuring that employees of the external auditors who have worked on the audit in the past two years are not appointed to senior financial positions within the Company, and the rotation of the lead engagement partner at least every five years. The current lead engagement partner has held the position for four years.
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Audit quality To maintain audit quality and provide comfort on the integrity of financial reporting, the Committee reviews and challenges the proposed external audit plan to make sure that PwC has identified all key risks and developed robust audit procedures.
The Committee also considers PwCs response to accounting, financial control and audit issues as they arise, and meets with them at least annually without management present, providing the external auditors with the opportunity to raise any matters in confidence.
Auditor appointment An annual review is conducted by the Committee of the level and constitution of the external audit and non-audit fees and the effectiveness, independence and objectivity of the external auditors.
The annual review includes consideration of:
the external audit process globally; the auditors performance; the expertise of the firm and our relationship with them; and the results of questionnaires completed by National Grid employees engaged with the audit and members of the Audit Committee.
Following this years annual review, the Committee is satisfied with the effectiveness, independence and objectivity of the external auditors, and recommends to the Board their reappointment for a further year. A resolution to reappoint PwC and giving authority to the Directors to determine their remuneration will be submitted to shareholders at the 2014 AGM.
Audit tender PwC have been the Companys external auditors since the merger with Lattice Group plc in 2002, having been the incumbent external auditors of both the merging parties and the audit contract has not been put out to tender since then. Their performance has been reviewed annually by the Committee since that time.
During the year the Committee spent time discussing a potential tender for the external audit, following the new requirement on audit tendering and rotation of auditors.
The Committee has also discussed the implications of the proposals by both the UK Competition Commission (implementing its decision to mandate tendering every 10 years) and the EU (requiring audit firm rotation at least every 20 years), and will implement them when they become final. These proposals have effectively superceded the comply-or-explain provision that underpins the Code. The Financial Reporting Council has decided to defer consideration of whether to make any changes to these sections of the Code until its next review, currently scheduled for 2016.
The Committee considered the additional disruption that both an audit tender and any change in audit firm would involve in light of the ongoing US financial controls program, and the services we currently receive from other firms that may be considered in a tender process.
The Committee concluded that a tender is not in the Companys interests at this time but agreed that this issue would be reviewed annually as part of the auditor appointment process. No representatives from PwC were present during the Committees discussion of the options for a tender of the external audit.
There are no contractual obligations restricting our choice of external auditors and we have not entered into any auditor liability agreement. |
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Non-audit services provided by the external auditors Non-audit services provided by the external auditors require approval by the Committee. Approval is given on the basis the service will not compromise independence and is a natural extension of the audit or if there are overriding business or efficiency reasons making the external auditors most suited to provide the service. Certain services are prohibited from being performed by the external auditors, as required under the SOX Act.
Total non-audit services provided by PwC during the year ended 31 March 2014 were £1.7 million (2013: £2.3 million), which comprised 15% (2013: 23%) of total audit and audit-related fees.
Total audit and audit-related fees include the statutory fee and fees paid to PwC for other services that the external auditors are required to perform, for example regulatory audits and SOX Act attestation. Non-audit fees represent all other services provided by PwC not included in the above.
Significant non-audit services provided by PwC in the year included the review of US pensions and other post-retirement benefits census data (£0.5 million) and tax compliance services in territories other than the US (£0.5 million).
PwC were engaged to review census data used in US pensions and other post-retirement benefit calculations and advise on enhancements to procedures and controls surrounding census data completeness and accuracy.
The Committee considered PwC best placed to provide this service given their in-depth understanding of our processes and control environment. In order to maintain the external auditors independence and objectivity, the work was performed by a team independent of the audit team, management reviewed and considered PwCs findings and PwC did not make any decisions on behalf of management. Additionally, PwC had no input in respect of the production of financial information subsequently used by the audit team.
The Committee also considered that tax compliance services were most efficiently provided by the external auditors, as much of the information used in preparing computations and returns is derived from audited financial information. In order to maintain the external auditors independence and objectivity, management reviewed and considered PwCs findings and PwC did not make any decisions on behalf of management. |
52 National Grid Annual Report and Accounts 2013/14
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Corporate Governance continued |
Audit information Having made the requisite enquiries, so far as the Directors in office at the date of the approval of this report are aware, there is no relevant audit information of which the auditors are unaware and each Director has taken all reasonable steps to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
Internal control, risk and compliance We regularly consider the effectiveness of financial reporting, internal controls and compliance with applicable legal and internal requirements. We also review the procedures for the identification, assessment, mitigation and reporting of risks.
To continuously improve and remain at best practice levels, the risk management team reviews risk process standards, emerging trends and concepts being driven by the main consultancy firms and seeks to apply these as appropriate. The standards issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the international risk standard ISO 31000 continue to inform the principles of our risk management process.
Specific improvements delivered during the year, and ongoing, were noted by the Committee at its meeting in September. These improvements include an enhanced approach for risk reporting to the Executive Committee, focusing on giving better visibility of mitigations and their impact on how risks are scored.
The scope of risk discussions has also been widened to incorporate specific consideration of our treatment of and preparedness for emerging risks (uncertainties on the horizon that are still developing and so may or may not evolve into threats or opportunities for us) and potential black swan type events (catastrophic events of extremely high impact and extremely low likelihood).
The Board has participated in an interactive risk workshop to reinforce awareness of our key risks so its views can be captured and incorporated into our risk management activities. The output of this session formed part of the risk information reviewed at the March Audit Committee meeting.
Details of our internal control and risk management systems, including over the financial reporting process can be found on pages 22 and 25 and page 170. Our risk factors are described in full on pages 167 to 169.
Compliance management The Global Ethics and Compliance team has continued to focus on promoting improved consistency of reporting on control frameworks across the compliance reporting process. The aim of this activity is to make sure any problem areas are transparent and that all parts of the business are applying a similar standard.
The Committee asked for a review of the key compliance areas that are subject to the reporting process. Currently, reporting focuses on legal compliance obligations only, and consideration is being given to whether all key areas are covered and what, if any, other areas should be included. The Committee also received the annual reports on the Companys anti-bribery procedures and whistleblowing procedures and reviewed their adequacy. It noted that no material instances of non-compliance had been identified. |
Going concern Having made enquiries and reviewed managements assessment of the going concern assumption, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next financial year and the foreseeable future. For this reason, the Directors are satisfied that, at the time of approving the financial statements, it is appropriate to continue to adopt the going concern basis in preparing the consolidated and individual financial statements of the Company.
Managements assessment process In accordance with the draft recommendations of the updated Financial Reporting Council guidance on going concern and liquidity risk, we have reviewed and amended our going concern assessment process.
Our process is an extension of our business planning process, and is further supplemented by our annual budget and other liquidity risk management controls. Our five year business plan and one year budget were reviewed and approved by the Board at its meetings in September 2013 and March 2014 respectively. The Finance Committee provides ongoing oversight of our liquidity policy, which requires us to maintain sufficient liquidity for a rolling 12 month period.
In light of our refreshed approach, we have reconsidered what the most appropriate foreseeable future period is. Given our business model, current regulatory clarity and other factors affecting our operating environment, and the robustness of our business planning process and scenario analysis, we have concluded the foreseeable future period is the five years ending 31 March 2018, in line with our business plan. This period is considered to be the foreseeable future as required for this going concern assessment only, and is in accordance with company law, accounting standards and the Listing Rules. We will reassess this period annually in light of developments in our operating environment, business model and strategic priorities.
Our business plan considers the significant solvency and liquidity risks involved in delivering our business model in light of our strategic priorities. The business plan models a number of upside and downside scenarios, derived from the risks and opportunities identified, and determines the impact these would have on our results and financial position over the five year period. In addition, we have reviewed and challenged a number of worst case scenarios and their possible remediation.
Our business model calls for significant capital investment to maintain and expand our network infrastructure. To deliver this, our business plan highlights that we will need to access capital markets to raise additional funds from time to time. We have a long and successful history in this regard; however, our business plan also models various KPIs used by lenders and credit rating agencies in assessing a companys credit worthiness. These models indicate that we should continue to have access to capital markets at commercially acceptable interest rates throughout the five year period. To monitor and control risks around access to capital markets we have policies and procedures in place to help mitigate, as far as possible, any risk of a change in our credit ratings and other credit metrics.
More detail on our financial risks, including liquidity and solvency, is provided in note 30 to the consolidated financial statements. There have been no major changes to the Groups significant liquidity and solvency risks in the year.
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Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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53
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Role Sets policy and grants authority for financing decisions, credit exposure, hedging and foreign exchange transactions, guarantees and indemnities subject to the risk appetite approved by the Board. It also approves other treasury, tax, pension funding and insurance strategies and, if appropriate, recommends them to the Board.
Review of the year The Finance Committee was established in 2002 to focus on the Companys debt book to make sure these matters were given the necessary attention.
Following a number of new Non-executive Directors joining the Board in 2012/13, a presentation on the work and remit of the Committee was given to the Board in April 2013.
The presentation focused on the risks inherent in the areas the Finance Committee covers namely, treasury activities, insurance, pensions and tax. The presentation aimed to help all Directors understand the role and responsibilities of the Committee.
During the year, external advisors have given presentations to the Committee on matters such as capital markets, the results of a debt investor survey and the current state of banks. Additionally, information was circulated between meetings to make sure the Committee was kept fully briefed.
This year, we continued to focus on funding plans to take into account international debt market conditions. The Committee received regular reports on treasury, tax, insurance, pensions and commodity activities to keep us advised of progress and we approved recommendations where appropriate.
In July, after seven years as chair of this Committee, I will be stepping down from the Board. I have been working closely with Therese to ensure a smooth handover of responsibilities. I have no doubt the Committee will continue to perform effectively and evolve under Thereses leadership.
Maria Richter Committee chairman
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Matters considered Examples of matters the Committee considered during the year include:
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| long-term funding requirements; | |||||||||||
| setting and reviewing treasury policies; | |||||||||||
| treasury performance updates provided at each meeting; | |||||||||||
| UK and US tax updates; | |||||||||||
| activities of the Energy Procurement Risk Management Committee in the US; | |||||||||||
| activities of the Incentive Risk Management Committee in the UK; | |||||||||||
| credit rating agencies views on the Company; | |||||||||||
| foreign exchange policy; | |||||||||||
| pensions updates, in particular funding of the Companys pension deficits; and | |||||||||||
| insurance renewal strategy. | |||||||||||
Committee membership and attendance Committee membership during the year and attendance at meetings is set out below. Attendance is expressed as the number of meetings attended out of the number possible or applicable for the individual Director during the year to 31 March 2014.
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Name | Attendance | |||||||||||
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Maria Richter (chairman) | 4 of 4 | |||||||||||
Steve Holliday |
4 of 4 | |||||||||||
Andrew Bonfield |
4 of 4 | |||||||||||
Jonathan Dawson |
4 of 4 | |||||||||||
Therese Esperdy 1 |
0 of 0 | |||||||||||
Ruth Kelly |
4 of 4 | |||||||||||
Mark Williamson 2 |
1 of 1 | |||||||||||
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1. |
Therese Esperdy was appointed to the Committee with effect from 18 March 2014.
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2. | Mark Williamson stepped down following his appointment as chairman of the Audit Committee on 29 July 2013. | |||||||||||
54 National Grid Annual Report and Accounts 2013/14
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Corporate Governance continued |
Strategic Report
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Corporate Governance
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Financial Statements
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Additional Information
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55
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Role Responsible for considering the structure, size and composition of the Board and committees, and succession planning. It also identifies and proposes individuals to be Directors and executive management reporting directly to the Chief Executive, and establishes the criteria for any new position.
Review of the year The Board is now in the final stages of its phased transition that commenced in 2011. Most recently we have welcomed Therese Esperdy and John Pettigrew to our Board and, following the AGM, Maria Richter will be stepping down from the Board. Nick Winser will also step down from the Board at this time, but will continue in his role as President of ENTSO-E and Chairman of NGET and NGG until July 2015 when he will be leaving the Company.
Following the changes in Board membership, the composition of the committees was reviewed and updated to reflect the new balance of skills, knowledge and experience on the Board.
Diversity of background, thinking styles and expertise have been important criteria in the transition of the Board. During the year the Committee reviewed our Board diversity policy. Progress against the policy was discussed and objectives to support the implementation of the policy were agreed, see page 56 for more details.
The Committee agreed that the first objective should be to continue to meet, and aspire to exceed, the target of 25% of Board positions to be held by women by 2015. I look forward to reporting on our progress next year.
Succession planning below Board level is also important.
During the year the Committee with the Chief Executive reviewed the Executive Committee timeline and succession plans, rather than these being considered by the Board, to allow for a more open discussion. The presentation focused on succession cover to address the key risks and actions identified by an external assessment.
Sir Peter Gershon Committee chairman
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Matters considered Examples of matters the Nominations Committee considered during the year include: |
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Non-executive and Executive Director appointments, see page 56 for details of the processes; |
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| the successor as Senior Independent Director to Ken Harvey; | |||||||||
| Board and committee membership following changes to the composition of the Board; | |||||||||
| the executive succession planning process focusing on the identification, development and readiness of successors to the Executive Committee in particular; and | |||||||||
| review of the findings from the Board evaluation, see page 46 for more information, and discussion of the Committees performance. | |||||||||
Committee membership and attendance Committee membership during the year and attendance at meetings is set out below. Attendance is expressed as the number of meetings attended out of the number possible or applicable for the individual Director during the year to 31 March 2014.
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Sir Peter Gershon (chairman)
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6 of 6 | |||||||||
Philip Aiken
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6 of 6 | |||||||||
Nora Mead Brownell
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6 of 6 | |||||||||
Jonathan Dawson
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6 of 6 | |||||||||
Therese Esperdy 1
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1 of 1 | |||||||||
Paul Golby
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6 of 6 | |||||||||
Ruth Kelly
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6 of 6 | |||||||||
Maria Richter
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6 of 6 | |||||||||
Mark Williamson | 6 of 6 | |||||||||
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Ken Harvey 2
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1 of 1 | |||||||||
George Rose 2 | 1 of 1 | |||||||||
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1. Therese Esperdy was appointed to the Committee with effect from 18 March 2014.
2. George Rose and Ken Harvey stepped down from the Board with effect from 29 July 2013. |
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58 National Grid Annual Report and Accounts 2013/14
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Report |
Annual statement from the Remuneration Committee chairman
I am delighted to present my first Directors Remuneration Report.
Following the introduction of a new UK regulatory framework in 2013 and the continued evolution of our US business, last summer the Committee initiated an extensive review of our executive remuneration strategy. Our objective was to assess whether the principles on which the current remuneration strategy is based continued to reflect our business drivers given recent changes. Our review concluded that a number of significant changes were appropriate. They are presented in this report for our shareholders consideration and, I hope, approval at our 2014 AGM.
The key factor in our discussions was to enhance the alignment of interest between executives and shareholders over the longer term. National Grid is a long-term business, where decisions taken today can have significant impact on performance and profitability over several years. Therefore the Committee believes that the bulk of incentives to executives should be paid in shares and that it is essential for high levels of personal shareholdings to become mandatory, rather than simply guidelines.
Having reached provisional conclusions I wrote to a number of our larger shareholders to seek their views. In the light of the constructive responses we received, the Committee amended its proposals and these amendments are incorporated into the recommendations in this report.
The key components of our recommendations are:
A rebalancing of variable pay from the Annual Performance Plan (APP) to the Long Term Performance Plan (LTPP). It is proposed:
to reduce the APP maximum from 150% of salary to 125% of salary for the CEO and the other Executive Directors; and
to increase the LTPP maximum from 225% to 350% of salary for the CEO and from 200% to 300% of salary for the other Executive Directors.
Increased alignment with shareholders by requiring Executive Directors to retain a significantly higher number of shares earned. It is proposed:
for the CEO, the new requirement is a shareholding of 500% of pre-tax salary, equivalent to over nine years post-tax salary; and
for the other Executive Directors, the new requirement is a shareholding of 400% of pre-tax salary. |
Stronger alignment with our business model and the long-term value drivers around a dividend-led total return. It is proposed to move to two key LTPP metrics RoE (50% weighting) and value growth (50% weighting):
RoE is aimed at focusing management on driving profits within the business; and
value growth is viewed as a clearer indicator than EPS of the long-term growth of the business and the creation of shareholder value.
Extended holding periods for incentive awards. It is proposed that any APP award is paid half in cash and half in shares. The shares would be paid immediately and be subject to a minimum holding period of two years. LTPP performance metrics would be measured over a three year period and awards would then be subject to a minimum two year holding period.
The Companys commitment to increasing the annual dividend by at least RPI for the foreseeable future would be reflected in LTPP awards. The Committee will have the explicit power to reduce LTPP vesting should the Company fail to honour the dividend commitment, irrespective of the level of vesting resulting from the performance against the LTPP targets set by the Committee.
The consequence of all these changes is to reduce near-term cash incentives (APP) and tilt the balance to longer-term awards and longer-term shareholding exposure, with a greater proportion of Executive Directors remuneration earned in shares. As a result, we are striking an important balance between long-term reward and increased financial risk to executives through very high levels of mandatory shareholdings. In setting the quantum of future LTPP awards we have taken account of the reduced APP opportunity and longer holding periods that we are proposing. However, I want to assure shareholders that the Committees intention is that any increase in remuneration should arise from commensurate increases in long-term performance. We will therefore seek to ensure that targets set for the LTPP metrics contain appropriately demanding levels of performance to justify any increase in executive reward.
For the 2014 LTPP award we are proposing that maximum payout would require an average annual Group RoE of 12.5% and an average annual value growth of 12% over the three year performance period. The Committee considers these stretch targets, in the light of the business plan and recent performance, to be more challenging to management than those for LTPP set in the recent past. To achieve such a performance would require incremental Group pre-tax profits of over £250 million per annum, which in turn would imply achieved customer savings in the region of £100 £200 million.
We can also confirm that, had the proposed APP and LTPP targets been applicable for 2013/14, no higher level of incentive remuneration would have resulted than was actually achieved under the current arrangements. |
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In addition to the incentive plans review, the Committee reviewed future pension policy and the Executive Directors salaries. Last year there were no salary increases for Executive Directors. For the year ahead the Committee has awarded a 2.5% salary increase to Andrew Bonfield, Steve Holliday and Tom King, in line with the wider Group salary review budget. Nick Winser will not receive a salary increase, due to the fact that he is to stand down from the Board at the AGM in July 2014.
John Pettigrew joined the Board on 1 April 2014 with a starting salary of £475,000 and will not receive a salary increase from 1 June 2014. His remuneration package is in line with the remuneration policy presented for approval in this report. In particular, his salary is below the Committees assessment of the market rate for equivalent roles. Subject to his performance, the Committees intention is to increase his salary towards market level by way of future phased increases in excess of those awarded to other Executive Directors.
Our 2013/14 performance is set out on page 68. Overall, against the APP performance metrics of adjusted EPS, operating profit, US capital delivery, UK and US RoE and individual objectives, performance was ahead of target. As a result, we have made awards to the Executive Directors of between 83% and 129% of salary.
Details of future targets and historical performance will be disclosed each year in respect of the LTPP, and details of historical performance will be disclosed each year in respect of the APP.
The Committee believes that our proposals to restructure incentive pay are appropriate for the Company and on behalf of the Committee I commend them to shareholders.
Jonathan Dawson Committee chairman |
Directors remuneration policy The following tables provide details of the policy we intend to apply, subject to shareholder approval, for three years from the date of the 2014 AGM. Following approval it will be displayed on the Companys website.
There may be circumstances from time to time when the Committee will consider it appropriate to apply some judgement and exercise discretion in respect of the approved policy. This ability to apply discretion is highlighted where relevant in the policy, detailed on pages 60 to 66, and the use of discretion will always be in the spirit of the approved policy.
The Committee will honour any commitments made to Directors before the policy outlined in this report comes into effect. |
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Our peer group The Committee benchmarks its remuneration policy against appropriate peer groups annually to ensure we remain competitive in the relevant markets. The primary focus for reward benchmarking is the FTSE 11-40 for UK-based Executive Directors and general industry and energy services companies with similar levels of revenue for US-based Executive Directors. These peer groups are considered appropriate for a large, complex, international and predominantly regulated business. |
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Shareholding requirement The requirement of Executive Directors to build up and hold a relatively high value of National Grid shares ensures they share a significant level of risk with shareholders and their interests are aligned.
From 2014/15 it is proposed that the existing shareholding guidelines for Executive Directors will be replaced by a firm requirement to build up and retain shares in the Company. The level of holding will increase from 200% of salary to 500% of salary for the CEO and from 125% of salary to 400% of salary for the other Executive Directors.
Unless the shareholding requirement is met, Executive Directors will not be permitted to sell shares, other than to pay tax or in exceptional circumstances.
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The Company includes in its annual employee opinion survey questions on the appropriateness of the pay arrangements within the Company. It does not specifically invite employees to comment on the Directors remuneration policy but any comments made by employees are noted.
Policy on recruitment remuneration Salaries for new Executive Directors appointed to the Board will be set in accordance with the terms of the approved remuneration policy in force at the time of appointment, and in particular will take account of the appointees skills and experience as well as the scope and market rate for the role.
Where appropriate, salaries may be set below market level initially, with the Committee retaining discretion to award increases in salary in excess of those of the wider workforce and inflation to bring salary to a market level over time, where this is justified by individual and Company performance.
Benefits consistent with those offered to other Executive Directors under the approved remuneration policy in force at the time of appointment will be offered, taking account of local market practice. The Committee may also agree that the Company will meet certain costs associated with the recruitment, for example legal fees, and the Committee may agree to meet certain relocation expenses or provide tax equalisation as appropriate.
Pensions for new Executive Directors appointed to the Board will be set in accordance with the terms of the approved remuneration policy in force at the time of appointment.
Ongoing incentive pay (APP and LTPP) for new Executive Directors will be in accordance with the approved remuneration policy in force at the time of appointment. This means the maximum APP award in any year would be 125% of salary and the maximum LTPP award would be 300% of salary (350% of salary for a new CEO).
For an externally appointed Executive Director, the Company may offer additional cash or share-based payments that it considers necessary to buy out current entitlements from the former employer that will be lost on recruitment to National Grid. Any such arrangements would reflect the delivery mechanisms, time horizons and levels of conditionality of the remuneration lost.
In order to facilitate buy out arrangements as described above, existing incentive arrangements will be used to the extent possible, although awards may also be granted outside of these shareholder-approved schemes if necessary and as permitted under the Listing Rules.
For an internally appointed Executive Director, any outstanding variable pay element awarded in respect of the prior role will continue on its original terms.
Fees for a new Chairman or Non-executive Director will be set in line with the approved policy in force at the time of appointment. |
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Differences in remuneration policy for all employees The remuneration policy for the Executive Directors is designed with regard to the policy for employees across the Company as a whole. However, there are some differences in the structure of remuneration policy for the senior executives. In general, these differences arise from the development of remuneration arrangements that are market competitive for our various employee categories. They also reflect the fact that, in the case of the Executive Directors, a greater emphasis tends to be placed on performance-related pay in the market, in particular long-term performance-related pay.
All employees are entitled to base salary, benefits and pension. Many employees are eligible for an APP award based on Company and/or individual performance. Eligibility and the maximum opportunity available is based on market practice for the employees job band. In addition, around 350 senior management employees are eligible to participate in the LTPP.
The Company has a number of all-employee share plans that provide employees with the opportunity to become, and to think like, a shareholder. These plans include Sharesave and the SIP in the UK and the 401(k) and 423(b) plans in the US. Further information is provided on page 60.
Consideration of remuneration policy elsewhere in the Company In setting the remuneration policy the Committee considers the remuneration packages offered to employees across the Company. As a point of principle, salaries, benefits, pensions and other elements of remuneration are benchmarked regularly to ensure they remain competitive in the markets in which we operate. In undertaking such benchmarking our aim is to be at mid-market level for all job bands, including those subject to union negotiation.
As would be expected, we have differences in pay and benefits across the business which reflect individual responsibility and there are elements of remuneration policy which apply to all, for example, flexible benefits and share plans.
When considering annual salary increases, the Committee reviews the proposals for salary increases for the employee population generally, as it does for any other changes to remuneration policy being considered. This will include a report on the status of negotiations with any trade union represented employees. |
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Service contracts and policy on payment for loss of office In line with our policy, all Executive Directors have service contracts which are terminable by either party with 12 months notice.
The contracts contain provisions for payment in lieu of notice, at the sole and absolute discretion of the Company. Such payments are limited to payment of salary only for the remainder of the notice period with the exception of Nick Winser. In Nicks case the value of benefits would also be paid. In the UK such payments would be phased on a monthly basis, over a period no greater than 12 months, and the Executive Director would be expected to mitigate any losses where employment is taken up during the notice period. In the US, for tax purposes the policy is to make any payment in lieu of notice as soon as reasonably practicable, and in any event within two and a half months of the later of 31 December and 31 March immediately following the notice date.
In the event of a UK Director being made redundant, statutory compensation would apply and the relevant pension plan rules may result in the early payment of an unreduced pension.
On termination of employment, no APP award would generally be payable and any DSP awards would generally lapse. However, the Committee has the discretion to deem an individual to be a good leaver, in which case an APP award would be payable on the termination date, based on performance during the financial year up to termination, and DSP awards would vest on the termination date. Examples of circumstances in which a Director would be treated as a good leaver include redundancy, retirement, illness, injury, disability and death. Any APP award would be prorated and would be subject to performance achieved against the objectives for that year.
On termination of employment, outstanding awards under the share plans will be treated in accordance with the relevant plan rules approved by shareholders. Share awards would normally lapse. Good leaver provisions apply at the Committees discretion and in specified circumstances, including redundancy, retirement, illness, injury, disability and death, where awards will be released to the departing Executive Director or, in the case of death, to their estate. Long-term share plan awards held by good leavers may vest subject to performance measured at the normal vesting date and are prorated. Such awards would vest at the same time as for other participants.
The Chairmans appointment is subject to six months notice by either party; for the other Non-executive Directors, notice is one month. No compensation is payable to Non-executive Directors if required to stand down.
Copies of Directors service contracts and letters of appointment are available to view at the Companys registered office. |
Dates of Directors service contracts/letters of appointment
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Andrew Bonfield | 1 November 2010 | |||||||
Steve Holliday | 1 April 2006 | |||||||
Tom King | 11 July 2007 | |||||||
John Pettigrew | 1 April 2014 | |||||||
Nick Winser | 28 April 2003 | |||||||
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Philip Aiken | 15 May 2008 | |||||||
Nora Mead Brownell | 1 June 2012 | |||||||
Jonathan Dawson | 4 March 2013 | |||||||
Therese Esperdy | 18 March 2014 | |||||||
Sir Peter Gershon | 1 August 2011 | |||||||
Paul Golby | 1 February 2012 | |||||||
Ruth Kelly | 1 October 2011 | |||||||
Maria Richter | 1 October 2003 | |||||||
Mark Williamson | 3 September 2012 | |||||||
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External appointments The Executive Directors may, with the approval of the Board, accept one external appointment as a non-executive director of another company and retain any fees received for the appointment. Experience as a board member of another company is considered to be beneficial personal development, that in turn is of value to the Company. |
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Total remuneration opportunity The total remuneration for each of the Executive Directors that could result from the remuneration policy in 2014 under three different performance levels below threshold (when only fixed pay is receivable), on target and maximum is shown below. |
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1. |
Fixed pay consists of salary, pension and benefits in kind as provided under the remuneration policy. |
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2. | Salary is that to be paid in 2014/15, taking account of the increases that will be effective from 1 June 2014 shown on page 72. | |||
3. | Benefits in kind and pension are as shown in the single total figure of remuneration table for 2013/14 on page 67, except for John Pettigrew. For John, benefits in kind are assumed to be £18,300 and pension is assumed to be £320,000. | |||
4. | APP calculations are based on 125% of salary for the period 1 April 2014 to 31 March 2015. | |||
5. | LTPP calculations are based on awards with a face value of 350% of 1 June 2014 salary for Steve Holliday and 300% of 1 June 2014 salary for all other Executive Directors. | |||
6. | LTPP and APP payout is 50% for on target performance and the maximum is 100% for achieving stretch performance. | |||
7. | Tom Kings remuneration opportunity has been converted at $1.62:£1. | |||
Statement of consideration of shareholder views The Committee considers all feedback received from shareholders throughout the year. While the Committee understands that not all shareholders views will be the same, we consult with our larger shareholders on a regular basis to understand their expectations with regard to executive remuneration issues and any changes in shareholder views in this regard. In 2013/14 larger shareholders were consulted on the proposed changes to remuneration policy. Shareholders were supportive of the direction of change proposed, particularly increasing holding periods for awards and retention thresholds. Several responses suggested a number of small changes and where possible the Committee has reflected these changes in the proposals.
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financial statements |
We have continued to develop our presentational format to provide shareholders and users of these financial statements with additional information and guidance, and to make them easier to understand.
Throughout these financial statements we have included additional information boxes, providing helpful commentary on what the disclosures mean and why they are important to the understanding of our financial performance and position. Some of these boxes highlight Our strategy in action, drawing out the key elements of our business model (set out in the Strategic Report on pages 14 and 21), and showing how the disclosures reflect this strategy.
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Audit opinions We have two audit opinions on our financial statements, reflecting our dual listing on the London Stock Exchange and the New York Stock Exchange. Due to the different reporting requirements for each listing, our auditors are required to confirm compliance with each set of standards in a prescribed format. The IFRS audit opinion has changed this year, reflecting the change to auditing standards, which requires the auditors to provide more detail as to how they have planned and completed their audit, as well as their views on significant matters they have noted and that were discussed by the Audit Committee. There are also additional specific disclosure requirements due to our US listing which are included in the notes.
Notes Notes to the financial statements provide additional information required by statute, accounting standards or other regulations to assist in a more detailed understanding of the primary financial statements. In many notes we have included an accounting policy that describes how the transactions or balance in that note have been measured, recognised and disclosed. The basis of preparation section provides details of accounting policies that apply to transactions and balances in general.
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Unaudited commentary We have presented with the financial statements certain analysis previously included in the financial review section of the Strategic Report of our Annual Report. This approach provides a more understandable narrative, a logical flow of information and reduces duplication. We have created a combined financial review, including a commentary on items within the primary statements, on pages 84 to 91. Unless otherwise indicated, all analysis provided in the financial statements is on a statutory IFRS basis. All information in ruled boxes styled in the same manner as this one does not form part of the audited financial statements. This has been further highlighted by including the word unaudited at the start of each box header. Unaudited commentary boxes appear on pages 85 to 87, 89, 91, 96, 106, 108 and 121.
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76 National Grid Annual Report and Accounts 2013/14
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responsibilities |
The Directors are responsible for preparing the Annual Report and Accounts, including the consolidated financial statements and the Company financial statements, the Directors Report, including the Remuneration Report and the Strategic Report, in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and the Company financial statements and the Remuneration Report in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom generally accepted accounting practice, UK GAAP). In preparing the consolidated financial statements, the Directors have also elected to comply with IFRS, issued by the International Accounting Standards Board (IASB). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company on a consolidated and individual basis and of the profit or loss of the Company on a consolidated basis for that period.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state that the consolidated financial statements comply with IFRS as issued by the IASB and IFRS adopted by the EU and, with regard to the Company financial statements, that applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the consolidated financial statements and Company financial statements on a going concern basis unless it is inappropriate to presume that the Company, on a consolidated and individual basis, will continue in business, in which case there should be supporting assumptions or qualifications as necessary. |
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Companys transactions and disclose with reasonable accuracy at any time the financial position of the Company on a consolidated and individual basis, and to enable them to ensure that the consolidated financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation and the Company financial statements and the Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and its subsidiaries and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Companys website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on page 43, confirms that:
to the best of their knowledge, the consolidated financial statements and the Company financial statements, which have been prepared in accordance with IFRS as issued by the IASB and IFRS as adopted by the EU and UK GAAP respectively, give a true and fair view of the assets, liabilities, financial position and profit of the Company on a consolidated and individual basis; to the best of their knowledge, the Strategic Report contained in the Annual Report and Accounts includes a fair review of the development and performance of the business and the position of the Company on a consolidated and individual basis, together with a description of the principal risks and uncertainties that it faces; and they consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Companys performance, business model and strategy.
By order of the Board
Alison Kay Group General Counsel & Company Secretary 18 May 2014 Company number: 4031152 |
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R eport of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of National Grid plc
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Audit opinion for Form 20-F In our opinion, the accompanying consolidated statements of financial position and the related consolidated income statements, consolidated statements of comprehensive income, consolidated cash flow statements and consolidated statements of changes in equity, present fairly, in all material respects, the financial position of National Grid plc and its subsidiaries at 31 March 2014 and 31 March 2013, and the results of their operations and their cash flows for each of the three years in the period ended 31 March 2014 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and in conformity with International Financial Reporting Standards as adopted by the European Union.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of 31 March 2014, based on criteria established in Internal Control Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Additional Information section appearing on page 170 of the 2014 Annual Report and Accounts. As discussed in note 1, the Group changed the manner in which it accounts for employee benefits.
Our responsibility is to express opinions on these financial statements and on the Companys internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers LLP London United Kingdom 21 May 2014 |
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preparation |
Accounting policies describe our approach to recognising and measuring transactions and balances in the year. Accounting policies applicable across the financial statements are shown below. Accounting policies that are specific to a component of the financial statements have been incorporated into the relevant note.
This section also shows areas of judgement and key sources of estimation uncertainty in these financial statements. In addition, we summarise new EU endorsed accounting standards, amendments and interpretations and whether these are effective in 2014 or later years, explaining how significant changes are expected to affect our reported results.
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A. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries, together with a share of the results, assets and liabilities of jointly controlled entities (joint ventures) and associates using the equity method of accounting, where the investment is carried at cost plus post-acquisition changes in the share of net assets of the joint venture or associate, less any provision for impairment.
A subsidiary is defined as an entity controlled by the Company. Control is achieved where the Company has the power to affect the returns of an entity to which it is exposed or to which it has rights.
Losses in excess of the consolidated interest in joint ventures and associates are not recognised, except where the Company or its subsidiaries have made a commitment to make good those losses.
Where necessary, adjustments are made to bring the accounting policies used in the individual financial statements of the Company, subsidiaries, joint ventures and associates into line with those used by the Company in its consolidated financial statements under IFRS. Intercompany transactions are eliminated.
The results of subsidiaries, joint ventures and associates acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Acquisitions are accounted for using the acquisition method, where the purchase price is allocated to the identifiable assets acquired and liabilities assumed on a fair value basis and the remainder recognised as goodwill.
B. Foreign currencies Transactions in currencies other than the functional currency of the Company or subsidiary concerned are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at closing exchange rates. Non-monetary assets are not retranslated unless they are carried at fair value.
Gains and losses arising on the retranslation of monetary assets and liabilities are included in the income statement, except where the adoption of hedge accounting requires inclusion in other comprehensive income note 15.
On consolidation, the assets and liabilities of operations that have a functional currency different from the Companys functional currency of pounds sterling, principally our US operations that have a functional currency of dollars, are translated at exchange rates prevailing at the reporting date. Income and expense items are translated at the weighted average exchange rates for the period where these do not differ materially from rates at the date of the transaction. Exchange differences arising are classified as equity and transferred to the consolidated translation reserve. |
|||||
National Grids principal activities involve the transmission and distribution of electricity and gas in Great Britain and northeastern US. The Company is a public limited liability company incorporated and domiciled in England, with its registered office at 1-3 Strand, London WC2N 5EH.
The Company has its primary listing on the London Stock Exchange and is also quoted on the New York Stock Exchange. These consolidated financial statements were approved for issue by the Board of Directors on 18 May 2014.
These consolidated financial statements have been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) and related interpretations as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the EU. They are prepared on the basis of all IFRS accounting standards and interpretations that are mandatory for periods ending 31 March 2014 and in accordance with the Companies Act 2006 applicable to companies reporting under IFRS and Article 4 of the EU IAS Regulation. The 2013 and 2012 comparative financial information has also been prepared on this basis.
The consolidated financial statements have been prepared on an historical cost basis, except for the recording of pension assets and liabilities, the revaluation of derivative financial instruments and certain commodity contracts and investments classified as available-for-sale.
The consolidated financial statements have been prepared on a going concern basis following the assessment made by the Directors as set out on page 52.
These consolidated financial statements are presented in pounds sterling, which is also the functional currency of the Company.
The preparation of financial statements 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 (see accounting policy C). |
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developments
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C. Areas of judgement and key sources of estimation uncertainty The preparation of financial statements requires management to make estimates and assumptions that affect the 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. Information about such judgements and estimations is contained in the notes to the financial statements, and the key areas are summarised below.
Areas of judgement that have the most significant effect on the amounts recognised in the financial statements are as follows:
the categorisation of certain items as exceptional items, remeasurements and stranded cost recoveries and the definition of adjusted earnings notes 4 and 7; and energy purchase contracts classification as being for normal purchase, sale or usage note 27.
IFRS provides certain options available within accounting standards. Choices we have made, and continue to make, include the following:
· Presentational formats: we use the nature of expense method for our income statement and aggregate our statement of financial position to net assets and total equity. In the income statement, we present subtotals of total operating profit, profit before tax and profit from continuing operations, together with additional subtotals excluding exceptional items, remeasurements and stranded cost recoveries. Exceptional items, remeasurements and stranded cost recoveries are presented separately on the face of the income statement. · Customer contributions: contributions received prior to 1 July 2009 towards capital expenditure are recorded as deferred income and amortised in line with the depreciation on the associated asset. · Financial instruments: we normally opt to apply hedge accounting in most circumstances where this is permitted. For net investment hedges, we have chosen to use the spot rate method, rather than the alternative forward rate method.
Key sources of estimation uncertainty that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
impairment of goodwill note 9; review of residual lives, carrying values and impairment charges for other intangible assets and property, plant and equipment notes 10 and 11; estimation of liabilities for pensions and other post-retirement benefits notes 22 and 29; valuation of financial instruments and derivatives notes 15 and 30; revenue recognition and assessment of unbilled revenue note 2; recoverability of deferred tax assets note 6; and environmental and decommissioning provisions note 23.
In order to illustrate the impact that changes in assumptions could have on our results and financial position, we have included sensitivity analysis in note 33.
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New IFRS accounting standards and interpretations adopted in 2013/14 During the year ended 31 March 2014, with the exception of IAS 19 (revised), and in respect of disclosures required by IFRS 13 Fair value measurements, the Company has not adopted any new IFRS, IAS or amendments issued by the IASB, or interpretations issued by the IFRS Interpretations Committee (IFRIC), which have had a material impact on the Companys consolidated financial statements. The impact of IAS 19 (revised) is set out in note 1. The additional disclosures required by IFRS 13 are included in note 30.
Other standards, interpretations and amendments issued by the IASB and IFRIC that have not had a material impact on the Companys consolidated results or assets and liabilities are:
IFRS 10 Consolidated financial statements; IFRS 11 Joint arrangements; IFRS 12 Disclosure of interests in other entities; amendments to IAS 27 Separate financial statements and IAS 28 Investments in associates and joint ventures as a result of the adoption of the above standards; amendments to IAS 1 Presentation of financial statements; and amendments to IFRS 7 Financial instruments: Disclosures.
New IFRS accounting standards and interpretations not yet adopted The Company enters into a significant number of transactions that fall within the scope of IFRS 9 Financial instruments. The IASB is completing IFRS 9 in phases and the Company is evaluating the impact of the standard as it develops. It is currently expected that the standard will be required to be adopted by the Company on 1 April 2018. We are currently assessing the likely impact of this standard on the Companys consolidated financial statements.
Other standards and interpretations or amendments thereto which have been issued, but are not yet effective, are not expected to have a material impact on the Companys consolidated financial statements. |
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of comprehensive income for the years ended 31 March |
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of changes in equity for the years ended 31 March |
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Consolidated cash flow statement for the years ended 31 March |
Notes |
2014
£m |
2013
(restated) 1 £m |
2012
(restated) 1 £m |
|||||||||||||||
|
||||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||
Total operating profit |
2(b | ) | 3,735 | 3,749 | 3,535 | |||||||||||||
Adjustments for: |
||||||||||||||||||
Exceptional items, remeasurements and stranded cost recoveries |
4 | (71 | ) | (110) | (44) | |||||||||||||
Depreciation, amortisation and impairment |
1,417 | 1,361 | 1,282 | |||||||||||||||
Share-based payment charge |
20 | 20 | 24 | |||||||||||||||
Changes in working capital |
(59 | ) | (410) | 146 | ||||||||||||||
Changes in provisions |
(150 | ) | (53) | (116) | ||||||||||||||
Changes in pensions and other post-retirement benefit obligations |
(323 | ) | (408) | (382) | ||||||||||||||
Cash flows relating to exceptional items |
(150 | ) | (112) | (205) | ||||||||||||||
Cash flows relating to stranded cost recoveries |
| | 247 | |||||||||||||||
|
||||||||||||||||||
Cash generated from operations |
4,419 | 4,037 | 4,487 | |||||||||||||||
Tax paid |
(400 | ) | (287) | (259) | ||||||||||||||
|
||||||||||||||||||
Net cash inflow from operating activities |
4,019 | 3,750 | 4,228 | |||||||||||||||
|
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Cash flows from investing activities |
||||||||||||||||||
Acquisition of investments |
(4 | ) | (14) | (13) | ||||||||||||||
Proceeds from sale of investments in subsidiaries |
| 183 | 365 | |||||||||||||||
Purchases of intangible assets |
(179 | ) | (175) | (203) | ||||||||||||||
Purchases of property, plant and equipment |
(2,944 | ) | (3,214) | (3,147) | ||||||||||||||
Disposals of property, plant and equipment |
4 | 32 | 24 | |||||||||||||||
Dividends received from joint ventures |
38 | 21 | 26 | |||||||||||||||
Interest received |
35 | 29 | 24 | |||||||||||||||
Net movements in short-term financial investments |
1,720 | (2,992) | 553 | |||||||||||||||
|
||||||||||||||||||
Net cash flow used in investing activities |
(1,330 | ) | (6,130) | (2,371) | ||||||||||||||
|
||||||||||||||||||
Cash flows from financing activities |
||||||||||||||||||
Proceeds from issue of treasury shares |
14 | 19 | 13 | |||||||||||||||
Purchase of own shares |
(5 | ) | (6) | (4) | ||||||||||||||
Proceeds received from loans |
1,134 | 5,062 | 1,809 | |||||||||||||||
Repayment of loans |
(2,192 | ) | (1,210) | (1,914) | ||||||||||||||
Net movements in short-term borrowings and derivatives |
37 | 452 | (49) | |||||||||||||||
Interest paid |
(901 | ) | (792) | (749) | ||||||||||||||
Dividends paid to shareholders |
(1,059 | ) | (810) | (1,006) | ||||||||||||||
|
||||||||||||||||||
Net cash flow (used in)/from financing activities |
(2,972 | ) | 2,715 | (1,900) | ||||||||||||||
|
||||||||||||||||||
Net (decrease)/increase in cash and cash equivalents |
26(a | ) | (283 | ) | 335 | (43) | ||||||||||||
Exchange movements |
(26 | ) | 14 | | ||||||||||||||
Net cash and cash equivalents at start of year |
648 | 299 | 342 | |||||||||||||||
|
||||||||||||||||||
Net cash and cash equivalents at end of year 2 |
18 | 339 | 648 | 299 | ||||||||||||||
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1. See note 1 on page 92.
2. Net of bank overdrafts of £15m (2013: £23m; 2012: £33m).
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Notes to the consolidated financial statements analysis of items in the primary statements |
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This note sets out the financial performance for the year split into the different parts of the business (operating segments). We monitor and manage the performance of these operating segments on a day-to-day basis.
Our strategy in action We own a portfolio of businesses that range from cash generative developed assets with minimal investment requirements (such as National Grid Metering, included within Other activities) to businesses with high levels of investment and growth (such as UK Electricity Transmission).
We generate 95% of our revenue from our regulated businesses in the UK and US. We work with our regulators to obtain agreements that balance the risks we face with the opportunity to deliver reasonable returns for our investors. When investing in non-regulated businesses we aim to leverage our core capabilities to deliver higher returns for investors.
Our regulated businesses earn revenue for the transmission, distribution and generation services they have provided during the year. In any one year, the revenue recognised may differ from that allowed under our regulatory agreements and any such timing differences are adjusted through future prices. Our non-regulated businesses earn revenue in line with their contractual terms.
|
||
Revenue primarily represents the sales value derived from the generation, transmission and distribution of energy, together with the sales value derived from the provision of other services to customers and, previously, recovery of US stranded costs during the year. It excludes value added (sales) tax and intra-group sales.
Revenue includes an assessment of unbilled energy and transportation services supplied to customers between the date of the last meter reading and the year end. This is estimated based on historical consumption and weather patterns.
Where revenue exceeds the maximum amount permitted by regulatory agreement and adjustments will be made to future prices to reflect this over-recovery, no liability is recognised, as such an adjustment relates to the provision of future services. Similarly no asset is recognised where a regulatory agreement permits adjustments to be made to future prices in respect of an under-recovery.
US stranded costs were various generation-related costs incurred prior to the divestiture of generation assets beginning in the late 1990s and costs of legacy contracts that are being recovered from customers. The recovery of stranded costs and other amounts allowed to be collected from customers under regulatory arrangements was recognised in the period in which these amounts were recoverable from customers. The recovery of stranded costs was substantially completed at 31 March 2012.
We present revenue and the results of the business analysed by operating segment, based on the information the Board of Directors uses internally for the purposes of evaluating the performance of operating segments and determining resource allocation between operating segments. The Board is National Grids chief operating decision-making body (as defined by IFRS 8 Operating Segments) and assesses the performance of operations principally on the basis of operating profit before exceptional items, remeasurements and stranded cost recoveries (see note 4).
Following the commencement of new RIIO regulatory arrangements in the UK, we have changed the way in which we report our operational and financial performance. We have reviewed our segmental disclosure for the year ended 31 March 2014 with the separation of our UK Transmission segment into two new segments: UK Electricity Transmission and UK Gas Transmission. We have also moved the Great Britain-France electricity interconnector from UK Electricity Transmission to Other activities. The information given in this note for the years ended 31 March 2013 and 2012 has been restated to provide a like-for-like comparison.
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100 National Grid Annual Report and Accounts 2013/14
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Notes to the consolidated financial statements continued |
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This note details the interest income generated by our financial assets and interest expense incurred on our financial liabilities. It also includes the expected return on our pension and other post-retirement assets, which is offset by the interest payable on pension and other post-retirement obligations and presented on a net basis. In reporting business performance, we adjust net financing costs to exclude any net gains or losses on derivative financial instruments included in remeasurements.
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102 National Grid Annual Report and Accounts 2013/14
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Notes to the consolidated financial statements continued |
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Tax is payable in the territories where we operate, mainly the UK and US. This note gives further details of the tax charge and tax liabilities, including current and deferred tax. The current tax charge is the tax payable on this years taxable profits. Deferred tax is an accounting adjustment to provide for tax that is expected to arise in the future due to differences in accounting and tax bases.
|
||||
The tax charge for the period is recognised in the income statement, the statement of comprehensive income or directly in equity, according to the accounting treatment of the related transaction. The tax charge comprises both current and deferred tax.
Current tax assets and liabilities are measured at the amounts expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that have been enacted or substantively enacted by the reporting date.
The calculation of the Groups total tax charge involves a degree of estimation and judgement, and management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided for using the balance sheet liability method and is recognised on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised on all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition of other assets and liabilities in a transaction (other than a business combination) that affects neither the accounting nor taxable profit or loss.
Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries and jointly controlled entities except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on the tax rates and tax laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company and its subsidiaries intend to settle their current tax assets and liabilities on a net basis.
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6. Taxation continued | |||||||||||||
Tax charged/(credited) to the income statement
|
||||||||||||||
|
2014
£m |
|
|
2013
(restated £m |
) 1
|
|
2012
(restated) 1 £m |
|
||||||
|
||||||||||||||
Tax before exceptional items, remeasurements and stranded cost recoveries |
581 | 619 | 697 | |||||||||||
|
||||||||||||||
Exceptional tax on items not included in profit before tax (note 4) |
(390 | ) | (128 | ) | (242) | |||||||||
Tax on other exceptional items, remeasurements and stranded cost recoveries |
93 | 66 | 8 | |||||||||||
|
||||||||||||||
Tax on total exceptional items, remeasurements and stranded cost recoveries (note 4) |
(297 | ) | (62 | ) | (234) | |||||||||
|
||||||||||||||
Total tax charge |
284 | 557 | 463 | |||||||||||
|
||||||||||||||
1. See note 1 on page 92. |
||||||||||||||
Taxation as a percentage of profit before tax |
||||||||||||||
|
2014
% |
|
|
2013
(restated % |
) 1
|
|
2012
(restated) 1 % |
|
||||||
|
||||||||||||||
Before exceptional items, remeasurements and stranded cost recoveries |
22.5 | 24.4 | 28.9 | |||||||||||
|
||||||||||||||
After exceptional items, remeasurements and stranded cost recoveries |
10.3 | 20.5 | 19.4 | |||||||||||
|
||||||||||||||
1. See note 1 on page 92. |
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The tax charge for the year can be analysed as follows: |
||||||||||||||
|
2014
£m |
|
|
2013
(restated £m |
) 1
|
|
2012
(restated) 1 £m |
|
||||||
|
||||||||||||||
Current tax |
||||||||||||||
UK corporation tax at 23% (2013: 24%; 2012: 26%) |
355 | 306 | 186 | |||||||||||
UK corporation tax adjustment in respect of prior years |
(9 | ) | (17 | ) | (5) | |||||||||
|
||||||||||||||
346 | 289 | 181 | ||||||||||||
|
||||||||||||||
Overseas corporation tax |
54 | 50 | 98 | |||||||||||
Overseas corporation tax adjustment in respect of prior years |
(88 | ) | (222 | ) | (144) | |||||||||
|
||||||||||||||
(34 | ) | (172 | ) | (46) | ||||||||||
|
||||||||||||||
Total current tax |
312 | 117 | 135 | |||||||||||
|
||||||||||||||
Deferred tax |
||||||||||||||
UK deferred tax |
(292 | ) | 35 | (12) | ||||||||||
UK deferred tax adjustment in respect of prior years |
(3 | ) | (17 | ) | (18) | |||||||||
|
||||||||||||||
(295 | ) | 18 | (30) | |||||||||||
|
||||||||||||||
Overseas deferred tax |
276 | 283 | 191 | |||||||||||
Overseas deferred tax adjustment in respect of prior years |
(9 | ) | 139 | 167 | ||||||||||
|
||||||||||||||
267 | 422 | 358 | ||||||||||||
|
||||||||||||||
Total deferred tax |
(28 | ) | 440 | 328 | ||||||||||
|
||||||||||||||
|
||||||||||||||
Total tax charge |
284 | 557 | 463 | |||||||||||
|
||||||||||||||
1. See note 1 on page 92.
Adjustments in respect of prior years include the following amounts that relate to exceptional items, remeasurements and stranded cost recoveries: £nil (2013: £1m credit; 2012: £1m credit).
|
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106 National Grid Annual Report and Accounts 2013/14
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Notes to the consolidated financial statements continued |
Unaudited commentary on taxation
Tax strategy National Grid manages its tax affairs in a proactive and responsible way in order to comply with all relevant legislation and minimise reputational risk. We have a good working relationship with all relevant tax authorities and actively engage with them in order to ensure that they are fully aware of our view of the tax implications of our business initiatives. Management responsibility and oversight for our tax strategy, which is approved by the Finance Committee, rests with the Finance Director and the Global Tax and Treasury Director who monitor our tax activities and report to the Finance Committee.
Total UK tax contribution National Grid has taken the decision to provide additional information in respect of its total UK tax contribution and first disclosed this in last years annual report. This year we have again disclosed information in respect of our total UK tax contribution for consistency and to aid transparency in an area in which there has been increasing public interest. As was the case in the prior year, the total amount of taxes we pay and collect in the UK year on year is significantly more than just the corporation tax which we pay on our UK profits. Within the total, we again include significant other taxes paid such as business rates and taxes on employment together with employee taxes and other indirect taxes.
For 2013/14 our total tax contribution to the UK Exchequer was £1.4bn (2012/13: £1.2bn). Taxes borne in 2014 were £733m, an 8% increase on taxes borne in 2013 of £678m and primarily due to higher corporation tax payments in the current year. Our 2012/13 total tax contribution of £1.2bn resulted in National Grid being the 17th highest contributor of UK taxes based on the results of the Hundred Groups 2013 Total Tax Contribution Survey, a position commensurate with the size of our business and capitalisation relative to other contributors to the survey. In 2012 we were in 16th position. In 2013 we ranked 9th in respect of taxes borne.
Of course, National Grids contribution to the UK economy is broader than just the taxes it pays over to and collects on behalf of HMRC. The Hundred Groups 2013 Total Tax Contribution Survey ranks National Grid in 4th place in respect of UK capital expenditure on fixed assets and we also rank highly in respect of investment in research and development. National Grids economic contribution also supports a significant number of UK jobs in our supply chain.
The most significant amounts making up the 2013/14 total tax contribution were as follows:
UK total tax contribution 2013/14
|
Tax transparency The UK tax charge for the year disclosed in the accounts in accordance with accounting standards and the UK corporation tax paid during the year will differ. For transparency we have included a reconciliation below of the tax charge per the income statement to the UK corporation tax paid in 2013/14.
The tax charge for the Group as reported in the income statement is £284m (2012/13: £557m). The UK tax charge is £51m (2012/13: £307m) and UK corporation tax paid was £329m (2012/13: £243m), with the principal differences between these two measures as follows:
|
|
||||||||
Year ended 31 March
|
||||||||||
Reconciliation of UK total tax charge to UK corporation tax paid |
|
2014
£m |
|
|
2013
(restated) 1 £m |
|
||||
|
||||||||||
Total UK tax charge (current tax £346m (2013: £289m) and deferred tax £295m credit (2013: £18m charge)) |
51 | 307 | ||||||||
Adjustment for non-cash deferred tax credit/(charge) |
295 | (18) | ||||||||
Adjustment for the current tax credit in respect of prior years |
9 | 17 | ||||||||
|
||||||||||
UK current tax charge |
355 | 306 | ||||||||
UK corporation tax instalment payments in respect of current year not payable until the following year |
(179 | ) | (155) | |||||||
UK corporation tax instalment payments in respect of prior years paid in current year |
153 | 92 | ||||||||
|
||||||||||
UK corporation tax paid |
329 | 243 | ||||||||
|
||||||||||
1. All comparatives restated for IAS 19 (revised). See note 1 on page 92.
Tax losses We have total unrecognised deferred tax assets in respect of losses of £280m (2012/13: £335m) of which £274m (2012/13: £319m) are capital losses in the UK as set out on page 105. These losses arose as a result of the disposal of certain businesses or assets and may be available to offset against future capital gains in the UK.
Development of future tax policy We believe that the continued development of a coherent and transparent tax policy in the UK is critical to help drive growth in the economy.
We continue to contribute to research into the structure of business taxation and its economic impact by contributing to the funding of the Oxford University Centre for Business Taxation at the Saïd Business School.
We are a member of a number of industry groups which participate in the development of future tax policy, including the Hundred Group, which represents the views of finance directors of FTSE 100 companies and several other large UK companies. Our Finance Director is Chairman of its Tax Committee. This helps to ensure that we are engaged at the earliest opportunity on taxation issues which affect our business. For example, in the current year we have engaged with and responded to a number of HMRC consultations, the subject matter of which has a direct impact on taxes borne or collected by our business, and reviewed numerous others with a potential impact.
This unaudited commentary does not form part of the financial statements.
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108 National Grid Annual Report and Accounts 2013/14
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Notes to the consolidated financial statements continued |
Unaudited commentary on dividends
Following the announcement of our new dividend policy in March 2013, we remain confident that our business is able to support a dividend rising at least in line with inflation for the foreseeable future, while continuing to invest as required in our regulated asset bases. The dividend cover chart opposite supports our decision.
With the exception of the 2013/14 interim dividend paid in January this year, a scrip option has been offered for all interim and final dividends in the last three years. The scrip take-up was as follows: 2012/13 final: 46%; 2012/13 interim: 35%; and 2011/12 final: 48%. |
Dividend cover Times
This unaudited commentary does not form part of the financial statements.
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Unaudited commentary on borrowings
As at 31 March 2014, total borrowings of £25,950m (2013: £28,095m) including bonds, bank loans, commercial paper, collateral, finance leases and other debt had decreased by £2,145m primarily representing maturity and redemption of debt during the year. We expect to repay £3,511m of our total borrowings in the next 12 months including commercial paper, collateral and interest, and we expect to be able to refinance this borrowing through the capital and money markets.
The maturity profile of long-term debt in our major entities is illustrated below:
National Grid long-term debt maturity profile £m
1. Includes hybrid bonds at first callable date (euro: 2020; sterling: 2025). Actual maturity of these bonds is euro: 2076; sterling: 2073.
Further information on our bonds can be found in the debt investor section of our website.
This unaudited commentary does not form part of the financial statements.
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29. Actuarial information on pensions and other post-retirement benefits continued National Grid UK Pension Scheme The 2010 actuarial funding valuation showed that, based on long-term financial assumptions, the contribution rate required to meet future benefit accrual was 35% of pensionable earnings (32% by employers and 3% by employees). In addition, National Grid makes payments to the scheme to cover administration costs and the Pension Protection Fund levy. The employer contribution rate and administration costs are being reviewed as part of the 2013 valuation.
Following the 2010 valuation, National Grid and the Trustees agreed a recovery plan which would see the funding deficit repaid by 31 March 2027. Under the schedule of contributions, no deficit contributions were made in 2010/11 or 2011/12. Annual payments of £47m, rising in line with the RPI from March 2010, commenced in 2012/13 and (subject to the current valuation discussions) are due to continue until 2027. As part of the initial 2013 valuation discussions with the Trustees an additional payment of £6m was paid in March 2014.
As part of the 2010 agreement, National Grid has established security account arrangements with a charge in favour of the Trustees. The value of the assets in the security account at 31 March 2014 was approximately £199m. The assets in the security account will be paid to the scheme in the event that National Grid Gas plc (NGG) is subject to an insolvency event, or is given notice of less than 12 months that Ofgem intends to revoke its licence under the Gas Act 1986. The assets in the security account will be released back to National Grid if the scheme moves into surplus.
This scheme ceased to allow new hires to join from 1 April 2002. A DC section of the scheme was offered for employees joining after this date, which closed to future contributions on 31 October 2013 and was replaced by The National Grid YouPlan (see below).
National Grid Electricity Group of the Electricity Supply Pension Scheme The 2010 actuarial funding valuation showed that, based on long-term financial assumptions, the contribution rate required to meet future benefit accrual was 29.6% of pensionable earnings (23.7% by employers and an average of 5.9% by employees). The employer contribution rate is being reviewed as part of the 2013 valuation.
Following the 2010 valuation, National Grid and the Trustees agreed a recovery plan that would see the funding deficit repaid by 31 March 2027. Under the schedule of contributions, payments of £45m were made in 2010/11 and 2011/12 and a further payment of £38m was made in 2012/13. Thereafter annual payments of £38m rising in line with RPI are due to continue until 2027. The actual payment made in 2013/14 was £45m which included an additional payment of £7m following initial 2013 valuation discussions with the Trustees. A further £35m paid in 2011/12 to support a de-risking initiative has been recognised from a funding perspective during 2013/14.
As part of this agreement, National Grid has established security account arrangements with a charge in favour of the Trustees. The value of the assets in the security account at 31 March 2014 was approximately £35m. The assets in the security account will be paid to the scheme in the event that National Grid Electricity Transmission plc (NGET) is subject to an insolvency event, or ceases to hold a licence granted under the Electricity Act 1989. The assets in the security account will be released back to National Grid if the scheme moves into surplus.
National Grid has also agreed to make a payment in respect of the deficit up to a maximum of £220m should certain triggers be breached; namely if NGET ceases to hold the licence granted under the Electricity Act 1989 or NGETs credit rating by two out of three specified agencies falls below certain agreed levels for a period of 40 days.
The scheme closed to new members from 1 April 2006.
The National Grid YouPlan Following a review of the DC section of the National Grid UK Pension Scheme, National Grid established a new DC trust, The National Grid YouPlan (YouPlan). This was launched on 1 November 2013 and future contributions for active members of the DC section were paid to YouPlan from this date.
Under the rules of the plan, National Grid double matches contributions to YouPlan currently up to a maximum of 5% of employee salary. Member accounts built up in the DC section prior to 1 November 2013 will be transferred to YouPlan in 2014.
YouPlan is the qualifying scheme used for automatic enrolment and National Grids staging date was 1 April 2013. All new hires are enrolled into YouPlan.
US pension plans National Grids DB pension plans in the US provide annuity or lump sum payments for vested employees. Non-union employees hired on or after 1 January 2011 are provided with a core contribution into the DC plan, irrespective of the employees contribution to the plan. A core contribution in the DC plan is also provided to new hires in ten groups of represented US employees. In addition, an employer match is offered to eligible employees in the DC plan on their elective deferrals into the plan. The assets of the plans are held in separate trusts and administered by the fiduciary committees.
Employees do not contribute to the DB pension plans. Employer contributions are made in accordance with the rules set forth by the US Internal Revenue Code and can vary according to the funded status of the plans and the amounts that are tax deductible. At present, there is some flexibility in the amount that is contributed on an annual basis. In general, the Companys policy for funding the US pension plans is to contribute amounts collected in rates and capitalised in the rate bases during the year. These contributions will be no less than the amounts needed to meet the requirements of the Pension Protection Act of 2006. |
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We are required to include the stand-alone balance sheet of our ultimate parent Company, National Grid plc, under the Companies Act 2006. This is because the publicly traded shares are those of National Grid plc and the following disclosures provide additional information to shareholders.
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D. Foreign currencies Transactions in currencies other than the functional currency of the Company are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at closing exchange rates. Gains and losses arising on retranslation of monetary assets and liabilities are included in the profit and loss account.
E. Financial instruments The Companys accounting policies under UK GAAP, namely FRS 25 Financial Instruments: Presentation, FRS 26 Financial Instruments: Measurement and FRS 29 Financial Instruments: Disclosures, are the same as the Groups accounting policies under IFRS, namely IAS 32 Financial Instruments: Presentation, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures. The Company applies these policies only in respect of the financial instruments that it has, namely investments, derivative financial instruments, debtors, cash at bank and in hand, borrowings and creditors.
The policies are set out in notes 13, 15, 17, 18, 19 and 20 to the consolidated financial statements. The Company is taking the exemption for financial instruments disclosures, because IFRS 7 disclosures are given in notes 30 and 33 to the consolidated financial statements.
F. Hedge accounting The Company applies the same accounting policy as the Group in respect of fair value hedges and cash flow hedges. This policy is set out in note 15 to the consolidated financial statements.
G. Parent Company guarantees The Company has guaranteed the repayment of the principal sum, any associated premium and interest on specific loans due by certain subsidiary undertakings primarily to third parties. In the event of default or non performance by the subsidiary, the Company recognises such guarantees as insurance contracts, at fair value with a corresponding increase in the carrying value of the investment.
H. Share awards to employees of subsidiary undertakings The issuance by the Company to employees of its subsidiaries of a grant over the Companys options represents additional capital contributions by the Company to its subsidiaries. An additional investment in subsidiaries results in a corresponding increase in shareholders equity. The additional capital contribution is based on the fair value of the option at the date of grant, allocated over the underlying grants vesting period. Where payments are subsequently received from subsidiaries, these are accounted for as a return of a capital contribution and credited against the Companys investments in subsidiaries. The Company has no employees.
I. Dividends Interim dividends are recognised when they are paid to the Companys shareholders. Final dividends are recognised when they are approved by shareholders. |
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A. Basis of preparation of individual financial statements under UK GAAP These individual financial statements of the Company have been prepared in accordance with applicable UK accounting and financial reporting standards and the Companies Act 2006. They have been prepared on an historical cost basis, except for the revaluation of financial instruments, and are presented in pounds sterling, which is the currency of the primary economic environment in which the Company operates. The 2013 comparative financial information has also been prepared on this basis.
These individual financial statements have been prepared on a going concern basis following the assessment made by the Directors as set out on page 52.
The Company has not presented its own profit and loss account as permitted by section 408 of the Companies Act 2006.
The Company has taken advantage of the exemptions in FRS 8 Related Party Disclosures from disclosing transactions with other members of the National Grid plc group of companies.
In accordance with exemptions under FRS 29 Financial Instruments: Disclosures, the Company has not presented the financial instruments disclosures required by the standard, as disclosures which comply with the standard are included in the consolidated financial statements.
B. Fixed asset investments Investments held as fixed assets are stated at cost less any provisions for impairment. Investments are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairments are calculated such that the carrying value of the fixed asset investment is the lower of its cost or recoverable amount. Recoverable amount is the higher of its net realisable value and its value-in-use.
C. Taxation Current tax for the current and prior periods is provided at the amount expected to be paid or recovered using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or the right to pay less tax, at a future date, at tax rates expected to apply when the timing differences reverse based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
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information in detail |
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Our licences, established under the Gas Act 1986 and Electricity Act 1989, as amended (the Acts), require us to develop, maintain and operate economic and efficient networks and to facilitate competition in the supply of gas and electricity in Great Britain. They also give us statutory powers, such as the right to bury our pipes or cables under public highways and the ability to use compulsory powers to purchase land to enable the conduct of our business.
Our networks are regulated by Ofgem, which has established price control mechanisms that set the amount of revenue that can be earned by our regulated businesses. Price control regulation is designed to ensure our interests, as a monopoly, are balanced with those of our customers. Ofgem allows us to charge reasonable, but not excessive, prices giving us a future level of revenue sufficient to meet our statutory duties and licence obligations, and also to make a reasonable return on our investment.
The price control includes a number of mechanisms to achieve its objectives, including financial incentives designed to encourage us to: continuously improve the cost and effectiveness of our services; manage and operate our networks efficiently; deliver high-quality services to our customers and wider stakeholder community; and invest in the development of the network in a manner that ensures long-term security of supply.
Our UK Electricity Transmission (UK ET), UK Gas Transmission (UK GT) and UK Gas Distribution (UK GD) businesses operate under eight separate price controls in the UK. These comprise two for our UK ET operations, one covering our role as transmission owner (TO) and the other for our role as system operator (SO); two for our UK GT operations, again one as TO and one as SO; and one for each of our four regional gas distribution networks. While each of the eight price controls may have differing terms, they are based on a consistent regulatory framework.
In addition to the eight price controls, our LNG storage business has a price control covering some aspects of its operations. There is also a tariff cap price control applied to certain elements of domestic metering and daily meter reading activities undertaken by National Grid Metering.
Interconnectors derive their revenues from congestion revenues. Congestion revenues are dependent on the existence of price differentials between markets at either end of the interconnector. European legislation governs how capacity is allocated. It requires all interconnection capacity to be allocated to the market via market-based methods, ie auctions.
There are two routes for interconnector investment: a regulated route, where interconnector developers have to comply with all aspects of European legislation on cross-border electricity infrastructure and receive a regulated return for their investment; or a merchant-exempt route, where developers would face the full upside and downside of the investment and typically have an exemption from European legislation.
National Grids UK interconnectors earn their revenue by auctioning capacity based on the price difference between the markets at each end of the link and are referred to as merchant interconnectors; this being the typical UK model. |
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Contents
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160 |
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160 | UK regulation | |||||||||
162 | US regulation | |||||||||
166 | Where we operate | |||||||||
167 | Risk factors | |||||||||
170 |
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170 | Information assurance | |||||||||
170 | Disclosure controls | |||||||||
170 | Internal control over financial reporting | |||||||||
171 |
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171 | Articles of Association | |||||||||
171 | Board biographies | |||||||||
173 | Capital gains tax (CGT) | |||||||||
173 | Change of control provisions | |||||||||
173 | Conflicts of interest | |||||||||
173 | Directors indemnity | |||||||||
173 | Events after the reporting period | |||||||||
174 | Material interests in shares | |||||||||
174 | Political donations and expenditure | |||||||||
174 | Research and development | |||||||||
174 | Share capital | |||||||||
175 | Share price | |||||||||
176 |
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176 | Articles of Association | |||||||||
177 | Code of Ethics | |||||||||
177 | Corporate governance practices: differences from New York Stock Exchange (NYSE) listing standards | |||||||||
177 | Depositary payments to the Company | |||||||||
178 | Description of securities other than equity securities: depositary fees and charges | |||||||||
178 | Documents on display | |||||||||
178 | Employees | |||||||||
178 | Exchange controls | |||||||||
178 | Exchange rates | |||||||||
179 | Key milestones | |||||||||
179 | Material contracts | |||||||||
179 | Property, plant and equipment | |||||||||
179 | Shareholder analysis | |||||||||
179 | Taxation | |||||||||
181 | The All-employee Share Plans | |||||||||
181 | The offer and listing | |||||||||
181 | Unresolved SEC staff comments | |||||||||
182 |
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RIIO price controls Our UK regulator has introduced a new regulatory framework called RIIO (revenue = incentives + innovation + outputs) that became effective on 1 April 2013 and lasts for eight years. The building blocks of the RIIO price control are broadly similar to the historical price controls used in the UK; however there are some significant differences in the mechanics of the calculations.
How is revenue calculated? Under RIIO the outputs we deliver are clearly articulated and are integrally linked to the calculation of our allowed revenue. These outputs have been determined through an extensive consultation process which has given stakeholders a greater opportunity to input to these decisions. The clarity around outputs should lead to greater transparency of our performance in delivering them.
The six key output categories are:
· Safety: ensuring the provision of a safe energy network. · Reliability (and availability) : promoting networks capable of delivering long-term reliability, as well as minimising the number and duration of interruptions experienced over the price control period, and ensuring adaptation to climate change. · Environmental impact: encouraging companies to play their role in achieving broader environmental objectives specifically facilitating the reduction of carbon emissions as well as minimising their own carbon footprint. · Customer and stakeholder satisfaction: maintaining high levels of customer satisfaction and stakeholder engagement, and improving service levels. · Customer connections: encouraging networks to connect customers quickly and efficiently. · Social obligations (UK GD only): extending the gas network to communities that are fuel poor where it is efficient to do so and introducing measures to address carbon monoxide poisoning incidents.
Within each of these output categories are a number of primary and secondary deliverables, reflecting what our stakeholders want us to deliver over the coming price control period. The nature and number of these deliverables varies according to the output category, with some being linked directly to our allowed revenue, some linked to legislation, and others having only a reputational impact. Ofgem, using information submitted by us along with independent assessments, determines the efficient level of expected costs necessary to deliver them. Under RIIO this is known as totex, short for total expenditure, and is similar to the sum of controllable opex, capex and repex (for UK GD) under the previous price control.
A number of assumptions are necessary in setting these outputs, such as certain prices or the volumes of work that will be needed. As a result, to protect us and our customers from windfall gains and losses, there are a number of uncertainty mechanisms within the RIIO framework that can result in adjustments to totex if actual prices or volumes differ from the assumptions.
Where we under- or over-spend the allowed totex for reasons that are not covered by uncertainty mechanisms, there is a sharing factor, ie the under- or over-spend is shared between us and customers through an adjustment to allowed revenues in a future year. This sharing factor provides an incentive for us to provide the outputs efficiently as we are able to keep a portion of the savings, with the remainder benefiting our customers. |
This sharing factor is one of the ways that RIIO has given innovation more prominence. Innovation includes traditional areas such as new technologies, as well as the broader challenge of finding new ways of working to deliver outputs more efficiently. This broader challenge will have an impact on everyone in our business.
Totex is then split between fast and slow money, a new concept under RIIO, based on a specified percentage. Fast money represents the amount of totex that we are able to recover in the current year. Slow money is added to our RAV.
In addition to fast money, in each year we are allowed to collect a depreciation of and a return on our RAV.
This operates in a similar way to the previous price control, although there have been changes to the asset lives for electricity transmission (transition from 20 years to 45 years evenly across the RIIO period) and the depreciation calculation for UK GD (changed from 45 years straight line to 45 years sum of digits for assets added post 2002). We are also allowed to collect additional revenues related to non-controllable costs and incentives.
The incentive mechanisms can increase or decrease our allowed revenue and result from our performance against various measures related to our outputs. RIIO has introduced new incentive mechanisms as a way to provide further incentives to align our objectives with those of our customers and other stakeholders. For example, performance against our customer satisfaction targets can have a positive or negative effect of up to 1% of allowed annual revenues. Incentives will normally affect our revenues two years after the year of performance.
RIIO regulatory building blocks
Allowed returns The cost of capital allowed under RIIO is as follows: |
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Transmission | Gas Distribution | |||||||||||||||
Gas | Electricity | |||||||||||||||
Cost of equity (post-tax real) | 6.8% | 7.0% | 6.7% | |||||||||||||
Cost of debt (pre-tax real) |
iBoxx 10 year simple trailing average index
(2.92% for 2013/14) |
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Notional gearing | 62.5% | 60.0% | 65.0% | |||||||||||||
Vanilla WACC 1 | 4.38% | 4.55% | 4.24% | |||||||||||||
1. Vanilla WACC = cost of debt x gearing + cost of equity x (1- gearing). |
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Business information in detail continued |
Gas Transmission | Electricity Transmission | Gas Distribution | ||||||||||||||||||||
Transmission
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System
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Repex: | Stepped decline from 50% in 2013/14 to 0% in 2020/21 | |||||||||||||||||||||
Baseline 35.6% | in seven equal instalments of 7.14% per annum | |||||||||||||||||||||
1 Fast |
Uncertainty 10% | 62.60% | 15.00% | 72.10% | 73.90% | 73.37% | 75.05% | 76.53% | ||||||||||||||
Repex: | Stepped increase from 50% in 2013/14 to 100% in 2020/21 | |||||||||||||||||||||
Baseline 64.4% | in seven equal instalments of 7.14% per annum | |||||||||||||||||||||
2 Slow |
Uncertainty 90% | 37.40% | 85.00% | 27.90% | 26.10% | 26.63% | 24.95% | 23.47% | ||||||||||||||
3 Sharing |
44.36% | 46.89% | 63.04% | |||||||||||||||||||
The sharing factor means that any over- and under-spend is shared between the businesses and consumers. The shared figures displayed are the sharing factors that apply to UK ET, UK GT and UK GD.
For more information on RIIO, including incentive mechanisms, please see the relevant investor fact sheets on the Investor Relations section of our website.
Regulators In the US, public utilities retail transactions are regulated by state utility commissions, including the NYPSC, the MADPU and the RIPUC.
Utility commissions serve as economic regulators, approving cost recovery and authorised rates of return. The state commissions establish the retail rates to recover the cost of transmission and distribution services, and focus on services and costs within their jurisdictions. FERC regulates the wholesale transactions of public utilities, such as interstate transmission and electricity generation, and provides for the wholesale cost recovery of these services.
Utility commissions are also charged with serving the public interest by ensuring utilities provide safe and reliable service at just and reasonable prices. They establish service standards and approve mergers and acquisitions of public utilities. FERC also regulates public utility holding companies and centralised service companies, including those of our US businesses.
With the exception of residential gas customers in Rhode Island, all of our customers are allowed to select a competitive supplier for the supply component of electricity and gas utility services.
Regulatory process Utilities in the US submit a formal rate filing to the relevant state regulatory body, requesting a revenue adjustment in a proceeding known as a rate case.
The rate case process is conducted in a litigated setting and, in the states in which we operate, it can take 10 to 13 months for the commission to render a final decision. In all states, the utility is required to prove that its requested rate change is prudent and reasonable. The utility may request a rate plan that can span multiple years. Unlike the state processes, the federal regulator has no specified timeline for adjudicating a rate case, but typically makes a final decision retroactive when the case is completed.
During the rate case process, consumer advocates and other intervening parties scrutinise and often file opposing positions to the utilitys rate request. The rate case decision reflects a weighing of the facts in light of the regulators policy objectives.
During a rate case, the utility, consumer advocates and intervening parties may agree on the resolution of aspects of a case and file a negotiated settlement with a commission for approval. |
Gas and electricity rates are established from a revenue requirement which comprises the utilitys total cost of providing distribution or delivery service to its customers. It includes operating expenses, depreciation, taxes and a fair and reasonable return on certain components of the utilitys regulated asset base, typically referred to as its rate base.
The rate of return applied to the rate base is the utilitys weighted average cost of capital. This represents its cost of debt and an allowed RoE intended to provide the utility with an opportunity to attract capital from investors and maintain its financial integrity. The total revenue requirement is apportioned among different customer classes and categories of service to establish the prices for service. The final revenue requirement and prices are ultimately approved in the rate case decision.
The revenue requirement is derived from a comprehensive study of the utilitys total costs during a recent 12 month period of operations, referred to as a test year.
Each commission has its own rules and standards for adjustments to the test year. These are intended to arrive at the total costs expected in the first year new rates will be in effect, or the rate year, and may include forecast capital investments in determining rate year rate base. Often, known and measurable adjustments are made to test year data to reflect normal operating conditions. In Massachusetts, only limited adjustments to this test year are allowed, which are required to be both known and measurable. New York and Rhode Island allow more comprehensive adjustments to the test year. In summary, the US regulatory regime is based on a building block approach intended to allow the utility to recover its cost of service and earn a return on its investments.
US regulatory building blocks
Our rate plans Each operating company has a set of rates for service. We have three electric distribution operations (upstate New York, Massachusetts, and Rhode Island) and six gas distribution |
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networks (upstate New York, New York City, Long Island, Massachusetts (2), and Rhode Island). Distribution and transmission electricity services in upstate New York are recovered with a combined rate billed to end use customers. In New England, retail transmission rates recover wholesale transmission charges assessed to our electric distribution companies from our end use customers.
Our rate plans are designed to a specific allowed RoE, by reference to an allowed operating expense level and rate base. Some rate plans include earnings sharing mechanisms that allow us to retain a proportion of the earnings above our allowed RoE we achieve through improving efficiency, with the balance benefiting customers.
In addition, our performance under certain rate plans is subject to service performance targets. We may be subject to monetary penalties in cases where we do not meet those targets.
Allowed RoE in context One measure used to monitor the performance of our regulated businesses is a comparison of achieved RoE to allowed RoE, with a target that the achieved should be equal to or above the allowed. This measure cannot be used in isolation, however, as there are a number of factors that may prevent us from achieving that target in any given year:
· Regulatory lag: in the years following the rate year, costs may increase due to inflation or other factors. If the cost increases cannot be offset by productivity gains, the total cost to deliver will be higher as a proportion of revenue and therefore achieved RoE will be lowered. · Cost disallowances: a cost disallowance is a decision by the regulator that a certain expense should not be recovered in rates from customers. The regulator may do this for a variety of reasons. We can respond to some disallowances by choosing not to incur those costs; others may be unavoidable. As a result, unless offsetting cost reductions can be found, the achieved RoE will be lowered. · Market conditions: if a utility files a new rate case, the new allowed RoE may be below the current allowed RoE as financial market conditions may have changed. As such, a utility that appears to be underperforming the allowed RoE and files a new rate case may not succeed in increasing revenues.
We work to increase achieved RoEs through: productivity improvements; positive performance against incentives or earned savings mechanisms such as energy efficiency programmes, where available; and, through filing a new rate case when achieved returns are lower than that which the Company could reasonably expect to attain through a new rate case.
Features of our rate plans We are responsible for billing our customers for their use of electricity and gas services. Customer bills typically comprise a commodity charge, covering the cost of the electricity or gas delivered, and charges covering our delivery service. Depending on the state, delivery rates are either based upon actual sales volumes and costs incurred in an historical test year, or on estimates of sales volumes and costs, and in both cases may differ from actual amounts. A substantial proportion of our costs, in particular electricity and gas purchases for supply to customers, are pass-through costs, meaning they are fully recoverable from our customers. These pass-through costs are recovered through separate charges to customers that are designed to recover those costs with no profit. Rates are adjusted from time to time to ensure any over- or under-recovery of these costs is returned to, |
or recovered from, our customers. There can be timing differences between costs being incurred and rates being adjusted.
Revenue for our wholesale transmission businesses in New England and New York is collected from wholesale transmission customers, who are typically other utilities and include our own New England electricity distribution businesses. With the exception of upstate New York, which continues to combine retail transmission and distribution rates to end use customers, these wholesale transmission costs are incurred by distribution utilities on behalf of their customers and are fully recovered as a pass-through from end use customers as approved by each state commission. Our Long Island generation plants sell capacity to LIPA under a power supply agreement, approved by FERC, which provides a similar economic effect to cost of service rate regulation.
US regulatory filings The objectives of our rate case filings are to ensure we have the right cost of service with the ability to earn a fair and reasonable rate of return, while providing a safe and reliable service to our customers. In order to achieve these objectives and to reduce regulatory lag, we have been requesting structural changes, such as revenue decoupling mechanisms, capital trackers, commodity-related bad debt true-ups, and pension and other post-employment benefit (OPEB) true-ups, separately from base rates. These terms are explained below the table on page 165.
Below we summarise significant developments in rate filings and the regulatory environment during the year.
Massachusetts Capital investment programmes Our Massachusetts gas and electricity operating companies have rate mechanisms that allow for the recovery of new capital investment, including a return, outside of base rate proceedings, subject to further review and reconciliation. Most recently, on the gas side, MADPU allowed approximately $11.6 million into rates effective from 1 November 2013, related to incremental additions to the rate base, and on the electricity side it allowed approximately $8.8 million into rates effective from 1 March 2014, related to rate base additions.
Storm fund recovery The Massachusetts electricity business collects $4.3 million per year in base rates to credit towards a storm fund devoted to funding storm restoration. The severity and frequency of storms in Massachusetts over the last few years left our storm fund in a deficit position of approximately $212 million. On 3 May 2013, MADPU allowed us to begin collecting $40 million per year for three years towards the replenishment of the storm fund, subject to a review of the prudency of the underlying costs. That review is under way. The funding of the remaining deficit will be addressed as part of the prudency review and in future rate proceedings.
Storm management audit The MADPUs December 2012 order regarding our performance during Tropical Storm Irene and the October 2011 snowstorm requires us to undergo an independent audit regarding our storm management. This audit is under way, addressing: emergency management systems, protocols and plans; preparation for and management of restoration efforts with respect to emergency events; the Companys emergency response resources and allocation of those resources during an emergency event; communications with state, municipal and public safety officials and with the DPU; dissemination of timely information to the public; and identification of management recommendations.
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New York Upstate New York 2012 rate plan filing Effective from 1 April 2013, the upstate New York electricity and gas businesses began the first year of their new three year rate plan. The new rate plan provides an increase in electricity delivery revenue of $43.4 million, $51.4 million and $28.3 million for rate years one to three respectively. For the gas operations, the rate plan provides a decrease in delivery revenue of $3.3 million in rate year one and an increase of $5.9 million and $6.3 million in rate years two and three respectively. The revenue requirements for Niagara Mohawks electricity and gas businesses are based on a RoE of 9.3%, which includes a stay out premium for the three year term, and a capital structure that includes a 48% common equity component. The final agreement also includes annual reconciliation mechanisms for certain non-controllable costs.
Downstate New York rate plan extension In 2013, The Brooklyn Union Gas Company (also known as KeySpan Energy Delivery New York or KEDNY) received approval from the PSC to extend its existing five year rate plan by two years. The extension provides a 9.4% RoE, with a 48% equity structure. Under the agreement, 80% of any earnings over 9.4% will fund recovery of prior environmental deferrals with the remaining 20% being retained by KEDNY. The agreement increased capital expenditure allowances to $320.1 million in 2013 and $293.7 million in 2014 as compared with the prior capital allowances of $155.4 million per year. The agreement also proposed updates to various customer service and other performance metrics.
2013 New York gas management audit On 13 February 2013, the PSC announced a comprehensive management and operations audit of National Grids three New York gas distribution utilities. New York law requires periodic management audits of all utilities at least once every five years. We last underwent a management audit in 2009 when the PSC audited Niagara Mohawks electricity business.
The final report is expected to be filed with the PSC this summer. The report will make recommendations regarding the operation and management of our New York gas utilities, and will specify costs and savings associated with each recommendation. In our next major gas rate proceeding, the Commission will consider our effectiveness in implementing the audit recommendations and seek to reflect the costs and savings associated with the recommendations in rates.
Long Island LIPA Amended and Restated Power Supply Agreement (A&RPSA) We own and manage a number of power plants on Long Island, with a generation capacity of 3.8 GW. We supply wholesale capacity and energy to LIPA under an agreement with LIPA that was renewed in May 2013. LIPA in turn provides retail electricity to communities and businesses on Long Island.
On 23 May 2013, FERC approved the A&RPSA which expires on 30 April 2028 and replaces the original Power Supply Agreement that was effective from May of 1998 to May of 2013. LIPA may terminate the agreement as early as 30 April 2025 upon two years advance notice. The A&RPSA became effective on 28 May 2013.
The agreement resulted in a rate decrease of $27.4 million annually compared with the rate in effect for the final year of the previous PSA. The agreement sets a RoE of 9.75% and a capital structure with an equity component of 50%. The A&RPSA continues certain annual rate adjustments, such as pension and other post-retirement benefit expenses, property tax true-up, adjustments for new plant in service, and certain inflationary |
increases. The A&RPSA allows both parties a RoE reopener in contract years four to six depending on financial market changes, and National Grid a one-time rate reopener in contract year six.
The A&RPSA also contains new options for modernising the power plants through retirement or repowering existing facilities to reduce energy costs and improve environmental performance.
Rhode Island Rhode Island 2014/15 electricity and gas infrastructure, safety, and reliability plans (ISR) Legislation provides our Rhode Island gas and electricity operating divisions with rate mechanisms that allow for recovery of capital investment, including a return, outside of base rate proceedings through the submission of annual ISR plans.
The electricity plan includes electricity operation expenses for vegetation management and certain inspection and maintenance costs.
In December 2013, we filed annual petitions seeking approval of our 2014/15 ISR plans for the electricity and gas systems. The PUC approved the petitions in March 2014.
The electricity ISR plan encompasses a $74.3 million spending programme for capital investment and $10.7 million for operating and maintenance expenses for vegetation management and inspection and maintenance.
The gas ISR plan encompasses a $71.7 million spending for capital investment and, for the first time, incremental operation and maintenance expense for the hiring, training and supervision of additional personnel to support increases in leak-prone pipe replacement.
FERC Complaint on transmission allowed RoE In September 2011 and December 2012, complaints were filed with FERC against certain transmission owners, including our New England transmission business, to lower the base RoE from the FERC approved rate of 11.14% to 9.2% and 8.7% respectively. The transmission owners argued that the complainants have not proven the existing rate is unjust and unreasonable and that the 11.14% base RoE should remain in effect. Non-binding preliminary findings by a FERC administrative law judge, suggested a 10.6% base RoE for a 15 month refund and a 9.7% base RoE prospectively.
Short-term borrowing extension In October 2013, National Grid filed an application with FERC on behalf of its electricity public utility subsidiaries seeking an extension of the Commissions prior authorisation to issue short-term debt, as required by Section 204 of the Federal Power Act. National Grid explained in its extension request that challenges associated with the implementation of the US enterprise resource system had delayed the production of certain FERC financial reports that are required in any Section 204 filing. FERC denied the extension request on the grounds that the lack of current FERC financial reports rendered the Commission unable to make the required findings under Section 204 as to the Companys ability to perform certain public utility functions. As a result, National Grid implemented a contingency plan aimed at ensuring that each impacted public utility subsidiary would have sufficient cash resources pending a new short-term borrowing authorisation. This contingency plan included the receipt of open account advances and/or capital contributions permitted under the existing FERC borrowing authorisation. National Grid intends to file its Section 204 renewal applications as soon as practicable this year. |
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disclosures
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A summary of the material terms of our Articles of Association (the Articles) and applicable English Law is set out on page 176.
Sir Peter Gershon CBE FREng, Chairman Appointment to the Board: August 2011 as Deputy Chairman, Chairman with effect from January 2012 Committee membership: N (ch) Previous appointments: Chairman of Premier Farnell plc, Chief Executive of the Office of Government Commerce, Managing Director of Marconi Electronic Systems and member of the UK Defence Academy Advisory Board. External appointments: Chairman of Tate & Lyle plc and the Aircraft Carrier Alliance and member of the HM Government Efficiency and Reform Board and The Sutton Trust Board. Experience: Chairman Engineer Government Partnering/JV/contract management City High tech industry US International General management
Steve Holliday FREng, Chief Executive Appointment to the Board: October 2002, appointed to National Grid Group plc 2001, Chief Executive with effect from January 2007. Committee membership: F Previous appointments: Executive Director of British Borneo Oil and Gas; he also spent 19 years within the Exxon Group, where he held senior positions in the international gas business and managed major operational areas such as refining and shipping. Most recently Chairman of UK Business Council for Sustainable Energy and the Technician Council. External appointments: Non-executive Director of Marks and Spencer Group plc, Chairman of Crisis UK, the Princes National Ambassador, Vice Chair for Business in the Community and Chair of the Energy and Efficiency Industrial Partnership. Experience: Chief Executive Engineer Government/regulatory Partnering/JV/contract management City Utilities energy Customer Oil and gas US International |
Philip Aiken AM, Non-executive Director Appointment to the Board: May 2008 Committee membership: A, N, S (ch) Previous appointments: Group President of BHP Billitons Energy business, Executive Director of BTR plc, held senior roles in BOC Group plc, senior advisor to Macquarie Capital (Europe) Limited, Chairman of Robert Walters plc, Non-executive and Senior Independent Director of Kazakhmys PLC and Non-executive Director of Miclyn Express Offshore Limited. External appointments: Chairman of AVEVA Group plc, Non-executive and Senior Independent Director of Essar Energy plc and Non-executive Director of Essar Oil Limited and Newcrest Mining Limited. Experience: Chairman Partnering/JV/contract management Emerging markets Natural resources International
Andrew Bonfield, Finance Director Appointment to the Board: November 2010 Committee membership: F, S Previous appointments: Chief Financial Officer at Cadbury plc until March 2010; he also spent five years as Executive Vice President & Chief Financial Officer of Bristol-Myers Squibb Company and has previous experience in the energy sector as Finance Director of BG Group plc. External appointments: Non-executive Director of Kingfisher plc. Experience: Finance Director Accountant Government/regulatory Partnering/JV/contract management City Utilities energy Customer US International
Nora Mead Brownell, Non-executive Director Appointment to the Board: 1 June 2012 Committee membership: N, R, S Previous appointments: Commissioner of the Pennsylvania Public Utility Commission from 1997 to 2001, Commissioner for the Federal Energy Regulatory Commission from 2001 to 2006 and former President of the National Association of Regulatory Utility Commissioners. Board member of ONCOR Electric Delivery Holding Company LLC. External appointments: Board member of Comverge, Inc. and Spectra Energy Partners LP and partner in ESPY Energy Solutions, LLC. Experience: US Government/regulatory US utilities energy FERC Various non-executive directorships US |
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Jonathan Dawson, Non-executive Director | Ruth Kelly, Non-executive Director | |||||
Appointment to the Board: 4 March 2013 Committee membership: F, N, R (ch) Previous appointments: Various roles within the Ministry of Defence before joining Lazard where he spent over 20 years. Non-executive Director of Galliford Try plc 2004 to 2008, National Australia Group Europe Limited 2005 to 2012 and Standard Life Investments (Holdings) Limited 2010 to 2013. External appointments: Non-executive and Senior Independent Director of Next plc, Non-executive Director of Jardine Lloyd Thompson Group plc and Chairman of Penfida Limited. Experience: City Corporate finance Banking Pensions
Therese Esperdy, Non-executive Director Appointment to the Board: 18 March 2014 Committee membership: F, N Previous appointments: Joined Chase Securities in 1997, having started her banking career with Lehman Brothers. Various senior roles at JPMorgan Chase & Co. including Head of US Debt Capital Markets and Global Head of Debt Capital Markets at JPMorgan. External appointments: Co head of Banking, Asia Pacific for JPMorgan Chase & Co. Experience: City Corporate finance Banking US International
Paul Golby CBE FREng, Non-executive Director Appointment to the Board: February 2012 Committee membership: N, R, S Previous appointments: Executive Director of Clayhithe plc before joining East Midlands Electricity plc in 1998 as Managing Director, Chief Executive of E.ON UK plc in 2002, and later additionally as Chairman, stepping down from the E.ON board in December 2011 and most recently Non-executive Chairman of AEA Technology Group plc. External appointments: Chairman of EngineeringUK, Chair of the Engineering and Physical Sciences Research Council and a member of the Council for Science and Technology. Experience: Chairman and chief executive Engineer Government/regulatory City Utilities energy |
Appointment to the Board: October 2011 Committee membership: A, F, N Previous appointments: Various senior roles in Government from 2001 to 2008, including Secretary of State for Transport, Secretary of State for Communities and Local Government, Secretary of State for Education and Skills and Financial Secretary to the Treasury. External appointments: Senior Executive at HSBC and Governor for the National Institute of Economic and Social Research. Experience: Government/regulatory Partnering/JV/contract management Financial and economic Infrastructure projects
Tom King, Executive Director, US Appointment to the Board: August 2007 Previous appointments: President of PG&E Corporation and Chairman and CEO of Pacific Gas and Electric Company from 2003 to 2007, having held a number of senior positions within the PG&E group since joining in 1998. Senior management positions with Kinder Morgan Energy Partners and Enron Corporation. Experience: Government/regulatory Partnering/JV/contract management Utilities energy Customer FERC Generation US
John Pettigrew, Executive Director, UK Appointment to the Board: 1 April 2014 Previous appointments: Joined The National Grid Company plc in 1991 and held various senior management roles, becoming Director of Engineering in 2003. He went on to become Chief Operating Officer and Executive Vice President for the US Electricity Distribution & Generation business between 2007 and 2010; Chief Operating Officer for UK Gas Distribution between 2010 and 2012; and UK Chief Operating Officer from 2012 to 2014. Currently UK Chief Operating Officer. Experience: Government/regulatory Partnering/JV/contract management Utilities energy US
Maria Richter, Non-executive Director Appointment to the Board: October 2003 Committee membership: A, F (ch), N Previous appointments: Morgan Stanley from 1993 to 2002, latterly as Managing Director of its Corporate Finance Retail Group. Vice President of Independent Power Group for Salomon Brothers and Vice President of Prudential Capital Corporation and Power Funding Associates. Most recently Non-executive Director of The Pantry, Inc. and The Vitec Group plc. External appointments: Non-executive Chairman of Pro Mujer UK and Non-executive Director of The Bessemer Group, Inc. Experience: City Financial services Emerging markets US International
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Authority to allot shares Shareholder approval was given at the 2013 AGM to allot shares of up to one third of the Companys share capital and a further third in connection with an offer by way of a rights issue.
This year the Directors are seeking a lower level of authority than in recent years, where an equivalent of two thirds of the issued share capital of the Company, exclusive of treasury shares, was sought. The Directors consider that the Company will have sufficient flexibility with the lower level of authority to respond to market developments. This authority is in line with investor guidelines.
The Directors currently have no intention of issuing new shares, or of granting rights to subscribe for or convert any security into shares, except in relation to, or in connection with, the operation and management of the Companys scrip dividend scheme and the exercise of options under the Companys share plans. No issue of shares will be made which would effectively alter control of the Company without the sanction of shareholders in general meeting.
The Company intends to actively manage the share issuance arising from the operation of the scrip dividend scheme. In some circumstances, additional shares may be allotted to the market under the authority provided by this resolution. Under these unlikely circumstances, it is expected that the allotment of new shares (or rights to subscribe for or convert any security into shares) will not exceed 1% of the issued share capital (excluding treasury shares) per annum. For further details in relation to the management of the scrip dividend scheme, see page 02.
Rights attached to shares Ordinary shareholders and ADS holders receive dividends and can vote at general meetings. Treasury shares do not attract a vote or dividends. There are no restrictions on the transfer or sale of ordinary shares. Some of the Companys employee share plans, details of which are contained in the Remuneration Report, include restrictions on the transfer of shares while the shares are subject to the plan. Where, under an employee share plan operated by the Company, participants are the beneficial owners of the shares but not the registered owner, the voting rights may be exercised by the registered owner at the direction of the participant. |
The following graph represents the movement of National Grids share price during 2013/14. A graph showing the total shareholder return over the last five years is available on page 72.
Source: Datastream
National Grid ordinary shares are listed on the London Stock Exchange under the symbol NG and the ADSs are listed on the New York Stock Exchange under the symbol NGG. |
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The following description is a summary of the material terms of our Articles and applicable English law. The following description is a summary only and is qualified in its entirety by reference to the Articles.
Summary The Articles set out the internal regulations of the Company and cover such matters as the rights of shareholders and the conduct of the Board and general meetings. Copies are available upon request and are displayed on the Companys website. Amendments to the Articles have to be approved by at least 75% of those voting in person or by proxy at a general meeting of the Company. Subject to company law and the Articles, the Directors may exercise all the powers of the Company, and may delegate authorities to committees and day-to-day management and decision-making to individual Executive Directors. The committee structure is set out on page 48.
General The Company is incorporated under the name National Grid plc and is registered in England and Wales with registered number 4031152. Under the Companies Act 2006, the Companys objects are unrestricted.
Directors Under the Articles, a Director must disclose any personal interest in a matter and may not vote in respect of that matter, subject to certain limited exceptions. As permitted under the Companies Act 2006, the Articles provide that the non conflicted Directors of the Company may authorise a conflict or potential conflict for a particular matter. In doing so, the non conflicted Directors must act in a way they consider, in good faith, will be most likely to promote the success of the Company for the benefit of the shareholders as a whole.
The Directors (other than a Director acting in an executive capacity) are paid fees for their services, which in total must not exceed £2,000,000 a year or any higher sum as decided by an ordinary resolution at a general meeting of shareholders. In addition, special pay may be awarded to a Director who acts in an executive capacity, serves on a committee, performs services which the Directors consider to extend beyond the ordinary duties of a Director, devotes special attention to the business of National Grid or goes or lives abroad on the Companys behalf. Directors may also receive reimbursement for expenses properly incurred, and may be awarded pensions and other benefits. The compensation awarded to the Executive Directors is determined by the Remuneration Committee and further details of Directors remuneration are set out in the Remuneration Report (see pages 58 to 73).
The Directors are empowered to exercise all the powers of National Grid to borrow money, subject to the limitation that the aggregate principal amount of all borrowings of its Group outstanding at any time must not exceed £35 billion or any other amount approved by shareholders by an ordinary resolution at a general meeting.
Directors can be appointed or removed by the Board or shareholders in a general meeting. Directors must stand for election at the first AGM following their appointment to the Board. Each Director must retire at least every three years but will be eligible for re-election. In accordance with best practice introduced |
by the UK Corporate Governance Code, all Directors wishing to continue in office currently offer themselves for re-election annually. No person is disqualified from being a Director or is required to vacate that office by reason of attaining a maximum age.
A Director is not required to hold shares in National Grid in order to qualify as a Director.
Rights, preferences and restrictions (i) Dividend rights National Grid may not pay any dividend otherwise than out of profits available for distribution under the Companies Act 2006 and other applicable provisions of English law. In addition, as a public company, National Grid may only make a distribution if, at the time of the distribution, the amount of its net assets is not less than the aggregate of its called up share capital and undistributable reserves (as defined in the Companies Act 2006) and to the extent that the distribution does not reduce the amount of those assets to less than that aggregate. Subject to the foregoing, shareholders may, by ordinary resolution, declare dividends in accordance with the respective rights of the shareholders, but not exceeding the amount recommended by the Board. The Board may pay interim dividends if it considers that National Grids financial position justifies the payment. Any dividend or interest unclaimed for 12 years from the date when it was declared or became due for payment will be forfeited and revert to National Grid.
(ii) Voting rights Subject to any rights or restrictions attached to any shares and to any other provisions of the Articles, at any general meeting on a show of hands, every shareholder who is present in person will have one vote and on a poll, every shareholder will have one vote for every share which they hold. On a show of hands or poll, shareholders may cast votes either personally or by proxy and a proxy need not be a shareholder. Under the Articles, all substantive resolutions at a general meeting must be decided on a poll, and resolutions of a procedural nature are decided by a show of hands, unless a poll is demanded in accordance with the Articles.
(iii) Liquidation rights In a winding up, a liquidator may, in each case with the sanction of a special resolution passed by the shareholders and any other sanction required under English law, (a) divide among the shareholders the whole or any part of National Grids assets (whether the assets are of the same kind or not) and may, for this purpose, value any assets and determine how the division should be carried out as between shareholders or different classes of shareholders, or (b) transfer any part of the assets to trustees on trust for the benefit of the shareholders as the liquidator determines, but in neither case will a shareholder be compelled to accept assets upon which there is a liability.
Variation of rights Subject to applicable provisions of English law, the rights attached to any class of shares of National Grid may be varied or cancelled with the written consent of the holders of three quarters in nominal value of the issued shares of that class, or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. |
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Some of the key dates and actions in the corporate history of National Grid are listed below. The full history goes back much further. |
The following table includes a brief analysis of shareholder numbers and shareholdings as at 31 March 2014. |
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Size of shareholding |
Number of shareholders |
% of shareholders |
Number of shares |
% of shares |
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1986 | British Gas (BG) privatisation | |||||||||||||||||
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1990 | Electricity transmission network in England and Wales transferred to National Grid on electricity privatisation |
150 |
174,219 | 17.6366 | 5,070,597 | 0.1316 | ||||||||||||
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1995 | National Grid listed on the London Stock Exchange |
51100 |
269,540 | 27.2862 | 19,092,359 | 0.4953 | ||||||||||||
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1997 | Centrica demerged from BG |
101500 |
427,082 | 43.2345 | 89,577,097 | 2.3241 | ||||||||||||
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1997 | Energis demerged from National Grid |
5011,000 |
58,849 | 5.9574 | 41,182,963 | 1.0685 | ||||||||||||
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2000 | Lattice Group demerged from BG and listed separately |
1,00110,000 |
55,016 | 5.5694 | 135,292,646 | 3.5101 | ||||||||||||
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2000 | New England Electric System and Eastern Utilities Associates acquired |
10,00150,000 |
2,079 | 0.2105 | 37,261,484 | 0.9667 | ||||||||||||
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2002 | Niagara Mohawk Power Corporation merged with National Grid in US |
50,001100,000 |
203 | 0.0206 | 14,546,599 | 0.3774 | ||||||||||||
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2002 | National Grid and Lattice Group merged to form National Grid Transco |
100,001500,000 |
429 | 0.0434 | 104,413,484 | 2.709 | ||||||||||||
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2004 | UK wireless infrastructure network acquired from Crown Castle International Corp |
500,0011,000,000 |
122 | 0.0124 | 85,852,431 | 2.2274 | ||||||||||||
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2005 | Four UK regional gas distribution networks sold and National Grid adopted as our name |
1,000,001+ |
287 | 0.029 | 3,322,050,361 | 86.1899 | ||||||||||||
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2006 | Rhode Island gas distribution network acquired |
Total |
987,826 | 100 | 3,854,340,021 | 100 | ||||||||||||
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2007 | UK and US wireless infrastructure operations and the Basslink electricity interconnector in Australia sold |
This section discusses certain US federal income tax and UK tax consequences of the ownership of ADSs and ordinary shares by certain beneficial holders thereof. This discussion applies to holders who qualify for benefits under the income tax convention between the US and the UK (the Tax Convention) and are a resident of the US for the purposes of the Tax Convention and are not resident or ordinarily resident in the UK for UK tax purposes at any material time (a US Holder).
US Holders generally will be entitled to benefits under the Tax Convention if they are:
the beneficial owner of the ADSs or ordinary shares, as applicable, and of any dividends that they receive; an individual resident or citizen of the US, a US corporation, or a US partnership, estate, or trust (but only to the extent the income of the partnership, estate, or trust is subject to US taxation in the hands of a US resident person); and not also a resident of the UK for UK tax purposes.
If a US Holder holds ADSs or ordinary shares in connection with the conduct of business or the performance of personal services in the UK or otherwise in connection with a branch, agency or permanent establishment in the UK, then the US Holder will not be entitled to benefits under the Tax Convention. Special rules, including a limitation of benefits provision, apply in limited circumstances to ADSs or ordinary shares owned by an investment or holding company. This section does not discuss the treatment of holders described in the preceding two sentences. This section does not purport to be a comprehensive description of all the tax considerations that may be relevant to any particular investor. National Grid has assumed that shareholders, including US Holders, are familiar with the tax rules applicable to investments in securities generally and with any special rules to which they may be subject. In particular, the discussion deals only with investors that will beneficially hold ADSs or ordinary shares as capital assets and does not address the tax treatment of investors that are subject to special rules, such as banks, insurance companies, dealers in securities or currencies, partnerships or other entities classified as partnerships for US federal income tax purposes, persons that control (directly or indirectly) 10% or more of our voting stock, persons that elect mark-to-market treatment, persons that hold ADSs or ordinary shares as a position in a straddle, conversion transaction, synthetic security, or other integrated financial transaction, persons who are liable for the alternative minimum tax, or the Medicare tax on net investment income, and persons whose functional currency is not the dollar. |
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2007 | KeySpan Corporation acquired | |||||||||||||||||
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2008 | Ravenswood generation station sold | |||||||||||||||||
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2010 | Rights issue raised £3.2 billion | |||||||||||||||||
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2012 | New Hampshire electricity and gas distribution businesses sold | |||||||||||||||||
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Each of our Executive Directors has a service agreement and each Non-executive Director has a letter of appointment. No contract (other than contracts entered into in the ordinary course of business) has been entered into by National Grid within the two years immediately preceding the date of this report which is, or may be, material; or which contains any provision under which any member of National Grid has any obligation or entitlement which is material to National Grid at the date of this report.
This information can be found under the heading note 11 property, plant and equipment on page 111, note 19 Borrowings on pages 119 to 121, Strategic Report pages 12 to 20, where we operate on page 166 and principal operations on pages 29 to 38.
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Other disclosures continued |
The statements regarding US and UK tax laws and administrative practices set forth below are based on laws, treaties, judicial decisions and regulatory interpretations in effect on the date of this document. These laws and practices are subject to change without notice, possibly with retrospective effect. In addition, the US statements set forth below are based on the representations of The Bank of New York Mellon as depositary (the Depositary). These statements assume that each obligation provided for in, or otherwise contemplated by, the deposit agreement entered into between National Grid Transco plc (now National Grid plc), the Depositary and the registered holders of ADRs, pursuant to which ADSs have been issued, dated as of 21 November 1995 and amended and restated as of 1 August 2005, and any related agreement, will be performed in accordance with its terms. Beneficial owners of ADSs who are residents or citizens of the US will be treated as the owners of the underlying ordinary shares for the purposes of the US Internal Revenue Code.
For the purposes of the Tax Convention, the Estate Tax Convention and UK tax considerations, we have assumed that a holder of ADRs will be treated as the owner of the ordinary shares represented by those ADSs and this section is based on that assumption. Despite a ruling in 2012 by the First-Tier Tax Tribunal in the UK that has cast doubt on this view, HMRC has stated that it will continue to apply its long-standing practice of treating such an ADR holder as holding the beneficial interest in the underlying shares. As such, this is an area of some uncertainty that may be subject to further developments.
A US Holder should consult their own advisor as to the tax consequences of the purchase, ownership and disposition of ADSs or ordinary shares in light of their particular circumstances, including the effect of any state, local or other national laws.
Taxation of dividends Under the Tax Convention, the UK is allowed to impose a 15% withholding tax on dividends paid to US shareholders controlling less than 10% of the voting capital of National Grid. The UK does not, however, currently impose a withholding tax on such dividends.
Cash distributions received by a US Holder with respect to their ADSs or ordinary shares generally will be treated as foreign source dividend income subject to US federal income taxation as ordinary income, to the extent paid out of National Grids current or accumulated earnings and profits, as determined under US federal income tax principles. The dollar amount of dividends received by certain non corporate US Holders with respect to ADSs or ordinary shares will generally be subject to taxation at the special reduced rate normally applicable to long-term capital gains, provided National Grid (i) is eligible for the benefits of the Tax Convention and (ii) was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a passive foreign investment company (PFIC).
Based on National Grids audited financial statements and relevant market and shareholder data, National Grid believes that it was not treated as a PFIC for US federal income tax purposes with respect to its taxable years ending 31 March 2013 and 2014. In addition, based on its current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, National Grid does not anticipate becoming a PFIC in the foreseeable future. Dividends paid by National Grid to corporate US Holders will not be eligible for the dividends received deduction generally allowed to corporations.
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Taxation of capital gains US Holders will not be liable for UK taxation on any capital gain realised on the disposal of ADSs or ordinary shares.
Sales or other taxable dispositions of ADSs or ordinary shares by a US Holder generally will give rise to US source capital gain or loss equal to the difference between the dollar value of the amount realised on the disposition and the US Holders dollar basis in the shares or ADSs. Any such capital gain or loss generally will be long-term capital gain or loss, currently subject to taxation at reduced rates for non corporate taxpayers, if the ordinary shares or ADSs were held for more than one year. The deductibility of capital losses is subject to limitations.
UK stamp duty and stamp duty reserve tax (SDRT) Transfers of ordinary shares SDRT at the rate of 0.5% of the amount of value of the consideration will generally be payable on any agreement to transfer ordinary shares that is not completed by the execution of a duly stamped instrument of transfer to the transferee. Where an instrument of transfer is executed and duly stamped before the expiry of the period of six years beginning with the date on which the agreement is made, the SDRT liability will be cancelled, and, if a claim is made within the specified period, any SDRT which has been paid will be refunded. SDRT is due whether or not the agreement or transfer of such chargeable securities is made or carried out in the UK and whether or not any party to that agreement or transfer is a UK resident. Purchases of ordinary shares completed by execution of a stock transfer form will generally give rise to a liability to UK stamp duty at the rate of 0.5% (rounded up to the nearest £5) of the amount or value of the consideration. Paperless transfers under the CREST paperless settlement system will generally be liable to SDRT at the rate of 0.5%, and not stamp duty. SDRT is generally the liability of the purchaser and UK stamp duty is usually paid by the purchaser or transferee.
Transfers of ADSs No UK stamp duty will be payable on the acquisition or transfer of existing ADSs or beneficial ownership of ADSs, provided that any instrument of transfer or written agreement to transfer is executed outside the UK and remains at all times outside the UK. An agreement for the transfer of ADSs in the form of ADRs will not give rise to a liability for SDRT. A charge to stamp duty or SDRT may arise on the transfer of ordinary shares to the Depositary or The Bank of New York Mellon as agent of the Depositary (the Custodian). The rate of stamp duty or SDRT will generally be 1.5% of the value of the consideration or, in some circumstances, the value of the ordinary shares concerned. However, following a ruling in 2012 by the First-Tier Tax Tribunal in the UK, there is no 1.5% SDRT charge on the issue of ordinary shares (or, where it is integral to the raising of new capital, the transfer of ordinary shares) to the Depositary or the Custodian. The Depositary will generally be liable for the stamp duty or SDRT. In accordance with the terms of the Depositary Agreement, the Depositary will charge any tax payable by the Depositary or the Custodian (or their nominees) on the deposit of ordinary shares to the party to whom the ADSs are delivered against such deposits. If the stamp duty is not a multiple of £5, the duty will be rounded up to the nearest multiple of £5. |
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US information reporting and backup withholding tax Dividend payments made to US Holders and proceeds paid from the sale, exchange, redemption or disposal of ADSs or ordinary shares to US Holders may be subject to information reporting to the US Internal Revenue Service (IRS). Such payments may be subject to backup withholding taxes unless the holder (i) is a corporation or other exempt recipient or (ii) provides a taxpayer identification number on a properly completed IRS Form W-9 and certifies that no loss of exemption from backup withholding has occurred.
US Holders should consult their tax advisors regarding these rules and any other reporting obligations that may apply to the ownership or disposition of ADSs or ordinary shares, including reporting requirements related to the holding of certain foreign financial assets.
UK inheritance tax An individual who is domiciled in the US for the purposes of the Estate Tax Convention and who is not a national of the UK for the purposes of the Estate Tax Convention will generally not be subject to UK inheritance tax in respect of the ADSs or ordinary shares on the individuals death or on a gift of the ADSs or ordinary shares during the individuals lifetime, unless the ADSs or ordinary shares are part of the business property of a permanent establishment of the individual in the UK or pertain to a fixed base in the UK of an individual who performs independent personal services.
Special rules apply to ADSs or ordinary shares held in trust. In the exceptional case where the ADSs or shares are subject both to UK inheritance tax and to US federal gift or estate tax, the Estate Tax Convention generally provides for the tax paid in the UK to be credited against tax paid in the US.
The all-employee share plans allow UK- or US-based employees to participate in either HMRC (UK) or Internal Revenue Service (US) approved plans. We believe by offering participation in such plans, it encourages all employees (including Executive Directors) to become shareholders in National Grid.
Sharesave Employees resident in the UK are eligible to participate in the Sharesave plan. Under this plan, participants may contribute between £5 and £250 in total each month, for a fixed period of three years, five years or both. Contributions are taken from net salary.
SIP Employees resident in the UK are eligible to participate in the SIP. Contributions up to £125 are deducted from participants gross salary and used to purchase ordinary shares in National Grid each month. The shares are placed in trust.
US Incentive Thrift Plans Employees of National Grids US companies are eligible to participate in the Thrift Plans, which are tax-advantaged savings plans (commonly referred to as 401(k) plans). They are DC pension plans that give participants the opportunity to invest up to applicable federal salary limits. The federal limits for calendar year 2013 are: for pre-tax contributions a maximum of 50% of salary limited to $17,500 for those under the age of 50 and $23,000 for those over 50; for post-tax contributions, up to 15% of salary. The total contributions (pre-tax and post-tax) are limited to the
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lesser of 50% of compensation or $51,000. For calendar year 2014, participants may invest up to the applicable federal salary limits: for pre-tax contributions a maximum of 50% of salary limited to $17,500 for those under the age of 50 and $23,000 for those over 50; for post-tax contributions up to 15% of salary. The total contributions (pre-tax and post-tax) are limited to the lesser of 50% of compensation or $52,000.
ESPP Employees of National Grids US companies are eligible to participate in the ESPP (commonly referred to as a 423(b) plan). Eligible employees have the opportunity to purchase ADSs on a monthly basis at a 15% discounted price. Under the plan employees may contribute up to 20% of base pay each year up to a maximum annual contribution of $18,888 to purchase ADSs in National Grid.
Price history The following table shows the highest and lowest intraday market prices for our ordinary shares and ADSs for the periods indicated: |
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Ordinary share (pence) |
ADS ($) | |||||||||||||||||||||
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High | Low | High | Low | |||||||||||||||||||
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2013/14 | 849.50 | 711.00 | 70.07 | 55.16 | ||||||||||||||||||
2012/13 | 770.00 | 627.00 | 58.33 | 49.55 | ||||||||||||||||||
2011/12 | 660.50 | 545.50 | 52.18 | 45.80 | ||||||||||||||||||
2010/11 1 | 666.00 | 474.80 | 51.00 | 36.72 | ||||||||||||||||||
2009/10 | 685.50 | 511.00 | 56.59 | 38.25 | ||||||||||||||||||
2013/14 Q4 | 842.50 | 769.00 | 70.07 | 63.19 | ||||||||||||||||||
Q3 | 797.50 | 725.16 | 65.39 | 58.85 | ||||||||||||||||||
Q2 | 817.75 | 727.45 | 61.59 | 55.30 | ||||||||||||||||||
Q1 | 849.50 | 711.00 | 64.56 | 55.16 | ||||||||||||||||||
2012/13 Q4 | 770.00 | 678.00 | 58.33 | 52.81 | ||||||||||||||||||
Q3 | 724.97 | 679.59 | 58.03 | 54.28 | ||||||||||||||||||
Q2 | 706.13 | 635.56 | 56.72 | 49.55 | ||||||||||||||||||
Q1 | 689.50 | 627.00 | 55.00 | 49.85 | ||||||||||||||||||
April 2014 | 844.50 | 806.22 | 71.23 | 67.62 | ||||||||||||||||||
March 2014 | 839.50 | 808.00 | 69.86 | 67.02 | ||||||||||||||||||
February 2014 | 842.50 | 777.50 | 70.07 | 63.24 | ||||||||||||||||||
January 2014 | 809.50 | 769.00 | 66.40 | 63.19 | ||||||||||||||||||
December 2013 | 797.50 | 742.50 | 65.39 | 60.67 | ||||||||||||||||||
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1. On 20 May 2010, we announced a 2 for 5 rights issue of 990,439,017 ordinary shares at 355 pence per share. |
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There are no unresolved staff comments required to be reported. |
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Other unaudited financial information Reconciliations of adjusted profit measures |
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Other unaudited financial information continued |
Analysis of the adjusted operating profit by segment for the year ended 31 March 2013 UK Electricity Transmission Net regulated revenue increased by £235 million due to an increase in regulated revenues under UK price control allowances partly offset by a £10 million increase in charges under the balancing services incentive scheme. Timing increased by £67 million, with in year over-recovery of £29 million compared with a prior year under-recovery of £38 million.
Our controllable costs increased by £8 million driven by inflation, recruitment and training costs associated with our capital investment programme and increases in contribution rates for our DB pension schemes.
Depreciation and amortisation increased by £42 million as a result of higher asset values due to our capital investment programme.
UK Gas Transmission Gas Transmission net regulated revenue increased by £112 million driven by increased price control revenues partly offset by lower incentive scheme performance and reduced auction revenues in our LNG storage business. There was no year-on-year timing movement due to an in year over-recovery of £17 million compared with a £17 million over-recovery in 2012/13.
Controllable costs increased by £21 million driven by inflation, an increase in our environmental provisions and increases in contribution rates for our DB pension schemes.
Depreciation and amortisation increased by £16 million due to an increase in the underlying asset base and some one-time asset write-offs.
UK Gas Distribution Net regulated revenue increased by £85 million driven by our regulatory RPI-X pricing formula and improved performance under incentive programmes. Timing reduced adjusted operating profit by £32 million driven by in year under-recoveries of £10 million compared with an over-recovery in the prior year of £22 million. The estimated closing under-recovered value at 31 March 2013 was £8 million.
Regulated controllable costs increased by £13 million due to: inflation, system maintenance costs and one-off contract strategy costs, partially offset by efficiencies enabled by our new front office systems. Post-retirement costs increased by £2 million as a result of increased contribution rates for our DB pension schemes.
Depreciation and amortisation increased by £10 million driven by higher average asset values due to the capital investment programme and new front office systems. Finally, other costs decreased by £3 million, resulting in an adjusted operating profit of £794 million for the year.
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US Regulated Our US Regulated business was affected by a reduction in timing differences of £37 million due to in year under-recoveries of £20 million compared with a prior year over-recovery of £17 million (after adjusting for foreign exchange movements).
The estimated closing over-recovered value at 31 March 2013 was £110 million. This was offset by a year-on-year reduction in major storm costs of £33 million, as the financial impact of Superstorm Sandy and Storm Nemo was lower than that from Hurricane Irene and the Massachusetts October snowstorm in 2011/12.
Net costs incurred in the US after insurance proceeds were £33 million lower than 2011/12 (after adjusting for foreign exchange movements).
An increase of £135 million in net regulated income reflects deferral recoveries in our upstate New York businesses together with higher revenues from our capital tracker regulatory arrangements.
Regulated controllable operating costs increased by £19 million reflecting inflation and higher spend on IS outsourcing and security. Post-retirement costs increased by £29 million primarily due to reductions in discount rates. Bad debt expense reduced by £33 million in the year due to improving economic conditions and improved collections.
Depreciation and amortisation increased by £17 million as a result of our capital expenditure programme in the year. Finally, other costs increased by £58 million due to increased property tax rates and assessed values, together with higher environmental costs in 2012/13. As a result, adjusted operating profit for the year was £1,254 million.
Other activities Our Other activities were significantly affected by the cost of major storms in the year, with an additional £51 million cost incurred compared with the prior year. This was as a result of insurance costs for Superstorm Sandy incurred in our insurance captive. Some of these costs are expected to be recovered from the reinsurance market.
Our metering business made £24 million lower operating profit than the prior year as a result of the disposal of OnStream in 2012, together with the impact of third-party disputes on legacy meter pricing in our regulated metering business.
Other costs increased by £126 million, primarily representing spend on the implementation of the new US information systems and financial procedures, offset by increased revenues from the French interconnector. As a result of these movements, Other activities recorded an adjusted operating profit of £11 million for the year. |
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financial information |
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31 March
£m |
31 March 2013 (restated) 1 £m |
31 March 2012 (restated) 1 £m |
31 March 2011 (restated) 1 £m |
31 March 2010 (restated) 1 £m |
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Summary statement of net assets |
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Non-current assets |
44,895 | 45,129 | 41,684 | 39,787 | 38,488 | |||||||||||||||||
Current assets |
7,489 | 9,576 | 5,387 | 6,323 | 5,065 | |||||||||||||||||
Assets of businesses held for sale |
| | 264 | 290 | | |||||||||||||||||
Total assets |
52,384 | 54,705 | 47,335 | 46,400 | 43,553 | |||||||||||||||||
Current liabilities |
(7,331 | ) | (7,445) | (6,004) | (6,826) | (6,559) | ||||||||||||||||
Non-current liabilities |
(33,134 | ) | (37,026) | (32,001) | (30,403) | (32,800) | ||||||||||||||||
Liabilities of businesses held for sale |
| | (87) | (110) | | |||||||||||||||||
Total liabilities |
(40,465 | ) | (44,471) | (38,092) | (37,339) | (39,359) | ||||||||||||||||
Net assets |
11,919 | 10,234 | 9,243 | 9,061 | 4,194 | |||||||||||||||||
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Shareholders equity |
11,911 | 10,229 | 9,236 | 9,052 | 4,182 | |||||||||||||||||
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Summary cash flow statement |
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Cash generated from continuing operations |
4,419 | 4,037 | 4,487 | 4,854 | 4,372 | |||||||||||||||||
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Tax (paid)/received |
(400 | ) | (287) | (259) | 4 | 144 | ||||||||||||||||
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Net cash inflow from operating activities |
4,019 | 3,750 | 4,228 | 4,858 | 4,516 | |||||||||||||||||
Net cash flows used in investing activities |
(1,330 | ) | (6,130) | (2,371) | (4,774) | (2,332) | ||||||||||||||||
Net cash flows from/(used in) financing activities |
(2,972 | ) | 2,715 | (1,900) | (430) | (2,212) | ||||||||||||||||
Net increase/(decrease) in cash and cash equivalents |
(283 | ) | 335 | (43) | (346) | (28) | ||||||||||||||||
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1. For the year ended 31 March 2014, the adoption of IAS 19 (revised) Employee benefits has resulted in a significant change in how we account for pensions and employee benefits. The numbers included in the selected financial data above for the years 31 March 2010, 2011, 2012 and 2013 have been restated to show the impact of IAS 19 (revised) had it been adopted since 2010. There have been no other significant changes in accounting standards, interpretations or policies that have a material financial impact on the selected financial data.
2. Items previously reported for 2010 separately as other operating income have been included within revenue.
3. Items previously reported for 2010 2013 have been restated to reflect the impact of the bonus element of the rights issue and the additional shares issued as scrip dividends.
4. Number of shares previously reported for 2010 2013 have been restated to reflect the impact of the additional shares issued as scrip dividends.
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188 National Grid Annual Report and Accounts 2013/14
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glossary of terms |
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189
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E earnings per share (EPS) Profit for the year attributable to equity shareholders of the parent allocated to each ordinary share.
Electricity Market Reform (EMR) An energy policy initiative, introduced by the Energy Act 2013, designed to provide greater financial certainty to investors in both low carbon and conventional generation in order to meet environmental targets and maintain security of supply, and to do so at the lowest cost to consumers.
employee engagement A key performance indicator, based on the percentage of favourable responses to certain indicator questions repeated in each employee survey, which provides a measure of how employees think, feel and act in relation to National Grid. Research shows that a highly engaged workforce leads to increased productivity and employee retention, therefore we use employee engagement as a measure of organisational health in relation to business performance.
equity In financial statements, the amount of net assets attributable to shareholders.
Estate Tax Convention The Estate Tax Convention is the convention between the US and the UK for the avoidance of double taxation with respect to estate and gift taxes.
EU The European Union, being the economic and political union of 27 member states located in Europe.
Exchange Act The Securities Exchange Act 1934, as amended.
F FERC The US Federal Energy Regulatory Commission.
finance lease A lease where the asset is treated as if it was owned for the period of the lease and the obligation to pay future rentals is treated as if they were borrowings. Also known as a capital lease.
financial year For National Grid this is an accounting year ending on 31 March. Also known as a fiscal year.
FRS A UK Financial Reporting Standard as issued by the UK Financial Reporting Council (FRC). These apply to the Companys individual financial statements on pages 155 to 159, which are prepared in accordance with UK GAAP.
G Grain LNG National Grid Grain LNG Limited.
Great Britain England, Wales and Scotland.
GW Gigawatt, being an amount of power equal to 1 billion watts (10 9 watts). |
H HMRC HM Revenue & Customs. The UK tax authority.
HVDC High voltage, direct current electric power transmission which uses direct current for the bulk transmission of electrical power, in contrast with the more common alternating current systems.
I IAS or IFRS An International Accounting Standard or International Financial Reporting Standard, as issued by the International Accounting Standards Board (IASB). IFRS is also used as the term to describe international generally accepted accounting principles as a whole.
individual financial statements Financial statements of a company on its own, not including its subsidiaries or joint ventures.
J joint venture A company or other entity which is controlled jointly with other parties.
K kV Kilovolt, being an amount of electric force equal to 1,000 volts.
L LIPA The Long Island Power Authority.
LNG Liquefied natural gas, being natural gas that has been condensed into a liquid form, typically at temperatures at or below -161°C (-258°F).
lost time injury An incident arising out of National Grids operations which leads to an injury where the employee or contractor normally has time off the following day or shift following the incident. It relates to one specific (acute) identifiable incident which arises as a result of National Grids premises, plant or activities, which was reported to the supervisor at the time and was subject to appropriate investigation.
lost time injury frequency rate (IFR) The number of lost time injuries per 100,000 hours worked in a 12 month period.
M MADPU The Massachusetts Department of Public Utilities.
MSA The managed services agreement, under which the Company maintained and operated the electricity transmission and distribution system on Long Island owned by LIPA, which was transitioned to a third party with effect from 31 December 2013.
MW Megawatt, being an amount of power equal to 1 million watts.
MWh Megawatt hours, being an amount of energy equivalent to delivering 1 million watts of power for a period of one hour.
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Definitions and glossary of terms continued |
N National Grid Metering (NGM) National Grid Metering Limited, National Grids UK regulated metering business.
New England The term refers to a region within the northeastern US that includes the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. National Grids New England operations are primarily in the states of Massachusetts and Rhode Island.
northeastern US The northeastern region of the US, comprising the states of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.
NYPSC The New York Public Service Commission.
O Ofgem The UK Office of Gas and Electricity Markets, part of the UK Gas and Electricity Markets Authority (GEMA), which regulates the energy markets in the UK.
OnStream Utility Metering Services Limited, an unregulated UK metering business, sold by National Grid on 24 October 2011.
ordinary shares Voting shares entitling the holder to part ownership of a company. Also known as common stock. National Grids ordinary shares have a nominal value of 11 17 ⁄ 43 pence.
P price control The mechanism by which Ofgem sets restrictions on the amounts of revenue we are allowed to collect from customers in our UK businesses. The allowed revenues are intended to cover efficiently incurred operational expenditure, capital expenditure and financing costs, including a return on equity invested.
PSA The 15 year power supply agreement with LIPA which came into effect on 28 May 2013, under which the Company supplies electricity to communities and businesses across Long Island.
R rate base The base investment on which the utility is authorised to earn a cash return. It includes the original cost of facilities, minus depreciation, an allowance for working capital and other accounts.
rate plan The term given to the mechanism by which a US utility regulator sets terms and conditions for utility service including, in particular, tariffs and rate schedules. The term can mean a multi-year plan that is approved for a specified period, or an order approving tariffs and rate schedules that remain in effect until changed as a result of future regulatory proceedings. Such proceedings can be commenced through a filing by the utility or on the regulators own initiative.
regulated controllable operating costs Total operating costs under IFRS less depreciation and certain regulatory costs where, under our regulatory agreements, mechanisms are in place to recover such costs in current or future periods.
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regulatory asset value (RAV) The value ascribed by Ofgem to the capital employed in the relevant licensed business. It is an estimate of the initial market value of the regulated asset base at privatisation, plus subsequent allowed additions at historical cost, less the deduction of annual regulatory depreciation. Deductions are also made to reflect the value realised from the disposal of certain assets that formed part of the regulatory asset base. It is also indexed to the RPI to allow for the effects of inflation.
return on capital employed (RoCE) The return on capital employed metric is designed to give an alternative comparison between the UK and US businesses showing the overall return on capital provided by both debt and equity. The calculation reflects regulatory treatments of costs.
return on equity (RoE) A performance metric measuring returns from the investment of shareholders funds. It is a financial ratio of a measure of earnings divided by an equity base.
Group return on equity (Group RoE) The Group return on equity calculation provides a measure of the performance of the whole Group compared with the amounts invested by the Group in assets attributable to equity shareholders. The Group return on equity measure is calculated using the Group capital employed in accordance with the definition used in the RoCE measures, adjusted for Group net debt and goodwill.
US regulated return on equity (US RoE) US regulated return on equity is a measure of how a business is performing operationally against the assumptions used by the relevant regulator. This US operational return measure is calculated using the assumption that the businesses are financed in line with the regulatory adjudicated capital structure. This is a post-tax US GAAP metric as calculated annually (on a calendar year to 31 December).
UK regulated return on equity (UK RoE) UK regulated return on equity is a measure of how a business is performing operationally against the assumptions used by Ofgem. These returns are calculated using the assumption that the businesses are financed in line with the regulatory adjudicated capital structure, at the assumed cost of debt and that UK taxation paid is at the level assumed by Ofgem.
revenue decoupling Revenue decoupling is the term given to the elimination of the dependency of a utilitys revenue on the volume of gas or electricity transported. The purpose of decoupling is to eliminate the disincentive a utility otherwise has to encourage energy efficiency programmes.
RIIO The revised regulatory framework issued by Ofgem which was implemented in the eight year price controls which started on 1 April 2013.
RIPUC The Rhode Island Public Utilities Commission.
route length The route length of an electricity transmission line is the geographical distance from the start tower to the end tower. In most cases in the UK, and in many cases in the US, the transmission line consists of a double circuit for additional reliability. In such cases, the circuit length is twice the route length. |
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RPI The UK retail price index as published by the Office for National Statistics.
S Scope 1 emissions Scope 1 emissions are direct greenhouse gas emissions that occur from sources that are owned or controlled by the Company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.
Scope 2 emissions Scope 2 emissions are greenhouse gas emissions from the generation of purchased electricity consumed by the Company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organisational boundary of the Company. Scope 2 emissions physically occur at the facility where electricity is generated.
SEC The US Securities and Exchange Commission, the financial regulator for companies with registered securities in the US, including National Grid and certain of its subsidiaries.
SF 6 Sulphur hexafluoride, an inorganic, colourless, odourless and non-flammable greenhouse gas. SF6 is used in the electrical industry as a gaseous dielectric medium for high voltage circuit breakers, switchgear and other electrical equipment. The Kyoto protocol estimated that the global warming potential over 100 years of SF 6 is 23,900 times more potent than that of CO 2 .
share premium The difference between the amount shares are issued for and the nominal value of those shares.
standard cubic metre A quantity of gas which at 15°C and atmospheric pressure (1.013 bar) occupies the volume of 1m 3 .
stranded cost recoveries The recovery of historical generation-related costs in the US, related to generation assets that are no longer owned by us.
STEM Science, technology, engineering and mathematics; the Company is currently looking to recruit people with skills in these subjects.
subsidiary A company or other entity that is controlled by National Grid.
swaption A swaption gives the buyer, in exchange for an option premium, the right, but not the obligation, to enter into an interest rate swap at some specified date in the future. The terms of the swap are specified on the trade date of the swaption.
T taxes borne Those taxes that represent a cost to the Company and which are reflected in our results.
taxes collected Those taxes that are generated by our operations but which do not affect our results; we generate the commercial activity giving rise to these taxes and then collect and administer them on behalf of HMRC.
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tonne A unit of mass equal to 1,000 kilogrammes, equivalent to approximately 2,205 pounds.
tonnes carbon dioxide equivalent (CO 2 e) A measure of greenhouse gas emissions in terms of the equivalent amount of carbon dioxide.
treasury shares Shares that have been repurchased but not cancelled. These shares can then be allotted to meet obligations under the Companys employee share schemes.
TWh Terawatt hours, being an amount of energy equivalent to delivering 1 billion watts of power for a period of 1,000 hours.
U UK The United Kingdom, comprising England, Wales, Scotland and Northern Ireland.
UK Corporate Governance Code 2012 (the Code) Guidance, issued by the Financial Reporting Council, on how companies should be governed, applicable to UK listed companies including National Grid.
UK GAAP Generally accepted accounting principles in the UK. These differ from IFRS and from US GAAP.
US The United States of America, its territories and possessions, any state of the United States and the District of Columbia.
US GAAP Generally accepted accounting principles in the US. These differ from IFRS and from UK GAAP.
US state regulators (state utility commissions) In the US, public utilities retail transactions are regulated by state utility commissions, including the New York Public Service Commission (NYPSC), the Massachusetts Department of Public Utilities (MADPU) and the Rhode Island Public Utilities Commission (RIPUC).
value added Value added is a measure to capture the value created through investment attributable to equity holders, being the change in total regulated and non-regulated assets including goodwill (both at constant currency) plus the cash dividend paid in the year less the growth in net debt (at constant currency). This is then presented on an absolute and a per share basis.
value growth Value growth is the growth in the value of our regulated and non-regulated assets including goodwill plus dividend less net debt, on a per share basis. |
192 National Grid Annual Report and Accounts 2013/14
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information or help? |
Capita Asset Services
For queries about ordinary shares :
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The Bank of New York Mellon
For queries about
American
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Further information about National Grid including share price and interactive tools can be found on our website: www.nationalgrid.com
Have you received unsolicited investment advice? Shareholders are advised to be wary of any unsolicited advice or offers, whether over the telephone, through the post or by email. If you receive any such unsolicited communication please check the company or person contacting you is properly authorised by the Financial Conduct Authority (FCA) before getting involved. You can check at www.fca.org.uk/ consumers/protect-yourself and can report calls from unauthorised firms to the FCA by calling 0800 111 6768. |
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0871 402 3344
Calls cost 8 pence per minute plus
Textphone: 18001 0871 664 0532 |
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1-800-466-7215 If calling from outside the US: +1-201-680-6825 |
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www.mybnymdr.com Email: shrrelations@ cpushareownerservices.com |
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Visit the National Grid share portal www.nationalgridshareholders.com Email: nationalgrid@capita.co.uk |
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The Bank of New York Mellon Depositary Receipts PO Box 30170 College Station, Texas 77842-3170 |
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National Grid Share Register Capita Asset Services The Registry 34 Beckenham Road Beckenham, Kent BR3 4TU
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Financial calendar The following dates have been announced or are indicative:
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American Depositary Shares The Company has amended the deposit agreement under which the ADS representing its ordinary shares are issued to allow a fee of up to $0.05 per ADS to be charged for any cash distribution made to ADS holders, including cash dividends. ADS holders who receive cash in relation to the 2013/14 final dividend will be charged a fee of $0.02 per ADS by the Depositary prior to the distribution of the cash dividend.
Electronic communications To receive an email notifying you as soon as new shareholder information is available to view online, including your electronic tax voucher, sign up for electronic communications. Simply go to the National Grid share portal www.nationalgridshareholders.com and once you have registered, click on the manage your account link and follow the on screen instructions to change your communication preference.
Manage your shareholding online via the National Grid share portal:
Have your dividends paid direct to your bank account instead of receiving cheques
Choose to receive your dividends in shares, via our scrip dividend scheme
Register your AGM votes
Get copies of your dividend tax vouchers and view your dividend payment history
Update your address details |
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4 June 2014 | Ordinary shares go ex-dividend for 2013/14 | |||||||||||||||
6 June 2014 | Record date for 2013/14 final dividend | |||||||||||||||
11 June 2014 | Scrip reference price announced | |||||||||||||||
27 June 2014 | Scrip election date | |||||||||||||||
28 July 2014 | 2014 AGM and interim management statement | |||||||||||||||
20 August 2014 | 2013/14 final dividend paid to qualifying shareholders | |||||||||||||||
7 November 2014 | 2014/15 half-year results | |||||||||||||||
19 November 2014 | Ordinary shares go ex-dividend | |||||||||||||||
21 November 2014 | Record date for 2014/15 interim dividend | |||||||||||||||
7 January 2015 | 2014/15 interim dividend paid to qualifying shareholders | |||||||||||||||
January/February 2015 | Interim management statement | |||||||||||||||
May 2015 | 2014/15 preliminary results | |||||||||||||||
Dividends The Directors are recommending a final dividend of 27.54 pence per ordinary share ($2.3107 per ADS) to be paid on 20 August 2014 to shareholders on the register as at 6 June 2014. Further details in respect of dividend payments can be found on page 07. If you live outside the UK, you may be able to request that your dividend payments be converted into your local currency.
Have your dividends paid directly into your bank or building society account: Your dividend reaches your account on the payment day It is more secure cheques do sometimes get lost in the post No more trips to the bank
Elect to receive your dividends as additional shares: Join our scrip dividend scheme No stamp duty or commission to pay
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Share dealing Capita Share Dealing Services offer our European Economic Area resident shareholders a range of quick and easy share dealing services by post, online or telephone from 10p per share (plus stamp duty as applicable). Dealing at live prices is available online or by telephone, different fees apply.
Visit www.capitadeal.com/nationalgrid or call Capita Share Dealing free on 0800 022 3374 for details and terms and conditions. This is not a recommendation to take any action . High street banks may also offer share dealing services. If you have any doubt as to what action you should take, please contact an authorised financial advisor.
ShareGift: If you only have a small number of shares which would cost more for you to sell than they are worth, you may wish to consider donating them to the charity.
ShareGift is a registered charity (no. 1052686) which specialises in accepting such shares as donations. For more information visit www.sharegift.org.uk or contact Capita Asset Services.
Individual Savings Accounts (ISAs): Corporate ISAs for National Grid shares are available from Stocktrade. For more information, call Stocktrade on 0131 240 0443, email isa@stocktrade.co.uk or write to Stocktrade, 6th floor, Atria One, 144 Morrison Street, Edinburgh EH3 8BR.
National Grid plc was incorporated on 11 July 2000. The Company is registered in England and Wales No. 4031152, with its registered office at 1-3 Strand, London WC2N 5EH.
The Companys agent in the United States is National Grid USA, Attn: General Counsel, 40 Sylvan Road, Waltham, MA 02451.
Cautionary statement This document comprises the Annual Report and Accounts for the year ending 31 March 2014 for National Grid and its subsidiaries. It contains the Directors Report and Financial Statements, together with the independent auditors report thereon, as required by the Companies Act 2006. The Directors Report, comprising pages 06 to 73 and 160 to 187, has been drawn up in accordance with the requirements of English law, and liability in respect thereof is also governed by English law. In particular, the liability of the Directors for these reports is solely to National Grid.
This document contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to our financial condition, our results of operations and businesses, strategy, plans and objectives. Words such as anticipates, expects, should, intends, plans, believes, outlook, seeks, estimates, targets, may, will, continue, project and similar expressions, as well as statements in the future tense, identify forward-looking statements. These forward-looking statements are not guarantees of our future performance and are subject to assumptions, risks and uncertainties that could cause actual future results to differ materially from those expressed in or implied by such forward-looking statements. Many of these assumptions, risks and uncertainties relate to factors that are beyond our ability to control or estimate precisely, such as changes in laws or regulations, announcements from and decisions by governmental bodies or regulators (including the timeliness of consents for construction projects); the timing of construction and delivery by third parties of new generation projects requiring connection; breaches of, or changes in, environmental, climate change and health and safety laws or regulations, including breaches or other incidents arising |
from the potentially harmful nature of our activities; network failure or interruption, the inability to carry out critical non network operations and damage to infrastructure, due to adverse weather conditions including the impact of major storms as well as the results of climate change or due to the failure of or unauthorised access to or deliberate breaches of our IT systems and supporting technology; performance against regulatory targets and standards and against our peers with the aim of delivering stakeholder expectations regarding costs and efficiency savings, including those related to investment programmes and internal transformation projects (including our US financial systems and our controls over financial reporting); and customers and counterparties (including financial institutions) failing to perform their obligations to the Company. Other factors that could cause actual results to differ materially from those described in this document include fluctuations in exchange rates, interest rates and commodity price indices; restrictions and conditions (including filing requirements) in our borrowing and debt arrangements, funding costs and access to financing; regulatory requirements for us to maintain financial resources in certain parts of our business and restrictions on some subsidiaries transactions such as paying dividends, lending or levying charges; inflation; the delayed timing of recoveries and payments in our regulated businesses and whether aspects of our activities are contestable; the funding requirements and performance of our pension schemes and other post-retirement benefit schemes; the failure to attract, train or retain employees with the necessary competencies, including leadership skills, and any significant disputes arising with our employees or the breach of laws or regulations by our employees; and the failure to respond to market developments and grow our business to deliver our strategy, as well as incorrect or unforeseen assumptions or conclusions (including unanticipated costs and liabilities) relating to business development activity, including assumptions in connection with joint ventures.
For further details regarding these and other assumptions, risks and uncertainties that may affect National Grid, please read the Strategic Report and the Risk factors on pages 167 to 169 of this document. In addition, new factors emerge from time to time and we cannot assess the potential impact of any such factor on our activities or the extent to which any factor, or combination of factors, may cause actual future results to differ materially from those contained in any forward-looking statement. Except as may be required by law or regulation, the Company undertakes no obligation to update any of its forward-looking statements, which speak only as of the date of this document.
The contents of any website references in this document do not form part of this document.
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Printed by Pureprint Group, ISO 14001, FSC ® certified and CarbonNeutral ® . |
Further Information
Exchange Rates
The following table sets forth the history of the exchange rates of one pound sterling to US dollars for the periods indicated and as at the latest practicable date, 3 June 2014.
High | Low | |||
June 2014* |
1.6757 | 1.6738 | ||
May 2014 |
1.6992 | 1.6706 |
* | For the period to 3 June 2014. |
Share ownership
At 3 June 2014, the latest practicable date, none of the directors had an individual beneficial interest amounting to greater than 1% of the Companys shares.
Material interests in shares
The following summarizes the significant changes in the percentage ownership held by our major shareholders during the past three years:
Capital Group Companies, Inc. held 5.04% of our outstanding share capital as at 9 June 2011. Their shareholding increased to 10. 91% of our outstanding share capital as at 31 March 2013 and that such holdings increased as at 5 April 2013 to 11.02 %. As noted on page 174 of the 2013/2014 Annual Report and Accounts, we have been notified that Capital Group Companies, Inc. held 11.103% of our outstanding share capital as at 31 March 2014 which percentage remains unchanged as at 3 June 2014.
Since 31 March 2014, we have not been notified of any other subsequent significant change in the percentage of shares held by the shareholders, listed on page 174 of the 2013/2014 Annual Report and Accounts.
Price history
The following table sets forth the highest and lowest intraday market prices for our ordinary shares and ADSs for the periods indicated.
Ordinary Share
(Pence) |
ADS ($) | |||||||
High | Low | High | Low | |||||
June 2014* |
897.92 | 874.50 | 75.09 | 73.15 | ||||
May 2014 |
895.50 | 835.86 | 74.86 | 70.42 |
* | For the period to 3 June 2014, the latest practicable date. |
Subsequent Events
NONE APPLICABLE
Exhibits
Pursuant to the rules and regulations of the SEC, National Grid has filed certain agreements as exhibits to this Annual Report on Form 20-F. These agreements may contain representations and warranties by the parties to them. These representations and warranties have been made solely for the benefit of the other party or parties to such agreement and (i) may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements if those statements turn out to be inaccurate, (ii) may have been qualified by disclosures that were made to such other party or parties and that either have been reflected in the companys filings or are not required to be disclosed in those filings, (iii) may apply materiality standards different from what may be viewed as material to investors and (iv) were made only as of the date of such agreements or such other date or dates as may be specified in such agreements.
In accordance with the instructions to Item 2(b)(i) of the Instructions to Exhibits to the Form 20-F, National Grid agrees to furnish to the SEC, upon request, a copy of any instrument relating to long-term debt that does not exceed 10 percent of the total assets of National Grid and its subsidiaries on a consolidated basis.
Description |
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1.1 |
Articles of Association of National Grid plc adopted by Special Resolution passed on 30 July 2012. |
Incorporated by reference | ||||||
2(a) |
Amended and restated Deposit Agreement dated as of 23 May 2013 among National Grid plc and The Bank of New York Mellon, as Depository, and all Owners and Holders from time to time of American Depositary Shares issued thereunder. (Exhibit 1 to National Grid plc Form F-6 dated 15 May 2013 File No. 333-178045) |
Incorporated by reference | ||||||
2(b).1 |
Amended and Restated Trust Deed dated 26 July 2010 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a 15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).1 to National Grid plc Form 20-F dated 13 June 2011 File No. 1-14958) |
Incorporated by reference | ||||||
2(b).2 |
Amended and Restated Trust Deed dated 18 February 2011 among National Grid Gas plc, National Grid Gas Finance (no 1) plc and the Law Debenture Trust Corporation p.l.c relating to a 10,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).2 to National Grid plc Form 20-F dated 13 June 2011 File No. 1-14958) |
Incorporated by reference | ||||||
2(b).3 |
Amended and Restated Trust Deed dated 22 February 2012 among National Grid Gas plc, National Grid Gas Finance (No 1) plc and the Law Debenture Trust Corporation p.l.c. relating to a 10,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).3 to National Grid plc Form 20-F dated 12 June 2012 File No. 1-14958) |
Incorporated by reference | ||||||
2(b).4 |
Amended and Restated Trust Deed dated 2 August 2011 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a 15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).5 to National Grid plc Form 20-F dated 12 June 2012 File No. 1-14958) |
Incorporated by reference | ||||||
2(b).5 |
Amended and Restated Trust Deed dated 27 March 2013 among National Grid Gas plc, National Grid Gas Finance (No 1) plc and the Law Debenture Trust Corporation p.l.c. relating to a 10,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).5 to National Grid plc Form 20-F dated 6 June 2013 File No. 1-14958) |
Incorporated by reference | ||||||
2(b).6 |
Amended and Restated Trust Deed dated 10 September 2012 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a 15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).6 to National Grid plc Form 20-F dated 6 June 2013 File No. 1-14958) |
Incorporated by reference | ||||||
2(b).7 |
Amended and Restated Trust Deed dated 12 September 2013 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to National Grid plc and National Grid Electricity Transmission plc 15,000,000,000 Euro Medium Term Note Programme. |
Filed herewith | ||||||
2(b).8 |
Amended and Restated Trust Deed dated 20 December 2013 among National Grid USA, National Grid North America Inc. and the Law Debenture Trust Corporation p.l.c. relating to National Grid USA 4,000,000,000 Euro Medium Term Note Programme. |
Filed herewith | ||||||
4(c).1 |
Service Agreement among The National Grid plc and Steven Holliday dated 1 April 2006. (Exhibit 4.(c).3 to National Grid Transco Form 20-F dated 19 June 2007 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).2 |
Service Agreement among The National Grid plc and Andrew Bonfield dated 1 November 2010. (Exhibit 4(c).20 to National Grid plc Form 20-F dated 13 June 2011 File No 1-14958) |
Incorporated by reference | ||||||
4(c).3 |
Service Agreement among National Grid Transco plc, National Grid Company plc and Nicholas Winser dated 28 April 2003. (Exhibit 4.8 to National Grid Transco Form 20-F dated 16 June 2004 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).4 |
Employment Agreement among National Grid plc, National Grid USA and Thomas King dated 11 July 2007. (Exhibit 4 (c).9 to National Grid plc Form 20-F dated 17 June 2008 File No. 1-14958) |
Incorporated by reference |
4(c).5 |
Service Agreement among National Grid Electricity Transmission plc and John Mark Pettigrew dated 28 February 2014. |
Filed Herewith | ||||||
4(c).6 |
Letter of AppointmentPhilip Aiken. (Exhibit 4 (c).11 to National Grid plc Form 20-F dated 17 June 2008 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).7 |
Letter of AppointmentSir Peter Gershon. (Exhibit 4(c).10 to National Grid plc Form 20-F dated 12 June 2012 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).8 |
Letter of AppointmentPaul Golby. (Exhibit 4(c).11 to National Grid plc Form 20-F dated 12 June 2012 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).9 |
Letter of AppointmentRuth Kelly. (Exhibit 4(c).14 to National Grid plc Form 20-F dated 12 June 2012 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).10 |
Letter of AppointmentMaria Richter. (Exhibit 4.14 to National Grid Transco Form 20-F dated 16 June 2004 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).11 |
Letter of AppointmentNora Mead Brownell. (Exhibit 4(c).13 to National Grid plc Form 20-F dated 6 June 2013 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).12 |
Letter of AppointmentMark Williamson. (Exhibit 4(c).14 to National Grid plc Form 20-F dated 6 June 2013 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).13 |
Letter of AppointmentJonathan Dawson. (Exhibit 4(c).15 to National Grid plc Form 20-F dated 6 June 2013 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).14 |
Letter of AppointmentTherese Esperdy. |
Filed Herewith | ||||||
4(c).15 |
National Grid plc Deferred Share Plan. (Exhibit 4.2 to National Grid plc S-8 dated 28 July 2011 File No. 333-175852) |
Incorporated by reference | ||||||
4(c).16 |
National Grid Executive Share Option Plan 2002. (Exhibit 4 (c) to National Grid Group Form 20-F dated 21 June 2002 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).17 |
National Grid Group Share Matching Plan 2002. (Exhibit 4 (c) to National Grid Group Form 20-F dated 21 June 2002 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).18 |
National Grid Transco Performance Share Plan 2002 (as approved 23 July 2002 by a resolution of the shareholders of National Grid Group plc, adopted 17 October 2002 by a resolution of the Board of National Grid Group plc, amended 26 June 2003 by the Share Schemes Sub-Committee of National Grid Transco plc, and amended 5 May 2004 by the Share Schemes Sub-Committee of National Grid Transco plc). (Exhibit 4.19 to National Grid Transco Form 20-F dated 16 June 2004 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).19 |
National Grid Executive Share Option Scheme. (Exhibit 4D to National Grid Group S-8 dated 26 July 2001 File No. 333-65968) |
Incorporated by reference | ||||||
4(c).20 |
Lattice Group Short Term Incentive Scheme (approved by a resolution of the shareholders of BG Group plc effective 23 October 2000; approved by a resolution of the Board of National Grid Transco plc on 30 April 2004; amended by resolutions of the Board of Lattice Group plc effective on 21 October 2002 and 13 May 2004). (Exhibit 4.23 to National Grid Transco Form 20-F dated 16 June 2004 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).21 |
National Grid USA Companies Defined Contribution Supplemental Executive Retirement Plan. (Exhibit 4.2 to National Grid plc S-8 dated 23 October 2012 File No. 14958) |
Incorporated by reference | ||||||
8 |
List of subsidiaries |
Filed herewith | ||||||
12.1 |
Certification of Steve Holliday pursuant to Rule 13a-14(a) of the Exchange Act. |
Filed herewith | ||||||
12.2 |
Certification of Andrew Bonfield pursuant to Rule 13a-14(a) of the Exchange Act. |
Filed herewith |
13.1 |
Certifications of Steve Holliday and Andrew Bonfield furnished pursuant to Rule 13a-14(b) of the Exchange Act (such certifications are not deemed filed for purpose of Section18 of the Exchange Act and not incorporated by reference in any filing under the Securities Act). |
Filed herewith | ||||||
15 |
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm to National Grid plc. |
Filed herewith |
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.
NATIONAL GRID PLC | ||||||
By: | /s/ Andrew Bonfield | |||||
Andrew Bonfield | ||||||
Finance Director |
London, England
5 June 2014
Exhibit 2(b).7
EXECUTION COPY
Dated 12 September 2013
NATIONAL GRID plc
and
NATIONAL GRID ELECTRICITY TRANSMISSION plc
as Issuers
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
as Trustee
AMENDED AND RESTATED TRUST DEED
relating to
National Grid plc and National Grid Electricity Transmission plc
Euro 15,000,000,000
Euro Medium Term Note Programme
arranged by
HSBC Bank plc
Linklaters LLP
One Silk Street
London EC2Y 8HQ
Telephone (+44) 20 7456 2000
Facsimile (+44) 20 7456 2222
Ref
Table of Contents
Contents |
Page | |||
1 Interpretation |
1 | |||
2 Issue of Instruments and Covenant to Pay |
7 | |||
3 Form of the Instruments |
9 | |||
4 Stamp Duties and Taxes |
10 | |||
5 Application of Moneys Received by the Trustee |
10 | |||
6 Covenants |
11 | |||
7 Remuneration and Indemnification of the Trustee |
14 | |||
8 Provisions Supplemental to the Trustee Acts |
16 | |||
9 Disapplication and Trustee Liability |
19 | |||
10 Waiver and Proof of Default |
19 | |||
11 Trustee not Precluded from Entering into Contracts |
20 | |||
12 Modification and Substitution |
20 | |||
13 Appointment, Retirement and Removal of the Trustee |
22 | |||
14 Instruments held in Clearing Systems and Couponholders |
23 | |||
15 Currency Indemnity |
24 | |||
16 Enforcement |
25 | |||
17 Communications |
25 | |||
18 Governing Law and Jurisdiction |
26 | |||
Schedule 1 Part A Form of CGN Temporary Global Instrument |
28 | |||
Schedule 1 Part B Form of CGN Permanent Global Instrument |
35 | |||
Schedule 1 Part C Form of NGN Temporary Global Instrument |
45 | |||
Schedule 1 Part D Form of NGN Permanent Global Instrument |
51 | |||
Schedule 2 Part A Form of Definitive Instrument |
58 |
A16888104
i
Schedule 2 Part B Terms and Conditions of the Instruments |
61 | |||
Schedule 2 Part C Form of Coupon |
107 | |||
Schedule 2 Part D Form of Talon |
109 | |||
Schedule 3 Provisions for Meetings of Instrumentholders |
111 |
A16888104
ii
This Amended and Restated Trust Deed is made on 12 September 2013 between :
(1) |
NATIONAL GRID plc ( National Grid ) AND NATIONAL GRID ELECTRICITY TRANSMISSION plc (NGET) , (each an Issuer and together, the Issuers ); and |
(2) |
THE LAW DEBENTURE TRUST CORPORATION p.l.c. , (the Trustee , which expression, where the meaning so admits, includes any other trustee for the time being of this Trust Deed). |
Whereas :
(A) |
The Issuers propose to issue from time to time bearer debt instruments and Australian Domestic Instruments (as defined below) (collectively, the Instruments ) in an aggregate nominal amount outstanding at any one time, including Instruments previously issued under the Programme, not exceeding the Programme Limit in accordance with the Dealer Agreement (the Programme ) and to be constituted by this Trust Deed (other than the Australian Domestic Instruments, which are to be constituted by the Deed Poll). |
(B) |
The Trustee has agreed to act as trustee of this Trust Deed on the following terms and conditions. |
(C) |
For the purposes of the Programme, the Issuers and the Trustee entered into an amended and restated trust deed dated 10 September 2012 (the Original Trust Deed ) and have agreed to make certain amendments to the Original Trust Deed. |
This Deed witnesses and it is declared as follows:
1 |
Interpretation |
1.1 |
Definitions |
In this Trust Deed:
Agency Agreement means the amended and restated agency agreement (as amended, supplemented and/or restated from time to time) relating to the Programme dated 12 September 2013, between the Issuers, the Trustee, The Bank of New York Mellon as Issuing and Paying Agent and the other agent(s) mentioned in it;
Agents has the meaning given to it in the Agency Agreement;
Australian Domestic Instruments means Instruments in registered uncertificated (or inscribed) form, constituted by the Deed Poll and issued by an Issuer in the Australian domestic capital markets;
Australian Issuing and Paying Agent means, in relation to all or any series of Australian Domestic Instruments, the person named as such in the Conditions or any Successor Australian Issuing and Paying Agent in each case at its specified office;
Australian Registrar means, in relation to all or any series of Australian Domestic Instruments, BTA Institutional Services Australia Limited ACN 002 916 393 or, if applicable, any Successor Australian Registrar;
Australian Agency and Registry Agreement means the agreement, as amended and/or supplemented from time to time, dated 10 September 2012 between the Issuers and the Australian Registrar pursuant to which the Issuers have appointed the Australian Registrar, and any other agreement for the time being in force appointing further or other Australian registrars, or in connection with its or their duties, the terms of which have
A16888104
1
previously been approved in writing by the Trustee, together with any agreement for the time being in force amending, modifying or replacing with the prior written approval of the Trustee any of the aforesaid agreements;
Calculation Agent means any person named as such in the Conditions or any Successor Calculation Agent;
Canadian Paying Agent means BNY Trust Company of Canada as Canadian Paying Agent under the Agency Agreement (or such other Canadian Paying Agent as may be appointed from time to time under the Agency Agreement);
CGN means a temporary Global Instrument in the form set out in Part A of Schedule 1 or a permanent Global Instrument in the form set out in Part B of Schedule 1.
Common Safekeeper means, in relation to a Series, the common safekeeper for Euroclear and Clearstream, Luxembourg appointed in respect of such Instruments.
Clearstream, Luxembourg means Clearstream Banking, société anonyme ;
Conditions means in respect of the Instruments of each Series the terms and conditions applicable to them which shall be substantially in the form set out in Part B of Schedule 2 (Terms and Conditions of the Instruments) as modified, with respect to any Instruments represented by a Global Instrument, by the provisions of such Global Instrument, and shall incorporate any additional provisions forming part of such terms and conditions set out in Part A of the Final Terms relating to the Instruments of that Series and shall be endorsed on the Definitive Instruments subject to amendment and completion as referred to in the first paragraph of Part A of Schedule 2 (Form of Definitive Instrument) and any reference to a particularly numbered Condition shall be construed accordingly;
Contractual Currency means, in relation to any payment obligation of any Instrument, the currency in which that payment obligation is expressed and, in relation to Clause 8 (Provisions supplemental to the Trustee Acts), pounds sterling or such other currency as may be agreed between the relevant Issuer and the Trustee from time to time;
Coupons means the coupons relating to interest bearing Instruments or, as the context may require, a specific number of them and includes any replacement Coupons issued pursuant to the Conditions;
Dealer Agreement means the amended and restated dealer agreement (as amended, supplemented and/or restated from time to time) relating to the Programme dated 12 September 2013 between the Issuers, the Arranger and the dealers named in it;
Deed Poll means the deed poll dated 10 September 2012 made by the Issuers and by which the Australian Domestic Instruments are constituted;
Definitive Instrument means an Instrument in definitive form having, where appropriate, Coupons and/or a Talon attached on issue and, unless the context requires otherwise, includes any replacement Instrument issued pursuant to the Conditions;
Effective Date means the date on which the Arranger has received, on behalf of the Dealers, each of the condition precedent documents listed in Schedule 2 to the Dealer Agreement and that each is, in form and substance, satisfactory to it;
Euroclear means Euroclear Bank S.A./N.V.;
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Event of Default means an event described in Condition 9 and that, if so required by that Condition, has been certified by the Trustee to be, in its opinion, materially prejudicial to the interests of the Instrumentholders;
Extraordinary Resolution has the meaning set out in Schedule 3 (Provisions for Meetings of Instrumentholders);
Final Terms means, in relation to a Tranche, the final terms document substantially in the form set out in the Prospectus which will be completed at or around the time of the agreement to issue each Tranche of Instruments and which will constitute final terms for the purposes of Article 5.4 of the Prospectus Directive. For avoidance of doubt, in the case of Instruments issued under the Programme which are not admitted to trading on the London Stock Exchanges regulated market, all references to the Final Terms shall be construed as references to the pricing supplement substantially in the form set forth in the Prospectus;
Global Instrument means a temporary Global Instrument and/or, as the context may require, a permanent Global Instrument, a CGN or a NGN, as the context may require;
holder in relation to an Instrument, Coupon or Talon, and Couponholder and Instrumentholder have the meanings given to them in the Conditions;
Instruments means the bearer debt instruments and the Australian Domestic Instruments to be issued by each of the Issuers pursuant to the Dealer Agreement, constituted by this Trust Deed, or in the case of the Australian Domestic Instruments, by the Deed Poll, and for the time being outstanding or, as a specific context may require, a specific number of them. For the avoidance of doubt, the provisions of this Trust Deed relating to Global Instruments, Coupons and Talons do not apply to Australian Domestic Instruments;
Issuing and Paying Agent means the person named as such in the Conditions or any Successor Issuing and Paying Agent in each case at its specified office;
month means a calendar month;
NGN means a temporary Global Instrument in the form set out in Part C of Schedule 1 or a permanent Global Instrument in the form set out in Part D of Schedule 1.
outstanding means, in relation to the Instruments, all the Instruments issued except (a) those that have been redeemed in accordance with the Conditions, (b) those in respect of which the date for redemption has occurred and the redemption moneys (including all interest accrued on such Instruments to the date for such redemption and any interest payable after such date) have been duly paid to the Trustee or to the Issuing and Paying Agent as provided in Clause 2 (Issue of Instruments and Covenant to Pay) and remain available for payment against presentation and surrender of Instruments and/or Coupons, as the case may be, (c) those which have become void or in respect of which claims have become prescribed, (d) those which have been purchased and cancelled as provided in the Conditions, (e) those mutilated or defaced Instruments which have been surrendered in exchange for replacement Instruments, (f) (for the purpose only of determining how many Instruments are outstanding and without prejudice to their status for any other purpose) those Instruments alleged to have been lost, stolen or destroyed and in respect of which replacement Instruments have been issued, and (g) any temporary Global Instrument to the extent that it shall have been exchanged for a permanent Global Instrument and any Global Instrument to the extent that it shall have been exchanged for one or more
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Definitive Instruments, in either case pursuant to its provisions provided that for the purposes of (i) ascertaining the right to attend and vote at any meeting of the Instrumentholders, (ii) the determination of how many Instruments are outstanding for the purposes of Conditions 9 and 11 and Schedule 3 (Provisions for Meetings of Instrumentholders), (iii) the exercise of any discretion, power or authority that the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Instrumentholders and (iv) the certification (where relevant) by the Trustee as to whether a Potential Event of Default is in its opinion materially prejudicial to the interests of the Instrumentholders, those Instruments which are beneficially held by or on behalf of the relevant Issuer or any of its subsidiary undertakings and not cancelled shall (unless no longer so held) be deemed not to remain outstanding. Save for the purposes of the proviso herein, in the case of each NGN, the Trustee shall rely on the records of Euroclear and Clearstream, Luxembourg in relation to any determination of the nominal amount outstanding of each NGN. In relation to Australian Domestic Instruments, the definition of Outstanding in the schedule to the Deed Poll shall apply in lieu of the foregoing definition.
Paying Agents means the persons (including the Issuing and Paying Agent) referred to as such in the Conditions or any Successor Paying Agents in each case at their respective specified offices;
permanent Global Instrument means a Global Instrument representing Instruments of one or more Tranches of the same Series, either on issue or upon exchange of a temporary Global Instrument, or part of it, and which shall be substantially in the form set out in Part B or Part D of Schedule 1, as the case may be (Form of Permanent Global Instrument);
Potential Event of Default means an event or circumstance that could with the giving of notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement provided for in Condition 9 become an Event of Default;
Programme Limit means the maximum aggregate nominal amount of Instruments which may be issued and outstanding at any time under the Programme, as such limit may be increased pursuant to the Dealer Agreement;
Procedures Memorandum means administrative procedures and guidelines in respect of non-syndicated issues relating to the terms of Instruments which may be issued and the settlement of issues of Instruments as shall be agreed upon from time to time by the relevant Issuer, the Trustee, the Permanent Dealers and the Issuing and Paying Agent and which are set out in Schedule 5 (Procedures Memorandum) of the Agency Agreement, where Permanent Dealers means all Dealers other than those appointed as such solely in respect of one or more specified Tranches;
Prospectus means the prospectus prepared in connection with the Programme and constituting (i) a base prospectus in respect of each Issuer for the purposes of Article 5.4 of the Prospectus Directive and (ii) listing particulars in respect of each Issuer for the purposes of Listing Rule 2.2.11 of the Listing Rules of the Financial Conduct Authority, as revised, supplemented or amended from time to time by the Issuers including any documents which are from time to time incorporated in the Prospectus by reference except that in relation to each Tranche of Instruments only the applicable Final Terms shall be deemed to be included in the Prospectus;
Prospectus Directive means Directive 2003/71/EC of the European Parliament and of the Council;
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Redemption Amount means the Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be, all as defined in the Conditions;
Series means a series of Instruments comprising one or more Tranches, whether or not issued on the same date, that (except in respect of the first payment of interest and their issue price) have identical terms on issue and are expressed to have the same series number;
specified office means, in relation to a Paying Agent, the office identified with its name at the end of the Conditions or any other office approved by the Trustee and notified to Instrumentholders pursuant to Clause 6.6 (Notices to Instrumentholders);
Successor means, in relation to an Agent, the Australian Issuing and Paying Agent or the Australian Registrar, such other or further person as may from time to time be appointed by either of the Issuers as such Agent, Australian Issuing and Paying Agent or Australian Registrar, as the case may be, with the written approval of, and on terms approved in writing by, the Trustee and notice of whose appointment is given to Instrumentholders pursuant to Clause 6.6 (Notices to Instrumentholders);
successor in business means (a) an entity which acquires all or substantially all of the undertaking and/or assets of either Issuer or of a successor in business of either Issuer; or (b) any entity into which any of the previously referred to entity is amalgamated, merged or reconstructed and is itself not the continuing company;
Talons mean talons for further Coupons or, as the context may require, a specific number of them and includes any replacement Talons issued pursuant to the Conditions;
TARGET System means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor thereto;
temporary Global Instrument means a Global Instrument representing Instruments of one or more Tranches of the same Series on issue and which shall be substantially in the form set out in Part A or Part C of Schedule 1, as the case may be (Form of Temporary Global Instrument);
Tranche means, in relation to a Series, those Instruments of that Series which are issued on the same date at the same issue price and in respect of which the first payment of interest is identical;
trust corporation means a trust corporation (as defined in the Law of Property Act 1925) or a corporation entitled to act as a trustee pursuant to applicable foreign legislation relating to trustees; and
Trustee Acts means both the Trustee Act 1925 and the Trustee Act 2000 of England and Wales.
1.2 |
Construction of Certain References |
Unless the context otherwise requires, all references in this Trust Deed to:
1.2.1 |
the records of Euroclear and Clearstream, Luxembourg shall be to the records that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflect the amount of such customers interests in the Instruments; |
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1.2.2 |
costs, charges, remuneration or expenses include any value added, turnover or similar tax charged in respect of them; |
1.2.3 |
an action, remedy or method of judicial proceedings for the enforcement of creditors rights include references to the action, remedy or method of judicial proceedings in jurisdictions other than England as shall most nearly approximate to it; |
1.2.4 |
the Trustees approval or consent shall, unless expressed otherwise, be subject to the requirement that any such approval or consent shall not be unreasonably withheld or delayed, such reasonableness to be determined by reference to acting in the interests of Instrumentholders as a whole; and |
1.2.5 |
the appointment or employment of or delegation to any person by the Trustee shall be deemed to include a reference to, if in the opinion of the Trustee it is reasonably practicable, the prior notification of and consultation with the Issuers and, in any event, the notification forthwith of such appointment, employment or delegation, as the case may be. |
1.3 |
Amendment and Restatement |
The Original Trust Deed shall be amended and restated on the terms of this Trust Deed, such amendment and restatement to take effect from the Effective Date. Any Instruments issued on or after the Effective Date shall be issued pursuant to this Trust Deed. This does not affect any Instruments issued prior to the Effective Date or any Instruments issued on or after the Effective Date so as to be consolidated and form a single Series with the Instruments of any Series issued prior to the Effective Date. Subject to such amendment and restatement, the Original Trust Deed shall continue in full force and effect.
1.4 |
Headings |
Headings shall be ignored in construing this Trust Deed.
1.5 |
Contracts |
References in this Amended and Restated Trust Deed to this Trust Deed or any other document are to this Amended and Restated Trust Deed or those documents as amended, supplemented or replaced from time to time in relation to the Programme and include any document that amends, supplements or replaces them.
1.6 |
Schedules |
The Schedules are part of this Trust Deed and have effect accordingly.
1.7 |
Alternative Clearing System |
References in this Trust Deed to Euroclear and/or Clearstream, Luxembourg shall, wherever the context so permits, be deemed to include reference to any additional or alternative clearing system approved by the relevant Issuer, the Trustee and the Issuing and Paying Agent. In the case of NGNs, such alternative clearing system must also be authorised to hold Instruments as eligible collateral for Eurosystem monetary policy and intra-day credit operations.
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1.8 |
Other Terms |
Other terms defined in the Conditions have the same meaning in this Trust Deed.
1.9 |
Contracts (Rights of Third Parties) Act 1999 |
A person who is not a party to this Trust Deed has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Trust Deed.
2 |
Issue of Instruments and Covenant to Pay |
2.1 |
Issue of Instruments |
Each of the Issuers may from time to time issue Instruments in Tranches of one or more Series on a continuous basis with no minimum issue size in accordance with the Dealer Agreement. Before issuing any Tranche and not later than, (i) in case of Instruments other than Australian Domestic Instruments, 3.00 p.m. (London time) on the second business day in London which for this purpose shall be a day on which commercial banks are open for general business in London preceding each proposed issue date; or (ii) in case of Australian Domestic Instruments, 3.00 p.m. (Sydney time) on the second business day in Sydney which for this purpose shall be a day on which commercial banks are open for general business in Sydney preceding each proposed issue date, the relevant Issuer shall give written notice or procure that it is given to the Trustee of the proposed issue of such Tranche, specifying the details to be included in the relevant Final Terms. Upon the issue by either of the Issuers of any Instruments expressed to be constituted by this Trust Deed, such Instruments shall forthwith be constituted by this Trust Deed without any further formality and irrespective of whether or not the issue of such debt securities contravenes any covenant or other restriction in this Trust Deed or the Programme Limit. For the avoidance of doubt, the parties acknowledge that the Australian Domestic Instruments are not constituted by this Trust Deed.
2.2 |
Separate Series |
The provisions of Clauses 2.3 (Covenant to Pay), 2.4 (Discharge), 2.5 (Payment after a Default) and 2.6 (Rate of Interest after a Default) and of Clauses 3 (Form of the Instruments) to 15 (Currency Indemnity) and Schedule 3 (Provisions for Meetings of Instrumentholders) (all inclusive) shall apply mutatis mutandis separately and independently to the Instruments of each Series and in such Clauses and Schedule the expressions Instrumentholders , Coupons , Couponholders and Talons , together with all other terms that relate to Instruments or their Conditions, shall be construed as referring to those of the particular Series in question and not of all Series unless expressly so provided, so that each Series shall be constituted by a separate trust pursuant to Clause 2.3 (Covenant to Pay) and that, unless expressly provided, events affecting one Series shall not affect any other.
2.3 |
Covenant to Pay |
The relevant Issuer shall on any date when any Instruments become due to be redeemed, in whole or in part, unconditionally pay to or to the order of the Trustee in the Contractual Currency, in the case of any Contractual Currency other than Euro, in the principal financial centre for the Contractual Currency and, in the case of Euro, in a city in which banks have access to the TARGET System, in same day funds the Redemption Amount of the Instruments becoming due for redemption on that date together with any applicable
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premium and shall (subject to the Conditions and other than in respect of Zero Coupon Instruments) until such payment (both before and after judgment) unconditionally so pay to or to the order of the Trustee interest in respect of the nominal amount of the Instruments outstanding as set out in the Conditions (subject to Clause 2.6 (Rate of Interest after a Default)) provided that (a) subject to the provisions of Clause 2.5, payment of any sum due in respect of the Instruments made to the Issuing and Paying Agent as provided in the Agency Agreement shall, to that extent, satisfy such obligation except to the extent that there is failure in its subsequent payment to the relevant Instrumentholders or Couponholders under the Conditions and (b) a payment made after the due date or as a result of the Instrument becoming repayable following an Event of Default shall be deemed to have been made when the full amount due has been received by the Issuing and Paying Agent or the Trustee and notice to that effect has been given to the Instrumentholders (if required under Clause 6.8 (Notice of Late Payment)), except to the extent that there is failure in its subsequent payment to the relevant Instrumentholders or Couponholders under the Conditions. This covenant shall only have effect each time Instruments are issued and outstanding, when the Trustee shall hold the benefit of this covenant on trust for the Instrumentholders and Couponholders of the relevant Series. For the avoidance of doubt, the parties acknowledge that this Clause does not apply to Australian Domestic Instruments.
2.4 |
Discharge |
Subject to Clause 2.5 (Payment after a Default), any payment to be made in respect of the Instruments or the Coupons by the relevant Issuer or the Trustee may be made as provided in the Conditions and any payment so made shall (subject to Clause 2.5 (Payment after a Default)) to that extent be a good discharge to such Issuer or the Trustee, as the case may be (including, in the case of Instruments represented by a NGN, whether or not the corresponding entries have been made in the records of Euroclear and Clearstream, Luxembourg), except to the extent that there is failure in its subsequent payment to the relevant Instrumentholders or Couponholders under the Conditions.
2.5 |
Payment after a Default |
At any time after an Event of Default or a Potential Event of Default has occurred the Trustee may:
2.5.1 |
by notice in writing to the relevant Issuer and the Paying Agents, require the Paying Agents, until notified by the Trustee to the contrary, so far as permitted by applicable law: |
(i) |
to act as Paying Agents of the Trustee under this Trust Deed and the Instruments (other than the Australian Domestic Instruments) on the terms of the Agency Agreement (with consequential amendments as necessary and except that the Trustees liability for the indemnification, remuneration and expenses of the Paying Agents shall be limited to the amounts for the time being held by the Trustee in respect of the Instruments (other than the Australian Domestic Instruments) on the terms of this Trust Deed) and thereafter to hold all Instruments (other than the Australian Domestic Instruments), Coupons and Talons and all moneys, documents and records held by them in respect of Instruments (other than the Australian Domestic Instruments), Coupons and Talons to the order of the Trustee; or |
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(ii) |
to deliver all Instruments (other than the Australian Domestic Instruments), Coupons and Talons and all moneys, documents and records held by them in respect of the Instruments (other than the Australian Domestic Instruments), Coupons and Talons to the Trustee or as the Trustee directs in such notice; and |
2.5.2 |
by notice in writing to the relevant Issuer, require such Issuer to make all subsequent payments in respect of the Instruments (other than the Australian Domestic Instruments), Coupons and Talons to or to the order of the Trustee and not to the Issuing and Paying Agent and with effect from the receipt of any such notice by such Issuer, until such notice is withdrawn, the first proviso to Clause 2.3 (Covenant to Pay) shall cease to have effect. |
2.6 |
Rate of Interest after a Default |
If the Instruments bear interest at a floating or other variable rate and they become immediately payable under the Conditions following an Event of Default, the rate of interest payable in respect of them shall continue to be calculated by the Calculation Agent in accordance with the Conditions (with consequential amendments as necessary) except that the rates of interest need not be notified to Instrumentholders. The first period in respect of which interest shall be so calculable shall commence on the expiry of the Interest Period during which the Instruments become so repayable.
3 |
Form of the Instruments |
3.1 |
The Global Instruments |
The Instruments (other than the Australian Domestic Instruments) shall initially be represented by a temporary Global Instrument or a permanent Global Instrument in the nominal amount of the Tranche being issued. Interests in a temporary Global Instrument shall be exchangeable for Definitive Instruments or interests in a permanent Global Instrument as set out in each temporary Global Instrument. Interests in a permanent Global Instrument shall be exchangeable for Definitive Instruments as set out in such permanent Global Instrument.
3.2 |
The Definitive Instruments |
The Definitive Instruments, Coupons and Talons shall be security printed in accordance with applicable legal and stock exchange requirements substantially in the forms set out in Schedule 2. The Instruments shall be endorsed with the Conditions.
3.3 |
Signature |
The Instruments (other than the Australian Domestic Instruments and Instruments settling in CDS Clearing and Depository Services Inc. ( CDS )), Coupons and Talons shall be signed manually or in facsimile by an authorised signatory of the relevant Issuer and the Instruments (other than the Australian Domestic Instruments) shall be authenticated by or on behalf of the Issuing and Paying Agent. The relevant Issuer may use the facsimile signature of any person who at the date of this Trust Deed is such an authorised signatory even if at the time of issue of any Instruments, Coupons or Talons he no longer holds that office. In the case of a Global Instrument which is a NGN, the Issuing and Paying Agent shall also instruct the Common Safekeeper to effectuate the same. Instruments settling in CDS will be signed manually by an authorised signatory of the relevant Issuer (unless CDS
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agrees that it will accept a facsimile signature) and the Instruments shall be authenticated by or on behalf of the Canadian Paying Agent. The Australian Domestic Instruments will be inscribed in a register maintained by the Australian Registrar in accordance with the Australian Agency and Registry Agreement. Instruments, Coupons and Talons so executed and authenticated (and effectuated, if applicable) shall be binding and valid obligations of the relevant Issuer. Execution in facsimile of any Instruments and any photostatic copying or other duplication of any Global Instruments (in unauthenticated form, but executed manually on behalf of the relevant Issuer as stated above) shall be binding upon such Issuer in the same manner as if such Instruments were signed manually by such signatories.
3.4 |
Title |
The holder of any Instrument, Coupon or Talon shall (save as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it, any writing on it or its theft or loss) and no person will be liable for so treating the holder.
4 |
Stamp Duties and Taxes |
4.1 |
Stamp Duties |
Each Issuer shall pay any stamp, issue, documentary or other taxes and duties, payable in the United Kingdom or Australia, in respect of the creation, issue and offering of the Instruments issued by it and the related Coupons and Talons and the execution or delivery of this Trust Deed. Each Issuer shall also indemnify the Trustee, the relevant Instrumentholders and the Couponholders from and against all stamp, issue, documentary or other taxes paid by any of them in any jurisdiction in connection with any action taken by or on behalf of the Trustee or, as the case may be (where entitled to do so), the relevant Instrumentholders or the Couponholders to enforce the relevant Issuers obligations under this Trust Deed or the relevant Instruments, Coupons or Talons.
4.2 |
Change of Taxing Jurisdiction |
If an Issuer becomes subject generally to the taxing jurisdiction of a territory or a taxing authority of or in that territory with power to tax other than or in addition to the United Kingdom or any such authority of or in such territory then such Issuer shall (unless the Trustee otherwise agrees) give the Trustee an undertaking satisfactory to the Trustee in terms corresponding to the terms of Condition 7 with the substitution for, or (as the case may require) the addition to, the references in that Condition to the United Kingdom of references to that other or additional territory or authority to whose taxing jurisdiction such Issuer has become so subject. In such event this Trust Deed and the relevant Instruments, Coupons and Talons shall be read accordingly.
5 |
Application of Moneys Received by the Trustee |
5.1 |
Declaration of Trust |
All moneys received by the Trustee in respect of the Instruments or amounts payable under this Trust Deed shall, despite any appropriation of all or part of them by the relevant Issuer, be held by the Trustee on trust to apply them (subject to Clause 5.2 (Accumulation)):
5.1.1 |
first, in payment of all costs, charges, expenses and liabilities reasonably incurred by the Trustee (including remuneration payable to it) in carrying out its functions under this Trust Deed; |
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5.1.2 |
secondly, in payment of any amounts owing in respect of the relevant Instruments or Coupons pari passu and rateably; and |
5.1.3 |
thirdly, in payment of any balance to such Issuer for itself. |
If the Trustee holds any moneys which represent principal, premium or interest in respect of Instruments or Coupons which have become void in accordance with the Conditions the Trustee shall hold them on these trusts.
5.2 |
Accumulation |
If the amount of the moneys at any time available for payment in respect of the Instruments under Clause 5.1 (Declaration of Trust) is less than 10 per cent. of the nominal amount of the Instruments then outstanding, the Trustee may, at its discretion, invest such moneys as provided in Clause 5.3 (Investment). The Trustee may retain such investments and accumulate the resulting income until the investments and the accumulations, together with any other funds for the time being under its control and available for such payment, amount to at least 10 per cent. of the nominal amount of the Instruments then outstanding and then such investments, accumulations and funds (after deduction of, or provision for, any applicable taxes) shall be applied as specified in Clause 5.1 (Declaration of Trust).
5.3 |
Investment |
Moneys held by the Trustee may be invested in its name or under its control in any investments or other assets anywhere, whether or not they produce income, or deposited in its name or under its control at such bank or other financial institution in such currency as the Trustee may, in its absolute discretion, think fit. If that bank or institution is the Trustee or a subsidiary, parent or associated undertaking of the Trustee, it need only account for an amount of interest equal to the standard amount of interest payable by it on such a deposit to an independent customer. The Trustee may at any time vary or transpose any such investments or assets or convert any moneys so deposited into any other currency, and shall not be responsible for any resulting loss, whether by depreciation in value, change in exchange rates or otherwise.
6 |
Covenants |
So long as any Instrument issued by it is outstanding, each of the Issuers shall:
6.1 |
Books of Account |
Keep, and procure that each of its subsidiary undertakings keeps, proper books of account and, at any time after an Event of Default has occurred or if the Trustee reasonably believes that such an event has occurred, so far as permitted by applicable law, allow, and procure that each such subsidiary undertaking shall allow, the Trustee and anyone appointed by it to whom the relevant Issuer and/or the relevant subsidiary undertaking has no reasonable objection, access to its books of account at all reasonable times during normal business hours.
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6.2 |
Notice of Events of Default |
Notify the Trustee in writing immediately on becoming aware of the occurrence of any Event of Default or Potential Event of Default.
6.3 |
Information |
So far as permitted by applicable law, give the Trustee such information as it reasonably requires to perform its functions.
6.4 |
Financial Statements etc. |
6.4.1 |
send to the Trustee at the time of their issue and, in the case of annual financial statements, in any event within 180 days of the end of each financial year, three copies in English of every balance sheet, profit and loss account, report or other notice, statement or circular issued, or that legally or contractually should be issued, to the members or creditors (or any class of them) of the relevant Issuer or any parent undertaking of it generally in their capacity as such; and |
6.4.2 |
National Grid shall, forthwith upon becoming aware of the occurrence of a National Grid Restructuring Event, provide or procure that the Reporting Accountants provide the Trustee with the Accountants Report. |
6.5 |
Certificate of Director, etc. |
6.5.1 |
send to the Trustee, within 14 days of its annual audited financial statements being made available to its members, and also within 21 days of any request by the Trustee a certificate of the relevant Issuer signed by a director that, having made all reasonable enquiries, to the best of the knowledge, information and belief of such Issuer as at a date (the Certification Date ) not more than five days before the date of the certificate no Event of Default or Potential Event of Default had occurred (and, in the case of a Potential Event of Default, was continuing) since the Certification Date of the last such certificate or (if none) the date of this Trust Deed or, if such an event had occurred (and, in the case of a Potential Event of Default, was continuing), giving details of it and certifying that it has complied with its obligations under this Trust Deed or, to the extent that it has failed so to comply, stating such; |
6.5.2 |
National Grid shall, forthwith upon becoming aware of the occurrence of a National Grid Restructuring Event, notify the Trustee in writing of the occurrence of an National Grid Restructuring Event and provide the Trustee with the directors Report; and |
6.5.3 |
in relation to Instruments issued by it, National Grid shall give to the Trustee, as soon as reasonably practicable after the acquisition or disposal of any company which thereby becomes a Principal Subsidiary or after any transfer is made to any member of the National Grid Group (as defined in Condition 9(c)) which thereby becomes a Principal Subsidiary, a certificate by the auditors of National Grid at that time (the Auditors ) addressed to the Trustee to such effect; |
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6.6 |
Notices to Instrumentholders |
Obtain the prior written approval of the Trustee to, and promptly give to the Trustee two copies of, the form of every notice given to the Instrumentholders in accordance with Condition 14 (such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial Services and Markets Act 2000 any such notice which is a communication within the meaning of that section).
6.7 |
Further Acts |
So far as permitted by applicable law, do such further things as may be necessary in the reasonable opinion of the Trustee to give effect to this Trust Deed.
6.8 |
Notice of Late Payment |
Forthwith upon request by the Trustee (if the Trustee determines such notice is necessary) give notice to the Instrumentholders of any unconditional payment to the Issuing and Paying Agent (or the Australian Issuing and Paying Agent or the Canadian Paying Agent, as applicable) or the Trustee of any sum due in respect of the Instruments or Coupons made after the due date for such payment.
6.9 |
Listing |
If the Instruments are so listed, use all reasonable endeavours to maintain the listing of the Instruments but, if it is unable to do so, having used such endeavours, or if the maintenance of such listing is agreed by the Trustee to be unduly onerous and the Trustee is satisfied that the interests of the Instrumentholders would not by such action be materially prejudiced, instead use all reasonable endeavours to obtain and maintain a listing of the Instruments on another stock exchange approved in writing by the Trustee.
6.10 |
Change in Agents |
6.10.1 |
Give at least 14 days prior notice to the Instrumentholders (other than holders of an Australian Domestic Instrument) in accordance with the Conditions of any future appointment, resignation or removal of an Agent or of any change by an Agent of its specified office; and |
6.10.2 |
Give at least 14 days prior notice to the holders of Australian Domestic Instruments in accordance with the Conditions of any future appointment, resignation or removal of the Australian Issuing and Paying Agent or Australian Registrar. |
6.11 |
Provision of Legal Opinions |
Procure the delivery of legal opinions addressed to the Trustee dated the date of such delivery, in form and content acceptable to the Trustee:
6.11.1 |
from Clifford Chance LLP (or such other firm of legal advisers as may be agreed between the relevant Issuer and the Trustee) as to the laws of England before the first issue of Instruments occurring after each anniversary of this Trust Deed or, if later, 12 months after the date of delivery of the latest such legal opinion and on the date of any amendment to this Trust Deed; |
6.11.2 |
from Herbert Smith Freehills (or such other firm of legal advisers as may be agreed between the relevant Issuer and the Trustee) as to the laws of New South Wales before the first issue of Australian Domestic Instruments occurring after the date of this Trust Deed and after each anniversary of this Trust Deed and on the date of any amendment to the Deed Poll or the Australian Agency and Registry Agreement; |
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6.11.3 |
unless the relevant Issuer has notified the Dealers and the Trustee in writing that it does not intend to issue Instruments under the Programme for the time being, from legal advisers reasonably acceptable to the Trustee as to such law as may reasonably be requested by the Trustee and in such form and with such content as the Trustee may require, on such occasions as the Trustee so requests on the basis that the Trustee considers it prudent in view of a change (or proposed change) in (or in the interpretation or application of) any applicable law, regulation or circumstance materially affecting the relevant Issuer, the Trustee, the relevant Instruments, the Coupons, the Talons, this Trust Deed or the Agency Agreement; and |
6.11.4 |
on each occasion on which a legal opinion is given to any Dealer pursuant to the Dealer Agreement from the legal adviser giving such opinion; |
6.12 |
Instruments Held by an Issuer |
Send to the Trustee as soon as practicable after being so requested by the Trustee a certificate of the relevant Issuer signed by any director or the Company Secretary stating the number of Instruments held at the date of such certificate by or on behalf of such Issuer or its subsidiary undertakings.
6.13 |
Obligations of Agents |
Comply with and perform all its obligations under the Agency Agreement and the Australian Agency and Registry Agreement and use all reasonable endeavours to procure that the Agents and the Australian Registrar comply with and perform all their respective obligations thereunder and not make any amendment or modification to the Agency Agreement or the Australian Agency and Registry Agreement without the prior written approval of the Trustee.
6.14 |
Copies of Dealer Agreement |
Provide the Trustee promptly with copies of all supplements and/or amendments to, and/or restatements of, the Dealer Agreement.
7 |
Remuneration and Indemnification of the Trustee |
7.1 |
Normal Remuneration |
So long as any Instrument is outstanding the relevant Issuer shall pay the Trustee as remuneration for its services as Trustee such sum on such dates in each case as they may from time to time agree. Such remuneration shall accrue from day to day from the date of this Trust Deed. However, if any payment to an Instrumentholder or Couponholder of moneys due in respect of any Instrument or Coupon is improperly withheld or refused, such remuneration shall again accrue as from the date of such withholding or refusal until payment to such Instrumentholder or Couponholder is duly made.
7.2 |
Extra Remuneration |
If an Event of Default or Potential Event of Default shall have occurred the relevant Issuer shall pay additional remuneration to the Trustee, which may be calculated using the Trustees normal hourly rates in force from time to time. In any other case if the Trustee finds it expedient or necessary or is requested by an Issuer to undertake duties that they
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both agree to be of an exceptional nature or otherwise outside the scope of the Trustees normal duties under this Trust Deed, such Issuer shall pay such additional remuneration as they may agree or, failing agreement as to any of the matters in this Clause 7 (or as to such sums referred to in Clause 7.1 (Normal Remuneration)), as determined by a financial institution (acting as an expert) selected by the Trustee and approved by such Issuer or, failing such approval, nominated by the President for the time being of The Law Society of England and Wales. The expenses involved in such nomination and such financial institutions fee shall be shared equally between the Trustee and the relevant Issuer. The determination of the relevant financial institution shall be conclusive and binding on the relevant Issuer, the Trustee, the relevant Instrumentholders and the relevant Couponholders.
7.3 |
Expenses |
Each of the Issuers (in respect of itself and, where applicable, Instruments issued by it) shall also, on demand by the Trustee, pay or discharge all costs, charges, liabilities and expenses reasonably incurred by the Trustee in the preparation and execution of this Trust Deed and the performance of its functions under this Trust Deed in relation to that Issuer including, but not limited to, legal and travelling expenses and any United Kingdom or Australian stamp, documentary or other taxes or duties paid by the Trustee in connection with any legal proceedings reasonably brought or contemplated by the Trustee against an Issuer (in respect of Instruments issued by it) to enforce any provision of this Trust Deed, the relevant Instruments, the Coupons or the Talons and in addition shall pay to the Trustee (if required) an amount equal to the amount of any value added tax or similar tax chargeable in respect of the Trustees remuneration under this Trust Deed. Such costs, charges, liabilities and expenses shall:
7.3.1 |
in the case of payments made by the Trustee before such demand, carry interest from the date specified in the demand at the rate of Trustees cost of funding on the date on which the Trustee made such payments; and |
7.3.2 |
in other cases, carry interest at such rate from 30 days after the date of the demand or (where the demand specifies that payment is to be made on an earlier date) from such earlier date provided that in such event no such interest shall accrue unless payment is actually made on such earlier date. |
7.4 |
Notice of Costs |
The Trustee shall wherever practicable give prior notice to the relevant Issuer of any costs, charges and expenses properly to be incurred and of payments to be made by the Trustee in the lawful exercise of its powers under this Trust Deed so as to afford such Issuer a reasonable opportunity to meet such costs, charges and expenses itself or to put the Trustee in funds to make payment of such costs, charges and expenses. However, failure of the Trustee to give any such prior notice shall not prejudice its rights to reimbursement of such costs, charges and expenses under this Clause 7.
7.5 |
Indemnity |
Each of the Issuers (in respect of itself and, where applicable, any Instruments issued by it) shall indemnify the Trustee in respect of all liabilities and expenses properly incurred by it or by anyone appointed by it or to whom any of its functions may be delegated by it in the carrying out of its functions and against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all costs, charges and expenses properly paid or
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incurred in disputing or defending any of the foregoing) which any of them may incur in relation to the relevant Issuer or that may be made against any of them arising out of or in relation to or in connection with, its appointment or the exercise of its functions in relation to that Issuer.
7.6 |
Continuing Effect |
Clauses 7.3 (Expenses) and 7.5 (Indemnity) shall continue in full force and effect as regards the Trustee even if it no longer is Trustee.
7.7 |
Determination of Series |
The Trustee shall be entitled in its absolute discretion to determine in respect of which Series of Instruments any costs, charge, liabilities and expenses incurred under this Trust Deed have been incurred or to allocate any such costs, charges, liabilities and expenses between the Instruments of any two or more Series.
8 |
Provisions Supplemental to the Trustee Acts |
8.1 |
Advice |
The Trustee may act on the opinion or advice of, or information obtained from, any expert (including, without limitation, any report or advice received from an independent financial adviser or from any accountant pursuant to the Conditions), whether or not (1) such opinion, advice or information is addressed to the Trustee or any other person, and (2) such experts liability in respect of the same is limited by reference to a monetary cap or otherwise and shall not be responsible to anyone for any loss occasioned by so acting. Any such opinion, advice or information may be sent or obtained by letter or fax and the Trustee shall not be liable to anyone for acting in good faith on any opinion, advice or information purporting to be conveyed by such means even if it contains some error or is not authentic.
8.2 |
Trustee to Assume Performance |
The Trustee need not notify anyone of the execution of this Trust Deed or do anything to find out if an National Grid Restructuring Event or NGET Restructuring Event, an Event of Default or Potential Event of Default has occurred. Until it has actual knowledge or express notice to the contrary, the Trustee may assume that no such event has occurred and that each Issuer is performing all of its obligations under this Trust Deed and the relevant Instruments, Coupons and Talons provided that the Trustee shall not be treated for any purposes as having any notice or knowledge which has been obtained by it or any officer or employee of it in some capacity other than as Trustee under this Trust Deed or in a private or confidential capacity such that it would not be proper to disclose to third parties.
8.3 |
Resolutions of Instrumentholders |
The Trustee shall not be responsible for having acted in good faith on a resolution purporting to have been passed at a meeting of Instrumentholders in respect of which minutes have been made and signed even if it is later found that there was a defect in the constitution of the meeting or the passing of the resolution or that the resolution was not valid or binding on the Instrumentholders or Couponholders.
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8.4 |
Certificate Signed by Directors, etc. |
If the Trustee, in the exercise of its functions, requires to be satisfied or to have information as to any fact or the expediency of any act, it may call for and accept as sufficient evidence of that fact or the expediency of that act a certificate signed by any two directors of the relevant Issuer as to that fact or to the effect that, in their opinion, that act is expedient and the Trustee need not call for further evidence and shall not be responsible for any loss occasioned by acting on such a certificate.
8.5 |
Deposit of Documents |
The Trustee may deposit this Trust Deed and any other documents with any bank or entity whose business includes the safe custody of documents or with any lawyer or firm of lawyers believed by it to be of good repute and may pay all sums due in respect of them.
8.6 |
Discretion |
The Trustee shall have absolute and uncontrolled discretion as to the exercise of its functions and shall not be responsible for any loss, liability, cost, claim, action, demand, expense or inconvenience which may result from their exercise or non-exercise.
8.7 |
Agents |
Whenever it considers it expedient in the interests of the Instrumentholders, the Trustee may, in the conduct of its trust business, instead of acting personally, employ and pay an agent selected by it, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money). The Trustee shall not be responsible to anyone for any misconduct or omission by any such agent so employed by it or be bound to supervise the proceedings or acts of any such agent.
8.8 |
Delegation |
Whenever it considers it expedient in the interests of the Instrumentholders, the Trustee may delegate to any person on any terms (including power to sub-delegate) all or any of its functions. If the Trustee exercises reasonable care in selecting such delegate, it shall not have any obligation to supervise such delegate or be responsible for any loss, liability, cost, claim, action, demand or expense incurred by reason of any misconduct or default by any such delegate or sub-delegate.
8.9 |
Nominees |
In relation to any asset held by it under this Trust Deed, the Trustee may appoint any person to act as its nominee on any terms.
8.10 |
Forged Instruments |
The Trustee shall not be liable to the relevant Issuer or any relevant Instrumentholder or Couponholder by reason of having accepted as valid or not having rejected any relevant Instrument, Certificate, Coupon or Talon purporting to be such and later found to be forged or not authentic.
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8.11 |
Confidentiality |
Unless ordered to do so by a court of competent jurisdiction, the Trustee shall not be required to disclose to any Instrumentholder or Couponholder any confidential financial or other information made available to the Trustee by the relevant Issuer.
8.12 |
Determinations Conclusive |
As between itself and the Instrumentholders and Couponholders, the Trustee may determine all questions and doubts arising in relation to any of the provisions of this Trust Deed. Such determinations, whether made upon such a question actually raised or implied in the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee, the Instrumentholders and the Couponholders.
8.13 |
Currency Conversion |
Where it is necessary or desirable to convert any sum from one currency to another, it shall (unless otherwise provided hereby or required by law) be converted at such rate or rates, in accordance with such method and as at such date as may reasonably be specified by the Trustee but having regard to current rates of exchange, if available. Any rate, method and date so specified shall be binding on the relevant Issuer and the relevant Instrumentholders and Couponholders.
8.14 |
Payment for and Delivery of Instruments |
The Trustee shall not be responsible for the receipt or application by the relevant Issuer of the proceeds of the issue of any relevant Instruments, any exchange of relevant Instruments or the delivery of relevant Instruments to the persons entitled to them.
8.15 |
Trustees consent |
Any consent given by the Trustee for the purposes of this Trust Deed may be given on such terms as the Trustee thinks fit. In giving such consent the Trustee may require the Issuers to agree to such modifications or additions to this Trust Deed as the Trustee may deem expedient in the interest of the Instrumentholders.
8.16 |
Instruments Held by an Issuer etc. |
In the absence of knowledge or express notice to the contrary, the Trustee may assume without enquiry (other than requesting a certificate under Clause 6.12 (Instruments Held by an Issuer)) that no Instruments are for the time being held by or on behalf of an Issuer or its subsidiary undertakings.
8.17 |
Legal Opinions |
The Trustee shall not be responsible to any person for failing to request, require or receive any legal opinion relating to any Instruments or for checking or commenting upon the content of any such legal opinion.
8.18 |
Programme Limit |
The Trustee shall not be concerned, and need not enquire, as to whether or not any Instruments are issued in breach of the Programme Limit.
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8.19 |
Events of Default |
The Trustee may determine whether or not an Event of Default is in its opinion capable of remedy or (in relation to Condition 9(b)) materially prejudicial to the interests of relevant Instrumentholders. Any such determination shall be conclusive and binding on the relevant Issuer and the relevant Instrumentholders.
8.20 |
Appointment of Independent Financial Adviser |
In connection with the Trustees right to appoint an independent financial adviser pursuant to Condition 5.6.2 (if applicable), the Trustee:
8.20.1 |
shall use its reasonable endeavours to identify and appoint the independent financial adviser but shall have no liability to any person if, having used its reasonable endeavours, it is unable to identify and appoint a suitable independent financial adviser; |
8.20.2 |
shall not be responsible for carrying on the role of independent financial adviser itself during the time it is attempting to identify such independent financial adviser or thereafter if it is unable to find such independent financial adviser; and |
8.20.3 |
shall not be required to take any action to find an independent financial adviser unless it has been previously indemnified and/or secured to its satisfaction or expend any of its own funds in the appointment of such an independent financial adviser. |
9 |
Disapplication and Trustee Liability |
9.1 |
Disapplication |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of this Trust Deed shall constitute a restriction or exclusion for the purposes of that Act.
9.2 |
Trustee Liability |
Subject to Sections 750 and 751 of the Companies Act 2006 (if applicable) and notwithstanding anything to the contrary in this Trust Deed, the Instruments or the Paying Agency Agreement, the Trustee shall not be liable to any person for any matter or thing done or omitted in any way in connection with or in relation to this Trust Deed, the Instruments or the Agency Agreement save in relation to its own gross negligence, wilful default or fraud.
10 |
Waiver and Proof of Default |
10.1 |
Waiver |
The Trustee may, without the consent of the Instrumentholders or Couponholders and without prejudice to its rights in respect of any subsequent breach, from time to time and at any time, if in its opinion the interests of the Instrumentholders will not be materially prejudiced thereby, waive or authorise, on such terms as seem expedient to it, any breach
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or proposed breach by an Issuer of this Trust Deed or the Conditions or determine that an Event of Default or Potential Event of Default shall not be treated as such provided that the Trustee shall not do so in contravention of an express direction given by an Extraordinary Resolution or a request made pursuant to Condition 9. No such direction or request shall affect a previous waiver, authorisation or determination. Any such waiver, authorisation or determination shall be binding on the relevant Instrumentholders and the Couponholders and, if the Trustee so requires, shall be notified to the Instrumentholders as soon as practicable.
10.2 |
Proof of Default |
Proof that the relevant Issuer has failed to pay a sum due to the holder of any one Instrument or Coupon shall (unless the contrary be proved) be sufficient evidence that it has made the same default as regards all other Instruments or Coupons which are then payable.
11 |
Trustee not Precluded from Entering into Contracts |
The Trustee and any other person, whether or not acting for itself, may acquire, hold or dispose of any Instrument, Coupon, Talon or other security (or any interest therein) of either of the Issuers or any other person, may enter into or be interested in any contract or transaction with any such person and may act on, or as depositary or agent for, any committee or body of holders of any securities of any such person in each case with the same rights as it would have had if the Trustee were not acting as Trustee and need not account for any profit.
12 |
Modification and Substitution |
12.1 |
Modification |
The Trustee may agree without the consent of the Instrumentholders or Couponholders to any modification to this Trust Deed of a formal, minor or technical nature or to correct a manifest error. The Trustee may also so agree to any other modification to this Trust Deed which is in its opinion not materially prejudicial to the interests of the Instrumentholders of the relevant Series, but such power does not extend to any such modification as is mentioned in the proviso to paragraph 2 of Schedule 3 (Provisions for Meetings of Instrumentholders). Any such modification, authorisation or waiver shall be binding on the relevant Instrumentholders and Couponholders and if the Trustee so requires, such modification shall be notified to the relevant Instrumentholders as soon as practicable.
12.2 |
Substitution |
12.2.1 |
The Trustee may, without the consent of the Instrumentholders or Couponholders, agree to the substitution of any other company (the Substituted Obligor ) in place of such Issuer (or of any previous substitute under this Clause 12) as the principal debtor under this Trust Deed (or, in the case of Australian Domestic Instruments, under the Deed Poll) and the relevant Instruments, Coupons and Talons provided that such substitution would not, in the opinion of the Trustee, be materially prejudicial to the interests of the Instrumentholders, and further provided that: |
(i) |
a deed is executed or undertaking given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by this Trust Deed (and, in the case of Australian Domestic Instruments, the Deed Poll) and the relevant Instruments, Coupons and Talons (with consequential amendments as the Trustee may deem appropriate) as if the Substituted Obligor had been named in this Trust Deed (and, in the case of Australian Domestic Instruments, the Deed Poll) and the relevant Instruments, Coupons and Talons as the principal debtor in place of such Issuer; |
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(ii) |
if the Substituted Obligor is subject generally to the taxing jurisdiction of a territory or any authority of or in that territory with power to tax (the Substituted Territory ) other than the territory to the taxing jurisdiction of which (or to any such authority of or in which) such Issuer is subject generally (the Issuers Territory ), the Substituted Obligor shall (unless the Trustee otherwise agrees) give to the Trustee an undertaking satisfactory to the Trustee in terms corresponding to Condition 7 with the substitution for the references in that Condition to such Issuers Territory of references to the Substituted Territory whereupon the Trust Deed (and, in the case of Australian Domestic Instruments, the Deed Poll), and the relevant Instruments, Coupons and Talons shall be read accordingly; |
(iii) |
if any two directors of the Substituted Obligor certify that it will be solvent immediately after such substitution, the Trustee need not have regard to the Substituted Obligors financial condition, profits or prospects or compare them with those of such Issuer; |
(iv) |
such Issuer and the Substituted Obligor comply with such other requirements as the Trustee may direct in the interests of the relevant Instrumentholders; and |
(v) |
the Trustee is satisfied (i) the Substituted Obligor has obtained all necessary governmental and regulatory approvals and consents necessary for its assumption of liability as principal debtor in respect of the relevant Instruments in place of such Issuer (or a previous substitute), (ii) all necessary governmental and regulatory approvals and consents necessary for or in connection with the assumption by the Substituted Obligor of its obligations under the relevant Instruments and Coupons and (iii) such approvals and consents are at the time of substitution in full force and effect. |
12.2.2 |
Release of Substituted Issuer |
An agreement by the Trustee pursuant to Clause 12.2 (Substitution) shall, if so expressed, release the relevant Issuer (or a previous substitute) from any or all of its obligations under this Trust Deed (and, in the case of Australian Domestic Instruments, under the Deed Poll) and the relevant Instruments, Coupons and Talons. Notice of the substitution shall be given to the Instrumentholders within 14 days of the execution of such documents and compliance with such requirements.
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12.2.3 |
Completion of Substitution |
On completion of the formalities set out in Clause 12.2 (Substitution), the Substituted Obligor shall be deemed to be named in this Trust Deed (and, in the case of Australian Domestic Instruments, the Deed Poll) and the relevant Instruments, Coupons and Talons as the principal debtor in place of the relevant Issuer (or of any previous substitute) and this Trust Deed (and, in the case of Australian Domestic Instruments, the Deed Poll) and the relevant Instruments, Coupons and Talons shall be deemed to be amended as necessary to give effect to the substitution.
13 |
Appointment, Retirement and Removal of the Trustee |
13.1 |
Appointment |
Each of the Issuers has the power of appointing new trustees but no one may be so appointed unless previously approved by an Extraordinary Resolution. The Trustee shall at all times be a trust corporation and such trust corporation may be the sole Trustee. Any appointment of a new Trustee shall be notified by each of the Issuers to its Instrumentholders in accordance with Condition 14 as soon as practicable.
13.2 |
Retirement and Removal |
Any Trustee may retire at any time on giving at least three months written notice to each of the Issuers without giving any reason or being responsible for any costs occasioned by such retirement and the Instrumentholders may by Extraordinary Resolution remove any Trustee provided that the retirement or removal of a sole trust corporation shall not be effective until a trust corporation is appointed as successor Trustee. If a sole trust corporation gives notice of retirement or an Extraordinary Resolution is passed for its removal, it shall use all reasonable endeavours to procure that another trust corporation is appointed as Trustee.
13.3 |
Co-Trustees |
The Trustee may, despite Clause 13.1 (Appointment), by written notice to each of the Issuers, appoint anyone to act either as a separate Trustee in respect of any Issue or as an additional Trustee jointly with the Trustee:
13.3.1 |
if the Trustee considers the appointment to be in the interests of the Instrumentholders and/or the Couponholders; |
13.3.2 |
to conform with a legal requirement, restriction or condition in a jurisdiction in which a particular act is to be performed; or |
13.3.3 |
to obtain a judgment or to enforce a judgment or any provision of this Trust Deed in any jurisdiction. |
Subject to the provisions of this Trust Deed the Trustee may, in the instrument of appointment, confer on any person so appointed such functions as it thinks fit. The Trustee may by written notice to each of the Issuers and that person remove that person. At the Trustees request, each Issuer shall forthwith do all things as may be required to perfect such appointment or removal and each of the Issuers irrevocably appoints the Trustee as its attorney in its name and on its behalf to do so.
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Before appointing such person to act as separate Trustee or additional Trustee the Trustee shall (unless it is not, in the opinion of the Trustee, reasonably practicable to do so) give notice to each of the Issuers of its intention to make such appointment (and the reason for that) and shall give due consideration to representations made by each of the Issuers concerning such appointment. Where, as a result of this provision, not all the Instruments have the same Trustee, the provisions of this Trust Deed shall apply in respect of each such Trustee as if each were named as a party to this Trust Deed.
13.4 |
Competence of a Majority of Trustees |
If there are more than two Trustees the majority of them shall be competent to perform the Trustees functions provided the majority includes a trust corporation.
14 |
Instruments held in Clearing Systems and Couponholders |
14.1 |
Instruments Held in Clearing Systems |
14.1.1 |
So long as any Global Instrument is held on behalf of a clearing system, in considering the interests of Instrumentholders, the Trustee may have regard to any information provided to it by the relevant clearing system or its operator as to the identity (either individually or by category) of its accountholders or participants with entitlements to any such Global Instrument and may consider such interests on the basis that such accountholders or participants were the holder(s) of such Global Instrument; |
14.1.2 |
Subject to Clause 3.4, so long as any Australian Domestic Instrument is held in a clearing system, in considering the interests of Instrumentholders, the Trustee may have regard to any information provided to it by the relevant clearing system or its operator as to the identity (either individually or by category) of its accountholders or participants with entitlements to any such Australian Domestic Instrument and may consider such interests on the basis that such accountholders or participants were the holder(s) of such Australian Domestic Instrument. |
14.2 |
Reliance on Instruments Held in Clearing Systems |
The Trustee and any Issuer may call for and, except in the case of manifest error, shall be at liberty to accept and place full reliance on as sufficient evidence thereof any certificate, letter of confirmation or other document issued on behalf of the relevant clearing system or any form of record made by any of them or such other evidence and/or information and/or certification as it shall, in its absolute discretion, think fit to the effect that at any particular time or throughout any particular period any particular person is, was, or will be, shown in its records as the holder of a particular nominal amount of Instruments represented by a Global Instrument or an Australian Domestic Instrument and if the Trustee or any Issuer does so rely, such letter of confirmation, form of record, evidence, information or certification shall be conclusive and binding on all concerned for all purposes. Any such certificate may comprise any form of statement or print out of electronic records provided by the relevant clearing system (including Euroclears EUCLID or Clearstream, Luxembourgs Creation Online system) in accordance with its usual procedures and in which the holder of a particular nominal amount of Instruments is clearly identified together with the amount of such holding. Neither an Issuer nor the Trustee shall be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by the relevant clearing system and subsequently found to be forged or not authentic.
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14.3 |
Couponholders |
No notices need be given to Couponholders. They shall be deemed to have notice of the contents of any notice given to Instrumentholders. Even if it has express notice to the contrary, in exercising any of its functions by reference to the interests of the Instrumentholders, the Trustee shall assume that the holder of each Instrument is the holder of all Coupons and Talons relating to it.
15 |
Currency Indemnity |
15.1 |
Currency of Account and Payment |
The Contractual Currency is the sole currency of account and payment for all sums payable by each of the Issuers under or in connection with this Trust Deed, the Instruments and the Coupons, including damages.
15.2 |
Extent of Discharge |
An amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the insolvency, winding-up or dissolution of either of the Issuers or otherwise), by the Trustee or any Instrumentholder or Couponholder in respect of any sum expressed to be due to it from the relevant Issuer, shall only discharge such Issuer to the extent of the Contractual Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).
15.3 |
Indemnity |
If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed, the Instruments or the Coupons, the relevant Issuer shall indemnify the recipient against any loss sustained by it as a result. In any event, the relevant Issuer shall indemnify the recipient against the cost of making any such purchase.
15.4 |
Indemnity Separate |
The indemnities in this Clause 15 and in Clause 7.5 (Indemnity) constitute separate and independent obligations from the other obligations in this Trust Deed, shall give rise to a separate and independent course of action, shall apply irrespective of any indulgence granted by the Trustee and/or any Instrumentholder or Couponholder and shall continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed, the Instruments and/or the Coupons or any other judgment or order.
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16 |
Enforcement |
16.1 |
Trustee to enforce |
Only the Trustee may enforce the rights of the Instrumentholders and Couponholders against the relevant Issuer, whether the same arise under the general law, this Trust Deed, the Instruments, the Coupons or otherwise, and no Instrumentholder or Couponholder shall be entitled to proceed directly against the relevant Issuer unless the Trustee, having become bound to proceed, fails to do so within a reasonable time and such failure is continuing.
16.2 |
Trustees Indemnity |
The Trustee shall not be bound to take any steps to enforce the performance of any provisions of this Trust Deed, the Instruments or the Coupons or to appoint an independent financial advisor pursuant to the Conditions of the Instruments unless it shall be indemnified and/or secured and/or prefunded by the relevant Instrumentholders and/or Couponholders to its satisfaction against all proceedings, claims and demands to which it may be liable and against all costs, charges, liabilities and expenses which may be incurred by it in connection with such enforcement or appointment, including the costs of its managements time and/or other internal resources, calculated using its normal hourly rates in force from time to time.
16.3 |
Legal proceedings |
If the Trustee (or any Instrumentholder or Couponholder where entitled in accordance with this Trust Deed so to do) institutes legal proceedings against the relevant Issuer to enforce any obligations under this Trust Deed:
16.3.1 |
proof in such proceedings that as regards any specified Instrument such Issuer has made default in paying any principal or interest due to the relevant Instrumentholder shall (unless the contrary be proved) be sufficient evidence that such Issuer has made the same default as regards all other Instruments which are then repayable or, as the case may be, in respect of which interest is then payable; and |
16.3.2 |
proof in such proceedings that as regards any specified Coupon such Issuer has made default in paying any sum due to the relevant Couponholder shall (unless the contrary be proved) be sufficient evidence that such Issuer has made the same default as regards all other Coupons which are then payable. |
16.4 |
Powers additional to general powers |
The powers conferred on the Trustee by this Clause 16 shall be in addition to any powers which may from time to time be vested in the Trustee by general law or as the holder of any Instruments or Coupons.
17 |
Communications |
17.1 |
Method |
Each communication under this Trust Deed shall be made by fax or otherwise in writing. Each communication or document to be delivered to any party under this Trust Deed shall be sent to that party at the fax number or postal address, and marked for the attention of
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the person (if any), from time to time designated by that party to each other party for the purpose of this Trust Deed. The initial telephone number, fax number, postal address and person so designated by the parties under this Trust Deed are set out in the Procedures Memorandum.
17.2 |
Deemed Receipt |
Any communication from any party to any other under this Trust Deed shall be effective, (if by fax) when good receipt is confirmed by the recipient following enquiry by the sender and (if in writing) when received, except that a communication received outside normal business hours shall be deemed to be received on the next business day in the city in which the recipient is located.
18 |
Governing Law and Jurisdiction |
18.1 |
Governing Law |
This Trust Deed and any non-contractual obligations arising out of in connection with it shall be governed by, and construed in accordance with, English law.
18.2 |
Jurisdiction |
The courts of England are to have jurisdiction to settle any disputes that may arise out of or in connection with this Trust Deed, the Instruments (other than the Australian Domestic Instruments), the Coupons or the Talons and accordingly any legal action or proceedings arising out of or in connection with this Trust Deed, the Instruments (other than the Australian Domestic Instruments), the Coupons or the Talons ( Proceedings ) may be brought in such courts. Each of the Issuers irrevocably submits to the jurisdiction of such courts and waives any objection to Proceedings in such courts on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. This clause is for the benefit of each of the Trustee and the relevant Instrumentholders (other than the holders of Australian Domestic Instruments) and Couponholders and shall not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).
18.3 |
Australian Courts Jurisdiction |
The courts of New South Wales, Australia and any courts of appeal from them are to have jurisdiction to settle any disputes that may arise out of or in connection with the Australian Domestic Instruments and accordingly any legal action or proceedings arising out of or in connection with the Australian Domestic Instruments ( Australian Proceedings ) may be brought in such courts. Each of the Issuers irrevocably submits to the jurisdiction of such courts and waives any objections to Australian Proceedings in such courts on the ground of venue or on the ground that the Australian Proceedings have been brought in an inconvenient forum. This submission is for the benefit of each of the Trustee and the holders of Australian Domestic Instruments and shall not limit the right of any of them to take Australian Proceedings in any other court of competent jurisdiction nor shall the taking of Australian Proceedings in any one or more jurisdictions preclude the taking of Australian Proceedings in any other jurisdiction (whether concurrently or not).
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For so long as any Australian Domestic Instruments are outstanding, each Issuer will appoint an agent as specified in the relevant Final Terms for the time being to accept service of process on its behalf in New South Wales in respect of any Australian Proceedings. In the event of such agent ceasing to act, the relevant Issuer will appoint another agent.
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27
Schedule 1
Part A
Form of CGN Temporary Global Instrument
[NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number [04031152/02366977] * )
EURO MEDIUM TERM NOTE PROGRAMME
Series No. [ ]
Tranche No. [ ]
TEMPORARY GLOBAL INSTRUMENT
Temporary Global Instrument No. [ ]
This temporary Global Instrument is issued without Coupons in respect of the Instruments (the Instruments ) of the Tranche and Series specified in the Second Schedule to this temporary Global Instrument of [National Grid plc/National Grid Electricity Transmission plc] * (the Issuer ).
1 |
Interpretation and Definitions |
References in this temporary Global Instrument to the Conditions are to the Terms and Conditions applicable to the Instruments (which are in the form set out in Part B of Schedule 2 (Terms and Conditions of the Instruments) to the amended and restated trust deed (as amended or supplemented as at the Issue Date, the Trust Deed ) dated 10 September 2012 between inter alios the Issuer and The Law Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented and/or modified and/or superseded by the provisions of this temporary Global Instrument (including the supplemental definitions and any modifications or additions set out in the Second Schedule hereto), which in the event of any conflict shall prevail). Other capitalised terms used in this temporary Global Instrument shall have the meanings given to them in the Conditions or the Trust Deed. If the Second Schedule to this temporary Global Instrument specifies that the applicable TEFRA exemption is either C Rules or not applicable, this temporary Global Instrument is a C Rules Instrument, otherwise this temporary Global Instrument is a D Rules Instrument.
2 |
Aggregate Nominal Amount |
The aggregate nominal amount from time to time of this temporary Global Instrument shall be an amount equal to the aggregate nominal amount of the Instruments as shall be shown by the latest entry in the fourth column of the First Schedule to this temporary Global Instrument, which shall be completed by or on behalf of the Issuing and Paying Agent upon (a) the issue of Instruments represented by this temporary Global Instrument, (b) the exchange of the whole or a part of this temporary Global Instrument for a corresponding interest in a permanent Global Instrument or, as the case may be, for Definitive Instruments and/or (c) the redemption or purchase and cancellation of Instruments represented by this temporary Global Instrument all as described below.
* |
Delete as applicable. |
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28
3 |
Promise to Pay |
Subject as provided in this temporary Global Instrument, the Issuer, for value received, by this temporary Global Instrument promises to pay to the bearer of this temporary Global Instrument, upon presentation and (when no further payment is due in respect of this temporary Global Instrument) surrender of this temporary Global Instrument, on the Maturity Date (or on such earlier date or, if the Maturity Date is specified to be perpetual, on such date as the amount payable upon redemption under the Conditions may become repayable in accordance with the Conditions) the amount payable upon redemption under the Conditions in respect of the aggregate nominal amount of Instruments represented by this temporary Global Instrument and (unless this temporary Global Instrument does not bear interest) to pay interest in respect of the Instruments from the Interest Commencement Date in arrear at the rates, on the dates for payment, and in accordance with the methods of calculation provided for in the Conditions, save that the calculation is made in respect of the total aggregate amount of the Instruments, together with such other sums and additional amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.
4 |
Exchange |
On or after the first day following the expiry of 40 days after the Issue Date (the Exchange Date ), this temporary Global Instrument may be exchanged (free of charge to the holder) in whole or (in the case of a D Rules Instrument only) from time to time in part by its presentation and, on exchange in full, surrender to or to the order of the Issuing and Paying Agent for interests in a permanent Global Instrument or, if so specified in the Second Schedule to this temporary Global Instrument, for Definitive Instruments in an aggregate nominal amount equal to the nominal amount of this temporary Global Instrument submitted for exchange provided that , in the case of any part of a D Rules Instrument submitted for exchange for a permanent Global Instrument or Definitive Instruments, there shall have been Certification with respect to such nominal amount submitted for such exchange dated no earlier than the Exchange Date.
Certification means the presentation to the Issuing and Paying Agent of a certificate or certificates with respect to one or more interests in this temporary Global Instrument, signed by Euroclear or Clearstream, Luxembourg, substantially to the effect set out in Schedule 3 (Provisions for Meetings of Instrumentholders) to the Trust Deed to the effect that it has received a certificate or certificates substantially to the effect set out in Schedule 3 to the Agency Agreement with respect to it and that no contrary advice as to the contents of the certificate has been received by Euroclear or Clearstream, Luxembourg, as the case may be.
Upon the whole or a part of this temporary Global Instrument being exchanged for a permanent Global Instrument, such permanent Global Instrument shall be exchangeable in accordance with its terms for Definitive Instruments.
The Definitive Instruments, for which this temporary Global Instrument or a permanent Global Instrument may be exchangeable, shall be duly executed and authenticated, shall, in the case of Definitive Instruments, have attached to them all Coupons (and, where appropriate, Talons) in respect of interest which have not already been paid on this temporary Global Instrument or the permanent Global Instrument, as the case may be, shall be security printed and shall be substantially in the form set out in the relevant Schedules to the Trust Deed as supplemented and/or modified and/or superseded by the terms of the Second Schedule to this temporary Global Instrument.
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On any exchange of a part of this temporary Global Instrument for an equivalent interest in a permanent Global Instrument or for Definitive Instruments, as the case may be, the portion of the nominal amount of this temporary Global Instrument so exchanged shall be endorsed by or on behalf of the Issuing and Paying Agent in Part 1 of the First Schedule to this temporary Global Instrument, whereupon the nominal amount of this temporary Global Instrument shall be reduced for all purposes by the amount so exchanged and endorsed.
5 |
Benefit of Conditions |
Except as otherwise specified in this temporary Global Instrument, this temporary Global Instrument is subject to the Conditions and the Trust Deed and, until the whole of this temporary Global Instrument is exchanged for equivalent interests in a permanent Global Instrument or for Definitive Instruments, as the case may be, the holder of this temporary Global Instrument shall in all respects be entitled to the same benefits as if it were the holder of the permanent Global Instrument (or the relevant part of it) or the Definitive Instruments, as the case may be, for which it may be exchanged as if such permanent Global Instrument or Definitive Instruments had been issued on the Issue Date.
6 |
Payments |
No person shall be entitled to receive any payment in respect of the Instruments represented by this temporary Global Instrument which falls due on or after the Exchange Date unless, upon due presentation of this temporary Global Instrument for exchange, delivery of (or, in the case of a subsequent exchange, due endorsement of) a permanent Global Instrument or delivery of Definitive Instruments, as the case may be, is improperly withheld or refused by or on behalf of the Issuer.
Payments due in respect of a D Rules Instrument before the Exchange Date shall only be made in relation to such nominal amount of this temporary Global Instrument with respect to which there shall have been Certification dated no earlier than such due date for payment.
Any payments which are made in respect of this temporary Global Instrument shall be made to its holder against presentation and (if no further payment falls to be made on it) surrender of it at the specified office of the Issuing and Paying Agent or of any other Paying Agent provided for in the Conditions. If any payment in full of principal is made in respect of any Instrument represented by this temporary Global Instrument, the portion of this temporary Global Instrument representing such Instrument shall be cancelled and the amount so cancelled shall be endorsed by or on behalf of the Issuing and Paying Agent in the First Schedule to this temporary Global Instrument (such endorsement being prima facie evidence that the payment in question has been made) upon which the nominal amount of this temporary Global Instrument shall be reduced for all purposes by the amount so cancelled and endorsed. If any other payments are made in respect of the Instruments represented by this temporary Global Instrument, a record of each such payment shall be endorsed by or on behalf of the Issuing and Paying Agent on an additional schedule to this temporary Global Instrument (such endorsement being prima facie evidence that the payment in question has been made). Condition 6.5(e) and Condition 7(e)(i) will apply to the Definitive Instruments only.
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For the purposes of any payments made in respect of this temporary Global Instrument, the words in the relevant place of presentation shall not apply in the definition of business day in Condition 6.7 (Non-Business Days).
7 |
Cancellation |
Cancellation of any Instrument represented by this temporary Global Instrument which is required by the Conditions to be cancelled (other than upon its redemption) shall be effected by reduction in the nominal amount of this temporary Global Instrument representing such Instrument on its presentation to or to the order of the Issuing and Paying Agent for endorsement in the First Schedule to this temporary Global Instrument, upon which the nominal amount of this temporary Global Instrument shall be reduced for all purposes by the amount so cancelled and endorsed.
8 |
Notices |
Notices required to be given in respect of the Instruments represented by this temporary Global Instrument may be given by their being delivered (so long as this temporary Global Instrument is held on behalf of Euroclear and Clearstream, Luxembourg or any other clearing system) to Euroclear, Clearstream, Luxembourg or such other clearing system, as the case may be, or otherwise to the holder of this temporary Global Instrument, rather than by publication as required by the Conditions.
No provision of this temporary Global Instrument shall alter or impair the obligation of the Issuer to pay the principal and premium of and interest on the Instruments when due in accordance with the Conditions.
This temporary Global Instrument shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Issuing and Paying Agent.
This temporary Global Instrument and all matters arising from or connected with it shall be governed by and construed in accordance with English law.
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In witness of which the Issuer has caused this temporary Global Instrument to be duly signed on its behalf.
Dated as of the Issue Date.
[NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
By:
CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
This temporary Global Instrument is authenticated by or on behalf of the Issuing and Paying Agent.
THE BANK OF NEW YORK MELLON
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
* |
Delete as applicable. |
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32
The First Schedule
Nominal amount of Instruments represented by this temporary Global Instrument
The following (i) issue of Instruments initially represented by this temporary Global Instrument, (ii) exchanges of the whole or a part of this temporary Global Instrument for interests in a permanent Global Instrument or for Definitive Instruments and/or (iii) cancellations or forfeitures of interests in this temporary Global Instrument have been made, resulting in the nominal amount of this temporary Global Instrument specified in the latest entry in the fourth column below:
Date |
Amount of decrease in
|
Reason for decrease in
|
Nominal amount of this
|
Notation made by or on
|
||||
Issue Date |
not applicable |
not applicable |
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33
The Second Schedule
[Insert the provisions of Part A of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Second Schedule]
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34
Schedule 1
Part B
Form of CGN Permanent Global Instrument
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES
INC. (CDS) TO [NATIONAL GRID PLC] [NATIONAL GRID ELECTRICITY TRANSMISSION PLC] (THE ISSUER) OR ITS AGENT FOR
REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT
, AND ANY CERTIFICATE ISSUED IN RESPECT
THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
(AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED
HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD
, TRANSFER
OR DEAL WITH THIS CERTIFICATE.]
§
[NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number [04031152/02366977] * )
EURO MEDIUM TERM NOTE PROGRAMME
Series No. [] Tranche No. []
PERMANENT GLOBAL INSTRUMENT
Permanent Global Instrument No. []
This permanent Global Instrument is issued without Coupons in respect of the Instruments (the Instruments ) of the Tranche(s) and Series specified in the Third Schedule to this permanent Global Instrument of [National Grid plc/National Grid Electricity Transmission plc]* (the Issuer ).
1 |
Interpretation and Definitions |
References in this permanent Global Instrument to the Conditions are to the Terms and Conditions applicable to the Instruments (which are in the form set out in Part B of Schedule 2 (Terms and Conditions of the Instruments) to the amended and restated trust deed (as amended or supplemented as at the Issue Date, the Trust Deed ) dated 10 September 2012 between, inter alios , the Issuer and The Law Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented and/or modified and/or superseded by the provisions of this permanent Global Instrument (including the supplemental definitions and any modifications or additions set out in the Third Schedule to this permanent Global Instrument), which in the event of any conflict shall prevail). Other capitalised terms used in this permanent Global Instrument shall have the meanings given to them in the Conditions or the Trust Deed.
§ |
Only applicable to Instruments which are settling and clearing in CDS. |
* |
Delete as applicable. |
A16888104
35
2 |
Aggregate Nominal Amount |
The aggregate nominal amount from time to time of this permanent Global Instrument shall be an amount equal to the aggregate nominal amount of the Instruments as shall be shown by the latest entry in the fourth column of the First Schedule to this permanent Global Instrument, which shall be completed by or on behalf of the Issuing and Paying Agent upon (a) the exchange of the whole or a part of the temporary Global Instrument initially representing the Instruments for a corresponding interest in this permanent Global Instrument (in the case of Instruments represented by a temporary Global Instrument upon issue), (b) the issue of the Instruments represented by this permanent Global Instrument (in the case of Instruments represented by this permanent Global Instrument upon issue), (c) the exchange of the whole of this permanent Global Instrument for Definitive Instruments and/or (d) the redemption or purchase and cancellation of Instruments represented by this permanent Global Instrument, all as described below.
3 |
Promise to Pay |
Subject as provided in this permanent Global Instrument, the Issuer, for value received, by this permanent Global Instrument promises to pay to the bearer of this permanent Global Instrument, upon presentation and (when no further payment is due in respect of this permanent Global Instrument) surrender of this permanent Global Instrument, on the Maturity Date (or on such earlier date or, if the Maturity Date is specified to be perpetual on such date as the amount payable upon redemption under the Conditions may become repayable in accordance with the Conditions), the amount payable upon redemption under the Conditions in respect of the aggregate nominal amount of Instruments represented by this permanent Global Instrument and (unless this permanent Global Instrument does not bear interest) to pay interest in respect of the Instruments from the Interest Commencement Date in arrear at the rates, on the dates for payment, and in accordance with the methods of calculation provided for in the Conditions, save that the calculation is made in respect of the total aggregate amount of the Instruments, together with such other sums and additional amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.
4 |
Exchange |
This permanent Global Instrument is exchangeable (free of charge to the holder) on or after the Exchange Date in whole but not in part for the Definitive Instruments if this permanent Global Instrument is held on behalf of [Euroclear or Clearstream, Luxembourg or any other clearing system (an Alternative Clearing System ) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so.] * [CDS Clearing and Depository Services Inc. ( CDS ) and (i) CDS has notified the Issuer that it is unwilling or unable to continue to act as a depository for the Instruments and a successor depository is not appointed by the Issuer within 90 working days after receiving such notice; or (ii) CDS ceases to be a recognised clearing agency under the Securities Act (Ontario) or a self-regulatory organisation under the Securities Act (Québec) or other applicable Canadian securities legislation and no successor clearing system satisfactory to the Trustee is available within 90 working days after the Issuer becoming aware that CDS is no longer so recognised.] *
* |
Delete as applicable. |
A16888104
36
Exchange Date means a day falling not less than 60 days, or in the case of failure to pay principal when due 30 days, after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the [Issuing and Paying Agent] * [Canadian Paying Agent] * is located and, except in the case of exchange pursuant to the first paragraph of this section above, in the cities in which [Euroclear and Clearstream, Luxembourg or, if relevant, the Alternative Clearing System, are] * [CDS is] * located.
Any such exchange may be effected on or after an Exchange Date by the holder of this permanent Global Instrument surrendering this permanent Global Instrument. In exchange for this permanent Global Instrument the Issuer shall deliver, or procure the delivery of, duly executed and authenticated Definitive Instruments in an aggregate nominal amount equal to the nominal amount of this permanent Global Instrument submitted for exchange (if appropriate, having attached to them all Coupons (and, where appropriate, Talons) in respect of interest which have not already been paid on this permanent Global Instrument), security printed and substantially in the form set out in Schedule 2 to the Trust Deed as supplemented and/or modified and/or superseded by the terms of the Third Schedule to this permanent Global Instrument.
5 |
Benefit of Conditions |
Except as otherwise specified in this permanent Global Instrument, this permanent Global Instrument is subject to the Conditions and the Trust Deed and, until the whole of this permanent Global Instrument is exchanged for Definitive Instruments, the holder of this permanent Global Instrument shall in all respects be entitled to the same benefits as if it were the holder of the Definitive Instruments for which it may be exchanged and as if such Definitive Instruments had been issued on the Issue Date.
6 |
Payments |
No person shall be entitled to receive any payment in respect of the Instruments represented by this permanent Global Instrument that falls due after an Exchange Date for such Instruments, unless upon due presentation of this permanent Global Instrument for exchange, delivery of Definitive Instruments is improperly withheld or refused by or on behalf of the Issuer or the Issuer does not perform or comply with any one or more of what are expressed to be its obligations under any Definitive Instruments.
Payments in respect of this permanent Global Instrument shall be made to its holder against presentation and (if no further payment falls to be made on it) surrender of it at the specified office of the Issuing and Paying Agent or of any other Paying Agent provided for in the Conditions. A record of each such payment shall be endorsed on the First or Second Schedule to this permanent Global Instrument, as appropriate, by the Issuing and Paying Agent or by the relevant Paying Agent, for and on behalf of the Issuing and Paying Agent, which endorsement shall (until the contrary is proved) be prima facie evidence that the payment in question has been made. Condition 6.5(e) and Condition 7(e)(i) will apply to the Definitive Instruments only.
* |
Delete as applicable. |
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37
For the purposes of any payments made in respect of this permanent Global Instrument, the words in the relevant place of presentation shall not apply in the definition of business day in Condition 6.7 (Non-Business Days).
7 |
Prescription |
Claims in respect of principal and interest (as each such term is defined in the Conditions) in respect of this permanent Global Instrument shall become void unless it is presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date.
8 |
Meetings |
For the purposes of any meeting of Instrumentholders, the holder of this permanent Global Instrument shall (unless this permanent Global Instrument represents only one Instrument) be treated as two persons for the purposes of any quorum requirements of a meeting of Instrumentholders and, at any such meeting, as having one vote in respect of each integral currency unit of the Specified Currency of the Instruments.
9 |
Cancellation |
Cancellation of any Instrument represented by this permanent Global Instrument which is required by the Conditions to be cancelled (other than upon its redemption) shall be effected by reduction in the nominal amount of this permanent Global Instrument representing such Instrument on its presentation to or to the order of the [Issuing and Paying Agent] § [Canadian Paying Agent] § for endorsement in the First Schedule to this permanent Global Instrument, upon which the nominal amount of this permanent Global Instrument shall be reduced for all purposes by the amount so cancelled and endorsed.
10 |
Purchase |
Instruments may only be purchased by the Issuer, or any of its subsidiary undertakings if they are purchased together with the right to receive all future payments of interest (if any) on the Instruments being purchased.
11 |
Issuers Options |
Any option of the Issuer provided for in the Conditions shall be exercised by the Issuer giving notice to the Instrumentholders within the time limits set out in and containing the information required by the Conditions, except that the notice shall not be required to contain the serial numbers of Instruments drawn in the case of a partial exercise of an option and accordingly no drawing of Instruments shall be required.
12 |
Instrumentholders Redemption Option [and Restructuring Redemption Option]* |
Any option of the Instrumentholders provided for in the Conditions may be exercised by the holder of this permanent Global Instrument giving notice to the [Issuing and Paying Agent] § [Canadian Paying Agent] § within the time limits relating to the deposit of Instruments with a
§ |
Delete as applicable. |
* |
If applicable. |
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38
Paying Agent set out in the Conditions substantially in the form of the relevant notice available from any Paying Agent and stating the nominal amount of Instruments in respect of which the option is exercised and at the same time presenting this permanent Global Instrument to the [Issuing and Paying Agent] * [Canadian Paying Agent] * , or to a Paying Agent acting on behalf of the [Issuing and Paying Agent] * [Canadian Paying Agent] * , for notation accordingly in the Fourth Schedule to this permanent Global Instrument.
13 |
Notices |
Notices required to be given in respect of the Instruments represented by this permanent Global Instrument may be given by their being delivered (so long as this permanent Global Instrument is held on behalf of Euroclear, Clearstream, Luxembourg [, CDS] * or any Alternative Clearing System) to Euroclear, Clearstream, Luxembourg [, CDS] * or such Alternative Clearing System, as the case may be, or otherwise to the holder of this permanent Global Instrument, rather than by publication as required by the Conditions.
14 |
Negotiability |
This permanent Global Instrument is a bearer document and negotiable and accordingly:
(a) |
is freely transferable by delivery and such transfer shall operate to confer upon the transferee all rights and benefits appertaining to this permanent Global Instrument and to bind the transferee with all obligations appertaining to this permanent Global Instrument pursuant to the Conditions; |
(b) |
the holder of this permanent Global Instrument is and shall be absolutely entitled as against all previous holders to receive all amounts by way of amounts payable upon redemption, interest or otherwise payable in respect of this permanent Global Instrument and the Issuer has waived against such holder and any previous holder of this permanent Global Instrument all rights of set-off or counterclaim which would or might otherwise be available to it in respect of the obligations evidenced by this permanent Global Instrument; and |
(c) |
payment upon due presentation of this permanent Global Instrument as provided in this permanent Global Instrument shall operate as a good discharge against such holder and all previous holders of this permanent Global Instrument. |
No provisions of this permanent Global Instrument shall alter or impair the obligation of the Issuer to pay the principal and premium of and interest on the Instruments when due in accordance with the Conditions.
This permanent Global Instrument shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the [Issuing and Paying Agent] * [Canadian Paying Agent] * .
This permanent Global Instrument and all matters arising from or connected with it shall be governed by, and construed in accordance with, English law.
* |
Delete as applicable. |
A16888104
39
In witness of which the Issuer has caused this permanent Global Instrument to be duly signed on its behalf.
Dated as of the Issue Date.
[NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
By:
CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
This permanent Global Instrument is authenticated by or on behalf of the Issuing and Paying Agent.
[THE BANK OF NEW YORK MELLON]*[BNY TRUST COMPANY OF CANADA]*
as [Issuing and Paying Agent] * [Canadian Paying Agent] *
By:
Authorised Signatory
For the purposes of authentication only
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
* |
Delete as applicable. |
A16888104
40
The First Schedule
Nominal amount of Instruments
represented by this permanent Global Instrument
The following (i) issue of Instruments initially represented by this permanent Global Instrument, (ii) exchanges of interests in a temporary Global Instrument for interests in this permanent Global Instrument or for Definitive Instruments and/or (iii) cancellations or forfeitures of interests in this permanent Global Instrument have been made, resulting in the nominal amount of this permanent Global Instrument specified in the latest entry in the fourth column below:
Date |
Amount of increase/
|
Reason for increase/
|
Nominal amount of this
|
Notation made by or on
|
§ |
Delete as applicable. |
A16888104
41
The Second Schedule
Payments of Interest
The following payments of interest or Interest Amount in respect of this permanent Global Instrument have been made:
Due date of payment |
Date of payment |
Amount of interest |
Notation made by or on behalf of
|
A16888104
42
The Third Schedule
[Insert the provisions of Part A of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Third Schedule.]
A16888104
43
The Fourth Schedule
Exercise of Instrumentholders Redemption Option
[and Restructuring Redemption Option]*
The following exercises of the option of the Instrumentholders provided for in the Conditions have been made in respect of the stated nominal amount of this permanent Global Instrument:
Date of exercise |
Nominal amount of this permanent
|
Date on which exercise of such
|
Notation made by or on behalf of
|
* |
If applicable. |
§ |
Delete as applicable. |
A16888104
44
Schedule 1
Part C
Form of NGN Temporary Global Instrument
[NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number [04031152/02366977]*)
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
TEMPORARY GLOBAL INSTRUMENT
Temporary Global Instrument No. []
This temporary Global Instrument is issued without Coupons in respect of the Instruments (the Instruments ) of the Tranche and Series specified in Part A of the Schedule to this temporary Global Instrument of [National Grid plc/National Grid Electricity Transmission plc]* (the Issuer ).
1 |
Interpretation and Definitions |
References in this temporary Global Instrument to the Conditions are to the Terms and Conditions applicable to the Instruments (which are in the form set out in Part B of Schedule 2 (Terms and Conditions of the Instruments) to the amended and restated trust deed (as amended or supplemented as at the Issue Date, the Trust Deed ) dated 10 September 2012 between, inter alios, the Issuer and The Law Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented and/or modified and/or superseded by the provisions of this temporary Global Instrument (including the supplemental definitions and any modifications or additions set out in Part A of the Schedule hereto), which in the event of any conflict shall prevail). Other capitalised terms used in this temporary Global Instrument shall have the meanings given to them in the Conditions or the Trust Deed. If the Schedule to this temporary Global Instrument specifies that the applicable TEFRA exemption is either C Rules or not applicable, this temporary Global Instrument is a C Rules Instrument, otherwise this temporary Global Instrument is a D Rules Instrument.
2 |
Aggregate Nominal Amount |
The aggregate nominal amount from time to time of this temporary Global Instrument shall be an amount equal to the aggregate nominal amount of the Instruments from time to time entered in the records of both Euroclear and Clearstream, Luxembourg (together the relevant Clearing Systems ), which shall be completed by or on behalf of the Issuing and Paying Agent upon (a) the issue of Instruments represented by this temporary Global Instrument, (b) the exchange of the whole or a part of this temporary Global Instrument for a corresponding interest recorded in the records of the relevant Clearing Systems in a permanent Global Instrument or, as the case may be, for Definitive Instruments and/or (c) the redemption or purchase and cancellation of Instruments represented by this temporary Global Instrument, all as described below.
The records of the relevant Clearing Systems (which expression in this temporary Global Instrument means the records that each relevant Clearing System holds for its customers which reflect the amount of such customers interests in the Instruments) shall be conclusive evidence of the nominal amount of the Instruments represented by this temporary Global Instrument and, for
* |
Delete as applicable. |
A16888104
45
these purposes, a statement issued by a relevant Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Instruments represented by the temporary Global Instrument at any time shall be conclusive evidence of the records of the relevant Clearing Systems at that time.
3 |
Promise to Pay |
Subject as provided in this temporary Global Instrument, the Issuer, for value received by this temporary Global Instrument, promises to pay to the bearer of this temporary Global Instrument, upon presentation and (when no further payment is due in respect of this temporary Global Instrument) surrender of this temporary Global Instrument, on the Maturity Date (or on such earlier date or, if the Maturity Date is specified to be perpetual, on such date as the amount payable upon redemption under the Conditions may become repayable in accordance with the Conditions) the amount payable upon redemption under the Conditions in respect of the aggregate nominal amount of Instruments represented by this temporary Global Instrument and (unless this temporary Global Instrument does not bear interest) to pay interest in respect of the Instruments from the Interest Commencement Date in arrear at the rates, on the dates for payment, and in accordance with the methods of calculation provided for in the Conditions, save that the calculation is made in respect of the total aggregate amount of the Instruments, together with such other sums and additional amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.
4 |
Exchange |
On or after the first day following the expiry of 40 days after the Issue Date (the Exchange Date ), this temporary Global Instrument may be exchanged (free of charge to the holder) in whole or (in the case of a D Rules Instrument only) from time to time in part by its presentation and, on exchange in full, surrender to or to the order of the Issuing and Paying Agent for interests recorded in the records of the relevant Clearing Systems in a permanent Global Instrument or, if so specified in Part A of the Schedule to this temporary Global Instrument, for Definitive Instruments in an aggregate nominal amount equal to the nominal amount of this temporary Global Instrument submitted for exchange provided that, in the case of any part of a D Rules Instrument submitted for exchange for interests recorded in the records of the relevant Clearing Systems in a permanent Global Instrument or Definitive Instruments, there shall have been Certification with respect to such nominal amount submitted for such exchange dated no earlier than the Exchange Date.
Certification means the presentation to the Issuing and Paying Agent of a certificate or certificates with respect to one or more interests in this temporary Global Instrument, signed by Euroclear or Clearstream, Luxembourg, substantially to the effect set out in Schedule 3 (Provisions for Meetings of Instrumentholders) to the Trust Deed to the effect that it has received a certificate or certificates substantially to the effect set out in Schedule 2 to the Trust Deed with respect to it and that no contrary advice as to the contents of the certificate has been received by Euroclear or Clearstream, Luxembourg, as the case may be.
Upon the whole or a part of this temporary Global Instrument being exchanged for a permanent Global Instrument, such permanent Global Instrument shall be exchangeable in accordance with its terms for Definitive Instruments.
The Definitive Instruments, for which this temporary Global Instrument or a permanent Global Instrument may be exchangeable, shall be duly executed and authenticated, shall, in the case of Definitive Instruments, have attached to them all Coupons (and, where appropriate, Talons) in respect of interest which have not already been paid on this temporary Global Instrument or the permanent Global Instrument, as the case may be, shall be security printed and shall be
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substantially in the form set out in the relevant Schedules to the Trust Deed as supplemented and/or modified and/or superseded by the terms of Part A of the Schedule to this temporary Global Instrument.
On any exchange of a part of this temporary Global Instrument for an equivalent interest recorded in the records of the relevant Clearing Systems in a permanent Global Instrument or for Definitive Instruments, as the case may be, the Issuer shall procure that details of the portion of the nominal amount hereof so exchanged shall be entered pro rata in the records of the relevant Clearing Systems and upon any such entry being made, the nominal amount of the Instruments recorded in the records of the relevant Clearing Systems and represented by this temporary Global Instrument shall be reduced for all purposes by an amount equal to such portion so exchanged.
5 |
Benefit of Conditions |
Except as otherwise specified in this temporary Global Instrument, this temporary Global Instrument is subject to the Conditions and the Trust Deed and, until the whole of this temporary Global Instrument is exchanged for equivalent interests in a permanent Global Instrument or for Definitive Instruments, as the case may be, the holder of this temporary Global Instrument shall in all respects be entitled to the same benefits as if it were the holder of the permanent Global Instrument (or the relevant part of it) or the Definitive Instruments, as the case may be, for which it may be exchanged as if such permanent Global Instrument or Definitive Instruments had been issued on the Issue Date.
6 |
Payments |
No person shall be entitled to receive any payment in respect of the Instruments represented by this temporary Global Instrument which falls due on or after the Exchange Date unless, upon due presentation of this temporary Global Instrument for exchange, delivery of (or, in the case of a subsequent exchange, a corresponding entry being recorded in the records of the relevant Clearing Systems) a permanent Global Instrument or delivery of Definitive Instruments, as the case may be, is improperly withheld or refused by or on behalf of the Issuer.
Payments due in respect of a D Rules Instrument before the Exchange Date shall only be made in relation to such nominal amount of this temporary Global Instrument with respect to which there shall have been Certification dated no earlier than such due date for payment.
Any payments which are made in respect of this temporary Global Instrument shall be made to its holder against presentation and (if no further payment falls to be made on it) surrender of it at the specified office of the Issuing and Paying Agent or of any other Paying Agent provided for in the Conditions and each payment so made will discharge the Issuers obligations in respect thereof. Any failure to make the entries in the records of the relevant Clearing Systems referred to herein shall not affect such discharge. If any payment in full or in part of principal is made in respect of any Instrument represented by this temporary Global Instrument, the Issuer shall procure that details of such payment shall be entered pro rata in the records of the relevant Clearing Systems and, upon any such entry being made, the nominal amount of the Instruments recorded in the records of the relevant Clearing Systems and represented by this temporary Global Instrument shall be reduced by the aggregate nominal amount of the Instruments so redeemed. If any other payments are made in respect of the Instruments represented by this temporary Global Instrument, the Issuer shall procure that a record of each such payment shall be entered pro rata in the records of the relevant Clearing Systems). Condition 6.5(e) and Condition 7(e)(i) will apply to the Definitive Instruments only.
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For the purposes of any payments made in respect of this temporary Global Instrument, the words in the relevant place of presentation shall not apply in the definition of business day in Condition 6.7 (Non-Business Days).
7 |
Cancellation |
On cancellation of any Instrument represented by this temporary Global Instrument which is required by the Conditions to be cancelled (other than upon its redemption), the Issuer shall procure that details of such cancellation shall be entered pro rata in the records of the relevant Clearing Systems and, upon any such entry being made, the nominal amount of the Instrument recorded in the records of the relevant Clearing Systems and represented by this temporary Global Instrument shall be reduced by the aggregate nominal amount of the Instruments so cancelled.
8 |
Notices |
Notices required to be given in respect of the Instruments represented by this temporary Global Instrument may be given by their being delivered (so long as this temporary Global Instrument is held on behalf of Euroclear and Clearstream, Luxembourg or any other clearing system) to Euroclear, Clearstream, Luxembourg or such other clearing system, as the case may be, or otherwise to the holder of this temporary Global Instrument, rather than by publication as required by the Conditions.
No provision of this temporary Global Instrument shall alter or impair the obligation of the Issuer to pay the principal and premium of and interest on the Instruments when due in accordance with the Conditions.
This temporary Global Instrument shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Issuing and Paying Agent and effectuated by the entity appointed as Common Safekeeper by the relevant Clearing Systems.
This temporary Global Instrument and all matters arising from or connected with it shall be governed by and construed in accordance with English law.
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In witness of which the Issuer has caused this temporary Global Instrument to be duly signed on its behalf.
Dated as of the Issue Date.
[NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc ] *
By:
Authorised Signatory
CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
This temporary Global Instrument is authenticated by or on behalf of the Issuing and Paying Agent.
THE BANK OF NEW YORK MELLON
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only
Effectuation
This temporary Global Instrument
Is effectuated by
[COMMON SAFEKEEPER ]
As Common Safekeeper
By:
Authorised Signatory
For the purposes of effectuation only
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
* |
Delete as applicable. |
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The Schedule
[Insert the provisions of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Schedule]
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Schedule 1
Part D
Form of NGN Permanent Global Instrument
[NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc]*
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number [04031152/02366977]*)
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
PERMANENT GLOBAL INSTRUMENT
Permanent Global Instrument No. []
This permanent Global Instrument is issued without Coupons in respect of the Instruments (the Instruments ) of the Tranche(s) and Series specified in Part A of the Schedule to this permanent Global Instrument of [National Grid plc/National Grid Electricity Transmission plc]* (the Issuer ).
1 |
Interpretation and Definitions |
References in this permanent Global Instrument to the Conditions are to the Terms and Conditions applicable to the Instruments (which are in the form set out in Part B of Schedule 2 (Terms and Conditions of the Instruments) to the amended and restated trust deed (as amended or supplemented as at the Issue Date, the Trust Deed ) dated 10 September 2012 between, inter alios, the Issuer and The Law Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented and/or modified and/or superseded by the provisions of this permanent Global Instrument (including the supplemental definitions and any modifications or additions set out in the Third Schedule to this permanent Global Instrument), which in the event of any conflict shall prevail). Other capitalised terms used in this permanent Global Instrument shall have the meanings given to them in the Conditions or the Trust Deed.
2 |
Aggregate Nominal Amount |
The aggregate nominal amount from time to time of this permanent Global Instrument shall be an amount equal to the aggregate nominal amount of the Instruments from time to time entered in the records of both Euroclear and Clearstream, Luxembourg (together, the relevant Clearing Systems ), which shall be completed and/or amended as the case may be upon (a) the exchange of the whole or a part of the interests recorded in the records of the relevant Clearing Systems in the temporary Global Instrument initially representing the Instruments for a corresponding interest in this permanent Global Instrument (in the case of Instruments represented by a temporary Global Instrument upon issue), (b) the issue of the Instruments represented by this permanent Global Instrument (in the case of Instruments represented by this permanent Global Instrument upon issue), (c) the exchange of the whole of this permanent Global Instrument for Definitive Instruments and/or (d) the redemption or purchase and cancellation of Instruments represented by this permanent Global Instrument, all as described below.
The records of the relevant Clearing Systems (which expression in this permanent Global Instrument means the records that each relevant Clearing System holds for its customers which reflect the amount of such customers interests in the Instruments) shall be conclusive evidence of the nominal amount of the Instruments represented by this permanent Global Instrument and, for
* |
Delete as applicable. |
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these purposes, a statement issued by a relevant Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Instruments represented by this permanent Global Instrument at any time shall be conclusive evidence of the records of the relevant Clearing System at that time.
3 |
Promise to Pay |
Subject as provided in this permanent Global Instrument, the Issuer, for value received, by this permanent Global Instrument promises to pay to the bearer of this permanent Global Instrument, upon presentation and (when no further payment is due in respect of this permanent Global Instrument) surrender of this permanent Global Instrument, on the Maturity Date (or on such earlier date or, if the Maturity Date is specified to be perpetual on such date as the amount payable upon redemption under the Conditions may become repayable in accordance with the Conditions), the amount payable upon redemption under the Conditions in respect of the aggregate nominal amount of Instruments represented by this permanent Global Instrument and (unless this permanent Global Instrument does not bear interest) to pay interest in respect of the Instruments from the Interest Commencement Date in arrear at the rates, on the dates for payment, and in accordance with the methods of calculation provided for in the Conditions, save that the calculation is made in respect of the total aggregate amount of the Instruments, together with such other sums and additional amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.
4 |
Exchange |
This permanent Global Instrument is exchangeable (free of charge to the holder) on or after the Exchange Date in whole but not in part for the Definitive Instruments if this permanent Global Instrument is held on behalf of Euroclear or Clearstream, Luxembourg or any other clearing system (an Alternative Clearing System ) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so.
Exchange Date means a day falling not less than 60 days, or in the case of failure to pay principal when due, 30 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Issuing and Paying Agent is located and, except in the case of exchange pursuant to the first paragraph of this section above, in the cities in which Euroclear and Clearstream, Luxembourg or, if relevant, the Alternative Clearing System, are located.
Any such exchange may be effected on or after an Exchange Date by the holder of this permanent Global Instrument surrendering this permanent Global Instrument. In exchange for this permanent Global Instrument the Issuer shall deliver, or procure the delivery of, duly executed and authenticated Definitive Instruments in an aggregate nominal amount equal to the nominal amount of this permanent Global Instrument submitted for exchange (if appropriate, having attached to them all Coupons (and, where appropriate, Talons) in respect of interest which have not already been paid on this permanent Global Instrument), security printed and substantially in the form set out in Schedule 2 to the Trust Deed as supplemented and/or modified and/or superseded by the terms of Part A of the Schedule to this permanent Global Instrument.
5 |
Benefit of Conditions |
Except as otherwise specified in this permanent Global Instrument, the Issuer shall procure that this permanent Global Instrument is subject to the Conditions and the Trust Deed and, until the whole of this permanent Global Instrument is exchanged for Definitive Instruments, the holder of
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this permanent Global Instrument shall in all respects be entitled to the same benefits as if it were the holder of the Definitive Instruments for which it may be exchanged and as if such Definitive Instruments had been issued on the Issue Date.
6 |
Payments |
No person shall be entitled to receive any payment in respect of the Instruments represented by this permanent Global Instrument that falls due after an Exchange Date for such Instruments, unless upon due presentation of this permanent Global Instrument for exchange, delivery of Definitive Instruments is improperly withheld or refused by or on behalf of the Issuer or the Issuer does not perform or comply with any one or more of what are expressed to be its obligations under any Definitive Instruments.
Payments in respect of this permanent Global Instrument shall be made to its holder against presentation and (if no further payment falls to be made on it) surrender of it at the specified office of the Issuing and Paying Agent or of any other Paying Agent provided for in the Conditions and each payment so made will discharge the Issuers obligations in respect thereof. Any failure to make the entries in the records of the relevant Clearing Systems referred to herein shall not affect such discharge. The Issuer shall procure that details of each such payment shall be entered pro rata in the records of the relevant Clearing Systems and in the case of any payment of principal and upon any such entry being made, the nominal amount of the Instruments recorded in the records of the relevant Clearing Systems and represented by this permanent Global Instrument shall be reduced by the aggregate nominal amount of the Instruments so redeemed. Condition 6.5(e) and Condition 7(e)(i) will apply to the Definitive Instruments only.
For the purposes of any payments made in respect of this permanent Global Instrument, the words in the relevant place of presentation shall not apply in the definition of business day in Condition 6.7 (Non-Business Days).
7 |
Prescription |
Claims in respect of principal and interest (as each is defined in the Conditions) in respect of this permanent Global Instrument shall become void unless it is presented for payment within a period of 10 years (in the case of principal) and 5 years (in the case of interest) from the appropriate Relevant Date.
8 |
Meetings |
For the purposes of any meeting of Instrumentholders the holder of this permanent Global Instrument shall (unless this permanent Global Instrument represents only one Instrument) be treated as two persons for the purposes of any quorum requirements of a meeting of Instrumentholders and, at any such meeting, as having one vote in respect of each integral currency unit of the specified currency of the Instruments.
9 |
Cancellation |
On cancellation of any Instrument represented by this permanent Global Instrument which is required by the Conditions to be cancelled (other than upon its redemption) the Issuer shall procure that details of such cancellation shall be entered pro rata in the records of the relevant Clearing Systems and, upon any such entry being made, the nominal amount of the Instruments recorded in the records of the relevant Clearing Systems and represented by this permanent Global Instrument shall be reduced by the aggregate nominal amount of the Instruments so cancelled.
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10 |
Purchase |
Instruments may only be purchased by the Issuer or any of its subsidiary undertakings if they are purchased together with the right to receive all future payments of interest on the Instruments being purchased.
11 |
Issuers Options |
Any option of the Issuer provided for in the Conditions shall be exercised by the Issuer giving notice to the Instrumentholders and the relevant Clearing Systems (or procuring that such notice is given on its behalf) within the time limits set out in and containing the information required by the Conditions, except that the notice shall not be required to contain the serial numbers of Instruments drawn in the case of a partial exercise of an option and accordingly no drawing of Instruments shall be required. In the case of a partial exercise of an option, the rights of accountholders with a clearing system in respect of the Instruments will be governed by the standard procedures of Euroclear and/or Clearstream, Luxembourg and shall be reflected in the records of Euroclear and/or Clearstream, Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion. Following the exercise of any such option, the Issuer shall procure that the nominal amount of the Instruments recorded in the records of the relevant Clearing Systems and represented by this permanent Global Instrument shall be reduced accordingly.
12 |
Instrumentholders Options Option [and Restructuring Redemption Option] |
Any option of the Instrumentholders provided for in the Conditions may be exercised by the holder of this permanent Global Instrument giving notice to the Issuing and Paying Agent within the time limits relating to the deposit of Instruments with a Paying Agent set out in the Conditions substantially in the form of the notice available from any Paying Agent, except that the notice shall not be required to contain the certificate numbers of the Instruments in respect of which the option has been exercised, following the exercise of any such option, the Issuer shall procure that the nominal amount of the Instruments recorded in the records of the relevant Clearing Systems and represented by this permanent Global Instrument shall be reduced by the aggregate nominal amount stated in the relevant exercise notice.
13 |
Notices |
Notices required to be given in respect of the Instruments represented by this permanent Global Instrument may be given by their being delivered (so long as this permanent Global Instrument is held on behalf of Euroclear, Clearstream, Luxembourg or any other clearing system) to Euroclear, Clearstream, Luxembourg or such Alternative Clearing System, as the case may be, or otherwise to the holder of this permanent Global Instrument, rather than by publication as required by the Conditions.
14 |
Negotiability |
This permanent Global Instrument is a bearer document and negotiable and accordingly:
(a) |
is freely transferable by delivery and such transfer shall operate to confer upon the transferee all rights and benefits appertaining to this permanent Global Instrument and to bind the transferee with all obligations appertaining to this permanent Global Instrument pursuant to the Conditions; |
|
If applicable. |
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(b) |
the holder of this permanent Global Instrument is and shall be absolutely entitled as against all previous holders to receive all amounts by way of amounts payable upon redemption, interest or otherwise payable in respect of this permanent Global Instrument and the Issuer has waived against such holder and any previous holder of this permanent Global Instrument all rights of set-off or counterclaim which would or might otherwise be available to it in respect of the obligations evidenced by this permanent Global Instrument; and |
(c) |
payment upon due presentation of this permanent Global Instrument as provided in this permanent Global Instrument shall operate as a good discharge against such holder and all previous holders of this permanent Global Instrument. |
No provisions of this permanent Global Instrument shall alter or impair the obligation of the Issuer to pay the principal and premium of and interest on the Instruments when due in accordance with the Conditions.
This permanent Global Instrument shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Issuing and Paying Agent and effectuated by the entity appointed as common safekeeper by the relevant Clearing Systems.
This permanent Global Instrument and all matters arising from or connected with it shall be governed by, and construed in accordance with, English law.
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In witness of which the Issuer has caused this permanent Global Instrument to be duly signed on its behalf.
Dated as of the Issue Date.
[NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc ] *
By: |
Authorised Signatory
CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
This permanent Global Instrument is authenticated by or on behalf of the Issuing and Paying Agent.
THE BANK OF NEW YORK MELLON as Issuing and Paying Agent |
||
By: |
||
Authorised Signatory |
||
For the purposes of authentication only |
Effectuation
This permanent Global Instrument is effectuated by [COMMON SAFEKEEPER] As Common Safekeeper |
||
By: |
||
Authorised Signatory |
For the purposes of effectuation only.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
* |
Delete as applicable. |
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The Schedule
[Insert the provisions of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Schedule.]
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Schedule 2
Part A
Form of Definitive Instrument
On the front:
[Denomination] |
[ISIN | ] | [Series | ] | [Certif. No. | ] |
[Currency and denomination]
[NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc]*
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number [04031152/02366977] * )
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[Title of issue]
This Instrument forms one of the Series of Instruments referred to above (the Instruments ) of [National Grid plc/National Grid Electricity Transmission plc] * (the Issuer ) designated as specified in the title of this Instrument. The Instruments are subject to the Terms and Conditions (the Conditions ) endorsed on this Instrument and are issued subject to, and with the benefit of, the Trust Deed referred to in the Conditions. Expressions defined in the Conditions have the same meanings in this Instrument.
The Issuer, for value received, promises to pay to the bearer of this Instrument, on presentation, and (when no further payment is due in respect of this Instrument) surrender, of this Instrument on the Maturity Date (or on such earlier date or, if the Maturity Date is specified to be perpetual, on such date as the amount payable upon redemption under the Conditions may become repayable in accordance with the Conditions) the amount payable upon redemption under the Conditions and (unless this Instrument does not bear interest) to pay interest from the Interest Commencement Date in arrear at the rates, in the amounts and on the dates for payment provided for in the Conditions together with such other sums and additional amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.
This Instrument shall not become valid or obligatory for any purpose until authenticated by or on behalf of the Issuing and Paying Agent.
* |
Delete as applicable. |
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In witness of which the Issuer has caused this Instrument to be signed on its behalf.
Dated as of the Issue Date.
[NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
By: |
||
CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
This Instrument is authenticated
by or on behalf of the Issuing and Paying Agent.
THE BANK OF NEW YORK MELLON as Issuing and Paying Agent |
||
By: |
||
Authorised Signatory |
||
For the purposes of authentication only |
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
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On the back:
Terms and Conditions of the Instruments
[The Terms and Conditions which are set out in Part B of Schedule 2 (Terms and Conditions of the Instruments) to the Trust Deed, as amended by and incorporating any additional provisions forming part of such Terms and Conditions, and set out in Part A of the relevant Final Terms shall be set out here.]
ISSUING AND PAYING AGENT
The Bank of New York Mellon
One Canada Square
London E14 5AL
PAYING AGENTS
KBL European Private Bankers S.A.
43 Boulevard Royal
L-2955 Luxembourg
BNY Trust Company of Canada
320 Bay Street, 11th Floor
Toronto, ON
Canada M5H 4A6
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Schedule 2
Part B
Terms and Conditions of the Instruments
The following is the text of the terms and conditions which, save for the text in italics and subject to completion by Part A of the relevant Final Terms, will be endorsed on the Instruments in definitive form (if any) issued in exchange for the Global Instrument(s) representing each Series and incorporated by reference into each Australian Domestic Instrument Either (a) the full text of these terms and conditions together with the relevant provisions of Part A of the Final Terms or (b) these terms and conditions as so completed (and subject to simplification by the dis-application of non-applicable provisions), shall be endorsed on such definitive Instruments. All capitalised terms which are not defined in these Conditions will have the meanings given to them in the Trust Deed or Part A of the relevant Final Terms. Those definitions will be endorsed on the definitive Instruments and incorporated by reference into each Australian Domestic Instrument. In the case of PSM Instruments issued under the Programme, references to the Final Terms in these Conditions shall be construed as references to the Pricing Supplement.
References in these terms and conditions (the Conditions ) to instruments (as defined below) are to the Instruments^ one Series only of the relevant Issuer (as defined below), not to all Instruments that may be issued under the Programme.
National Grid plc ( National Grid ) and National Grid Electricity Transmission plc ( NGET ) (each an Issuer and together, the Issuers ) have established a Euro Medium Term Note Programme (the Programme ) for the issuance of up to Euro 15,000,000,000 in aggregate principal amount of debt instruments (the Instruments ). The Instruments, other than the Australian Domestic Instruments (as defined below), are constituted by a Trust Deed (as amended or supplemented from time to time, the Trust Deed ) dated 12 September 2013 between the Issuers and The Law Debenture Trust Corporation p.I.c. (the Trustee , which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Instrumentholders (as defined below). These Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Definitive Instruments, Coupons and Talons referred to below. An Agency Agreement (as amended or supplemented from time to time, the Agency Agreement ) dated 12 September 2013 has been entered into in relation to the Instruments (other than the Australian Domestic Instruments) between the Issuers, the Trustee, The Bank of New York Mellon as initial issuing and paying agent and the other agent(s) named in it. The issuing and paying agent, the paying agent(s) and the calculation agent(s) for the time being (if any) are referred to below respectively as the Issuing and Paying Agent , the Paying Agents (which expression shall include the Issuing and Paying Agent) and the Calculation Agent(s) .
Instruments (the Australian Domestic Instruments ) may be issued under a deed poll (as amended or supplemented from time to time, the Australian Deed Poll ) dated 10 September 2012 made by the Issuers in favour of the Trustee and the holders of those Instruments. Thè provisions of these Conditions relating to Coupons and Talons (each as defined below) do not apply to Australian Domestic Instruments. An agency and registry agreement (as amended or supplemented from time to time, the Australian Agency and Registry Agreement ) dated 10 September 2012 has been entered into in relation to the Australian Domestic Instruments between the Issuers and BTA Institutional Services Australia Ltd as issuing and paying agent and registrar (the Australian Issuing and Paying Agent and the Australian Registrar ). The Australian Registrar will maintain a register of holders of the Australian Domestic Instruments (the Australian Register ). References in these terms and conditions to the Agent and the Paying
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Agent and the Agency Agreement shall, in relation to the Australian Domestic Instruments, be a reference to the Australian Issuing and Paying Agent and the Australian Agency and Registry Agreement respectively.
Copies of the Trust Deed, the Agency Agreement and the Australian Agency and Registry Agreement are available for inspection during usual business hours at the registered office of the Trustee (as at 12 September 2013 at Fifth Floor, 100 Wood Street, London EC2V 7EX) and at the specified offices of the Paying Agents.
The Instrumentholders, the holders of the interest coupons (the Coupons ) appertaining to interest bearing Instruments and, where applicable in the case of such Instruments, talons for further Coupons (the Talons ) (the Couponholders ) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of those provisions of the Agency Agreement applicable to them.
1 |
Form, Denomination and Title |
The Instruments are issued in:
(a) |
bearer form in the Specified Denomination(s) specified in the relevant Final Terms and are serially numbered; or |
(b) |
in the case of Australian Domestic instruments, registered uncertificated (or inscribed) form and are constituted by the Australian Deed Poll, |
as specified in the relevant Final Terms.
Instruments of one Specified Denomination are not exchangeable for Instruments of another Specified Denomination. Australian Domestic Instruments may not be exchanged for Instruments in bearer form and Instruments in bearer form may not be exchanged for Australian Domestic Instruments.
This Instrument is a Fixed Rate Instrument, a Floating Rate Instrument, a Zero Coupon Instrument, an index Linked Interest Instrument or an Index Linked Redemption Instrument or a combination of any of the preceding, depending upon the Interest and Redemption/Payment Basis specified in the relevant Final Terms.
Instruments are issued with Coupons (and, where appropriate, a Talon) attached, save in the case of Zero Coupon Instruments in which case references to interest (other than in relation to interest due after the Maturity Date), Coupons and Talons in these Conditions are not applicable. Talons may be required if more than twenty seven coupon payments are to be made with regards to the relevant Instruments.
Title to the Instruments and Coupons and Talons shall pass by delivery and except as ordered by a court of competent jurisdiction or as required by law, the Issuer and the Paying Agents shall be entitled to treat the bearer of any Instrument, Coupon or Talon as the absolute owner of that instrument, Coupon or Talon, as the case may be, and shall not be required to obtain any proof of ownership as to the identity of the bearer.
In these Conditions, Instrumentholder means the bearer of any Instrument of one Series only of an Issuer, holder (in relation to an Instrument, Coupon or Talon) means the bearer of any instrument, Coupon or Talon and capitalised terms have the meanings given to them herein, the absence of any such meaning indicating that such term is not applicable to the Instruments.
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In the case of Australian Domestic Instruments, the following provisions apply and prevail over the foregoing provisions of this Condition 1 to the extent of any inconsistency.
Australian Domestic Instruments will be debt obligations of the Issuer constituted by the Australian Deed Poll and will take the form of entries in the Australian Register to be established and maintained by the Australian Registrar in Sydney, or such other place specified In the applicable Final Terms agreed by the Issuer with the Australian Registrar. The relevant Issuer will arrange for the Australian Registrar to maintain the Australian Register so as to show at all times such details of the Instrumentholders and the Australian Domestic Instruments as are required to be shown on the Australian Register by or for the effective operation of these Conditions or by law or which the relevant Issuer and Australian Registrar determine should be shown in the Australian Register. Although Australian Domestic Instruments will not be constituted by the Trust Deed, Australian Domestic Instruments will have the benefit of, and be issued subject to, certain other provisions of the Trust Deed. The Agency Agreement is not applicable to Australian Domestic Instruments. In relation to Australian Domestic Instruments, the expression Instrumentholder or holder means a person (or persons) whose name is for the time being entered in the Australian Register as the holder of an Australian Domestic Instrument. For the avoidance of doubt, where an Australian Domestic Instrument is entered into the Austraclear System, the expressions Instrumentholder or holder in respect of that Australian Domestic Instrument means Austraclear as operator of the Austraclear System.
Australian Domestic Instruments will not be serially numbered, unless otherwise agreed with the Australian Registrar. Each entry In the Australian Register constitutes a separate and individual acknowledgement to the Trustee on behalf of, and to, the relevant Instrumentholder of the indebtedness of the relevant Issuer to the Trustee on behalf of, and to, the relevant Instrumentholder. The obligations of the relevant Issuer in respect of each Australian Domestic Instrument constitute separate and independent obligations which the Instrumentholder and the Trustee are entitled to enforce in accordance with (and subject to) these Conditions, the Trust Deed and the Australian Deed Poll. No certificate or other evidence of title will be issued by or on behalf of the relevant Issuer to evidence title to an Australian Domestic Instrument unless the relevant Issuer determines that certificates should be made available or it is required to do so pursuant, to any applicable law or regulation.
No Australian Domestic instrument will be registered in the name of more than four persons. Australian Domestic Instruments registered in the name of more than one person are held by those persons as joint tenants. Australian Domestic Instruments will be registered by name only, without reference to any trusteeship and an entry in the Australian Register in relation to an Australian Domestic Instrument constitutes conclusive evidence that the person so entered is the absolute owner of such Instrument, subject to rectification for fraud or error.
Title to an Australian Domestic Instrument and all rights and entitlements arising by virtue of the Australian Deed Poll or the Trust Deed in respect of that Australian Domestic Instrument vest absolutely in the registered owner of the Australian Domestic instrument, subject to rectification of the Australian Register for fraud or error, such that no person who has previously been registered as the owner of the Australian Domestic Instrument has or is entitled to assert against the Issuer or the Australian Registrar or the registered owner of the Australian Domestic Instrument for the time being and from time to time any rights, benefits or entitlements in respect of the Australian Domestic Instrument.
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Australian Domestic Instruments may be transferred in whole but not in part. Australian Domestic Instruments will be transferred by duly completed and (if applicable) stamped transfer and acceptance forms In the form specified by, and obtainable from, the Australian Registrar or by any other manner approved by the Issuer and the Australian Registrar. Australian Domestic Instruments entered in the Austraclear System (as defined below) will be transferable only in accordance with the Austraclear Regulations (as defined below).
Unless the Australian Domestic Instruments are lodged in the Austraclear System, application for the transfer of Australian Domestic Instruments must be made by the lodgment of a transfer and acceptance form with the Australian Registrar. Each transfer and acceptance form must be accompanied by such evidence (if any) as the Australian Registrar may require to prove the title of the transferor or the transferors right to transfer the Australian Domestic Instruments and must be signed by both the transferor and the transferee,
The transferor of an Australian Domestic Instrument is deemed to remain the holder of that Australian Domestic Instrument until the name of the transferee Is entered in the Australian Register in respect of that Australian Domestic Instrument. Transfers will not be registered later than eight days prior to the Maturity Date of the Australian Domestic Instrument.
Australian Domestic Instruments may only be transferred within, to or from Australia if:
(a) |
the aggregate consideration payable by the transferee at the time of transfer is at least A$500,000 (disregarding moneys lent by the transferor or its associates) or the offer or invitation giving rise to the transfer otherwise does not require disclosure to investors in accordance with Part 6D.2 or Part 7.9 of the Corporations Act 2001 of Australia ( Australian Corporations Act ); |
(b) |
the transferee is not a retail client as defined in section 761G of the Australian Corporations Act; |
(c) |
the transfer is in compliance with all applicable laws, regulations and directives (including, without limitation, in the case of a transfer to or from Australia, the laws of the jurisdiction in which the transfer takes place); and |
(d) |
in the case of a transfer between persons outside Australia, if a transfer and acceptance form is signed outside Australia. |
A transfer to an unincorporated association is not permitted.
Transfers will be registered without charge provided taxes, duties or other governmental charges (if any) imposed in relation to the transfer have been paid.
A person becoming entitled to an Australian Domestic Instrument as a consequence of the death or bankruptcy of a Holder or of a vesting order or a person administering the estate of a Holder may, upon producing such evidence as to that entitlement or status as the Australian Registrar considers sufficient, transfer the Australian Domestic instrument or, if so entitled, become registered as the holder of the Australian Domestic Instrument.
Where the transferor executes a transfer of less than ail Australian Domestic Instruments registered in its name, and the specific Australian Domestic Instruments to be transferred are not identified, the Australian Registrar may register the transfer in respect of such of
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the Australian Domestic Instruments registered in the name of the transferor as the Australian Registrar thinks fit, provided the aggregate principal amount of the Australian Domestic Instruments registered as having been transferred equals the aggregate principal amount of the Australian Domestic Instruments expressed to be transferred in the transfer.
In this Condition 1:
Austraclear means Austraclear Limited (ABN 94 002 060 773).
Austraclear Regulations means the rules and regulations established by Austraclear (as amended or replaced from time to time) to govern the use of the Austraclear System.
Austraclear System means the system operated by Austraclear for holding securities and the electronic recording and settling of transactions in those securities between members of that system.
2 |
Status and Negative Pledge |
2.1 |
Status |
The Instruments and the Coupons relating to them constitute direct, unconditional and unsecured obligations of the Issuer and rank pari passu without any preference or priority among themselves. The payment obligations of the issuer under the Instruments and Coupons shall, subject to such exceptions as are from time to time applicable under the laws of England and, in relation to Instruments issued by National Grid, as provided in Condition 2.2, rank equally with all other present and future unsecured obligations {other than subordinated obligations, if any) of the Issuer.
2.2 |
Negative Pledge |
So long as any Instrument or Coupon of National Grid remains outstanding (as defined in the Trust Deed) National Grid will not create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest ( Securit y ) upon the whole or any part of its undertaking, assets or revenues present or future to secure any Relevant Indebtedness, or any guarantee of or indemnity in respect of any Relevant Indebtedness unless, at the same time or prior thereto, National Grids obligations under the Instruments, the Coupons and the Trust Deed (a) are secured equally and rateably therewith or benefit from a guarantee or indemnity in substantially identical terms thereto, as the case may be, in each case to the satisfaction of the Trustee, or (b) have the benefit of such other security, guarantee, indemnity or other arrangement as the Trustee in its absolute discretion shall deem to be not materially less beneficial to the Instrumentholders or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Instrumentholders.
For the purposes of these Conditions, Relevant Indebtedness means any present or future indebtedness in the form of, or represented by, bonds, notes, debentures, loan stock or other securities which are for the time being, or are intended, with the agreement of the Issuer, to be quoted, listed or ordinarily dealt in on any stock exchange.
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3 |
Interest |
3.1 |
Interest on Fixed Rate Instruments |
Each Fixed Rate Instrument bears interest on Its outstanding nominal amount from the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest, payable in arrear on each Interest Payment Date. The amount of Interest payable shall be determined in accordance with Condition 3.2.4(d),
If a Fixed Coupon Amount or a Broken Amount is specified in the relevant Fina! Terms, the amount of interest payable on each Interest Payment Date will amount to the Fixed Coupon Amount, or, if applicable, the Broken Amount so specified and in the case of a Broken Amount will be payable on the particular Interest Payment Date(s) specified in the relevant Final Terms.
3.2 |
Interest on Floating Rate Instruments and Index Linked Interest Instruments |
3.2.1 |
Interest Payment Dates |
Each Floating Rate Instrument and Index Linked Interest Instrument bears interest on its outstanding nominal amount from the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest, such interest being payable in arrear on each Interest Payment Date. The amount of Interest payable shall be determined in accordance with Condition 3.2.4(d). Such Interest Payment Date(s) is/are either specified in the relevant Final Terms as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are specified in the relevant Final Terms, Interest Payment Date shall mean each date which falls the number of months or other period specified in the relevant Final Terms as the Interest Period after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.
3.2.2 |
Business Day Convention |
If any date which is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is (a) the Floating Rate Convention, such date shall be postponed to the next day which is a Business Day unless it would then fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (b) the Following Business Day Convention, such date shall be postponed to the next day which is a Business Day, (c) the Modified Following Business Day Convention, such date shall be postponed to the next day which is a Business Day unless it would then fall into the next calendar month, in that event such date shall be brought forward to the immediately preceding Business Day or (d) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day.
3.2.3 |
Rate of Interest for Floating Rate Instruments |
The Rate of Interest in respect of Floating Rate Instruments for each Interest Accrual Period shall be determined in the manner specified in the relevant Final Terms and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply, depending upon which is specified in the relevant Final Terms.
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(a) |
ISDA Determination for Floating Rate Instruments: Where ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this sub-paragraph (a), ISDA Rate for an Interest Accrual Period means a rate equal to the Floating Rate which would be determined by the Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA Definitions and under which: |
(i) |
the Floating Rate Option is as specified in the relevant Final Terms; |
(ii) |
the Designated Maturity is a period specified in the relevant Final Terms; and |
(iii) |
the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise specified in the relevant Final Terms. |
For the purposes of this sub-paragraph (a), Floating Rate, Calculation Agent , Floating Rate Option , Designated Maturity , Reset Date and Swap Transaction have the meanings given to those terms in the ISDA Definitions.
(b) |
Screen Rate Determination for Floating Rate Instruments: |
(i) |
Where Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period will, subject as provided below, be either: |
(x) |
the offered quotation; or |
(y) |
the arithmetic mean of the offered quotations, |
(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as at (1) 11.00 a.m. London time, in the case of LIBOR ( LIBOR ); or (2) 11:00 a.m. Brussels time, in the case of EURIBOR ( EURIBOR ); or (3) 10:10 a.m. Sydney time, in the case of AUD-BBR-BBSW; or (4) 10:00 a.m. Toronto time, in the case of CAD-BA-CDOR; or (5) 11:00 a.m. Hong Kong time, in the case of HKD-HIBOR-HIBOR=; or (6) 11:00 a.m. Frankfurt time, in the case of EUR-ISDA-EURIBOR Swap Rate-11:00, on the interest Determination Date in question as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean of such offered quotations.
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(ii) |
if the Relevant Screen Page is not available or if, sub-paragraph (i)(x) applies and no such offered quotation appears on the Relevant Screen Page or if sub-paragraph (i)(y) above applies and fewer than three such offered quotations appear on the Relevant Screen Page in each case as at the time specified above, subject as provided below, the Calculation Agent shall request, if the Reference Rate is LiBOR, the principal London office of each of the Reference Banks or, if the Reference Rate is EURiBOR, the principal Euro-zone office of each of the Reference Banks or, if the Reference Rate is AUD-BBR-BBSW, the principal office of each of the Reference Banks or, if the Reference Rate is CAD-BA-CDOR, the principal Toronto office of each of the Reference Banks or, if the Reference Rate is EUR-ISDA-EURIBOR Swap Rate-11:00, the principal office of each of the Reference Banks or, if the Reference Rate is HKD- HIBOR-HIBOR=, the principal Hong Kong office of each of the Reference Banks, to provide the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate if the Reference Rate is: (1) LIBOR, at approximately 11.00 a.m. (London time), or (2) EURIBOR, at approximately 11.00 a.m. (Brussels time), or (3) AUD- BBR-BBSW, at approximately 10:00 a.m. (Sydney time), or (4) CAD-BA- CDOR, at 10:00 a.m., (Toronto time) or (5) EUR-ISDA-EURIBOR Swap Rate-11:00, at approximately 11:00 a.m. (Frankfurt time), or (6) HKD- HIBOR-HIBOR=, at approximately 11:00 a.m. (Hong Kong time), on the Interest Determination Date in question. If, two (in the case of LIBOR, EURIBOR, CAD-BA-CDOR or HKD-HIBOR-HIBOR=); or five (in the case of AUD-BBR-BBSW); or three (in the case of EUR-ISDA-EURIBOR Swap Rate-11:00), or more of the Reference Banks provide the Calculation Agent with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean of such offered quotations as determined by the Calculation Agent; and |
(iii) |
if paragraph (ii) above applies and the Calculation Agent determines that fewer than the specified number of Reference Banks are providing offered quotations, subject as provided below, the Rate of Interest shall be (1) in case the Reference Rate is either LIBOR or EURIBOR, the arithmetic mean of the rates per annum (expressed as a percentage) as communicated to (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them, at which such banks were offered, if the Reference Rate is LIBOR, at approximately 11.00 a.m. (London time) or, if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time) on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in, if the Reference Rate is LIBOR, the London inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the case may be, or, if fewer than two of the Reference Banks provide the Calculation Agent with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which |
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would have been used for the Reference Rate, or the arithmetic mean of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at which, if the Reference Rate is LIBOR, at approximately 11.00 a.m. (London time) or, if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time), on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Trustee and the Issuer suitable for such purpose) informs the Calculation Agent it is quoting to leading banks in, if the Reference Rate is LIBOR, the London inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the case may be; (2) in case the Reference Rate is AUD-BBR- BBSW, the rate shall then be determined by the Calculation Agent having regard to the comparable indices then available; (3) in case the Reference Rate is EUR-ISDA-EURIBOR Swap Rate-11:00, the rate shall be the arithmetic mean of the mid-market annual swap rate quotations provided by the principal office of each of the Reference Banks, eliminating the highest quotation (or, in the event of equality, on of the highest) and the lowest quotation (or, in the event of equality, one of the lowest); (4) in case the Reference Rate is CAD-BA-CDOR, the arithmetic mean of the bid rates as communicated to (and at the request of) the Calculation Agent by Schedule I chartered banks in Toronto, for Canadian Dollar bankers acceptances for a period of the applicable Interest Period in an amount representative for a single transaction in the relevant market at the relevant time accepted by those banks as of 10:00 a.m. Toronto time; and (5) in the case of HKD-HIBOR-HIBOR, the arithmetic mean of the quotations as communicated to (and at the request of) the Calculation Agent by major banks in Hong Kong, for loans in Hong Kong Dollars to leading European banks for a period of the applicable maturity as at approximately 11:00 a.m. Hong Kong time, provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual Period, in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding Interest Accrual Period)
(iv) |
If the Reference Rate from time to time in respect of Floating Rate Instruments is specified in the applicable Final Terms as being BBSW, the Rate of Interest in respect of such Instruments for the relevant Interest Period shall be the average mid rate for Bills (having the meaning that term has in the Bills of Exchange Act 1909 of Australia) having a tenor closest to the relevant Interest Period displayed on the BBSW page of the Reuters Monitor System on the first day of that Interest Period, plus or minus (as indicated in the |
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applicable Final Terms) the Margin (if any), all as determined by the Calculation Agent. However, if the average mid rate is not displayed by 10:30 am on that day, or if it is displayed but the Calculation Agent determines that there is an obvious error in that rate, the Rate of Interest in respect of such Instruments for the relevant Interest Period shall be determined by the Calculation Agent in good faith at approximately 10:30 am on that day, having regard, to the extent possible, to the mid rate of the rates otherwise bid and offered for bank accepted Bills of that tenor at or around that time
3.2 .4 |
Rate of Interest for Index Linked Interest Instruments |
The Rate of Interest in respect of Index Linked Interest Instruments for each Interest Accrual Period shall be determined in the manner specified in the relevant Final Terms and interest will accrue accordingly.
(a) |
Zero Coupon Instruments |
Where an Instrument, the Interest Basis of which is specified to be Zero Coupon, is repayable prior to the Maturity Date and is not paid when due, the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount of such Instrument. As from the Maturity Date, the Rate of Interest for any overdue principal of such an Instrument shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as defined in Condition 5.4.1(b)).
(b) |
Accrual of Interest |
Interest shall cease to accrue on each Instrument on the due date for redemption unless, upon due presentation, payment is improperly withheld or refused, in which event interest shall continue to accrue (as well after as before judgment) at the Rate of Interest in the manner provided in this Condition 3 to the Relevant Date (as defined in Condition 7).
(c) |
Margin, Maximum/Minimum Rates of Interest, Redemption Amounts and Rounding |
(i) |
If any Margin is specified in the relevant Final Terms (either (x) generally, or (y) in relation to one or more Interest Accrual Periods), an adjustment shall be made to all Rates of Interest, in the case of (x), or the Rates of Interest for the specified Interest Accrual Periods, in the case of (y), calculated in accordance with Condition 3.2.3(b) above, by adding (if a positive number) or subtracting (if a negative number) the absolute value of such Margin, subject always to the next paragraph. |
(ii) |
If any Maximum or Minimum Rate of Interest or Redemption Amount is specified in the relevant Final Terms, then any Rate of Interest or Redemption Amount shall be subject to such maximum or minimum, as the case may be. |
(iii) |
For the purposes of any calculations required pursuant to these Conditions (unless otherwise specified), (x) all percentages resulting from such calculations shall be rounded, if necessary, to the nearest |
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one hundred thousandth of a percentage point (with halves being rounded up), (y) all figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with halves being rounded up), save in the case of yen, which shall be rounded down to the nearest yen. For these purposes unit means the lowest amount of such currency which is available as legal tender in the country of such currency. |
(d) |
Calculations |
The amount of interest payable per Calculation Amount in respect of any Instrument for any Interest Accrual Period shall be equal to the product of the Rate of Interest, the Calculation Amount as specified in the relevant Final Terms, and the Day Count Fraction for such Interest Accrual Period, unless an Interest Amount (or a formula for its calculation) is applicable to such Interest Accrual Period, in which case the amount of interest payable per Calculation Amount in respect of such Instrument for such Interest Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for which interest is required to be calculated, the provisions above shall apply save that the Day Count Fraction shall be for the period for which interest is required to be calculated.
(e) |
Determination and Publication of Rates of Interest, Interest Amounts, Final Redemption Amounts, Early Redemption Amounts and Optional Redemption Amounts |
The Calculation Agent shall as soon as practicable on each Interest Determination Date or such other time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain any quotation or make any determination or calculation, determine such rate and calculate the Interest Amounts for the relevant Interest Accrual Period, calculate the Redemption Amount, obtain such quote or make such determination or calculation, as the case may be, and cause the Rate of Interest and the Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date and, if required to be calculated, the Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount to be notified to the Trustee, the Issuer, each of the Paying Agents, the Instrumentholders, any other Calculation Agent appointed in respect of the Instruments that is to make a further calculation upon receipt of such information and, if the Instruments are listed on a stock exchange and the rules of such exchange so require, such exchange as soon as possible after their determination but in no event later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification to such exchange of a Rate of Interest and interest Amount, or (ii) in ail other cases, the fourth Business Day after such determination.
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Where any interest Payment Date or Interest Period Date is subject to adjustment pursuant to Condition 3.2.3(b)(ii), the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or shortening of the Interest Period, if the Instruments become due and payable under Condition 9, the accrued interest and the Rate of Interest payable in respect of the Instruments shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest or the Interest Amount so calculated need be made unless the Trustee otherwise requires. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties.
(f) |
Determination or Calculation by Trustee |
If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Accrual Period or any Interest Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount the Trustee shall do so (or shall appoint an agent on its behalf to do so) and such determination or cafcuiation shall be deemed to have been made by the Calculation Agent. In doing so, the Trustee shall apply the preceding provisions of this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances.
3.2.5 |
Definitions |
In these Conditions, unless the context otherwise requires, the following defined terms shall have the meanings set out below:
Business Day means:
(a) |
in the case of a currency other than Euro, a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such currency (which in the case of: (i) Canadian dollars is Toronto except when the Reference Rate is LIBOR, then the financial centres are London and Toronto; and (ii) in the case of Australian dollars is Sydney); and/or |
(b) |
in the case of Euro, a day on which the TARGET System is operating (a TARGET Business Day ); and/or |
(c) |
in the case of a currency and/or one or more Business Centres as specified in the relevant Final Terms, a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency or, if no currency is indicated, generally in each of the Business Centres. |
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Day Count Fraction means, in respect of the calculation of an amount of interest on any Instrument for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period or Interest Accrual Period, the Calculation Period ):
(a) |
if Actual/Actual or Actual/Actual-ISDA is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 365 (or, if any portion of that Calculation Period falls in a leap year, the sum of (i) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); |
(b) |
if Actual/365 (Fixed) is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 365; |
(c) |
if Actual/360 is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 360; |
(d) |
if 30/360 , 360/360 or Bond Basis is specified in the relevant Final Terms, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: |
where:
Yi is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y z is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
M/ 1 is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
M 2 is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
Di is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D., will be 30; and
D 2 is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D, is greater than 29, in which case D 2 will be 30;
(e) |
if 30E/360 or Eurobond Basis is specified in the relevant Final Terms, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: |
where:
Yi is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y2 is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
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M-, is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
W is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
D, is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case Di will be 30; and
D2 is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30;
(f) |
if 30E/360 (ISDA) is specified in the relevant Final Terms, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows: |
where:
Yi is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y2 is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
Mi is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
M2 is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
Di is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D, will be 30; and
D2 is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30;
(g) |
if Actual/Actual-ICMA is specified in the relevant Final Terms: |
(i) |
if the Calculation Period is equal to or shorter than the Determination Period during which it falls, the actual number of days in the Calculation Period divided by the product of (x) the actual number of days in such Determination Period and (y) the number of Determination Periods in any year; and |
(ii) |
if the Calculation Period is longer than one Determination Period, the sum of: |
(1) |
the actual number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (a) the actual number of days in such Determination Period and (b) the number of Determination Periods in any year; and |
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(2) |
the actual number of days in such Calculation Period falling in the next Determination Period divided by the product of (a) the actual number of days in such Determination Period and (b) the number of Determination Periods in any year, |
where:
Determination Period means the period from and including a Determination Date in any year to but excluding the next Determination Date; and
Determination Date means the date specified as such in the relevant Final Terms or, if none is so specified, the Interest Payment Date and
(h) |
if RBA Bond Basis or Australian Bond Basis is specified in the relevant Final Terms, one divided by the number of Interest Payment Dates in each 12 month period or, where the relevant period does not constitute an Interest Period, the product of: |
(i) |
one divided by the number of Interest Payment Dates in each 12 month period; and |
(ii) |
the number of days in the relevant period divided by the actual number of days in the Interest Period ending on the next Interest Payment Date. |
(i) |
if Actual/Actual Canadian Compound Method is specified in the applicable Final Terms, whenever it is necessary to compute any amount of accrued interest in respect of the Instruments for a period of less than one full year, other than in respect of any regular semi-annual interest payments, such interest will be calculated on the basis of the actual number of days in the Calculation Period and a year of 365 days. |
Euro-zone means the region comprising of member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community as amended.
interest Accrual Period means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period Date and each successive period beginning on (and including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date.
Interest Amount means:
(i) |
in respect of an Interest Accrual Period, the amount of interest payable per Calculation Amount for that interest Accrual Period and which, in the case of Fixed Rate Instruments, and unless otherwise specified in the relevant Final Terms, shall mean the Fixed Coupon Amount or Broken Amount specified in the relevant Final Terms as being payable on the Interest Payment Date ending the Interest Period of which such Interest Accrual Period forms part; and |
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(ii) |
in respect of any other period, the amount of interest payable per Calculation Amount for that period. |
Interest Commencement Date means the Issue Date or such other date as may be specified in the relevant Final Terms.
Interest Determination Date means, with respect to a Rate of Interest and Interest Accrual Period, the date specified as such in the relevant Final Terms or, if none is so specified, (a) the first day of such Interest Accrual Period if the Specified Currency is Sterling or (b) the day falling two Business Days in London prior to the first day of such Interest Accrual Period if the Specified Currency is neither Sterling nor Euro or (c) the day falling two TARGET Business Days prior to the first day of such Interest Accrual Period if the Specified Currency is Euro.
Interest Payment Date means the date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms, as the same may be adjusted in accordance with the relevant Business Day Convention.
Interest Period means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date.
Interest Period Date means each Interest Payment Date unless otherwise specified in the relevant Final Terms.
ISDA Definitions means the 2006 ISDA Definitions as published by the International Swaps and Derivatives Association, inc., as may be supplemented or amended from time to time.
Rate of Interest means the rate of interest payable from time to time in respect of this Instrument and that is either specified on, or calculated in accordance with the provisions of, the relevant Final Terms.
Redemption Amount means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of the relevant Final Terms.
Reference Banks means, in the case of a determination of LIBOR, the principal London office of four major banks in the London inter-bank market, in the case of a determination of EURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bank market, in each case selected by the Calculation Agent or as specified in the relevant Final Terms, in the case of AUD-BBR-BBSW, the financial institutions authorised to quote on the Reuters Screen BBSW Page, in the case of CAD-BA-CDOR, four major Canadian Schedule I chartered banks, in the case of HKD- HIBOR-HIBOR=, four major banks in the Hong Kong interbank market and in the case of EUR-ISDA-EURIBOR Swap Rate-11:00, five leading swap dealers in the interbank market.
Reference Rate means the rate specified as such in the relevant Final Terms.
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Relevant Screen Page means such page, section, caption, column or other part of a particular information service as may be specified in the relevant Final Terms.
Specified Currency means the currency specified as such in the relevant Final Terms or, if none is specified, the currency in which the Instruments are denominated.
TARGET System means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor to it.
3.2.6 |
Calculation Agent |
The Issuer shall procure that there shall at ail times be one or more Calculation Agents if provision is made for them in the relevant Final Terms and for so long as any Instrument is outstanding. Where more than one Calculation Agent is appointed in respect of the Instruments, references in these Conditions to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under these Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent falls duly to establish the Rate of Interest for an Interest Period or Interest Accrual Period or to calculate any Interest Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be, or to comply with any other requirement, the Issuer shall (with the prior approval of the Trustee) appoint a leading bank or investment banking firm engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) which is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as specified in this paragraph.
4 |
Indexation |
This Condition 4 is applicable only if the relevant Final Terms specifies the Instruments as Index Linked instruments.
4.1 |
U.K. Retail Prices Index (RPI) |
Where RPI (as defined below) is specified as the Index or Index Figure (each as defined below) in the relevant Final Terms, Conditions 4.1 to 4.6 will apply. For purposes of Conditions 4.1 to 4.6, unless the context otherwise requires, the following defined terms shall have the meanings set out below:
Base index Figure means (subject to Condition 4.3(i)) the base index figure as specified in the relevant Final Terms;
Her Majestys Treasury means Her Majestys Treasury or any officially recognised party performing the function of a calculation agent (whatever such partys title), on its or its successors behalf, in respect of the Reference Gilt;
index or index Figure means, subject as provided In Condition 4.3(i), the U.K. Retail Prices Index (for all items) published by the Office for National Statistics (January 1987 = 100) or any comparable index which may replace the U.K. Retail Prices Index for the
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purpose of calculating the amount payable on repayment of the Reference Gilt (the RPI). Any reference to the index Figure which is specified in the relevant Final Terms as:
(i) |
applicable to a particular month, shall, subject as provided in Conditions 4.3 and 4.5, be construed as a reference to the Index Figure published in the seventh month prior to that particular month and relating to the month before that of publication; or |
(ii) |
applicable to the first calendar day of any month shall, subject as provided in Conditions 4.3 and 4.5, be construed as a reference to the Index Figure published in the second month prior to that particular month and relating to the month before that of publication; or |
(iii) |
applicable to any other day In any month shall, subject as provided in Conditions 4.3 and 4.5, be calculated by linear interpolation between (x) the Index Figure applicable to the first calendar day of the month in which the day falls, calculated as specified in sub-paragraph (ii) above and (y) the Index Figure applicable to the first calendar day of the month following, calculated as specified in sub-paragraph (ii) above and rounded to the nearest fifth decimal place. |
Index Ratio applicable to any month or date, as the case may be, means the Index Figure applicable to such month or date, as the case may be, divided by the Base Index Figure and rounded to the nearest fifth decimal place;
Limited index Ratio means (a) in respect of any month or date, as the case may be, prior to the relevant Issue Date, the Index Ratio for that month or date, as the case may be, (b) in respect of any Limited Indexation Date after the relevant issue Date, the product of the Limited Indexation Factor for that month or date, as the case may be, and the Limited Index Ratio as previously calculated in respect of the month or date, as the case may be, twelve months prior thereto; and (c) in respect of any other month, the Limited Index Ratio as previously calculated in respect of the most recent Limited Indexation Month;
Limited Indexation Date means any date falling during the period specified in the relevant Final Terms for which a Limited Indexation Factor is to be calculated;
Limited Indexation Factor means, in respect of a Limited Indexation Month or Limited Indexation Date, as the case may be, the ratio of the Index Figure applicable to that month or date, as the case may be, divided by the Index Figure applicable to the month or date, as the case may be, twelve months prior thereto, provided that (a) if such ratio is greater than the Maximum Indexation Factor specified in the relevant Final Terms, it shall be deemed to be equal to such Maximum Indexation Factor and (b) if such ratio is less than the Minimum Indexation Factor specified in the relevant Final Terms, it shall be deemed to be equal to such Minimum Indexation Factor;
Limited Indexation Month means any month specified in the relevant Final Terms for which a Limited Indexation Factor is to be calculated;
Limited Index Linked instruments means Index Linked Instruments to which a Maximum indexation Factor and/or a Minimum Indexation Factor (as specified in the relevant Final Terms) applies; and
Reference Gilt means the index-linked Treasury Stock/Treasury Gilt specified as such in the relevant Final Terms for so long as such gilt is in issue, and thereafter such issue of index-linked Treasury Stock/Treasury Gilt determined to be appropriate by a gilt-edged market maker or other adviser selected by the Issuer (an indexation Adviser).
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4.2 |
Application of the Index Ratio |
Each payment of interest and principal in respect of the Instruments shall be the amount provided in, or determined in accordance with, these Conditions, multiplied by the index Ratio or Limited Index Ratio in the case of Limited Index Linked Instruments applicable to the month or date, as the case may be, on which such payment falls to be made and rounded in accordance with Condition 3.2.4(c).
4.3 |
Changes in Circumstances Affecting the Index |
(i) |
Change in base: If at any time and from time to time the index is changed by the substitution of a new base therefor, then with effect from the month from and including that in which such substitution takes effect or the first date from and including that on which such substitution takes effect, as the case may be, (1) the definition of Index and Index Figure in Condition 4,1 shall be deemed to refer to the new date or month in substitution for January 1987 (or, as the case may be, to such other date or month as may have been substituted therefor), and (2) the new Base Index Figure shall be the product of the existing Base Index Figure and the Index Figure for the date on which such substitution takes effect, divided by the Index Figure for the date immediately preceding the date on which such substitution takes effect. |
(ii) |
Delay in publication of Index if sub-paragraph (i) of the definition of Index Figure is applicable: If the Index Figure which is normally published in the seventh month and which relates to the eighth month (the relevant month ) before the month in which a payment is due to be made is not published on or before the fourteenth business day before the date on which such payment is due (the date for payment ), the Index Figure applicable to the month in which the date for payment falls shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on the advice of the Indexation Adviser) to have been published by the United Kingdom Debt Management Office or the Bank of England, as the case may be, for the purposes of indexation of payments on the Reference Gilt or, failing such publication, on any one or more issues of index-linked Treasury Stock selected by an Indexation Adviser (and approved by the Trustee (acting solely on the advice of the Indexation Adviser)) or (2) if no such determination is made by such Indexation Adviser within seven days, the Index Figure last published (or, if later, the substitute index figure last determined pursuant to Condition 4.3(i)) before the date for payment. |
(iii) |
Delay in publication of Index if sub-paragraph (ii) and/or (iii) of the definition of Index Figure is applicable; If the Index Figure relating to any month (the calculation month ) which is required to be taken into account for the purposes of the determination of the Index Figure for any date is not published on or before the fourteenth business day before the date on which such payment is due (the date for payment ), the Index Figure applicable for the relevant calculation month shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on the advice of the Indexation Adviser) to have been published by the United Kingdom Debt Management Office or the Bank of England, as the case may be, for the purposes of indexation of payments on the Reference Gilt or, falling such |
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publication, on any one or more issues of index-linked Treasury Stock selected by an Indexation Adviser (and approved by the Trustee (acting solely on the advice of the Indexation Adviser)) or (2) if no such determination is made by such Indexation Adviser within seven days, the index Figure last published (or, if later, the substitute index figure last determined pursuant to Condition 4.3(i)) before the date for payment.
4.4 |
Application of Changes |
Where the provisions of Condition 4.3(ii) or Condition 4.3(iii) apply, the determination of the Indexation Adviser as to the Index Figure applicable to the month in which the date for payment falls or the date for payment, as the case may be, shall be conclusive and binding. If, an Index Figure having been applied pursuant to Condition 4.3(ii)(2) or Condition 4.3(iii)(2), the Index Figure relating to the relevant month or relevant calculation month, as the case may be, is subsequently published while an Instrument is still outstanding, then:
(i) |
in relation to a payment of principal or interest in respect of such Instrument other than upon final redemption of such Instrument, the principal or interest (as the case may be) next payable after the date of such subsequent publication shall be increased or reduced, as the case may be, by an amount equal to the shortfall or excess, as the case may be, of the amount of the relevant payment made on the basis of the Index Figure applicable by virtue of Condition 4.3(ii)(2) or Condition 4.3(iii)(2) below or above the amount of the relevant payment that would have been due if the Index Figure subsequently published had been published on or before the fourteenth business day before the date for payment; and |
(ii) |
in relation to a payment of principal or interest upon final redemption, no subsequent adjustment to amounts paid will be made. |
4.5 |
Material Changes to or Cessation of the Index |
(i) |
Material changes to the Index: If notice is published by Her Majestys Treasury, or on its behalf, following a change to the coverage or the basic calculation of the Index, then the Calculation Agent shall make any such adjustments to the Index consistent with any adjustments made to the index as applied to the Reference Gilt. |
(ii) |
Cessation of the Index: If (1) the Trustee has been notified by the Calculation Agent that the Index has ceased to be published or (2) if Her Majestys Treasury, or a person acting on its behalf, announces that it will no longer continue to publish the Index, then the Calculation Agent shall determine a successor index in lieu of any previously applicable index (the Successor index ) by using the following methodology: |
(a) |
if at any time a successor index has been designated by Her Majestys Treasury in respect of the Reference Gilt, such successor index shall be designated the Successor Index for the purposes of all subsequent Interest Payment Dates notwithstanding that any other Successor Index may previously have been determined under paragraphs (b) or (c) below; or |
(b) |
If a Successor Index has not been determined under paragraph (a) above, the Issuer and the Trustee (acting solely on the advice of the Indexation Adviser) |
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together shall seek to agree for the purpose of the Instruments one or more adjustments to the Index or a substitute index (with or without adjustments) with the intention that the same should leave the Issuer and the Instrumentholders in no better and no worse position than they would have been had the Index not ceased to be published; or |
(c) |
if the Issuer and the Trustee (acting solely on the advice of the Indexation Adviser) fail to reach agreement as mentioned above within 20 business days following the giving of notice as mentioned in paragraph (i), a bank or other person in London shall be appointed by the Issuer and the Trustee or, failing agreement on and the making of such appointment within 20 business days following the expiry of the 20 day period referred to above, by the Trustee (acting solely on the advice of the Indexation Adviser) (in each case, such bank or other person so appointed being referred to as the Expert), to determine for the purpose of the Instruments one or more adjustments to the Index or a substitute index (with or without adjustments) with the intention that the same should leave the Issuer and the Instrumentholders in no better and no worse position than they would have been had the Index not ceased to be published. Any Expert so appointed shall act as an expert and not as an arbitrator and all fees, costs and expenses of the Expert and of any Indexation Adviser and of any of the Issuer and the Trustee in connection with such appointment shall be borne by the Issuer. |
(iii) |
Adjustment or replacement: The Index shall be adjusted or replaced by a substitute index pursuant to the foregoing paragraphs, as the case may be, and references in these Conditions to the Index and to any Index Figure shall be deemed amended in such manner as the Trustee (acting solely on the advice of the Indexation Adviser) and the Issuer agree are appropriate to give effect to such adjustment or replacement. Such amendments shall be effective from the date of such notification and binding upon the Issuer, the Trustee and the Instrumentholders, and the Issuer shall give notice to the Instrumentholders in accordance with Condition 14 of such amendments as promptly as practicable following such notification or adjustment. |
4.6 |
Redemption for Index Reasons |
If either (i) the Index Figure for three consecutive months is required to be determined on the basis of an Index Figure previously published as provided in Condition 4.3(ii)(2) and the Trustee has been notified by the Calculation Agent that publication of the Index has ceased or (ii) notice is published by Her Majestys Treasury, or on its behalf, following a change in relation to the Index, offering a right of redemption to the holders of the Reference Gilt, and (in either case) no amendment or substitution of the Index shall have been designated by Her Majestys Treasury in respect of the Reference Gilt to the Issuer and such circumstances are continuing, the Issuer may, upon giving not more than 60 nor less than 30 days notice to the Instrumentholders (or such other notice period as may be specified in the relevant Final Terms) in accordance with Condition 14, redeem all, but not some only, of the Instruments at their principal amount together with interest accrued but unpaid up to and including the date of redemption (in each case adjusted in accordance with Condition 4.2).
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4.7 |
HICP |
Where HICP (as defined below) is specified as the Index or Index Level (each as defined below) in the relevant Final Terms, the Conditions 4.7 to 4.10 will apply. For purposes of Conditions 4.7 to 4.10, unless the context otherwise requires, the following defined terms shall have the meanings set out below:
Base Index Level means the base index level as specified in the relevant Final Terms;
Index or Index Level means (subject as provided in Condition 4.9) the non-revised Harmonised Index of Consumer Prices excluding tobacco or relevant Successor Index (as defined in Condition 4.9 (i)), measuring the rate of inflation in the European Monetary Union excluding tobacco, expressed as an index and published by Eurostat (the HICP). The first publication or announcement of a level of such index for a calculation month (as defined in Condition 4.9 (i)) shall be final and conclusive and later revisions to the level for such calculation month will not be used in any calculations. Any reference to the Index Level which is specified in these Conditions as applicable to any day (d) in any month (m) shall, subject as provided in Condition 4.9, be calculated as follows:
where:
I d is the Index Level for the day d
HICP m-2 is the level of HICP for month m-2
HICP m-3 is the level of HICP for month m-3
nbd is the actual number of days from and excluding the first day of month m to but including day d; and
q m is the actual number of days in month m,
provided that if Condition 4.9 applies, the Index Level shall be the Substitute Index Level determined in accordance with such Condition.
Index Business Day means a day on which the TARGET System is operating;
Index Determination Date means in respect of any date for which the index Level is required to be determined, the fifth Index Business Day prior to such date;
Index Ratio applicable to any date means the Index Level applicable to the relevant index Determination Date divided by the Base index Level and rounded to the nearest fifth decimal place, 0.000005 being rounded upwards;
Related Instrument means an inflation-linked bond selected by the Calculation Agent that is a debt obligation of one of the governments (but not any government agency) of France, Italy, Germany or Spain and which pays a coupon or redemption amount which is calculated by reference to the level of inflation in the European Monetary Union with a maturity date which falls on (a) the same day as the Maturity Date, (b) the next longest maturity date after the Maturity Date if there is no such bond maturing on the Maturity Date, or (c) the next shortest maturity before the Maturity Date if no bond defined in (a) or (b) is selected by the Calculation Agent. The Calculation Agent will select the Related Instrument from such of those inflation-linked bonds issued on or before the relevant Issue Date and, if there is more than one such inflation-linked bond maturing on the same date, the Related Instrument shall be selected by the Calculation Agent from such of those bonds. If the Related Instrument is redeemed the Calculation Agent will select a new Related Instrument on the same basis, but selected from all eligible bonds in issue at the time the originally selected Related Instrument is redeemed (including any bond for which the redeemed originally selected Related Instrument is exchanged).
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4.8 |
Application of the Index Ratio |
Each payment of interest and principal in respect of the Instruments shall be the amount provided in, or determined in accordance with, these Conditions, multiplied by the Index Ratio applicable to the date on which such payment falls to be made and rounded in accordance with Condition 3.2.4(c).
4.9 |
C hanges in Circumstances Affecting the Index |
(i) |
Delay in publication of Index |
(a) |
If the Index Level relating to any month (the calculation month ) which is required to be taken into account for the purposes of the determination of the Index Level for any date (the Relevant Level ) has not been published or announced by the day that is five Business Days before the date on which such payment is due (the Affected Payment Date ), the Calculation Agent shall determine a Substitute Index Level (as defined below) (in place of such Relevant Level) by using the following methodology: |
(1) |
if applicable, the Calculation Agent will take the same action to determine the Substitute Index Level for the Affected Payment Date as that taken by the calculation agent (or any other party performing the function of a calculation agent (whatever such partys title)) pursuant to the terms and conditions of the Related Instrument; |
(2) |
if (1) above does not result in a Substitute index Level for the Affected Payment Date for any reason, then the Calculation Agent shall determine the Substitute Index Level as follows: |
Substitute Index Level = Base Level x (Latest Level / Reference Level)
Where:
Base Level means the level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) in respect of the month which is 12 calendar months prior to the month for which the Substitute Index Level is being determined;
Latest Level means the latest level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) prior to the month in respect of which the Substitute Index Level is being calculated; and
Reference Level means the level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) in respect of the month that is 12 calendar months prior to the month referred to in Latest Level above.
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(b) |
If a Relevant Level is published or announced at any time after the day that is five Business Days prior to the next Interest Payment Date, such Relevant Level will not be used in any calculations. The Substitute Index Level so determined pursuant to this Condition 4.9(i) will be the definitive level for that calculation month. |
(ii) |
Cessation of publication: If the Index Level has not been published or announced for two consecutive months or Eurostat announces that it will no longer continue to publish or announce the Index then the Calculation Agent shall determine a successor index in lieu of any previously applicable Index (the Successor Index ) by using the following methodology: |
(a) |
if at any time (other than after an Early Termination Event (as defined below) has been designated by the Calculation Agent pursuant to paragraph (e) below) a successor index has been designated by the calculation agent (or any other party performing the function of a calculation agent (whatever such partys title)) pursuant to the terms and conditions of the Related Instrument, such successor index shall be designated the Successor index for the purposes of all subsequent Interest Payment Dates, notwithstanding that any other Successor Index may previously have been determined under paragraphs (b), (c) or (d) below; or |
(b) |
if a Successor index has not been determined under paragraph (a) above (and there has been no designation of an Early Termination Event pursuant to paragraph (e) below), and a notice has been given or an announcement has been made by Eurostat (or any successor entity which publishes such index) specifying that the Index will be superseded by a replacement index specified by Eurostat (or any such successor), and the Calculation Agent determines that such replacement index is calculated using the same or substantially similar formula or method of calculation as used in the calculation of the previously applicable Index, such replacement index shall be the Index from the date that such replacement index comes into effect; or |
(c) |
if a Successor Index has not been determined under paragraphs (a) or (b) above (and there has been no designation of an Early Termination Event pursuant to paragraph (e) below), the Calculation Agent shall ask five leading independent dealers to state what the replacement index for the Index should be, If between four and five responses are received, and of those four or five responses, three or more leading independent dealers state the same index, this index will be deemed the Successor Index. If three responses are received, and two or more leading independent dealers state the same index, this index will be deemed the Successor Index. If fewer than three responses are received, the Calculation Agent will proceed to paragraph (d) below; |
(d) |
if no Successor Index has been determined under paragraphs (a), (b) or (c) above on or before the fifth Index Business Day prior to the next Affected Payment Date the Calculation Agent will determine an appropriate alternative index for such Affected Payment Date, and such index will be deemed the Successor Index; |
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(e) |
if the Calculation Agent determines that there is no appropriate alternative index, the Issuer and the Instrumentholders shall, in conjunction with the Calculation Agent, determine an appropriate alternative index. If the Issuer and the Instrumentholders, in conjunction with the Calculation Agent, do not reach agreement on an appropriate alternative index within a period of ten Business Days, then an Early Termination Event will be deemed to have occurred and the Issuer will redeem the Instruments pursuant to Condition 4,10. |
(iii) |
Rebasing of the Index: If the Calculation Agent determines that the Index has been or will be rebased at any time, the Index as so rebased (the Rebased Index ) will be used for the purposes of determining each relevant Index Level from the date of such rebasing; provided, however, that the Calculation Agent shall make such adjustments as are made by the calculation agent (or any other party performing the function of a calculation agent (whatever such partys title)) pursuant to the terms and conditions of the Related Instrument to the levels of the Rebased index so that the Rebased Index levels reflect the same rate of inflation as the Index before it was rebased. Any such rebasing shall not affect any prior payments made. |
(iv) |
Material Modification Prior to Interest Payment Date: If, on or prior to the day that is five Business Days before an Interest Payment Date, Eurostat announces that it will make a material change to the Index then the Calculation Agent shall make any such adjustments to the Index consistent with adjustments made to the Related Instrument. |
(v) |
Manifest Error in Publication: if, within thirty days of publication, the Calculation Agent determines that Eurostat (or any successor entity which publishes such index) has corrected the level of the Index to remedy a manifest error in its original publication, the Calculation Agent will notify the parties of (A) that correction, (B) the amount that is payable as a result of that correction and (C) take such other action as it may deem necessary to give effect to such correction. |
4.10 |
Redemption for Index Reasons |
If an Early Termination Event as described under Condition 4.9(ii)(e) is deemed to have occurred, the Issuer will, upon giving not more than 60 nor less than 30 days notice to the Instrumentholders (or such other notice period as may be specified in the relevant Final Terms) in accordance with Condition 14, redeem ail, but not some only, of the Instruments at their principal amount together with interest accrued but unpaid up to and including the date of redemption {in each case adjusted in accordance with Condition 4.8).
5 |
Redemption, Purchase and Options |
5.1 |
Final Redemption |
Unless previously redeemed, purchased and cancelled as provided below, this Instrument will be redeemed at its Final Redemption Amount (which, unless otherwise provided, is its nominal amount) on the Maturity Date specified in the relevant Final Terms provided, however, that if this Instrument is a Perpetual Instrument it will only be redeemable and repayable in accordance with the following provisions of this Condition 5.
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5.2 |
Redemption for Taxation Reasons |
If, on the occasion of the next payment in respect of the Instruments the Issuer satisfies the Trustee immediately before the giving of the notice referred to below that it would be unable to make such payment without having to pay additional amounts as described in Condition 7, and such requirement to pay such additional amounts arises by reason of a change in the laws of the United Kingdom or any political sub-division of the United Kingdom or taxing authority in the United Kingdom or any political sub-division of the United Kingdom or in the interpretation or application of the laws of the United Kingdom or any political sub-division of the United Kingdom or in any applicable double taxation treaty or convention, which change becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Instruments, and such requirement cannot be avoided by the Issuer taking reasonable measures (such measures not involving any material additional payments by, or expense for, the Issuer), the Issuer may, at its option, at any time, having given not less than 30 nor more than 45 days notice to the Instrumentholders (or such other notice period as may be specified in the relevant Final Terms) in accordance with Condition 14, redeem all, but not some only, of the Instruments at their Early Redemption Amount together with interest accrued to the date of redemption provided that the date fixed for redemption shall not be earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts or make such withholding or deduction, as the case may be, were a payment in respect of the Instruments then due. Prior to the publication of any notice of redemption pursuant to this Condition 5.2, the Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer stating that the requirement referred to above cannot be avoided by the Issuer taking reasonable measures available to it and the Trustee shall be entitled to accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out above in which event it shall be conclusive and binding on Instrumentholders and Couponholders.
5.3 |
Purchases |
The Issuer and any of its subsidiary undertakings may at any time purchase Instruments {provided that all unmatured Coupons and unexchanged Talons appertaining to them are attached or surrendered with them) in the open market or otherwise at any price.
5.4 |
Early Redemption |
5.4.1 |
Zero Coupon Instruments |
(a) |
The Early Redemption Amount payable in respect of any Zero Coupon Instrument, the Early Redemption Amount of which is not linked to an index and/or a formula, upon redemption of such Instrument pursuant to Condition 5.2 or upon it becoming due and payable as provided in Condition 9 shall be the Amortised Face Amount (calculated as provided below) of such Instrument unless otherwise specified in the relevant Final Terms. |
(b) |
Subject to the provisions of sub-paragraph (c) below, the Amortised Face Amount of any such Instrument shall be the scheduled Final Redemption Amount of such Instrument on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which, if none is specified in the relevant Final Terms, shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Instruments if they were discounted back to their issue price on the Issue Date) compounded annually. |
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(c) |
If the Early Redemption Amount payable in respect of any such Instrument upon its redemption pursuant to Condition 5.2 or, if applicable, Condition 5,5 or 5.6 or upon it becoming due and payable as provided in Condition 9, is not paid when due, the Early Redemption Amount due and payable in respect of such Instrument shall be the Amortised Face Amount of such Instrument as defined in sub-paragraph (b) above, except that such sub-paragraph shall have effect as though the reference in that sub-paragraph to the date on which the Instrument becomes due and payable was replaced by a reference to the Relevant Date as defined in Condition 7. The calculation of the Amortised Face Amount in accordance with this sub-paragraph shall continue to be made (both before and after judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in which case the amount due and payable shall be the scheduled Final Redemption Amount of such Instrument on the Maturity Date together with any interest that may accrue in accordance with Condition 3.2. |
Where such calculation is to be made for a period of less than one year, it shall be made on the basis of the Day Count Fraction specified in the relevant Final Terms.
5.4.2 |
Other Instruments |
The Early Redemption Amount payable in respect of any Instrument (other than Instruments described in Condition 5.4.1), upon redemption of such Instrument pursuant to this Condition 5.4 or upon it becoming due and payable as provided in Condition 9, shall be the Final Redemption Amount unless otherwise specified in the relevant Final Terms.
5.5 |
Redemption at the Option of the Issuer and Exercise of Issuers Options |
5.5.1 |
If (i) Residual Holding Call Option is specified In the relevant Final Terms, and (ii) if at any time the Residual Holding Percentage or more of the aggregate nominal amount of Instruments originally issued shall have been redeemed or purchased and cancelled, the Issuer shall have the option to redeem such outstanding Instruments in whole, but not in part, at their Residual Holding Redemption Amount. Unless otherwise specified in the relevant Final Terms, the Residual Holding Redemption Amount will be calculated by the Calculation Agent by discounting the outstanding nominal amount of the Instruments and the remaining interest payments (If applicable) to the Maturity Date by a rate per annum (expressed as a percentage to the nearest one hundred thousandth of a percentage point (with halves being rounded up)) equal to the Benchmark Yield, being the yield on the Benchmark Security at the close of business on the third Business Day prior to the date fixed for such redemption, plus the Benchmark Spread. Where the specified calculation is to be made for a period of less than one year, it shall be calculated using the Benchmark Day Count Fraction. The Issuer will give not less than 15 nor more than 30 days irrevocable notice to the Instrumentholders and the Trustee of any such redemption pursuant to this Condition 5.5.1. |
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5.5.2 |
If Call Option is specified in the relevant Final Terms, the Issuer may, on giving not less than 15 nor more than 30 days irrevocable notice to the Instrumentholders (or such other notice period as may be specified in the relevant Final Terms), redeem, or exercise any Issuers option In relation to, all or, if so provided, some of such Instruments on any Optional Redemption Date or Option Exercise Date, as the case may be. Any such redemption of Instruments shall be at their Optional Redemption Amount together with interest accrued to the date fixed for redemption. Any such redemption or exercise must relate to Instruments of a nominal amount at least equal to the minimum nominal amount (if any) permitted to be redeemed specified in the relevant Final Terms and no greater than the maximum nominal amount (if any) permitted to be redeemed specified In the relevant Final Terms. |
All instruments in respect of which any such notice is given shall be redeemed, or the Issuers option shall be exercised, on the date specified in such notice in accordance with this Condition.
In the case of a partial redemption or a partial exercise of an Issuers option, the notice to Instrumentholders shall also contain the serial numbers of the Instruments to be redeemed, which shall have been drawn in such place as the Trustee may approve and in such manner as it deems appropriate, subject to compliance with any applicable laws, listing authority and stock exchange requirements.
5.6 |
Redemption at the Option of Instrumentholders following a Restructuring Event |
5.6.1 |
*[Redemption of Instruments issued by National Grid at the option of Instrumentholders |
If at any time whilst any of the Instruments issued by National Grid remains outstanding, there occurs the National Grid Restructuring Event, a Public Announcement shall be made and if, within the National Grid Restructuring Period, either:
(a) |
(if at the time that the National Grid Restructuring Event occurs there are Rated Securities) a Rating Downgrade in respect of the National Grid Restructuring Event occurs; or - |
(b) |
(if at the time that the National Grid Restructuring Event occurs there are no Rated Securities) a Negative Rating Event In respect of the National Grid Restructuring Event occurs, |
(the National Grid Restructuring Event and Rating Downgrade or the National Grid Restructuring Event and Negative Rating Event, as the case may be, occurring within the National Grid Restructuring Period, together called a Put Event ),
then the holder of each Instrument issued by National Grid will have the option upon the giving of a Put Notice (as defined in Condition 5.6.4) to require National Grid to redeem or, at the option of National Grid, purchase (or procure the purchase of) such Instrument on the Put Date (as defined in Condition 5.6.4) at its principal amount together with accrued interest to the Put Date.
Promptly upon National Grid becoming aware that a Put Event has occurred, National Grid shall, or at any time upon the Trustee becoming similarly so aware the Trustee may, and if so requested in writing by the holders of at least one-
* |
Only applicable where National Grid is the Issuer. |
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quarter in principal amount of the Instruments then outstanding or if so directed by an Extraordinary Resolution of the Instrumentholders, the Trustee shall, give notice (a Put Event Notice ) to the Instrumentholders in accordance with Condition 14 specifying the nature of the Put Event and the procedure (as set out in Condition 5.6.4) for exercising the option contained in this Condition 5.6.1.
National Grid shall, forthwith upon becoming aware of the occurrence of the National Grid Restructuring Event (a) provide the Trustee with the relevant Directors Report and (b) provide or procure that the Reporting Accountants provide the Trustee with the Accountants Report. The Directors Report and the Accountants Report shall, in the absence of manifest error, be conclusive and binding on all concerned, including the Trustee and the Instrumentholders. The Trustee shall be entitled to act, or not act, and rely on without being expected to verify the accuracy of the same (and shall have no liability to Instrumentholders for doing so) any Directors Report and/or any Accountants Report (whether or not addressed to it).
5.6.2 |
For the purposes of this Condition |
Accountants Report means a report of the Reporting Accountants stating whether the amounts included in the calculation of the Operating Profit and the amount for Consolidated Operating Profit as included in the Directors Report have been accurately extracted from the accounting records of National Grid and its Subsidiaries and whether the Disposal Percentage included in the Directors Report has been correctly calculated which will be prepared pursuant to an engagement letter to be entered into by the Reporting Accountants, National Grid and the Trustee.
National Grid shall use reasonable endeavours to procure that there shall at the relevant time be Reporting Accountants who have (a) entered into an engagement letter with National Grid and the Trustee which shall (i) not limit the liability of the Reporting Accountants to the Trustee by reference to a monetary cap and (ii) be available for inspection by instrumentholders at the principal office of the Trustee or (b) agreed to provide Accountants Reports on such other terms as National Grid and the Trustee shall approve. If National Grid, having used reasonable endeavours, is unable to procure that there shall at the relevant time be Reporting Accountants who have entered Into an engagement letter complying with (i) above, the Trustee may rely on an Accountants Report which contains a limit on the liability of the Reporting Accountants by reference to a monetary cap or otherwise.
Investors should be aware that the engagement letter may contain a limit on the liability of the Reporting Accountants which may impact on the interests of Instrumentholders.
National Grid shall give notice to the Trustee of the identity of the Reporting Accountants;
Consolidated Operating Profit means the consolidated operating profit on ordinary activities before tax and interest and before taking account of depreciation and amortisation of goodwill and regulatory assets (for the avoidance of doubt, exceptional items, as reflected in the Relevant Accounts shall not be included) of National Grid and its subsidiaries (including any share of operating profit of associates and joint ventures) determined in accordance with International Financial Reporting Standards ( IFRS ) by reference to the Relevant Accounts;
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Directors Report means a report prepared and signed by two directors of National Grid addressed to the Trustee setting out the Operating Profit, the Consolidated Operating Profit and the Disposal Percentage and stating any assumptions which the Directors of National Grid have employed in determining the Operating Profit;
Disposal Percentage means, in relation to a sale, transfer, lease or other disposal or dispossession of any Disposed Assets, the ratio of (a) the aggregate Operating Profit to (b) the Consolidated Operating Profit, expressed as a percentage;
Disposed Assets means, where National Grid and/or any of its Subsidiaries sells, transfers, leases or otherwise disposes of or is dispossessed by any means (but excluding sales, transfers, leases, disposals or dispossessions which, when taken together with any related lease back or similar arrangements entered into in the ordinary course of business, have the result that Operating Profit directly attributable to any such undertaking, property or assets continues to accrue to National Grid or, as the case may be, such Subsidiary), otherwise than to a wholly-owned Subsidiary of National Grid or to National Grid, of the whole or any part (whether by a single transaction or by a number of transactions whether related or not) of its undertaking or (except in the ordinary course of business of National Grid or any such Subsidiary) property or assets, the undertaking, property or assets sold, transferred, leased or otherwise disposed of or of which it is so dispossessed;
Negative Rating Event shall be deemed to have occurred if either (a) National Grid does not, either prior to or not later than 21 days after the relevant National Grid Restructuring Event, seek, and thereupon use all reasonable endeavours to obtain, a rating of the Instruments or any other unsecured and unsubordinated debt of National Grid having an initial maturity of five years or more ( Rateable Debt ) from a Rating Agency or (b) if National Grid does so seek and use such endeavours, it is unable, as a result of such National Grid Restructuring Event, to obtain such a rating of at least investment grade {BBB- or Baa3 or their respective equivalents for the time being), provided that a Negative Rating Event shall not be deemed to have occurred in respect of a particular National Grid Restructuring Event if the Rating Agency declining to assign a rating of at least investment grade (as described above) does not announce or publicly confirm that its declining to assign a rating of at least investment grade was the result, in whole or in part, of any event or circumstance comprised in or arising as a result of, or in respect of, the applicable National Grid Restructuring Event (whether or not the National Grid Restructuring Event shall have occurred at the time such investment grade rating is declined);
National Grid Restructuring Event shall be deemed to have occurred at any time (whether or not approved by the Board of Directors of National Grid) that the sum of Disposal Percentages for National Grid within any period of 36 months commencing on or after the issue date of the first Tranche of the Instruments is greater than 50 per cent.;
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National Grid Restructuring Period means the period ending 90 days after a Public Announcement (or such longer period in which the Rated Securities or Rateable Debt, as the case may be, is or are under consideration (announced publicly within the first mentioned period) for rating review or, as the case may be, rating by a Rating Agency);
Operating Profit , in relation to any Disposed Assets, means the operating profits on ordinary activities before tax and interest and before taking account of depreciation and amortisation of goodwill and regulatory assets (for the avoidance of doubt, exceptional items, as reflected In the Relevant Accounts, shall not be included) of National Grid and its Subsidiaries directly attributable to such Disposed Assets as determined in accordance with IFRS by reference to the Relevant Accounts and, if Relevant Accounts do not yet exist, determined in a manner consistent with the assumptions upon which the Directors Report is to be based. Where the Directors of National Grid have employed assumptions in determining the Operating Profit, those assumptions should be clearly stated in the Directors Report;
Public Announcement means an announcement by National Grid or the Trustee, of the occurrence of the National Grid Restructuring Event published in a leading national newspaper having general circulation in the United Kingdom (which is expected to be the Financial Times )]
Rated Securities means the Instruments, if and for so long as they shall have an effective rating from a Rating Agency and otherwise any Rateable Debt which is rated by a Rating Agency; provided that if there shall be no such Rateable Debt outstanding prior to the maturity of the Instruments, the holders of not less than one-quarter in principal amount of outstanding Instruments may require National Grid to obtain and thereafter update on an annual basis a rating of the Instruments from a Rating Agency. In addition, National Grid may at any time obtain and thereafter update on an annual basis a rating of the Instruments from a Rating Agency, provided that, except as provided above, National Grid shall not have any obligation to obtain such a rating of the Instruments;
Rating Agency means Standard & Poors Ratings Services, a division of The McGraw-Hill Companies, Inc. and its successors or Moodys Investors Service, inc. and its successors or any rating agency substituted for either of them (or any permitted substitute of them) by National Grid from time to time with the prior written approval of the Trustee;
Rating Downgrade shall be deemed to have occurred in respect of the National Grid Restructuring Event if the then current rating whether provided by a Rating Agency at the invitation of National Grid or by its own volition assigned to the Rated Securities by any Rating Agency is withdrawn or reduced from an investment grade rating (BBB- or Baa3 or their respective equivalents for the time being or better) to a non-investment grade rating (BB+ or Ba1 or their respective equivalents for the time being or worse) or, if a Rating Agency shall already have rated the Rated Securities below investment grade (as described above), the rating is lowered one full rating category; provided that a Rating Downgrade otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular National Grid Restructuring Event if the Rating Agency making the reduction in rating to which this definition would otherwise apply does not
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announce or publicly confirm that the reduction was the result, in whole or part, of any event or circumstance comprised in or arising as a result of, or in respect of, the applicable National Grid Restructuring Event (whether or not the applicable National Grid Restructuring Event shall have occurred at the time of the Rating Downgrade);
Relevant Accounts means the most recent annual audited consolidated financial accounts of National Grid and its Subsidiaries preceding the relevant sale, transfer, lease or other disposal or dispossession of any Disposed Asset;
Reporting Accountants means the auditors of National Grid (but not acting in their capacity as auditors) or such other firm of accountants as may be nominated by National Grid and approved in writing by the Trustee for the purpose or, failing which, as may be selected by the Trustee for the purpose; and
Subsidiary means a subsidiary within the meaning of Section 1159 of the Companies Act 2006 and Subsidiaries shall be construed accordingly.
5.6.3 |
The Trustee shall not be responsible for ascertaining or monitoring whether or not the National Grid Restructuring Event, a Negative Rating Event or a Rating Downgrade in relation to National Grid has occurred and, unless and until it has actual knowledge to the contrary, shall be entitled to assume that no such event has occurred. |
5.6.4 |
To exercise the option of redemption of an Instrument under Condition 5.6.1 the Instrumentholder must deliver each Instrument to be redeemed accompanied by a duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent (a Put Notice ) and, in which the Instrumentholder may specify an account to which payment is to be made under this Condition 5.6 to the specified office of any Paying Agent on any business day falling within the period (the Put Period ) of 45 days after a Put Event Notice is given. The Instrument should be delivered together with all Coupons (and Talons) appertaining thereto maturing after the date (the Put Date ) falling seven days after the expiry of the Put Period, failing which (unless Condition 6.6.1 applies) the Paying Agent will require payment of an amount equal to the face value of any such missing Coupon and/or Talon. Any amount so paid will be reimbursed in the manner provided in Condition 6 against presentation and surrender of the relevant missing Coupon and/or Talon, subject to Condition 8. The Paying Agent to which such Instrument and Put Notice are delivered will issue to the Instrumentholder concerned a non-transferable receipt in respect of the Instrument so delivered. Payment in respect of any Instrument so delivered will be made, if the Instrumentholder duly specified a bank account in the Put Notice to which payment is to be made, on the Put Date by transfer to that bank account and, in every other case, on or after the Put Date in the manner provided in Condition 6 against presentation and surrender (or, in the case of part payment, endorsement) of such receipt at the specified office of any Paying Agent. A Put Notice, once given, shall be irrevocable. For the purposes of the Conditions and the Trust Deed, receipts issued pursuant to this Condition 5.6 shall be treated as if they were Instruments. National Grid shall redeem the relevant instruments on the Put Date unless previously redeemed or purchased.] |
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5.6.5 |
*[Redemption of Instruments issued by NGET at the option of Instrumentholders |
If NGET Restructuring Put Option is specified in the relevant Final Terms and at any time whilst any of the Instruments issued by NGET remains outstanding there occurs an NGET Restructuring Event and in relation to that NGET Restructuring Event, a Negative Certification is made and, within the NGET Restructuring Period either:
(a) |
(if at the time that an NGET Restructuring Event occurs there are Rated Securities) a Rating Downgrade in respect of the relevant NGET Restructuring Event occurs; or |
(b) |
(if at the time that an NGET Restructuring Event occurs there are no Rated Securities) a Negative Rating Event in respect of the relevant NGET Restructuring Event occurs, |
(the NGET Restructuring Event and Rating Downgrade or the NGET Restructuring Event and Negative Rating Event, as the case may be, occurring within the NGET Restructuring Period, together with a Negative Certification, shall be called a Put Event ),
then the holder of each Instrument of NGET will have the option upon the giving of a Put Notice (as defined in Condition 5.6.4) to require NGET to redeem or, at the option of NGET, purchase (or procure the purchase of) such Instrument on the Put Date (as defined in Condition 5.6.4) at its principal amount together with accrued interest to the Put Date.
Promptly upon NGET becoming aware that a Put Event has occurred, and in any event no later than 14 days after the occurrence of a Put Event, NGET shall, or at any time upon the Trustee becoming similarly so aware the Trustee may, and if so requested in writing by the holders of at least one-quarter in principal amount of the Instruments then outstanding or if so directed by an Extraordinary Resolution of the Instrumentholders, the Trustee shall, give notice (a Put Event Notice) to the Instrumentholders in accordance with Condition 14 specifying the nature of the Put Event and the procedure (as set out in Condition 5.6.4) for exercising the option contained in this Condition 5.6.1.
5.6.6 |
For the purposes of this Condition |
Electricity Act means the Electricity Act 1989 as amended or re-enacted from time to time and all subordinate legislation made pursuant thereto;
Electricity Transmission Licence means the transmission licence, as subsequently amended from time to time, originally granted by the Secretary of State for Energy to NGET under the Electricity Act;
Negative Certification means, on the occurrence of an NGET Restructuring Event, such event or events being certified in writing by an independent financial adviser appointed by NGET and approved by the Trustee (or, if NGET shall not have appointed such an adviser within 21 days after becoming aware of the occurrence of such NGET Restructuring Event, appointed by the Trustee (following consultation with NGET)) as being in its opinion materially prejudicial to the interests of the Instrumentholders. Any Negative Certification by an independent
* |
Only applicable where NGET is the Issuer. |
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financial adviser as to whether or not, in its opinion, any event defined as an NGET Restructuring Event is materially prejudicial to the interests of the Instrumentholders shall, in the absence of manifest error, be conclusive and binding upon NGET, the Trustee, the Instrumentholders and the Couponholders;
Negative Rating Event shall be deemed to have occurred if NGET is unable as a result of an NGET Restructuring Event to obtain a rating of the Instruments or of any other comparable unsecured and unsubordinated debt of NGET (or of any Subsidiary of NGET and which is guaranteed on an unsecured and unsubordinated basis by NGET) having an initial maturity of five years or more ( Rateable Debt ) from a Rating Agency of at least investment grade (BBB-/Baa3, or their respective equivalents for the time being), which rating NGET shall use all reasonable endeavours to obtain, provided that a Negative Rating Event shall not be deemed to have occurred in respect of a particular NGET Restructuring Event if the Rating Agency making the relevant reduction or declining to assign a rating of at least investment grade (as described above) does not announce or publicly confirm or otherwise inform the Trustee that the reduction or its declining to assign a rating of at least investment grade was the result, in whole or in part, of any event or circumstance comprised in or arising as a result of, or in respect of, the applicable NGET Restructuring Event;
NGET Restructuring Event means the occurrence of any one or more of the following events;
(a) |
the Secretary of State for Trade and Industry or any official succeeding to his functions gives NGET written notice of revocation of the Electricity Transmission Licence in accordance with the terms as to revocation set out in Schedule 2 of the Electricity Transmission Licence, such revocation to become effective not later than the Maturity Date of the Instruments or NGET agrees in writing with the Secretary of State for Trade and Industry or any official succeeding to his functions to any revocation or surrender of the Electricity Transmission Licence or any legislation (whether primary or subordinate) is enacted terminating or revoking the Electricity Transmission Licence; or |
(b) |
any modification is made to the terms and conditions of the Electricity Transmission Licence other than such a modification which the Trustee, in its opinion, considers to be not materially prejudicial to the interests of the Instrumentholders and has so confirmed in writing to NGET; or |
(c) |
any legislation (whether primary or subordinate) is enacted removing, reducing or qualifying the duties or powers of the Secretary of State for Trade and industry or any official succeeding to his functions and/or the Gas and Electricity Markets Authority under Section 3A of the Electricity Act as compared with those in effect on the issue date of the first Tranche of the Instruments other than such legislation which the Trustee, in its opinion, considers to be not materially prejudicial to the interests of the Instrumentholders and has so confirmed in writing to NGET; |
NGET Restructuring Period means:
(a) |
if at the time at which the NGET Restructuring Event occurs there are Rated Securities, the period of 90 days starting from and including the day on which an NGET Restructuring Event occurs or such longer period in which the Rated Securities are under consideration (announced publicly within such 90 day period) for rating review by a Rating Agency; or |
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(b) |
if at the time at which an NGET Restructuring Event occurs there are no Rated Securities, the period starting from and including the day on which an NGET Restructuring Event occurs and ending on the day 90 days following the date on which a Negative Certification shall have been given to NGET in respect of that NGET Restructuring Event; |
Rated Securities means (a) the Instruments or (b) such other comparable unsecured and unsubordinated debt of NGET (or of any Subsidiary of NGET and which is guaranteed on an unsecured and unsubordinated basis by NGET) having an initial maturity of five years or more selected by NGET from time to time for the purpose of this definition with the approval of the Trustee and which possesses an investment grade rating (BBB-/Baa3, or their respective equivalents for the time being, or better) by any Rating Agency (whether at the invitation of NGET or by its own volition);
Rating Agency means Standard & Poors Ratings Services, a division of The McGraw-Hill Companies, Inc., or any of its Subsidiaries and their successors or Moodys Investors Service, Inc., or any of its Subsidiaries and their successors or any rating agency substituted for either of them (or any permitted substitute of them) by NGET from time to time with the prior written approval of the Trustee;
Rating Downgrade shall be deemed to have occurred in respect of an NGET Restructuring Event if the rating assigned to the Rated Securities by any Rating Agency which is current immediately prior to the occurrence of an NGET Restructuring Event (whether provided by a Rating Agency at the invitation of NGET or by its own volition) is withdrawn or reduced from an investment grade rating (BBB-/Baa3, or their respective equivalents for the time being, or better) to a non-investment grade rating (BB+/Ba1, or their respective equivalents for the time being, or worse) or, if the Rating Agency shall have already rated the Rated Securities below investment grade (as described above), the rating is lowered one full rating category (from BB+/Ba1 to BB/Ba2 or such similar lowering) provided that a Rating Downgrade shall not be deemed to have occurred in respect of or as a result of a particular NGET Restructuring Event if the Rating Agency making the relevant reduction in rating or declining to assign a rating of at least investment grade as provided in these Conditions does not announce or publicly confirm, or otherwise inform the Trustee, that the reduction or declining was the result, in whole or part, of any event or circumstance comprised in or arising as a result of, or in respect of, the applicable NGET Restructuring Event;
Subsidiary means a subsidiary within the meaning of Section 1159 of the Companies Act 2006 and Subsidiaries shall be construed accordingly.
5.6.7 |
The Trustee shall not be responsible for ascertaining whether or not an NGET Restructuring Event, a Negative Rating Event or a Rating Downgrade in relation to NGET has occurred and, unless and until It has actual knowledge to the contrary, shall be entitled to assume that no such event has occurred. |
5.6.8 |
To exercise the option of redemption of an Instrument under Condition 5.6,1 the Instrumentholder must deliver each Instrument to be redeemed accompanied by a |
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duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent (a Put Notice ) and, in which the Instrumentholder may specify an account to which payment is to be made under this Condition 5.6 to the specified office of any Paying Agent on any business day falling within the period (the Put Period ) of 45 days after a Put Event Notice is given. The Instrument should be delivered together with all Coupons (and Talons) appertaining thereto maturing after the date (the Put Date ) falling seven days after the expiry of the Put Period, failing which (unless Condition 6.6.1 applies) the Paying Agent will require payment of an amount equal to the face value of any such missing Coupon and/or Talon. |
Any amount so paid will be reimbursed in the manner provided in Condition 6 against presentation and surrender of the relevant missing Coupon and/or Talon, subject to Condition 8. The Paying Agent to which such Instrument and Put Notice are delivered will issue to the Instrumentholder concerned a non-transferable receipt in respect of the Instrument so delivered.
Payment in respect of any Instrument so delivered will be made, if the Instrumentholder duly specified a bank account in the Put Notice to which payment is to be made, on the Put Date by transfer to that bank account and, in every other case, on or after the Put Date in the manner provided in Condition 6 against presentation and surrender (or, in the case of part payment, endorsement) of such receipt at the specified office of any Paying Agent. A Put Notice, once given, shall be irrevocable. For the purposes of the Conditions and the Trust Deed, receipts issued pursuant to this Condition 5.6 shall be treated as if they were Instruments. NGET shall redeem the relevant Instruments on the Put Date unless previously redeemed or purchased.]
5.7 |
Redemption at the Option of Instrumentholders |
If Put Option is specified in the relevant Final Terms, the Issuer shall, at the option of any Instrumentholder, upon such Instrumentholder giving not less than 15 nor more than 30 days notice to the Issuer (or such other notice period as may be specified in the relevant Final Terms) redeem such Instrument on the Optional Redemption Date(s) (as specified in the relevant Final Terms) at its Optional Redemption Amount (as specified in the relevant Final Terms) together with interest accrued to the date fixed for redemption.
To exercise such option (which must be exercised on an Option Exercise Date) the holder must deposit such Instrument with any Paying Agent at its specified office, together with a duly completed option exercise notice ( Exercise Notice ) in the form obtainable from any Paying Agent within the Instrumentholders Option Period (as specified in the Final Terms). No Instrument so deposited and option exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer.
5.8 |
Cancellation |
All Instruments redeemed pursuant to any of the foregoing provisions will be cancelled forthwith together with all unmatured Coupons and unexchanged Talons attached thereto. All Instruments purchased by or on behalf of the Issuer or any of its Subsidiaries may, at the option of the Issuer be held by or may be surrendered together with all unmatured Coupons and all unexchanged Talons attached to them to a Paying Agent for cancellation, but may not be resold and when held by the Issuer or any of its respective Subsidiaries
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shall not entitle the holder to vote at any meeting of Instrumentholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of Instrumentholders or for the purposes of Condition 11.
6 |
Payments and Talons |
6.1 |
Payments |
Payments of principal and interest in respect of Instruments (other than Australian Domestic Instruments) will, subject as mentioned below, be made against presentation and surrender of the relevant Instruments (in the case of all payments of principal and, in the case of interest, as specified in Condition 6.6.4) or Coupons (in the case of interest, save as specified in Condition 6.6.4), as the case may be, at the specified office of any Paying Agent outside the United States by a cheque payable in the currency in which such payment is due drawn on, or, at the option of the holder, by transfer to an account denominated in that currency with, a bank in the principal financial centre for that currency; provided that in the case of Euro, the transfer shall be in a city in which banks have access to the TARGET System.
6.2 |
Payments in respect of Australian Domestic Instruments |
Payments of principal and interest in respect of Australian Domestic Instruments will be made in Australian dollars to the persons registered in the Australian Register on the relevant Record Date (as defined below) as the holders of such Australian Domestic Instruments. Payments to holders in respect of each Australian Domestic Instrument will be made:
(i) |
if the Australian Domestic Instrument is held by Austraclear and entered in the Austraclear System, by crediting on the relevant Interest Payment Date, the Maturity Date or other date on which payment is due the amount then due to the account or accounts to which payments should be made in accordance with the Austraclear Regulations or as otherwise agreed with Austraclear; and |
(ii) |
if the Australian Domestic Instrument is not held by Austraclear and entered in the Austraclear System, by crediting on the Interest Payment Date, the Maturity Date or other date on which payment is due, the amount then due to an account in Australia previously notified by the Instrumentholder(s) of the Australian Domestic Instrument to the relevant Issuer and the Australian Registrar. |
Payment of an amount due in respect of an Australian Domestic instrument to the holder or otherwise in accordance with this Condition or to the Trustee discharges the obligation of the Issuer to all persons to pay that amount.
Payments will for all purposes be taken to be made when the relevant Issuer or the Agent gives irrevocable instructions for the making of the relevant payment by electronic transfer, being instructions which would be reasonably expected to result, in the ordinary course of banking business, in the funds transferred reaching the account to which the payment is to be made on the same day as the day on which the instructions are given.
If, following the application of Condition 6.7 (Non-business days), a payment is due to be made under an Australian Domestic Instrument to an account on a business day on which banks are not open for general banking business in the city in which the account is located, the Instrumentholder is not entitled to payment of such amount until the next business day on which banks in such city are open for general banking business and is not entitled to any interest or other payment in respect of any such delay.
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In this Condition, in relation to Australian Domestic Instruments, Record Date means, in the case of payments of principal or interest, close of business on the date which is the eighth calendar day before the due date for the relevant payment of principal or interest.
6.3 |
Payments in the United States |
Notwithstanding the above, if any Instruments are denominated in U.S. dollars, payments in respect of them may be made at the specified office of any Paying Agent in New York City in the same manner as specified above if (a) the Issuer shall have appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment of the amounts on the Instruments in the manner provided above when due, (b) payment in full of such amounts at all such offices is illegal or effectively precluded by exchange controls or other similar restrictions on payment or receipt of such amounts and (c) such payment is then permitted by United States law, without involving, in the opinion of the Issuer, any adverse tax consequence to the Issuer.
6.4 |
Payments subject to Fiscal Laws etc. |
Save as provided in Condition 7, payments will be subject in all cases to any applicable fiscal or other laws, regulations and directives or other laws and regulations to which the relevant Issuer or the relevant Paying Agent agrees to be subject and the relevant Issuer or the relevant Paying Agent will not be liable for any taxes or duties of whatever nature imposed or levied by such laws, regulations, directives or agreements. No commission or expenses shall be charged to the Instrumentholders or Couponholders in respect of such payments.
6.5 |
Appointment of Agents |
The Issuing and Paying Agent, the Paying Agents and the Calculation Agent initially appointed by the Issuer and their respective specified offices are listed below. The Issuing and Paying Agent, the Paying Agents and the Calculation Agent act solely as agents of the Issuer and do not assume any obligation or relationship of agency or trust for or with any holder. The Issuer reserves the right at any time with the approval of the Trustee to vary or terminate the appointment of the issuing and Paying Agent, any other Paying Agent or the Calculation Agent and to appoint additional or other Paying Agents, provided that the Issuer shall at all times maintain (a) an Issuing and Paying Agent, (b) a Paying Agent having its specified office in a major European city, which shall be London so long as the Instruments are admitted to the Official List of the Financial Conduct Authority under Part VI of the Financial Services and Markets Act 2000 and admitted to trading on the London Stock Exchanges Regulated Market, (c) a Calculation Agent where the Conditions so require one, (d) so long as the Instruments are listed on any stock exchange or admitted to listing by any other relevant authority, a Paying Agent having a specified office in such place as may be required by the rules and regulations of any other relevant stock exchange or other relevant authority, (e) so long as the Instruments clear in a clearing system other than or in addition to Euroclear and Clearstream, Luxembourg, a Paying Agent that is able to make payments to such clearing system in accordance with the rules and procedure of such clearing system and (f) to the extent that the Issuer is able to do so and not provided for by the foregoing provisions of this Condition 6.5, a Paying Agent with
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a specified office in a European Union member state that will not be obliged to withhold or deduct tax pursuant to any law implementing European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000. As used in these Conditions, the terms Issuing and Paying Agent , Calculation Agen t , and Paying Agent include any additional or replacement issuing and Paying Agent, Calculation Agent or Paying Agent appointed under this Condition.
In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in respect of any instruments denominated in U.S. dollars in the circumstances described in Condition 6.3.
Notice of any such change or any change of any specified office shall promptly be given to the Instrumentholders in accordance with Condition 14.
6.6 |
Unmatured Coupons and unexchanged Talons |
6.6.1 |
Upon the due date for redemption of any Instrument, unmatured Coupons relating to such Instrument (whether or not attached) shall become void and no payment shall be made in respect of them. |
6.6.2 |
Upon the due date for redemption of any Instrument, any unexchanged Talon relating to such Instrument (whether or not attached) shall become void and no Coupon shall be delivered in respect of such Talon. |
6.6.3 |
Where any Instrument which provides that the relevant Coupons are to become void upon the due date for redemption of those Instruments is presented for redemption without all unmatured Coupons, and where any Instrument is presented for redemption without any unexchanged Talon relating to it, redemption shall be made only against the provision of such indemnity as the Issuer may require. |
6.6.4 |
If the due date for redemption of any Instrument is not a due date for payment of interest, interest accrued from the preceding due date for payment of interest or the Interest Commencement Date, as the case may be, shall only be payable against presentation (and surrender if appropriate) of the relevant Instrument. Interest accrued on an Instrument that only bears interest after its Maturity Date shall be payable on redemption of that Instrument against presentation of that Instrument. |
6.7 |
Non-business Days |
If any date for payment in respect of any Instrument or Coupon is not a business day, the holder shall not be entitled to payment until the next following business day nor to any interest or other sum in respect of such postponed payment. In this paragraph, business day means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the relevant place of presentation, in such jurisdictions as shall be specified as Financial Centres in the relevant Final Terms and:
6.7.1 |
(in the case of a payment in a currency other than Euro) where payment is to be made by transfer to an account maintained with a bank in the relevant currency, on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency (which in the case of Australian dollars is Sydney); or |
6.7.2 |
(in the case of a payment in Euro) which is a TARGET Business Day. |
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6.8 |
Talons |
On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet issued in respect of any Instrument, the Talon forming part of such Coupon sheet may be surrendered at the specified office of the Issuing and Paying Agent in exchange for a further Coupon sheet (but excluding any Coupons which may have become void pursuant to Condition 8).
7 |
Taxation |
All payments of principal and interest by or on behalf of the Issuer in respect of the Instruments and the Coupons will be made without withholding or deduction for or on account of, any present or future taxes or duties of whatever nature imposed or levied by or on behalf of the United Kingdom or any political sub-division of the United Kingdom or any authority in or of the United Kingdom having power to tax, unless such withholding or deduction is compelled by law. In that event, the Issuer will pay such additional amounts of principal and interest as will result in the receipt by the Instrumentholders or, as the case may be, the Couponholders of the amounts which would otherwise have been received by them in respect of the Instruments or Coupons had no withholding or deduction been made, except that no such additional amounts shall be payable in respect of any Instrument or Coupon presented for payment:
(a) |
by or on behalf of, a person who is liable to such taxes or duties in respect of such Instrument or Coupon by reason of his having some connection with the United Kingdom other than the mere holding of such Instrument or Coupon; or |
(b) |
by or on behalf of a person who would not be liable or subject to such deduction or withholding by making a declaration of non-residence or other claim for exemption to a tax authority; or |
(c) |
more than 30 days after the Relevant Date except to the extent that the holder would have been entitled to such additional amounts on presenting the same for payment on such 30th day; or |
(d) |
where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to any law implementing European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000; or |
(e) |
by or on behalf of a holder who would have been able to avoid such withholding or deduction (i) by presenting the relevant Instrument or Coupon to another Paying Agent in a Member State of the European Union; or (ii) by satisfying any statutory or procedural requirements (including, without limitation, the provision of information). |
As used in these Conditions, Relevant Date in respect of any Instrument or Coupon means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date on which notice is duly given to the Instrumentholders in accordance with Condition 14 that, upon further presentation of the Instrument or Coupon being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon such presentation. References in these Conditions to (a) principal shall be deemed to include any premium payable in respect of the Instruments, Final Redemption Amounts, Early Redemption Amounts, Optional
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Redemption Amounts, Amortised Face Amounts and all other amounts in the nature of principal payable pursuant to Condition 5 or any amendment or supplement to it, (b) interest shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 3 or any amendment or supplement to it and (c) principal and/or interest shall be deemed to include any additional amounts which may be payable under this Condition or any undertaking given in addition to or in substitution for it under the Trust Deed.
8 |
Prescription |
Instruments and Coupons (which, for this purpose, shall not include Talons) shall be prescribed and become void unless presented for payment within 10 years (in the case of principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of them.
9 |
Events of Default |
If any of the following events (each an Event of Default ) occurs and is continuing, the Trustee at its discretion may, and if so requested by the holders of at least one-quarter in nominal amount of the Instruments then outstanding or if so directed by an Extraordinary Resolution shall, give notice to the Issuer at its registered office that the Instruments are, and they shall accordingly immediately become due and repayable at their Redemption Amount together with accrued interest (if any) to the date of payment:
(a) |
Non-Payment: there is default for more than 30 days in the payment of any principal or interest due in respect of the Instruments; or |
(b) |
Breach of Other Obligations: there is default in the performance or observance by the Issuer of any other obligation or provision under the Trust Deed or the Instruments (other than any obligation for the payment of any principal or interest in respect of the Instruments) which default is incapable of remedy or, if in the opinion of the Trustee capable of remedy, is not remedied within 90 days after notice of such default shall have been given to the Issuer by the Trustee; or |
(c) |
Cross-Acceleration: if (i) any other present or future Relevant Indebtedness of the Issuer [(or a Principal Subsidiary)] * becomes due and payable prior to its stated maturity by reason of any actual event of default or (ii) any amount in respect of such Relevant Indebtedness is not paid when due or, as the case may be, within any applicable grace period, provided that the aggregate amount of the Relevant Indebtedness in respect of which one or more of the events mentioned above in this paragraph (c) have occurred equals or exceeds £50,000,000, for the period up to 31 March 2017, and thereafter, £100,000,000. |
[For the purposes of this Condition 9, Principal Subsidiary means National Grid Gas plc, NGET National Grid North America Inc. and National Grid USA, and includes any successor entity thereto or any member of the group of companies comprising National Grid and each of its subsidiary undertakings (the National Grid Group ) which the Auditors have certified to the Trustee as being a company to which all or substantially all of the assets of a Principal Subsidiary are transferred. In the event that all or substantially all of the assets of a Principal Subsidiary are transferred to a member of the National Grid Group as described above, the transferor of such assets shall cease to be deemed to be a Principal Subsidiary for the purposes of this Condition.]*; or
* |
Only applicable where National Grid Is the Issuer. |
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(d) |
Winding-up: a resolution is passed, or a final order of a court in the United Kingdom is made and, where possible, not discharged or stayed within a period of 90 days, that the Issuer be wound up or dissolved; or |
(e) |
Enforcement Proceedings: attachment is made of the whole or substantially the whole of the assets or undertakings of the Issuer and such attachment is not released or cancelled within 90 days or an encumbrancer takes possession or an administrative or other receiver or similar officer is appointed of the whole or substantially the whole of the assets or undertaking of the Issuer or an administration or similar order is made in relation to the Issuer and such taking of possession, appointment or order is not released, discharged or cancelled within 90 days; or |
(f) |
insolvency: the issuer ceases to carry on all or substantially all of its business or is unable to pay its debts within the meaning of Section 123(1)(e) or Section 123(2) of the Insolvency Act 1986; or |
(g) |
Bankruptcy: the issuer is adjudged bankrupt or insolvent by a court of competent jurisdiction in its country of incorporation, |
provided that in the case of paragraph (b) the Trustee shall have certified that in its opinion such event is materially prejudicial to the interests of the Instrumentholders.
10 |
Enforcement |
The Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer as it may think fit to enforce any obligation, condition or provision binding on the Issuer under the Instruments or under the Trust Deed, but shall not be bound to do so unless:
(a) |
it has been so directed by an Extraordinary Resolution or in writing by the holders of at least one-quarter of the principal amount of the instruments outstanding; and |
(b) |
it has been indemnified to its satisfaction. |
No Instrumentholder or Couponholder shall be entitled to institute proceedings directly against the Issuer unless the Trustee, having become bound to proceed as specified above, fails to do so within a reasonable time and such failure is continuing.
11 |
Meetings of Instrumentholders, Modifications and Substitution |
11.1 |
Meetings of Instrumentholders |
The Trust Deed and the Australian Deed Poll (in the case of Australian Domestic Instruments) each contains provisions for convening meetings of Instrumentholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution (as defined in the Trust Deed or the Australian Deed Poll (as applicable)) of a modification of any of these Conditions or any provisions of the Trust Deed or the Australian Deed Poll (as applicable). An Extraordinary Resolution duly passed at any such meeting shall be binding on Instrumentholders (whether or not they were present at the meeting at which such resolution was passed) and on all Couponholders, except that any
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Extraordinary Resolution proposed, inter alia , (a) to amend the dates of maturity or redemption of the Instruments or any date for payment of interest on the instruments, (b) to reduce or cancel the nominal amount of, or any premium payable on redemption of, the Instruments, (c) to reduce the rate or rates of interest in respect of the Instruments or to vary the method or basis of calculating the rate or rates or amount of interest or the basis for calculating any Interest Amount in respect of the Instruments, (d) if a Minimum and/or a Maximum Rate of Interest is shown on the face of the Instrument, to reduce any such Minimum and/or Maximum Rate of Interest, (e) to vary any method of calculating the Final Redemption Amount, the Early Redemption Amount or the Optional Redemption Amount, (f) to take any steps that as specified in this Instrument may only be taken following approval by an Extraordinary Resolution to which the special quorum provisions apply, and (g) to modify the provisions concerning the quorum required at any meeting of Instrumentholders or the majority required to pass the Extraordinary Resolution will only be binding if passed at a meeting of the Instrumentholders (or at any adjournment of that meeting) at which a special quorum (as defined in the Trust Deed or the Australian Deed Poll (as applicable)) is present. A resolution in writing signed by the holders of not less than 95 per cent, in nominal amount of the Instruments will be binding on all Instrumentholders and Couponholders. The Issuer may convene a meeting of Instrumentholders jointly with the holders of all other instruments issued pursuant to the Agency Agreement and the Australian Deed Poll and not forming a single series with the Instruments to which meeting the provisions referred to above apply as if all such instruments formed part of the same series, provided that the proposals to be considered at such meeting affect the rights of the holders of the instruments of each series attending the meeting in identical respects (save insofar as the Conditions applicable to each such series are not identical).
11.2 |
Modification of the Trust Deed and the Australian Deed Poll |
The Trustee may agree, without the consent of the Instrumentholders or Couponholders, to (a) any modification of any of the provisions of the Trust Deed or the Australian Deed Poll that is of a formal, minor or technical nature or is made to correct a manifest error, and (b) any other modification (except as mentioned in the Trust Deed or the Australian Deed Poll), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed or the Australian Deed Poll that is in the opinion of the Trustee not materially prejudicial to the interests of the Instrumentholders. Any such modification, authorisation or waiver shall be binding on the Instrumentholders and the Couponholders and, if the Trustee so requires, such modification shall be notified to the Instrumentholders as soon as practicable.
11.3 |
Substitution |
The Trust Deed contains provisions permitting the Trustee to agree, subject to such amendment of the Trust Deed and/or the Australian Deed Poll and such other conditions as the Trustee may require, but without the consent of the Instrumentholders or the Couponholders, to the substitution of any other company in place of the Issuer or of any previous substituted company, as principal debtor under the Trust Deed or the Australian Deed Poll (in the case of Australian Domestic Instruments) and the Instruments. In the case of such a substitution the Trustee may agree, without the consent of the Instrumentholders or the Couponholders, to a change of the law governing the Instruments, the Coupons, the Talons and/or the Trust Deed and/or the Australian Deed Poll (as applicable) provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Instrumentholders.
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11.4 |
Entitlement of the Trustee |
In connection with the exercise of its functions (including but not limited to those referred to in this Condition) the Trustee shall have regard to the interests of the Instrumentholders as a class and shall not have regard to the consequences of such exercise for individual Instrumentholders or Couponholders and the Trustee shall not be entitled to require, nor shall any Instrumentholder or Couponholder be entitled to claim, from the Issuer any indemnification or payment in respect of any tax consequence of any such exercise upon individual Instrumentholders or Couponholders.
12 |
Replacement of Instruments, Coupons and Talons |
If an Instrument, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it may be replaced, subject to applicable laws, listing authority and stock exchange regulations, at the specified office of such other Paying Agent as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Instrumentholders in accordance with Condition 14 on payment by the claimant of the fees and costs incurred in connection with that replacement and on such terms as to evidence, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Instrument, Coupon or Talon is subsequently presented for payment or, as the case may be, for exchange for further Coupons, there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such Instruments, Coupons or further Coupons) and otherwise as the Issuer may require. Mutilated or defaced Instruments, Coupons or Talons must be surrendered before replacements will be issued.
13 |
Further Issues |
The Issuer may from time to time without the consent of the Instrumentholders or Couponholders create and issue further instruments having the same terms and conditions as the Instruments and so that such further issue shall be consolidated and form a single series with such Instruments.
References in these Conditions to the Instruments include (unless the context requires otherwise) any other instruments issued pursuant to this Condition and forming a single series with the Instruments. Any such further instruments forming a single series with Instruments constituted by the Trust Deed or any deed supplemental to it or the Australian Deed Poll shall, and any other instruments may (with the consent of the Trustee), be constituted by the Trust Deed or the Australian Deed Poll (in the case of Australian Domestic Instruments).
The Trust Deed and the Australian Deed Poll each contains provisions for convening a single meeting of the Instrumentholders and the holders of instruments of other series if the Trustee so decides.
14 |
Notices |
All notices to the Instrumentholders will be valid if published in a daily English language newspaper of general circulation in the United Kingdom (which is expected to be the Financial Times ). If in the opinion of the Trustee any such publication is not practicable, notice shall be validly given if published in another leading daily English language newspaper with general circulation in Europe. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the first date on which publication is made, as provided above.
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In the case of Australian Domestic Instruments, the following provisions shall apply in lieu of any provisions of this Condition 14 which are inconsistent with the following provisions. Notices regarding Australian Domestic Instruments shall be published in a leading daily newspaper of general circulation in Australia, it is expected that such notices will normally be published in The Australian Financial Review . Any such notice will be deemed to have been given to the holders on the date of such publication.
Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Instruments in accordance with this Condition.
15 |
Indemnification of Trustee |
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including but not limited to provisions relieving it from any obligation to (a) appoint an independent financial adviser and (b) take proceedings to enforce repayment unless indemnified to its satisfaction. The Trustee is entitled to enter into business transactions with the Issuer or any of its subsidiary undertakings, parent undertakings, joint ventures or associated undertakings without accounting for any profit resulting from these transactions and to act as trustee for the holders of any other securities issued by the Issuer or any of its subsidiary undertakings, parent undertakings, joint ventures or associated undertakings.
16 |
Contracts (Rights of Third Parties) Act 1999 |
No person shall have any right to enforce any term or condition of the Instruments under the Contracts (Rights of Third Parties) Act 1999.
17 |
Governing Law and Jurisdiction |
17.1 |
The Instruments (other than Australian Domestic Instruments) and any non-contractual obligations arising out of or connected with them are governed by, and shall be construed in accordance with, English law. |
17.2 |
The courts of England have exclusive jurisdiction to settle any dispute (a Dispute ), arising from or connected with the Instruments (other than Australian Domestic Instruments). |
17.3 |
The Issuer agrees that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue to the contrary. |
17.4 |
Nothing in this Condition 17 prevents the Trustee or any Instrumentholder from taking proceedings relating to a Dispute ( Proceedings ) in any other courts with jurisdiction. To the extent allowed by law, the Trustee or Instrumentholders may take concurrent Proceedings in any number of jurisdictions. |
17.5 |
The Australian Domestic Instruments, the Australian Deed Poll and (unless otherwise specified in the applicable Final Terms) the Australian Agency and Registry Agreement will be governed by, and construed in accordance with, the laws in force in New South Wales, Australia, save that the provisions of Condition 9 (Events of Default) shall be interpreted so as to have the same meaning they would have if governed by English law, |
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17.6 |
In the case of Australian Domestic Instruments, each Issuer has irrevocably agreed for the benefit of Instrumentholders that the courts of New South Wales, Australia are to have jurisdiction to settle any disputes which may arise out of or in connection with the Australian Domestic instruments, the Australian Deed Poll and the Australian Agency and Registry Agreement and that accordingly any suit, action or proceedings arising out of or in connection with the Australian Domestic Instruments, the Australian Deed Poll or the Australian Agency and Registry Agreement (together referred to as Australian Proceedings ) may be brought in such courts. |
17.7 |
Each Issuer has irrevocably waived any objection which it may have now or hereafter to the laying of the venue of any Australian Proceedings in any such court and any claim that any such Australian Proceedings have been brought in an inconvenient forum and has further irrevocably agreed that a judgment in any such Australian Proceedings brought in the courts of New South Wales shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction. |
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Schedule 2
Part C
Form of Coupon
On the front:
[NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc]*
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[Title of issue]
Coupon for [[set out amount due, if known]/the amount] due on [the Interest Payment Date falling in] ** [], [].
[Coupon relating to the Instrument in the nominal amount of []]***
This Coupon is payable to bearer (subject to the Conditions endorsed on the Instrument to which this Coupon relates, which shall be binding upon the holder of this Coupon whether or not it is for the time being attached to such Instrument) at the specified offices of the Issuing and Paying Agent and the Paying Agents set out on the reverse of this Coupon (or any other Issuing and Paying Agent or further or other Paying Agents or specified offices duly appointed or nominated and notified to the Instrumentholders).
[If the Instrument to which this Coupon relates shall have become due and payable before the maturity date of this Coupon, this Coupon shall become void and no payment shall be made in respect of it.]****
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)) AND 1287(a) OF THE INTERNAL REVENUE CODE.
[NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
By:
[Cp. No.] | [Denomination] | [ISIN] | [Series] | [Certif. No.] |
* |
Delete as applicable. |
** |
[Only necessary where Interest Payment Dates are subject to adjustment in accordance with a Business Day Convention, otherwise the particular Interest Payment Date should be specified.] |
*** |
[Only required for Coupons relating to Floating Rate or Index Linked Interest Instruments that are issued in more than one denomination.] |
**** |
[Delete if Coupons are not to become void upon early redemption of Instrument.] |
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On the back:
ISSUING AND PAYING AGENT
The Bank of New York Mellon
One Canada Square
London E14 5AL
PAYING AGENTS
KBL European Private Bankers S.A.
43 Boulevard Royal
L-2955 Luxembourg
BNY Trust Company of Canada
320 Bay Street, 11th Floor
Toronto, ON
Canada M5H 4A6
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Schedule 2
Part D
Form of Talon
On the front:
[NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc]*
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[Title of issue]
Talon for further Coupons falling due on [the Interest Payment Dates falling in]** [] [].
[Talon relating to the Instrument in the nominal amount of []]***
After all the Coupons relating to the Instrument to which this Talon relates have matured, further Coupons (including if appropriate a Talon for further Coupons) shall be issued at the specified office of the Issuing and Paying Agent set out on the reverse of this Talon (or any other Issuing and Paying Agent or specified office duly appointed or nominated and notified to the Instrumentholders) upon production and surrender of this Talon.
[If the Instrument to which this Talon relates shall have become due and payable before the original due date for exchange of this Talon, this Talon shall become void and no exchange shall be made in respect of it.]****
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
[NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc]*
By:
[Talon No.] | [ISIN] | [Series] | [Certif. No.] |
* |
Delete as applicable. |
** |
[The maturity dates of the relevant Coupons should be set out if known, otherwise reference should be made to the months and years in which the Interest Payment Dates fall.] |
*** |
[Only when required where the Series comprises Instruments of more than one denomination.] |
**** |
[Delete if Talon is not to become void upon early redemption of the Instrument.] |
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On the back:
ISSUING AND PAYING AGENT
The Bank of New York Mellon
One Canada Square
London E14 5AL
PAYING AGENTS
KBL European Private Bankers S.A.
43 Boulevard Royal
L-2955 Luxembourg
BNY Trust Company of Canada
320 Bay Street, 11 th Floor
Toronto, ON
Canada M5H 4A6
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Schedule 3
Provisions for Meetings of Instrumentholders
For the avoidance of doubt, these provisions do not apply to Australian Domestic Instruments.
Interpretation
1 |
In this Schedule: |
1.1 |
references to a meeting are to a meeting of Instrumentholders of a single Series of Instruments issued by the relevant Issuer and include, unless the context otherwise requires, any adjournment; |
1.2 |
references to Instruments and Instrumentholders are only to the Instruments of the Series in respect of which a meeting has been, or is to be, called, and to the holders of these Instruments, respectively; |
1.3 |
agent means a holder of a voting certificate or a proxy for, or representative of, an Instrumentholder; |
1.4 |
block voting instruction means an instruction issued in accordance with paragraphs 8 to 14; |
1.5 |
Extraordinary Resolution means a resolution passed at a meeting duly convened and held in accordance with this Trust Deed by a majority of at least 75 per cent. of the votes cast; |
1.6 |
voting certificate means a certificate issued in accordance with paragraphs 5, 6, 7 and 14; and |
1.7 |
references to persons representing a proportion of the Instruments are to Instrumentholders or agents holding or representing in the aggregate at least that proportion in nominal amount of the Instruments for the time being outstanding. |
Powers of meetings
2 |
A meeting shall, subject to the Conditions and without prejudice to any powers conferred on other persons by this Trust Deed, have power by Extraordinary Resolution: |
2.1 |
to sanction any proposal by the relevant Issuer or the Trustee for any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Instrumentholders and/or the Couponholders against such Issuer whether or not those rights arise under this Trust Deed; |
2.2 |
to sanction the exchange or substitution for the Instruments of, or the conversion of the Instruments into, shares, bonds or other obligations or securities of the relevant Issuer or any other entity; |
2.3 |
to assent to any modification of this Trust Deed, the Instruments, the Talons or the Coupons proposed by the relevant Issuer or the Trustee; |
2.4 |
to authorise anyone to concur in and do anything necessary to carry out and give effect to an Extraordinary Resolution; |
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2.5 |
to give any authority, direction or sanction required to be given by Extraordinary Resolution; |
2.6 |
to appoint any persons (whether Instrumentholders or not) as a committee or committees to represent the Instrumentholders interests and to confer on them any powers or discretions which the Instrumentholders could themselves exercise by Extraordinary Resolution; |
2.7 |
to approve a proposed new Trustee and to remove a Trustee; |
2.8 |
to approve the substitution of any entity for the relevant Issuer (or any previous substitute) as principal debtor under this Trust Deed; and |
2.9 |
to discharge or exonerate the Trustee from any liability in respect of any act or omission for which it may become responsible under this Trust Deed, the Instruments, the Talons or the Coupons, |
provided that the special quorum provisions in paragraph 19 shall apply to any Extraordinary Resolution (a special quorum resolution ) for the purpose of sub-paragraph 2.2 or 2.7, any of the proposals listed in Condition 11.1 or any amendment to this proviso.
Convening a meeting
3 |
The relevant Issuer or the Trustee may at any time convene a meeting. If it receives a written request by Instrumentholders holding at least 10 per cent. in nominal amount of the Instruments of any Series for the time being outstanding and is indemnified to its satisfaction against all costs and expenses, the Trustee shall convene a meeting of the Instrumentholders of that Series. Every meeting shall be held at a time and place approved by the Trustee. |
4 |
At least 21 days notice (exclusive of the day on which the notice is given and of the day of the meeting) shall be given to the Instrumentholders. A copy of the notice shall be given by the party convening the meeting to the other parties. The notice shall specify the day, time and place of meeting and, unless the Trustee otherwise agrees, the nature of the resolutions to be proposed and shall explain how Instrumentholders may appoint proxies or representatives, obtain voting certificates and use block voting instructions and the details of the time limits applicable. |
Arrangements for voting
5 |
If a holder of an Instrument wishes to obtain a voting certificate in respect of it for a meeting, he must deposit it for that purpose at least 48 hours before the time fixed for the meeting with a Paying Agent or to the order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the purpose. The Paying Agent shall then issue a voting certificate in respect of it. |
6 |
A voting certificate shall: |
6.1 |
be a document in the English language; |
6.2 |
be dated; |
6.3 |
specify the meeting concerned and the serial numbers of the Instruments deposited; and |
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6.4 |
entitle, and state that it entitles, its bearer to attend and vote at that meeting in respect of those Instruments. |
7 |
Once a Paying Agent has issued a voting certificate for a meeting in respect of an Instrument, it shall not release the Instrument until either: |
7.1 |
the meeting has been concluded; or |
7.2 |
the voting certificate has been surrendered to the Paying Agent. |
8 |
If a holder of an Instrument wishes the votes attributable to it to be included in a block voting instruction for a meeting, then, at least 48 hours before the time fixed for the meeting, (i) he must deposit the Instrument for that purpose with a Paying Agent or to the order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the purpose and (ii) he or a duly authorised person on his behalf must direct the Paying Agent how those votes are to be cast. The Paying Agent shall issue a block voting instruction in respect of the votes attributable to all Instruments so deposited. |
9 |
A block voting instruction shall: |
9.1 |
be a document in the English language; |
9.2 |
be dated; |
9.3 |
specify the meeting concerned; |
9.4 |
list the total number and serial numbers of the Instruments deposited, distinguishing with regard to each resolution between those voting for and those voting against it; |
9.5 |
certify that such list is in accordance with Instruments deposited and directions received as provided in paragraphs 8, 11 and 14; and |
9.6 |
appoint a named person (a proxy ) to vote at that meeting in respect of those Instruments and in accordance with that list. |
A proxy need not be an Instrumentholder.
10 |
Once a Paying Agent has issued a block voting instruction for a meeting in respect of the votes attributable to any Instruments: |
10.1 |
it shall not release the Instruments, except as provided in paragraph 11, until the meeting has been concluded; and |
10.2 |
the directions to which it gives effect may not be revoked or altered during the 48 hours before the time fixed for the meeting. |
11 |
If the receipt for an Instrument deposited with a Paying Agent in accordance with paragraph 8 is surrendered to the Paying Agent at least 48 hours before the time fixed for the meeting, the Paying Agent shall release the Instrument and exclude the votes attributable to it from the block voting instruction. |
12 |
Each block voting instruction shall be deposited at least 24 hours before the time fixed for the meeting at such place as the Trustee shall designate or approve, and in default it shall not be valid unless the chairman of the meeting decides otherwise before the meeting proceeds to business. If the Trustee requires, a notarially certified copy of each block voting instruction shall be produced by the proxy at the meeting but the Trustee need not investigate or be concerned with the validity of the proxys appointment. |
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13 |
A vote cast in accordance with a block voting instruction shall be valid even if it or any of the Instrumentholders instructions pursuant to which it was executed has previously been revoked or amended, unless written intimation of such revocation or amendment is received from the relevant Paying Agent by the relevant Issuer or the Trustee at its registered office or by the chairman of the meeting in each case at least 24 hours before the time fixed for the meeting. |
14 |
No Instrument may be deposited with or to the order of a Paying Agent at the same time for the purposes of both paragraph 5 and paragraph 8 for the same meeting. |
Chairman
15 |
The chairman of a meeting shall be such person as the Trustee may nominate in writing, but if no such nomination is made or if the person nominated is not present within 15 minutes after the time fixed for the meeting the Instrumentholders or agents present shall choose one of their number to be chairman, failing which the relevant Issuer may appoint a chairman. The chairman need not be an Instrumentholder or agent. The chairman of an adjourned meeting need not be the same person as the chairman of the original meeting. |
Attendance
16 |
The following may attend and speak at a meeting: |
16.1 |
Instrumentholders and agents; |
16.2 |
the chairman; |
16.3 |
the relevant Issuer and the Trustee (through their respective representatives) and their respective financial and legal advisers; and |
16.4 |
the Dealers and their advisers. |
No one else may attend or speak.
Quorum and Adjournment
17 |
No business (except choosing a chairman) shall be transacted at a meeting unless a quorum is present at the commencement of business. If a quorum is not present within 15 minutes from the time initially fixed for the meeting, it shall, if convened on the requisition of Instrumentholders or if the relevant Issuer and the Trustee agree, be dissolved. In any other case it shall be adjourned until such date, not less than 14 nor more than 42 days later, and time and place as the chairman may decide. If a quorum is not present within 15 minutes from the time fixed for a meeting so adjourned, the meeting shall be dissolved. |
18 |
Two or more Instrumentholders or agents present in person shall be a quorum: |
18.1 |
in the cases marked No minimum proportion in the table below, whatever the proportion of the Instruments which they represent; and |
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18.2 |
in any other case, only if they represent the proportion of the Instruments shown by the table below. |
Column 1 |
Column 2 |
Column 3 |
||
Purpose of meeting |
Any meeting except one referred to in column 3 |
Meeting previously adjourned through
|
||
Required proportion |
Required proportion |
|||
To pass a special quorum resolution |
Two thirds |
One third |
||
To pass any other Extraordinary Resolution |
A clear majority |
No minimum proportion |
||
Any other purpose |
10 per cent. |
No minimum proportion |
19 |
The chairman, may with the consent of (and shall if directed by) a meeting, adjourn the meeting from time to time and from place to place. Only business which could have been transacted at the original meeting may be transacted at a meeting adjourned in accordance with this paragraph or paragraph 18. |
20 |
At least 10 days notice of a meeting adjourned through want of a quorum shall be given in the same manner as for an original meeting and that notice shall state the quorum required at the adjourned meeting. However, no notice need otherwise be given of an adjourned meeting. |
Voting
21 |
Each question submitted to a meeting shall be decided by a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by the chairman, the relevant Issuer, the Trustee or one or more persons holding one or more Instruments or voting certificates or representing 2 per cent. of the Instruments. |
22 |
Unless a poll is demanded a declaration by the chairman that a resolution has or has not been passed shall be conclusive evidence of the fact without proof of the number or proportion of the votes cast in favour of or against it. |
23 |
If a poll is demanded, it shall be taken in such manner and (subject as provided below) either at once or after such adjournment as the chairman directs. The result of the poll shall be deemed to be the resolution of the meeting at which it was demanded as at the date it was taken. A demand for a poll shall not prevent the meeting continuing for the transaction of business other than the question on which it has been demanded. |
24 |
A poll demanded on the election of a chairman or on a question of adjournment shall be taken at once. |
25 |
On a show of hands every person who is present in person and who produces an Instrument or a voting certificate or is a proxy or representative has one vote. On a poll every such person has one vote in respect of each integral currency unit of the Specified Currency of such Series of Instruments so produced or represented by the voting certificate so produced or for which he is a proxy or representative. Without prejudice to the obligations of proxies, a person entitled to more than one vote need not use them all or cast them all in the same way. |
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26 |
In case of equality of votes the chairman shall both on a show of hands and on a poll have a casting vote in addition to any other votes which he may have. |
Effect and Publication of an Extraordinary Resolution
27 |
An Extraordinary Resolution shall be binding on all the Instrumentholders, whether or not present at the meeting, and on all the Couponholders and each of them shall be bound to give effect to it accordingly. The passing of such a resolution shall be conclusive evidence that the circumstances justify its being passed. The relevant Issuer shall give notice of the passing of an Extraordinary Resolution to Instrumentholders within 14 days but failure to do so shall not invalidate the resolution. |
28 |
A resolution in writing signed by or on behalf of the holders of not less than 95 per cent. in nominal amount of the Instruments who for the time being are entitled to receive notice of a meeting in accordance with the provisions of this Schedule shall for all purposes be as valid and effectual as an Extraordinary Resolution passed at a meeting of such Instrumentholders duly convened and held in accordance with the provisions of this Schedule. Such resolution in writing may be contained in one document or several documents in similar form each signed by or on behalf of one or more of the Instrumentholders. |
Minutes
29 |
Minutes shall be made of all resolutions and proceedings at every meeting and, if purporting to be signed by the chairman of that meeting or of the next succeeding meeting, shall be conclusive evidence of the matters in them. Until the contrary is proved every meeting for which minutes have been so made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted. |
Trustees Power to Prescribe Regulations
30 |
Subject to all other provisions in this Trust Deed the Trustee may without the consent of the Instrumentholders prescribe such further regulations regarding the holding of meetings and attendance and voting at them as it in its sole discretion determines including (without limitation) such requirements as the Trustee thinks reasonable to satisfy itself that the persons who purport to make any requisition in accordance with this Trust Deed are entitled to do so and as to the form of voting certificates or block voting instructions so as to satisfy itself that persons who purport to attend or vote at a meeting are entitled to do so. |
31 |
The holder of a Global Instrument shall (unless such Global Instrument represents only one Instrument) be treated as two persons for the purposes of any quorum requirements of a meeting of Instrumentholders. |
32 |
The above provisions of this Schedule shall have effect subject to the following provisions: |
32.1 |
Meetings of Instrumentholders of separate Series will normally be held separately. However, the Trustee may from time to time determine that meetings of Instrumentholders of separate Series shall be held together. |
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32.2 |
A resolution that in the opinion of the Trustee affects one Series alone shall be deemed to have been duly passed if passed at a separate meeting of the Instrumentholders of the Series concerned. |
32.3 |
A resolution that in the opinion of the Trustee affects the Instrumentholders of more than one Series but does not give rise to a conflict of interest between the Instrumentholders of the different Series concerned shall be deemed to have been duly passed if passed at a single meeting of the Instrumentholders of the relevant Series provided that for the purposes of determining the votes an Instrumentholder is entitled to cast pursuant to paragraph 26, each Instrumentholder shall have one vote in respect of each whole Euro 1.00 nominal amount of Instruments held, converted, if such Instruments are not denominated in Euro, in accordance with Clause 8.13 ( Currency Conversion ). |
32.4 |
A resolution that in the opinion of the Trustee affects the Instrumentholders of more than one Series and gives or may give rise to a conflict of interest between the Instrumentholders of the different Series concerned shall be deemed to have been duly passed only if it shall be duly passed at separate meetings of the Instrumentholders of the relevant Series. |
32.5 |
To all such meetings as previously set out all the preceding provisions of this Schedule shall mutatis mutandis apply as though references therein to Instruments and to Instrumentholders were references to the Instruments and Instrumentholders of the Series concerned. |
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In witness of which this Trust Deed has been executed as a deed on the date stated at the beginning.
EXECUTED BY AFFIXING THE COMMON SEAL of NATIONAL GRID plc |
} |
|||
in the presence of: |
/s/ HARRIET HILL |
|||
EXECUTED BY AFFIXING THE COMMON SEAL of NATIONAL GRID ELECTRICITY TRANSMISSION plc |
} |
|||
in the presence of: |
/s/ HEATHER RAYNER |
|||
EXECUTED AS A DEED BY AFFIXING THE COMMON SEAL of THE LAW DEBENTURE TRUST CORPORATION p.l.c. |
} |
|||
in the presence of: |
||||
Director |
/s/ JULIAN MASON-JEBB |
|||
Authorised Signatory |
/s/ CAROL MORIS |
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Exhibit 2(b).8
EXECUTION COPY
Dated 20 December 2013
NATIONAL GRID USA
and
NATIONAL GRID NORTH AMERICA INC.
as Issuers
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
as Trustee
AMENDED AND RESTATED TRUST DEED
relating to
National Grid USA
Euro 4,000,000,000
Euro Medium Term Note Programme
arranged by
HSBC Bank plc
Ref: EXM/RR/ES
Linklaters LLP
Table of Contents
Contents |
Page | |||||
1 |
Interpretation |
1 | ||||
2 |
Issue of Instruments and Covenant to Pay |
6 | ||||
3 |
Form of the Instruments |
8 | ||||
4 |
Stamp Duties and Taxes |
9 | ||||
5 |
Application of Moneys Received by the Trustee |
10 | ||||
6 |
Covenants |
11 | ||||
7 |
Remuneration and Indemnification of the Trustee |
13 | ||||
8 |
Provisions Supplemental to the Trustee Acts |
15 | ||||
9 |
Disapplication and Trustee Liability |
19 | ||||
10 |
Waiver and Proof of Default |
19 | ||||
11 |
Trustee not Precluded from Entering into Contracts |
19 | ||||
12 |
Modification and Substitution |
20 | ||||
13 |
Appointment, Retirement and Removal of the Trustee |
21 | ||||
14 |
Instruments held in Clearing Systems |
22 | ||||
15 |
Currency Indemnity |
23 | ||||
16 |
Enforcement |
23 | ||||
17 |
Communications |
24 | ||||
18 |
Governing Law and Jurisdiction |
24 | ||||
Schedule 1 Part A Form of Global Certificate |
26 | |||||
Schedule 1 Part B Form of Certificate |
32 | |||||
Schedule 2 Terms and Conditions of the Instruments |
37 | |||||
Schedule 3 Provisions for Meetings of Instrumentholders |
61 |
i
This Trust Deed is made on 20 December 2013 between :
(1) |
NATIONAL GRID USA and NATIONAL GRID NORTH AMERICA INC. (each an Issuer and together, the Issuers ); and |
(2) |
THE LAW DEBENTURE TRUST CORPORATION p.l.c. (the Trustee , which expression, where the meaning so admits, includes any other trustee for the time being of this Trust Deed). |
Whereas :
(A) |
The Issuers propose to issue from time to time debt instruments in registered form (the Instruments ) in an aggregate nominal amount outstanding at any one time, not exceeding the Programme Limit in accordance with the Dealer Agreement (the Programme ) and to be constituted by this Trust Deed. |
(B) |
This Trust Deed amends and restates the amended and restated trust deed dated 20 December 2012 between National Grid USA and the Trustee (the Original Trust Deed ) in respect of all Instruments issued pursuant to the Programme on or after the date of this Trust Deed. The Original Trust Deed will continue in full force and effect in respect of all Instruments issued prior to the date of this Trust Deed and any Instruments issued on or after the date of this Trust Deed which are to be consolidated and form a single series with any Instruments issued prior to the date hereof. |
(C) |
The Trustee has agreed to act as trustee of this Trust Deed on the following terms and conditions. |
This Deed witnesses and it is declared as follows:
1 |
Interpretation |
1.1 |
Definitions |
In this Trust Deed:
Agency Agreement means the amended and restated agency agreement (as amended, supplemented and/or restated from time to time) relating to the Programme dated 20 December 2012, between the Issuers, the Trustee, The Bank of New York Mellon as Issuing and Paying Agent, The Bank of New York Mellon (Luxembourg) S.A. as Registrar and the other agent(s) mentioned in it;
Agents has the meaning given to it in the Agency Agreement;
Calculation Agent means any person named as such in the Conditions or any Successor Calculation Agent;
Certificate means a registered certificate representing one or more Instruments of the same Series and, save as provided in the Conditions, comprising the entire holding by an Instrumentholder of his Instruments of that Series and, save in the case of Global Certificates, being substantially in the form set out in Schedule1 Part B;
Common Safekeeper means, in relation to a Series where the relevant Global Certificate is held under the NSS, the common safekeeper for Euroclear and Clearstream, Luxembourg appointed in respect of such Instruments;
Clearstream, Luxembourg means Clearstream Banking, société anonyme ;
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Conditions means in respect of the Instruments of each Series the terms and conditions applicable to them which shall be substantially in the form set out in Schedule 2 (Terms and Conditions of the Instruments) as modified, with respect to any Instruments represented by a Global Certificate, by the provisions of such Global Certificate, and shall incorporate any additional provisions forming part of such terms and conditions set out in Part A of the Final Terms relating to the Instruments of that Series and any reference to a particularly numbered Condition shall be construed accordingly;
Contractual Currency means, in relation to any payment obligation of any Instrument, the currency in which that payment obligation is expressed and, in relation to Clause 8 (Provisions Supplemental to the Trustee Acts), such currency as may be agreed between the Issuer and the Trustee from time to time;
Dealer Agreement means the amended and restated dealer agreement (as amended, supplemented and/or restated from time to time) relating to the Programme dated 20 December 2013 between the Issuers, the Arranger and the dealers named in it;
Definitive Instrument means a Certificate other than a Global Certificate and includes any replacement Instrument or Certificate issued pursuant to the Conditions;
Effective Date means the date on which the Arranger, has received, on behalf of the Dealers, each of the condition precedent documents listed in Schedule 2 to the Dealer Agreement and that each is, in form and substance, satisfactory to it;
Euroclear means Euroclear Bank S.A./N.V.;
Event of Default means an event described in Condition 8 and that, if so required by that Condition, has been certified by the Trustee to be, in its opinion, materially prejudicial to the interests of the Instrumentholders;
Extraordinary Resolution has the meaning set out in Schedule 3 (Provisions for Meetings of Instrumentholders);
Final Terms means, in relation to a Tranche, the final terms document substantially in the form set out in the Prospectus which will be completed at or around the time of the agreement to issue each Tranche of Instruments and which will constitute final terms for the purposes of Article 5.4 of the Prospectus Directive. For the avoidance of doubt, in the case of Instruments issued under the Programme which are not admitted to trading on the London Stock Exchanges regulated market, all references to the Final Terms shall be construed as references to the pricing supplement substantially in the form set forth in the Prospectus;
Global Certificate means a Temporary Global Certificate and/or the Permanent Global Certificate substantially in the form set out in Part A of Schedule 1 representing Instruments of one or more Tranches of the same Series;
holder in relation to an Instrument and Instrumentholder have the meanings given to them in the Conditions;
Instruments means the debt instruments to be issued by each Issuer pursuant to the Dealer Agreement, constituted by this Trust Deed and for the time being outstanding or, as the context may require, a specific number of them;
Issuing and Paying Agent means the person named as such in the Conditions or any Successor Issuing and Paying Agent in each case at its specified office;
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month means a calendar month;
NSS means the new safekeeping structure which applies to Instruments held in global form by a Common Safekeeper for Euroclear and Clearstream, Luxembourg and which is required for such Instruments to be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations;
outstanding means, in relation to the Instruments, all the Instruments issued except (a) those that have been redeemed in accordance with the Conditions, (b) those in respect of which the date for redemption has occurred and the redemption moneys (including all interest accrued on such Instruments to the date for such redemption and any interest payable after such date) have been duly paid to the Trustee or to the Issuing and Paying Agent as provided in Clause 2 (Issue of Instruments and Covenant to Pay) and remain available for payment against presentation and surrender of such Instruments, (c) those which have become void or in respect of which claims have become prescribed, (d) those which have been purchased and cancelled as provided in the Conditions, (e) those mutilated or defaced Instrument(s) which have been surrendered in exchange for replacement Certificate(s), (f) those Instruments alleged to have been lost, stolen or destroyed and in respect of which replacement Instruments have been issued, and (g) any Temporary Global Certificate to the extent that such Certificates have been exchanged for a Permanent Global Certificate, provided that for the purposes of (i) ascertaining the right to attend and vote at any meeting of the Instrumentholders, (ii) the determination of how many Instruments are outstanding for the purposes of Conditions 8 and 10 and Schedule 3 (Provisions for Meetings of Instrumentholders), (iii) the exercise of any discretion, power or authority that the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Instrumentholders and (iv) the certification (where relevant) by the Trustee as to whether a Potential Event of Default is in its opinion materially prejudicial to the interests of the Instrumentholders, those Instruments which are beneficially held by or on behalf of the Issuer or any of its subsidiary undertakings and not cancelled shall (unless no longer so held) be deemed not to remain outstanding;
Paying Agents means the persons (including the Issuing and Paying Agent) referred to as such in the Conditions or any Successor Paying Agents in each case at their respective specified offices;
Permanent Global Certificate means a permanent Global Certificate in the form set out in Part A of Schedule 1 hereto, issued in a denomination equal to the outstanding principal amount of the Temporary Global Certificate upon expiration of the Restricted Period and certification of non-U.S. beneficial ownership;
Potential Event of Default means an event or circumstance that could with the giving of notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement provided for in Condition 8 become an Event of Default;
Programme Limit means the maximum aggregate nominal amount of Instruments which may be issued and outstanding at any time under the Programme, as such limit may be increased pursuant to the Dealer Agreement;
Prospectus means the prospectus prepared in connection with the Programme and constituting (i) a base prospectus in respect of each Issuer for the purposes of Article 5.4 of the Prospectus Directive and (ii) listing particulars in respect of each Issuer for the purposes of Listing Rule 2.2.11 of the Listing Rules of the Financial Conduct Authority, as revised, supplemented or amended from time to time by the Issuers including any
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documents which are from time to time incorporated in the Prospectus by reference except that in relation to each Tranche of Instruments only the applicable Final Terms shall be deemed to be included in the Prospectus;
Prospectus Directive means Directive 2003/71/EC, as amended, of the European Parliament and of the Council;
Redemption Amount means the Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be, all as defined in the Conditions;
Register means the register maintained by the Registrar;
Registrar means the person named as such in the Conditions or any Successor Registrar in each case at its specified office;
Restricted Period means the 40-day distribution compliance period as defined in Regulation S under the Securities Act;
Securities Act means the U.S. Securities Act of 1933, as amended;
Series means a series of Instruments comprising one or more Tranches, whether or not issued on the same date, that (except in respect of the first payment of interest and their issue price) have identical terms on issue and are expressed to have the same series number;
specified office means, in relation to a Paying Agent, the Registrar or a Transfer Agent the office identified with its name at the end of the Conditions or any other office approved by the Trustee and notified to Instrumentholders pursuant to Clause 6.6 (Notices to Instrumentholders);
Successor means, in relation to an Agent such other or further person as may from time to time be appointed by either Issuer as such Agent with the written approval of, and on terms approved in writing by, the Trustee and notice of whose appointment is given to Instrumentholders pursuant to Clause 6.6 (Notices to Instrumentholders);
successor in business means (a) an entity which acquires all or substantially all of the undertaking and/or assets of either the Issuer or of a successor in business of either the Issuer; or (b) any entity into which any of the previously referred to entity is amalgamated, merged or reconstructed and is itself not the continuing company;
TARGET System means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor thereto;
Temporary Global Certificate means a temporary Global Certificate in the form set out in Part A of Schedule 1 hereto, bearing the Temporary Global Certificate Legend;
Temporary Global Certificate Legend means the legend set forth in Clause 3;
Tranche means, in relation to a Series, those Instruments of that Series which are issued on the same date at the same issue price and in respect of which the first payment of interest is identical;
Transfer Agents means the persons (including the Registrar) referred to as such in the Conditions or any Successor Transfer Agents in each case at their specified offices;
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trust corporation means a trust corporation (as defined in the Law of Property Act 1925) or a corporation entitled to act as a trustee pursuant to applicable foreign legislation relating to trustees; and
Trustee Acts means both the Trustee Act 1925 and the Trustee Act 2000 of England and Wales.
1.2 |
Construction of Certain References |
Unless the context otherwise requires, all references in this Trust Deed to:
1.2.1 |
the records of Euroclear and Clearstream, Luxembourg shall be to the records that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflect the amount of such customers interests in the Instruments; |
1.2.2 |
costs, charges, remuneration or expenses include any value added, turnover or similar tax charged in respect of them; |
1.2.3 |
an action, remedy or method of judicial proceedings for the enforcement of creditors rights include references to the action, remedy or method of judicial proceedings in jurisdictions other than England as shall most nearly approximate to it; |
1.2.4 |
the Trustees approval or consent shall, unless expressed otherwise, be subject to the requirement that any such approval or consent shall not be unreasonably withheld or delayed, such reasonableness to be determined by reference to acting in the interests of Instrumentholders as a whole; and |
1.2.5 |
the appointment or employment of or delegation to any person by the Trustee shall be deemed to include a reference to, if in the opinion of the Trustee it is reasonably practicable, the prior notification of and consultation with the Issuers and, in any event, the notification forthwith of such appointment, employment or delegation, as the case may be. |
1.3 |
Headings |
Headings shall be ignored in construing this Trust Deed.
1.4 |
Contracts |
References in this Trust Deed to this Trust Deed or any other document are to this Trust Deed or those documents as amended, supplemented or replaced from time to time in relation to the Programme and include any document that amends, supplements or replaces them.
1.5 |
Schedules |
The Schedules are part of this Trust Deed and have effect accordingly.
1.6 |
Alternative Clearing System |
References in this Trust Deed to Euroclear and/or Clearstream, Luxembourg shall, wherever the context so permits, be deemed to include reference to any additional or alternative clearing system approved by the relevant Issuer, the Trustee and the Issuing and Paying Agent. In the case of Global Certificates held under the NSS, such alternative clearing system must also be authorised to hold Instruments as eligible collateral for Eurosystem monetary policy and intra-day credit operations.
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1.7 |
Other Terms |
Other terms defined in the Dealer Agreement or the Conditions have the same meaning in this Trust Deed.
1.8 |
Contracts (Rights of Third Parties) Act 1999 |
A person who is not a party to this Trust Deed has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Trust Deed.
1.9 |
Effectiveness |
Upon execution of this Trust Deed by all the parties hereto, the Original Trust Deed shall be replaced by this Trust Deed and the Original Trust Deed shall be of no further force and effect, except in respect of Instruments issued prior to the date of this Trust Deed.
2 |
Issue of Instruments and Covenant to Pay |
2.1 |
Issue of Instruments |
Each Issuer may from time to time issue Instruments in Tranches of one or more Series on a continuous basis with no minimum issue size in accordance with the Dealer Agreement. Before issuing any Tranche and not later than 3.00 p.m. (London time) on the second business day in London which for this purpose shall be a day on which commercial banks are open for general business in London preceding each proposed issue date, the relevant Issuer shall give written notice or procure that it is given to the Trustee of the proposed issue of such Tranche, specifying the details to be included in the relevant Final Terms. Upon the issue by either Issuer of any Instruments expressed to be constituted by this Trust Deed, such Instruments shall forthwith be constituted by this Trust Deed without any further formality and irrespective of whether or not the issue of such debt securities contravenes any covenant or other restriction in this Trust Deed or the Programme Limit.
2.2 |
Separate Series |
The provisions of Clauses 2.3 (Covenant to Pay), 2.4 (Discharge), 2.5 (Payment after a Default) and 2.6 (Rate of Interest after a Default) and of Clauses 3 (Form of the Instruments) to 15 (Currency Indemnity) and Schedule 3 (Provisions for Meetings of Instrumentholders) (all inclusive) shall apply mutatis mutandis separately and independently to the Instruments of each Series and in such Clauses and Schedule the expressions Instrumentholders , and Certificates , together with all other terms that relate to Instruments or their Conditions, shall be construed as referring to those of the particular Series in question and not of all Series unless expressly so provided, so that each Series shall be constituted by a separate trust pursuant to Clause 2.3 (Covenant to Pay) and that, unless expressly provided, events affecting one Series shall not affect any other.
2.3 |
Covenant to Pay |
The relevant Issuer shall on any date when any Instruments become due to be redeemed, in whole or in part, unconditionally pay to or to the order of the Trustee in the Contractual Currency, in the case of any Contractual Currency other than Euro, in the principal financial
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centre for the Contractual Currency and, in the case of Euro, in a city in which banks have access to the TARGET System, in same day funds the Redemption Amount of the Instruments becoming due for redemption on that date together with any applicable premium and shall (subject to the Conditions and other than in respect of Zero Coupon Instruments) until such payment (both before and after judgment) unconditionally so pay to or to the order of the Trustee interest in respect of the nominal amount of the Instruments outstanding as set out in the Conditions (subject to Clause 2.6 (Rate of Interest after a Default)) provided that (a) subject to the provisions of Clause 2.5, payment of any sum due in respect of the Instruments made to the Issuing and Paying Agent as provided in the Agency Agreement shall, to that extent, satisfy such obligation except to the extent that there is failure in its subsequent payment to the relevant Instrumentholders under the Conditions and (b) a payment made after the due date or as a result of the Instrument becoming repayable following an Event of Default shall be deemed to have been made when the full amount due has been received by the Issuing and Paying Agent or the Trustee and notice to that effect has been given to the Instrumentholders (if required under Clause 6.8 (Notice of Late Payment)), except to the extent that there is failure in its subsequent payment to the relevant Instrumentholders under the Conditions. This covenant shall only have effect each time Instruments are issued and outstanding, when the Trustee shall hold the benefit of this covenant on trust for the Instrumentholders of the relevant Series.
2.4 |
Discharge |
Subject to Clause 2.5 (Payment after a Default), any payment to be made in respect of the Instruments by the relevant Issuer or the Trustee may be made as provided in the Conditions and any payment so made shall (subject to Clause 2.5 (Payment after a Default)) to that extent be a good discharge to such Issuer or the Trustee, as the case may be, except to the extent that there is failure in its subsequent payment to the relevant Instrumentholders under the Conditions.
2.5 |
Payment after a Default |
At any time after an Event of Default or a Potential Event of Default has occurred the Trustee may:
2.5.1 |
by notice in writing to the relevant Issuer and the Paying Agents, require the Paying Agents, until notified by the Trustee to the contrary, so far as permitted by applicable law: |
(i) |
to act as Paying Agents and the Transfer Agents of the Trustee under this Trust Deed and the Instruments on the terms of the Agency Agreement (with consequential amendments as necessary and except that the Trustees liability for the indemnification, remuneration and expenses of the Paying Agents shall be limited to the amounts for the time being held by the Trustee in respect of the Instruments on the terms of this Trust Deed) and thereafter to hold all Instruments and Certificates, and all moneys, documents and records held by them in respect of Instruments and Certificates to the order of the Trustee; or |
(ii) |
to deliver all Instruments and Certificates and all moneys, documents and records held by them in respect of the Instruments and Certificates to the Trustee or as the Trustee directs in such notice; and |
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2.5.2 |
by notice in writing to the relevant Issuer, require such Issuer to make all subsequent payments in respect of the Instruments to or to the order of the Trustee and not to the Issuing and Paying Agent and with effect from the receipt of any such notice by such Issuer, until such notice is withdrawn, the first proviso to Clause 2.3 (Covenant to Pay) shall cease to have effect. |
2.6 |
Rate of Interest after a Default |
If the Instruments bear interest at a floating or other variable rate and they become immediately payable under the Conditions following an Event of Default, the rate of interest payable in respect of them shall continue to be calculated by the Calculation Agent in accordance with the Conditions (with consequential amendments as necessary) except that the rates of interest need not be notified to Instrumentholders. The first period in respect of which interest shall be so calculable shall commence on the expiry of the Interest Period during which the Instruments become so repayable.
3 |
Form of the Instruments |
3.1 |
The Global Certificates |
The Instruments shall initially be represented by one or more Temporary Global Certificates in the nominal amount of the Tranche being issued. Each Global Certificate shall be printed or typed substantially in the form set out in Part A of Schedule 1 and may be a facsimile. Interests in the Temporary Global Certificate shall be exchangeable for interests in a Permanent Global Certificate upon expiration of the Restricted Period and certification of non-U.S. beneficial ownership.
Following termination of the Restricted Period and receipt by the Issuing and Paying Agent of copies of certificates from Euroclear and Clearstream, Luxembourg (if available) certifying that they have received certification of non-U.S. beneficial ownership of 100 per cent. of the aggregate principal amount of each Temporary Global Certificate, the Issuing and Paying Agent shall complete a Permanent Global Certificate (being substantially in the form set out in Schedule 1 Part A of the Trust Deed) in an aggregate nominal amount up to that of the relevant Tranche, authenticate it (or cause its agent on it behalf to do so), and deliver the Permanent Global Certificate to the Common Safekeeper which is holding the Temporary Global Certificate representing the Tranche for the time being on behalf of Euroclear and/or Clearstream, Luxembourg together with instructions to the Common Safekeeper to effectuate the same, and, in each case, procure the exchange of interests in such Temporary Global Certificate for interests in an equal nominal amount of such Permanent Global Certificate in accordance with such Temporary Global Certificate. In the case of a total exchange of interests in the Temporary Global Certificate, the Issuing and Paying Agent shall cancel or arrange for the cancellation of the Temporary Global Certificate.
3.2 |
Temporary Global Certificate Legend |
The Temporary Global Certificate shall bear a legend in substantially the following form:
BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON, AS DEFINED IN THE U.S. SECURITIES ACT OF 1933 (THE SECURITIES ACT), NOR IS IT PURCHASING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
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3.3 |
The Certificates |
The Certificates shall be printed in accordance with applicable legal and stock exchange requirements substantially in the form set out in Part B of Schedule 1. The Certificates (other than the Global Certificates) shall be endorsed with the Conditions.
3.4 |
Signature |
The Instruments and Certificates shall be signed manually or in facsimile by an authorised signatory of the relevant Issuer and the Certificates shall be authenticated by or on behalf of the Registrar. The relevant Issuer may use the facsimile signature of any person who at the date of this Trust Deed is such an authorised signatory even if at the time of issue of any Instruments or Certificates he no longer holds that office. In the case of a Global Certificate which is held under the NSS, the Issuing and Paying Agent or the Registrar shall also instruct the Common Safekeeper to effectuate the same. Certificates so executed and authenticated (and effectuated, if applicable) shall represent binding and valid obligations of the relevant Issuer. Execution in facsimile of any Instruments and any photostatic copying or other duplication of any Global Certificates (in unauthenticated form, but executed manually on behalf of the relevant Issuer as stated above) shall represent binding obligations upon the Issuer in the same manner as if such Certificates were signed manually by such signatories.
3.5 |
Title |
The holder of any Instrument whose name is entered in the Register as being entitled to such Instrument shall (save as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it, any writing on it or its theft or loss) and no person will be liable for so treating the holder.
4 |
Stamp Duties and Taxes |
4.1 |
Stamp Duties |
Each Issuer shall pay any stamp, issue, documentary or other taxes and duties payable in the United States of America in respect of the creation, issue and offering of the Instruments and/or Certificates issued by it and the execution or delivery of this Trust Deed. Each Issuer shall also indemnify the Trustee and the relevant Instrumentholders from and against all stamp, issue, documentary or other taxes paid by any of them in any jurisdiction in connection with any action taken by or on behalf of the Trustee or, as the case may be (where entitled to do so), the relevant Instrumentholders to enforce relevant Issuers obligations under this Trust Deed or the relevant Instruments or Certificates.
4.2 |
Change of Taxing Jurisdiction |
If an Issuer becomes subject generally to the taxing jurisdiction of a territory or a taxing authority of or in that territory with power to tax other than, or in addition to, the United States of America or any political sub-division of the United States of America then such Issuer shall (unless the Trustee otherwise agrees) give the Trustee an undertaking satisfactory to the Trustee in terms corresponding to the terms of Condition 6 with the substitution for, or (as the case may require) the addition to, the references in that Condition to the United States of America of references to that other or additional territory or authority to whose taxing jurisdiction such Issuer has become so subject. In such event this Trust Deed and the relevant Instruments and Certificates shall be read accordingly.
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5 |
Application of Moneys Received by the Trustee |
5.1 |
Declaration of Trust |
All moneys received by the Trustee in respect of the Instruments or amounts payable under this Trust Deed shall, despite any appropriation of all or part of them by the relevant Issuer, be held by the Trustee on trust to apply them (subject to Clause 5.2 (Accumulation)):
5.1.1 |
first, in payment of all costs, charges, expenses and liabilities reasonably incurred by the Trustee (including remuneration payable to it) in carrying out its functions under this Trust Deed; |
5.1.2 |
secondly, in payment of any amounts owing in respect of the relevant Instruments pari passu and rateably; and |
5.1.3 |
thirdly, in payment of any balance to such Issuer for itself. |
If the Trustee holds any moneys which represent principal, premium or interest in respect of Instruments which have become void in accordance with the Conditions the Trustee shall hold them on these trusts.
5.2 |
Accumulation |
If the amount of the moneys at any time available for payment in respect of the Instruments under Clause 5.1 (Declaration of Trust) is less than 10 per cent. of the nominal amount of the Instruments then outstanding, the Trustee may, at its discretion, invest such moneys as provided in Clause 5.3 (Investment). The Trustee may retain such investments and accumulate the resulting income until the investments and the accumulations, together with any other funds for the time being under its control and available for such payment, amount to at least 10 per cent of the nominal amount of the Instruments then outstanding and then such investments, accumulations and funds (after deduction of, or provision for, any applicable taxes) shall be applied as specified in Clause 5.1 (Declaration of Trust).
5.3 |
Investment |
Moneys held by the Trustee may be invested in its name or under its control in any investments or other assets anywhere, whether or not they produce income, or deposited in its name or under its control at such bank or other financial institution in such currency as the Trustee may, in its absolute discretion, think fit. If that bank or institution is the Trustee or a subsidiary, parent or associated undertaking of the Trustee, it need only account for an amount of interest equal to the standard amount of interest payable by it on such a deposit to an independent customer. The Trustee may at any time vary or transpose any such investments or assets or convert any moneys so deposited into any other currency, and shall not be responsible for any resulting loss, whether by depreciation in value, change in exchange rates or otherwise.
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6 |
Covenants |
So long as any Instrument issued by it is outstanding, each Issuer shall:
6.1 |
Books of Account |
Keep, and procure that each of its subsidiary undertakings keeps, proper books of account and, at any time after an Event of Default has occurred or if the Trustee reasonably believes that such an event has occurred, so far as permitted by applicable law, allow, and procure that each such subsidiary undertaking shall allow, the Trustee and anyone appointed by it to whom the relevant Issuer and/or the relevant subsidiary undertaking has no reasonable objection, access to its books of account at all reasonable times during normal business hours.
6.2 |
Notice of Events of Default |
Notify the Trustee in writing immediately on becoming aware of the occurrence of any Event of Default or Potential Event of Default.
6.3 |
Information |
So far as permitted by applicable law, give the Trustee such information as it reasonably requires to perform its functions.
6.4 |
Financial Statements etc. |
Send to the Trustee at the time of their issue and, in the case of annual financial statements, in any event within 180 days of the end of each financial year, three copies in English of every balance sheet, profit and loss account, report or other notice, statement or circular issued, or that legally or contractually should be issued, to the members or creditors (or any class of them) of the relevant Issuer or any parent undertaking of it generally in their capacity as such.
6.5 |
Certificate of a Director, etc. |
6.5.1 |
Send to the Trustee, within 14 days of its annual audited financial statements being made available to its members, and also within 21 days of any request by the Trustee a certificate of the relevant Issuer signed by a director that, having made all reasonable enquiries, to the best of the knowledge, information and belief of such Issuer as at a date (the Certification Date ) not more than five days before the date of the certificate no Event of Default or Potential Event of Default had occurred (and, in the case of a Potential Event of Default, was continuing) since the Certification Date of the last such certificate or (if none) the date of this Trust Deed or, if such an event had occurred (and, in the case of a Potential Event of Default, was continuing), giving details of it and certifying that it has complied with its obligations under this Trust Deed or, to the extent that it has failed so to comply, stating such. |
6.5.2 |
Give to the Trustee, as soon as reasonably practicable after the acquisition of any company which thereby becomes a Principal Subsidiary or after any transfer is made to any member of the Group (as defined in Condition 8) which thereby becomes a Principal Subsidiary, a certificate by the auditors of such Issuer at that time (the Auditors ) addressed to the Trustee to such effect. |
6.6 |
Notices to Instrumentholders |
Obtain the prior written approval of the Trustee to, and promptly give to the Trustee two copies of, the form of every notice given to the Instrumentholders in accordance with
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Condition 13 (such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial Services and Markets Act 2000 any such notice which is a communication within the meaning of that section).
6.7 |
Further Acts |
So far as permitted by applicable law, do such further things as may be necessary in the reasonable opinion of the Trustee to give effect to this Trust Deed.
6.8 |
Notice of Late Payment |
Forthwith upon request by the Trustee (if the Trustee determines such notice is necessary) give notice to the Instrumentholders of any unconditional payment to the Issuing and Paying Agent or the Trustee of any sum due in respect of the Instruments made after the due date for such payment.
6.9 |
Listing |
If the Instruments are so listed, use all reasonable endeavours to maintain the listing of the Instruments but, if it is unable to do so, having used such endeavours, or if the maintenance of such listing is agreed by the Trustee to be unduly onerous and the Trustee is satisfied that the interests of the Instrumentholders would not by such action be materially prejudiced, instead use all reasonable endeavours to obtain and maintain a listing of the Instruments on another stock exchange approved in writing by the Trustee.
6.10 |
Change in Agents |
Give at least 14 days prior notice to the Instrumentholders in accordance with the Conditions of any future appointment, resignation or removal of an Agent or of any change by an Agent of its specified office.
6.11 |
Provision of Legal Opinions |
Procure the delivery of legal opinions addressed to the Trustee dated the date of such delivery, in form and content acceptable to the Trustee:
6.11.1 |
from Allen & Overy LLP as to the laws of England and the laws of New York and the Issuerss internal counsel as to the laws of the United States (or such other legal advisers as may be agreed between the Issuers and the Trustee) before the first issue of Instruments occurring after each anniversary of this Trust Deed or, if later, 12 months after the date of delivery of the latest such legal opinion and on the date of any amendment to this Trust Deed; |
6.11.2 |
unless the relevant Issuer has notified the Dealers and the Trustee in writing that it does not intend to issue Instruments under the Programme for the time being, from legal advisers reasonably acceptable to the Trustee as to such law as may reasonably be requested by the Trustee and in such form and with such content as the Trustee may require, on such occasions as the Trustee so requests on the basis that the Trustee considers it prudent in view of a change (or proposed change) in (or in the interpretation or application of) any applicable law, regulation or circumstance materially affecting such Issuer, the Trustee, the relevant Instruments, the Certificates, this Trust Deed or the Agency Agreement; and |
6.11.3 |
on each occasion on which a legal opinion is given to any Dealer pursuant to the Dealer Agreement from the legal adviser giving such opinion; |
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6.12 |
Instruments Held by the Issuer |
Send to the Trustee as soon as practicable after being so requested by the Trustee a certificate of the relevant Issuer signed by any director or the Company Secretary stating the number of Instruments held at the date of such certificate by or on behalf of such Issuer or its subsidiary undertakings.
6.13 |
Obligations of Agents |
Comply with and perform all its obligations under the Agency Agreement and use all reasonable endeavours to procure that the Agents comply with and perform all their respective obligations thereunder and not make any amendment or modification to the Agency Agreement without the prior written approval of the Trustee.
6.14 |
Copies of Dealer Agreement |
Provide the Trustee promptly with copies of all supplements and/or amendments to, and/or restatements of, the Dealer Agreement.
7 |
Remuneration and Indemnification of the Trustee |
7.1 |
Normal Remuneration |
So long as any Instrument is outstanding the relevant Issuer shall pay the Trustee as remuneration for its services as Trustee such sum on such dates in each case as they may from time to time agree. Such remuneration shall accrue from day to day from the date of this Trust Deed. However, if any payment to an Instrumentholder of moneys due in respect of any Instrument is improperly withheld or refused, such remuneration shall again accrue as from the date of such withholding or refusal until payment to such Instrumentholder is duly made.
7.2 |
Extra Remuneration |
If an Event of Default shall have occurred or if the Trustee finds it expedient or necessary or is requested by either of the Issuers to undertake duties that they both agree to be of an exceptional nature or otherwise outside the scope of the Trustees normal duties under this Trust Deed, the relevant Issuer shall pay such additional remuneration as they may agree (and which may be calculated by reference to the Trustees normal hourly rates in force from time to time) or, failing agreement as to any of the matters in this Clause 7 (or as to such sums referred to in Clause 7.1 (Normal Remuneration)), as determined by a person (acting as an expert) selected by the Trustee and approved by such Issuer or, failing such approval, nominated by the President for the time being of The Law Society of England and Wales. The expenses involved in such nomination and such persons fee shall be shared equally between the Trustee and the relevant Issuer. The determination of the relevant person shall be conclusive and binding on the Issuer, the Trustee and the relevant Instrumentholders.
7.3 |
Expenses |
Each Issuer (in respect of itself and, where applicable, Instruments issued by it) shall also, on demand by the Trustee, pay or discharge all costs, charges, liabilities and expenses reasonably incurred by the Trustee in the preparation and execution of this Trust Deed and the performance of its functions under this Trust Deed including, but not limited to, legal and travelling expenses and any United Kingdom stamp, documentary or other taxes or
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duties paid by the Trustee in connection with any legal proceedings reasonably brought or contemplated by the Trustee against an Issuer to enforce any provision of this Trust Deed, the relevant Instruments and in addition shall pay to the Trustee (if required) an amount equal to the amount of any value added tax or similar tax chargeable in respect of the Trustees remuneration under this Trust Deed. Such costs, charges, liabilities and expenses shall:
7.3.1 |
in the case of payments made by the Trustee before such demand, carry interest from the date of the demand at the rate of the Trustees cost of funding on the date on which the Trustee made such payments; and |
7.3.2 |
in other cases, carry interest at such rate from 30 days after the date of the demand or (where the demand specifies that payment is to be made on an earlier date) from such earlier date provided that in such event no such interest shall accrue unless payment is actually made on such earlier date. |
7.4 |
Notice of Costs |
The Trustee shall wherever practicable give prior notice to the relevant Issuer of any costs, charges and expenses properly to be incurred and of payments to be made by the Trustee in the lawful exercise of its powers under this Trust Deed so as to afford such Issuer a reasonable opportunity to meet such costs, charges and expenses itself or to put the Trustee in funds to make payment of such costs, charges and expenses. However, failure of the Trustee to give any such prior notice shall not prejudice its rights to reimbursement of such costs, charges and expenses under this Clause 7.
7.5 |
Indemnity |
Each Issuer shall indemnify the Trustee in respect of all liabilities and expenses properly incurred by it or by anyone appointed by it or to whom any of its functions may be delegated by it in the carrying out of its functions and against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all costs, charges and expenses properly paid or incurred in disputing or defending any of the foregoing) which any of them may incur in relation to the relevant Issuer or that may be made against any of them arising out of or in relation to or in connection with, its appointment or the exercise of its functions in relation to that Issuer.
7.6 |
Continuing Effect |
Clauses 7.3 (Expenses) and 7.5 (Indemnity) shall continue in full force and effect as regards the Trustee even if it no longer is Trustee.
7.7 |
Determination of Series |
The Trustee shall be entitled in its absolute discretion to determine in respect of which Series of Instruments any costs, charges, liabilities and expenses incurred under this Trust Deed have been incurred or to allocate any such costs, charges, liabilities and expenses between the Instruments of any two or more Series.
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8 |
Provisions Supplemental to the Trustee Acts |
8.1 |
Advice |
The Trustee may act on the opinion or advice of, or information obtained from, any expert (including, without limitation, any report or advice received from an independent financial adviser or from any accountant pursuant to the Conditions), whether or not (1) such opinion, advice or information is addressed to the Trustee or any other person, and (2) such experts liability in respect of the same is limited by reference to a monetary cap or otherwise and shall not be responsible to anyone for any loss occasioned by so acting. Any such opinion, advice or information may be sent or obtained by letter or fax and the Trustee shall not be liable to anyone for acting in good faith on any opinion, advice or information purporting to be conveyed by such means even if it contains some error or is not authentic.
8.2 |
Trustee to Assume Performance |
The Trustee need not notify anyone of the execution of this Trust Deed or do anything to find out if an Event of Default or Potential Event of Default has occurred. Until it has actual knowledge or express notice to the contrary, the Trustee may assume that no such event has occurred and that each Issuer is performing all of its obligations under this Trust Deed and the relevant Instruments provided that the Trustee shall not be treated for any purposes as having any notice or knowledge which has been obtained by it or any officer or employee of it in some capacity other than as Trustee under this Trust Deed or in a private or confidential capacity such that it would not be proper to disclose to third parties.
8.3 |
Resolutions of Instrumentholders |
The Trustee shall not be responsible for having acted in good faith on a resolution purporting to have been passed at a meeting of Instrumentholders in respect of which minutes have been made and signed even if it is later found that there was a defect in the constitution of the meeting or the passing of the resolution or that the resolution was not valid or binding on the Instrumentholders.
8.4 |
Certificate Signed by Directors, etc. |
If the Trustee, in the exercise of its functions, requires to be satisfied or to have information as to any fact or the expediency of any act, it may call for and accept as sufficient evidence of that fact or the expediency of that act a certificate signed by any two directors of the relevant Issuer as to that fact or to the effect that, in their opinion, that act is expedient and the Trustee need not call for further evidence and shall not be responsible for any loss occasioned by acting on such a certificate.
8.5 |
Deposit of Documents |
The Trustee may deposit this Trust Deed and any other documents with any bank or entity whose business includes the safe custody of documents or with any lawyer or firm of lawyers believed by it to be of good repute and may pay all sums due in respect of them.
8.6 |
Discretion |
The Trustee shall have absolute and uncontrolled discretion as to the exercise of its functions and shall not be responsible for any loss, liability, cost, claim, action, demand, expense or inconvenience which may result from their exercise or non-exercise.
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8.7 |
Agents |
Whenever it considers it expedient in the interests of the Instrumentholders, the Trustee may, in the conduct of its trust business, instead of acting personally, employ and pay an agent selected by it, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money). The Trustee shall not be responsible to anyone for any misconduct or omission by any such agent so employed by it or be bound to supervise the proceedings or acts of any such agent.
8.8 |
Delegation |
Whenever it considers it expedient in the interests of the Instrumentholders, the Trustee may delegate to any person on any terms (including power to sub-delegate) all or any of its functions. If the Trustee exercises reasonable care in selecting such delegate, it shall not have any obligation to supervise such delegate or be responsible for any loss, liability, cost, claim, action, demand or expense incurred by reason of any misconduct or default by any such delegate or sub-delegate.
8.9 |
Nominees |
In relation to any asset held by it under this Trust Deed, the Trustee may appoint any person to act as its nominee on any terms.
8.10 |
Forged Instruments |
The Trustee shall not be liable to the relevant Issuer or any relevant Instrumentholder by reason of having accepted as valid or not having rejected any relevant Instrument or Certificate purporting to be such and later found to be forged or not authentic.
8.11 |
Confidentiality |
Unless ordered to do so by a court of competent jurisdiction, the Trustee shall not be required to disclose to any Instrumentholder any confidential financial or other information made available to the Trustee by the relevant the Issuer.
8.12 |
Determinations Conclusive |
As between itself and the Instrumentholders, the Trustee may determine all questions and doubts arising in relation to any of the provisions of this Trust Deed. Such determinations, whether made upon such a question actually raised or implied in the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Instrumentholders.
8.13 |
Currency Conversion |
Where it is necessary or desirable to convert any sum from one currency to another, it shall (unless otherwise provided hereby or required by law) be converted at such rate or rates, in accordance with such method and as at such date as may reasonably be specified by the Trustee but having regard to current rates of exchange, if available. Any rate, method and date so specified shall be binding on the relevant Issuer and the relevant Instrumentholders.
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8.14 |
Payment for and Delivery of Instruments |
The Trustee shall not be responsible for the receipt or application by the relevant Issuer of the proceeds of the issue of any relevant Instruments, any exchange of relevant Instruments or the delivery of relevant Instruments to the persons entitled to them.
8.15 |
Trustees consent |
Any consent given by the Trustee for the purposes of this Trust Deed may be given on such terms as the Trustee thinks fit. In giving such consent the Trustee may require the Issuers to agree to such modifications or additions to this Trust Deed as the Trustee may deem expedient in the interest of the Instrumentholders.
8.16 |
Instruments Held by the Issuer etc. |
In the absence of knowledge or express notice to the contrary, the Trustee may assume without enquiry (other than requesting a certificate under Clause 6.12 (Instruments Held by the Issuer)) that no Instruments are for the time being held by or on behalf of an Issuer or its subsidiary undertakings.
8.17 |
Legal Opinions |
The Trustee shall not be responsible to any person for failing to request, require or receive any legal opinion relating to any Instruments or for checking or commenting upon the content of any such legal opinion.
8.18 |
Programme Limit |
The Trustee shall not be concerned, and need not enquire, as to whether or not any Instruments are issued in breach of the Programme Limit.
8.19 |
Events of Default |
The Trustee may determine whether or not an Event of Default is in its opinion capable of remedy or (in relation to Condition 8(b)) materially prejudicial to the interests of relevant Instrumentholders. Any such determination shall be conclusive and binding on the relevant Issuer and the relevant Instrumentholders.
8.20 |
Appointment of Independent Financial Adviser |
In connection with the Trustees right to appoint an independent financial adviser pursuant to Clause 8.1 (if applicable), the Trustee:
8.20.1 |
shall use its reasonable endeavours to identify and appoint the independent financial adviser but shall have no liability to any person if, having used its reasonable endeavours, it is unable to identify and appoint a suitable independent financial adviser; |
8.20.2 |
shall not be responsible for carrying on the role of independent financial adviser itself during the time it is attempting to identify such independent financial adviser or thereafter if it is unable to find such independent financial adviser; and |
8.20.3 |
shall not be required to take any action to find an independent financial adviser unless it has been previously indemnified and/or secured to its satisfaction or expend any of its own funds in the appointment of such an independent financial adviser. |
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8.21 |
Illegality |
No provision of this Trust Deed or the Conditions shall require the Trustee to do anything which may in its opinion be illegal or contrary to applicable law or regulation.
8.22 |
Banker, Lawyer, Broker or other Professional acting as Trustee |
Any trustee being a banker, lawyer, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by him or his partner or firm on matters arising in connection with the trusts of this Trust Deed and also his properly incurred charges in addition to disbursements for all other work and business done and all time spent by him or his partner or firm on matters arising in connection with the Trust Deed, including matters which might or should have been attended to in person by a trustee not being a banker, lawyer, broker or other professional person.
8.23 |
No Obligation to Risk Own Funds or Incur Financial Liability |
Nothing contained in this Trust Deed shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not assured to it.
8.24 |
No Obligation to Act without Indemnity, Security or Prefunding |
The Trustee shall not be bound to take any steps to enforce the performance of any provisions of this Trust Deed, the Instruments to appoint an independent financial advisor pursuant to the Conditions of the Instruments unless it shall be indemnified and/or secured and/or prefunded by the relevant Instrumentholders to its satisfaction against all proceedings, claims and demands to which it may be liable and against all costs, charges, liabilities and expenses which may be incurred by it in connection with such enforcement or appointment, including the cost of its managements time and/or other internal resources, calculated using its normal hourly rates in force from time to time.
8.25 |
Evaluation of Risk |
When determining whether an indemnity or any security is satisfactory to it, the Trustee shall be entitled to evaluate its risk in given circumstances by considering the worst-case scenario and, for this purpose, it may take into account, without limitation, the potential costs of defending or commencing proceedings in England or elsewhere and the risk however remote, of any award of damages against it in England or elsewhere.
8.26 |
Quality of Indemnity or Security |
The Trustee shall be entitled to require that any indemnity or security given to it by the Instrumentholders or any of them be given on a joint and several basis and be supported by evidence satisfactory to it as to the financial standing and creditworthiness of each counterparty and/or as to the value of the security and an opinion as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security.
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9 |
Disapplication and Trustee Liability |
9.1 |
Disapplication |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of this Trust Deed shall constitute a restriction or exclusion for the purposes of that Act.
9.2 |
Trustee Liability |
Subject to Sections 750 and 751 of the Companies Act 2006 (if applicable) and notwithstanding anything to the contrary in this Trust Deed, the Instruments or the Paying Agency Agreement, the Trustee shall not be liable to any person for any matter or thing done or omitted in any way in connection with or in relation to this Trust Deed, the Instruments or the Agency Agreement save in relation to its own gross negligence, wilful default or fraud.
10 |
Waiver and Proof of Default |
10.1 |
Waiver |
The Trustee may, without the consent of the Instrumentholders and without prejudice to its rights in respect of any subsequent breach, from time to time and at any time, if in its opinion the interests of the Instrumentholders will not be materially prejudiced thereby, waive or authorise, on such terms as seem expedient to it, any breach or proposed breach by an Issuer of this Trust Deed or the Conditions or determine that an Event of Default or Potential Event of Default shall not be treated as such provided that the Trustee shall not do so in contravention of an express direction given by an Extraordinary Resolution or a request made pursuant to Condition 8. No such direction or request shall affect a previous waiver, authorisation or determination. Any such waiver, authorisation or determination shall be binding on the relevant Instrumentholders and, if the Trustee so requires, shall be notified to the Instrumentholders as soon as practicable.
10.2 |
Proof of Default |
Proof that the relevant Issuer has failed to pay a sum due to the holder of any one Instrument shall (unless the contrary be proved) be sufficient evidence that it has made the same default as regards all other Instruments which are then payable.
11 |
Trustee not Precluded from Entering into Contracts |
The Trustee and any other person, whether or not acting for itself, may acquire, hold or dispose of any Instrument, Certificate or other security (or any interest therein) of either Issuer or any other person, may enter into or be interested in any contract or transaction with any such person and may act on, or as depositary or agent for, any committee or body of holders of any securities of any such person in each case with the same rights as it would have had if the Trustee were not acting as Trustee and need not account for any profit.
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12 |
Modification and Substitution |
12.1 |
Modification |
The Trustee may agree without the consent of the Instrumentholders to any modification to this Trust Deed of a formal, minor or technical nature or to correct a manifest error. The Trustee may also agree to any other modification to this Trust Deed which is in its opinion not materially prejudicial to the interests of the Instrumentholders of the relevant Series, but such power does not extend to any such modification as is mentioned in the proviso to paragraph 2 of Schedule 3 (Provisions for Meetings of Instrumentholders). Any such modification, authorisation or waiver shall be binding on the relevant Instrumentholders and if the Trustee so requires, such modification shall be notified to the relevant Instrumentholders as soon as practicable.
12.2 |
Substitution |
12.2.1 |
The Trustee may, without the consent of the Instrumentholders, agree to the substitution of any other company (the Substituted Obligor ) in place of the relevant Issuer (or of any previous substitute under this Clause 12) as the principal debtor under this Trust Deed and the relevant Instruments provided that such substitution would not, in the opinion of the Trustee, be materially prejudicial to the interests of the Instrumentholders, and further provided that : |
(i) |
a deed is executed or undertaking given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by this Trust Deed and the relevant Instruments (with consequential amendments as the Trustee may deem appropriate) as if the Substituted Obligor had been named in this Trust Deed and the relevant Instruments and Certificates as the principal debtor in place of such Issuer; |
(ii) |
if the Substituted Obligor is subject generally to the taxing jurisdiction of a territory or any authority of or in that territory with power to tax (the Substituted Territory ) other than the territory to the taxing jurisdiction of which (or to any such authority of or in which) the Issuer is subject generally (the Issuers Territory ), the Substituted Obligor shall (unless the Trustee otherwise agrees) give to the Trustee an undertaking satisfactory to the Trustee in terms corresponding to Condition 6 with the substitution for the references in that Condition to such Issuers Territory of references to the Substituted Territory whereupon the Trust Deed, and the relevant Instruments and Certificates shall be read accordingly; |
(iii) |
if any two directors of the Substituted Obligor certify that it will be solvent immediately after such substitution, the Trustee need not have regard to the Substituted Obligors financial condition, profits or prospects or compare them with those of such Issuer; |
(iv) |
such Issuer and the Substituted Obligor comply with such other requirements as the Trustee may direct in the interests of the relevant Instrumentholders; and |
(v) |
the Trustee is satisfied that (i) the Substituted Obligor has obtained all necessary governmental and regulatory approvals and consents necessary for its assumption of liability as principal debtor in respect of the relevant |
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Instruments in place of such Issuer (or a previous substitute), (ii) all necessary governmental and regulatory approvals and consents necessary for or in connection with the assumption by the Substituted Obligor of its obligations under the relevant Instruments and (iii) such approvals and consents are at the time of substitution in full force and effect. |
12.2.2 |
Release of Substituted Issuer |
An agreement by the Trustee pursuant to Clause 12.2 (Substitution) shall, if so expressed, release the relevant Issuer (or a previous substitute) from any or all of its obligations under this Trust Deed and the relevant Instruments. Notice of the substitution shall be given to the Instrumentholders within 14 days of the execution of such documents and compliance with such requirements.
12.2.3 |
Completion of Substitution |
On completion of the formalities set out in Clause 12.2 (Substitution), the Substituted Obligor shall be deemed to be named in this Trust Deed and the relevant Instruments and Certificates as the principal debtor in place of the relevant Issuer (or of any previous substitute) and this Trust Deed and the relevant Instruments and Certificates, shall be deemed to be amended as necessary to give effect to the substitution.
13 |
Appointment, Retirement and Removal of the Trustee |
13.1 |
Appointment |
Each Issuer has the power of appointing new trustees but no one may be so appointed unless previously approved by an Extraordinary Resolution. The Trustee shall at all times be a trust corporation and such trust corporation may be the sole Trustee. Any appointment of a new Trustee shall be notified by each Issuer to its Instrumentholders in accordance with Condition 13 as soon as practicable.
13.2 |
Retirement and Removal |
Any Trustee may retire at any time on giving at least three months written notice to each Issuer without giving any reason or being responsible for any costs occasioned by such retirement and the Instrumentholders may by Extraordinary Resolution remove any Trustee provided that the retirement or removal of a sole trust corporation shall not be effective until a trust corporation is appointed as successor Trustee. If a sole trust corporation gives notice of retirement or an Extraordinary Resolution is passed for its removal, it shall use all reasonable endeavours to procure that another trust corporation is appointed as Trustee.
13.3 |
Co-Trustees |
The Trustee may, despite Clause 13.1 (Appointment), by written notice to (i) each Issuer, appoint anyone to act as an additional Trustee jointly with the Trustee, or (ii) the relevant Issuer appoint anyone to act as a separate Trustee in respect of any Issue or :
13.3.1 |
if the Trustee considers the appointment to be in the interests of the Instrumentholders; or |
13.3.2 |
to conform with a legal requirement, restriction or condition in a jurisdiction in which a particular act is to be performed; or |
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13.3.3 |
to obtain a judgment or to enforce a judgment or any provision of this Trust Deed in any jurisdiction. |
Subject to the provisions of this Trust Deed the Trustee may, in the instrument of appointment, confer on any person so appointed such functions as it thinks fit. The Trustee may by written notice to each Issuer and that person remove that person. At the Trustees request, each Issuer shall forthwith do all things as may be required to perfect such appointment or removal and the Issuers irrevocably appoint the Trustee as their attorney in their name and on their behalf to do so.
Before appointing such person to act as separate Trustee or additional Trustee the Trustee shall (unless it is not, in the opinion of the Trustee, reasonably practicable to do so) give notice to the Issuers of its intention to make such appointment (and the reason for that) and shall give due consideration to representations made by the Issuers concerning such appointment. Where, as a result of this provision, not all the Instruments have the same Trustee, the provisions of this Trust Deed shall apply in respect of each such Trustee as if each were named as a party to this Trust Deed.
13.4 |
Competence of a Majority of Trustees |
If there are more than two Trustees the majority of them shall be competent to perform the Trustees functions provided the majority includes a trust corporation.
14 |
Instruments held in Clearing Systems |
14.1 |
Instruments Held in Clearing Systems |
So long as any Instruments represented by a Global Certificate are held on behalf of a clearing system, in considering the interests of Instrumentholders, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders or participants with entitlements to any such Instrument and may consider such interests on the basis that such accountholders or participants were the holder(s) of such Instrument.
14.2 |
Evidence of Holdings |
The Trustee and each Issuer may call for and, except in the case of manifest error, shall be at liberty to accept and place full reliance on as sufficient evidence thereof any certificate, letter of confirmation or other document issued on behalf of Euroclear or Clearstream, Luxembourg or any form of record made by any of them or such other evidence and/or information and/or certification as it shall, in its absolute discretion, think fit to the effect that at any particular time or throughout any particular period any particular person is, was, or will be, shown in its records as the holder of a particular nominal amount of Instruments represented by a Global Certificate and if the Trustee or such Issuer does so rely, such letter of confirmation, form of record, evidence, information or certification shall be conclusive and binding on all concerned for all purposes. Any such certificate may comprise any form of statement or print out of electronic records provided by the relevant clearing system (including Euroclears EUCLID or Clearstream, Luxembourgs Creation Online system) in accordance with its usual procedures and in which the holder of a particular nominal amount of Instruments is clearly identified together with the amount of such holding. Neither such Issuer nor the Trustee shall be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic.
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15 |
Currency Indemnity |
15.1 |
Currency of Account and Payment |
The Contractual Currency is the sole currency of account and payment for all sums payable by each Issuer under or in connection with this Trust Deed and the Instruments, including damages.
15.2 |
Extent of Discharge |
An amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the insolvency, winding-up or dissolution of either Issuer or otherwise), by the Trustee or any Instrumentholder in respect of any sum expressed to be due to it from the relevant Issuer, shall only discharge such Issuer to the extent of the Contractual Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).
15.3 |
Indemnity |
If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed or the Instruments, the relevant Issuer shall indemnify the recipient against any loss sustained by it as a result. In any event, such Issuer shall indemnify the recipient against the cost of making any such purchase.
15.4 |
Indemnity Separate |
The indemnities in this Clause 15 and in Clause 7.5 (Indemnity) constitute separate and independent obligations from the other obligations in this Trust Deed, shall give rise to a separate and independent course of action, shall apply irrespective of any indulgence granted by the Trustee and/or any Instrumentholder and shall continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed or the Instruments or any other judgment or order.
16 |
Enforcement |
16.1 |
Trustee to enforce |
Only the Trustee may enforce the rights of the Instrumentholders against the relevant Issuer, whether the same arise under the general law, this Trust Deed, the Instruments or otherwise, and no Instrumentholder shall be entitled to proceed directly against such Issuer unless the Trustee, having become bound to proceed, fails to do so within a reasonable time and such failure is continuing.
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16.2 |
Trustees Indemnity |
The Trustee shall not be bound to take any steps to enforce the performance of any provisions of this Trust Deed or the Instruments or to appoint an independent financial advisor pursuant to the Conditions of the Instruments unless it shall be indemnified and/or secured and/or prefunded by the relevant Instrumentholders to its satisfaction against all proceedings, claims and demands to which it may be liable and against all costs, charges, liabilities and expenses which may be incurred by it in connection with such enforcement or appointment, including the cost of its managements time and/or other internal resources, calculated using its normal hourly rates in force from time to time.
16.3 |
Legal proceedings |
If the Trustee (or any Instrumentholder where entitled in accordance with this Trust Deed so to do) institutes legal proceedings against the relevant Issuer to enforce any obligations under this Trust Deed, proof in such proceedings that as regards any specified Instrument such Issuer has made default in paying any principal or interest due to the relevant Instrumentholder shall (unless the contrary be proved) be sufficient evidence that such Issuer has made the same default as regards all other Instruments which are then repayable or, as the case may be, in respect of which interest is then payable. Powers additional to general powers
The powers conferred on the Trustee by this Clause 16 shall be in addition to any powers which may from time to time be vested in the Trustee by general law or as the holder of any Instruments.
17 |
Communications |
17.1 |
Method |
Each communication under this Trust Deed shall be made by fax or otherwise in writing. Each communication or document to be delivered to any party under this Trust Deed shall be sent to that party at the fax number or address, and marked for the attention of the person (if any), from time to time designated by that party to each other party for the purpose of this Trust Deed. The initial telephone number, fax number, address and person so designated by the parties under this Trust Deed are set out in the Procedures Memorandum.
17.2 |
Deemed Receipt |
Any communication from any party to any other under this Trust Deed shall be effective, (if by fax) when good receipt is confirmed by the recipient following enquiry by the sender and (if in writing) when received, except that a communication received outside normal business hours shall be deemed to be received on the next business day in the city in which the recipient is located.
18 |
Governing Law and Jurisdiction |
18.1 |
Governing Law |
This Trust Deed and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
18.2 |
Jurisdiction |
The courts of England are to have jurisdiction to settle any disputes that may arise out of or in connection with this Trust Deed or the Instruments and accordingly any legal action or
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proceedings arising out of or in connection with this Trust Deed or the Instruments ( Proceedings ) may be brought in such courts. Each Issuer irrevocably submits to the jurisdiction of such courts and waives any objection to Proceedings in such courts on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. This Clause is for the benefit of each of the Trustee and the relevant Instrumentholders and shall not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).
18.3 |
Service of Process |
Each Issuer irrevocably appoints National Grid plc of 1-3 Strand, London WC2N 5EH to receive, for it and on their behalf, service of process in any Proceedings in England. Such service shall be deemed completed on delivery to such process agent (whether or not it is forwarded to and received by the relevant Issuer). If for any reason such process agent ceases to be able to act as such or no longer has an address in England each Issuer irrevocably agrees to appoint a substitute process agent acceptable to the Trustee and shall immediately notify the Trustee of such appointment. Nothing shall affect the right to serve process in any other manner permitted by law.
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Schedule 1
Part A
Form of Global Certificate
[BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON, AS DEFINED IN THE U.S. SECURITIES ACT OF 1933 (THE SECURITIES ACT), NOT IS IT PURCHASING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]*
[NATIONAL GRID USA
(Incorporated in the State of Delaware, United States of America)/
NATIONAL GRID NORTH AMERICA INC.
(incorporated in the State of Delaware, United States of America)]
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[TEMPORARY / PERMANENT] GLOBAL CERTIFICATE
Global Certificate No. []
This Global Certificate is issued in respect of the Instruments (the Instruments ) of the Tranche and Series specified in Part A of the Schedule hereto of [National Grid USA / National Grid North America Inc.] (the Issuer ). This Global Certificate certifies that the person whose name is entered in the Register (the Registered Holder ) is registered as the holder of an issue of Instruments of the nominal amount, specified currency and specified denomination set out in Part A of the Schedule hereto.
Interpretation and Definitions
References in this Global Certificate to the Conditions are to the Terms and Conditions applicable to the Instruments (which are in the form set out in Schedule 2 ( Terms and Conditions of the Instruments ) to the amended and restated trust deed (as amended or supplemented as at the Issue Date, the Trust Deed ) dated 20 December 2012 between the Issuer and The Law Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented and/or modified and/or superseded by the provisions of this Global Certificate (including the supplemental definitions and any modifications or additions set out the Schedule hereto), which in the event of any conflict shall prevail). Other capitalised terms used in this Global Certificate shall have the meanings given to them in the Conditions or the Trust Deed.
Promise to Pay
The Issuer, for value received, promises to pay to the holder of the Instruments represented by this Global Certificate (subject to surrender of this Global Certificate if no further payment falls to be made in respect of such Instruments) on the Maturity Date (or on such earlier date as the amount payable upon redemption under the Conditions may become repayable in accordance with the Conditions) the amount payable upon redemption under the Conditions in respect of the Instruments represented by this Global
* |
To be included on the face of the Temporary Global Certificate and may be removed no earlier than 40 days after the issue date upon certification of non-U.S. beneficial ownership. |
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Certificate and (unless the Instruments represented by this Certificate do not bear interest) to pay interest in respect of such Instruments from the Interest Commencement Date in arrear at the rates, on the dates for payment, and in accordance with the methods of calculation provided for in the Conditions, save that the calculation is made in respect of the total aggregate amount of the Instruments represented by this Global Certificate, together with such other sums and additional amounts (if any) as may be payable under the Conditions, in accordance with the Conditions. Each payment will be made to, or to the order of, the person whose name is entered on the Register at the close of business on the Clearing System Business Day immediately prior to the date for payment, where Clearing System Business Day means Monday to Friday inclusive except 25 December and 1 January.
For the purposes of this Global Certificate, (a) the holder of the Instruments represented by this Global Certificate is bound by the provisions of the Agency Agreement, (b) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Instruments represented by this Global Certificate, (c) this Global Certificate is evidence of entitlement only, (d) title to the Instruments represented by this Global Certificate passes only on due registration on the Register, and (e) only the holder of the Instruments represented by this Global Certificate is entitled to payments in respect of the Instruments represented by this Global Certificate.
Transfer of Instruments represented by Global Certificates
If the Schedule hereto states that the Instruments are to be represented by a Global Certificate on issue, transfers of the holding of Instruments represented by this Global Certificate pursuant to Condition 17(a) may only be made in part:
(i) |
if the Instruments represented by this Global Certificate are held on behalf of Euroclear or Clearstream, Luxembourg or any other clearing system (an Alternative Clearing System ) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so or |
(ii) |
with the consent of the Issuer |
provided that, in the case of the first transfer of part of a holding pursuant to (i) above, the holder of the Instruments represented by this Global Certificate has given the Registrar not less than 30 days notice at its specified office of such holders intention to effect such transfer. Where the holding of Instruments represented by this Global Certificate is only transferable in its entirety, the Certificate issued to the transferee upon transfer of such holding shall be a Global Certificate. Where transfers are permitted in part, Certificates issued to transferees shall not be Global Certificates unless the transferee so requests and certifies to the Registrar that it is, or is acting as a nominee for, Clearstream, Luxembourg, Euroclear and/or an Alternative Clearing System.
Meetings
For the purposes of any meeting of Instrumentholders, the holder of the Instruments represented by this Global Certificate shall (unless this Global Certificate represents only one Instrument) be treated as two persons for the purposes of any quorum requirements of a meeting of Instrumentholders and as being entitled to one vote in respect of each integral currency unit of the Specified Currency of the Instruments.
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This Global Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar and in the case of instruments held under the NSS only, effectuated by the entity appointed as Common Safekeeper by the relevant Clearing Systems.
This Global Certificate and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.
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In witness whereof the Issuer has caused this Global Certificate to be signed on its behalf.
Dated as of the Issue Date.
[NATIONAL GRID USA
By:
]
[NATIONAL GRID NORTH AMERICA INC.
By:
]
CERTIFICATE OF AUTHENTICATION
This Global Certificate is authenticated by or on behalf of the Registrar.
THE BANK OF NEW YORK MELLON (LUXEMBOURG) S.A.
as Registrar
By:
Authorised Signatory
For the purposes of authentication only.
Effectuation
This Global Certificate is effectuated
by or on behalf of the Common Safekeeper
CLEARSTREAM BANKING, SOCIÉTÉ ANONYME
as Common Safekeeper
By:
Authorised Signatory
For the purposes of effectuation of Instruments held through the NSS only
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Form of Transfer
For value received the undersigned transfers to
|
|
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[] nominal amount of the Instruments represented by this Global Certificate, and all rights under them.
Dated |
|
|
Signed |
Certifying Signature |
Notes:
(i) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Instruments represented by this Global Certificate or (if such signature corresponds with the name as it appears on the face of this Global Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(ii) |
A representative of the Instrumentholder should state the capacity in which he signs e.g. executor. |
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Schedule
[Insert the provisions of the relevant Final Terms that relate to the Conditions or the Global Certificate as the Schedule.]
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Schedule 1
Part B
Form of Certificate
[NATIONAL GRID USA
(Incorporated in the State of Delaware, United States of America) /
NATIONAL GRID NORTH AMERICA INC.
(incorporated in the State of Delaware, United States of America) ]
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[Title of issue]
This Certificate certifies that [] of [] (the Registered Holder ) is, as at the date hereof, registered as the holder of [nominal amount] of Instruments of the Series of Instruments referred to above (the Instruments ) of [National Grid USA / National Grid North America Inc.] (the Issuer ), designated as specified in the title hereof. The Instruments are subject to the Terms and Conditions (the Conditions ) endorsed hereon and are issued subject to, and with the benefit of, the Trust Deed referred to in the Conditions. Expressions defined in the Conditions have the same meanings in this Certificate.
The Issuer, for value received, promises to pay to the holder of the Instrument(s) represented by this Certificate (subject to surrender of this Certificate if no further payment falls to be made in respect of such Instruments) on the Maturity Date (or on such earlier date as the amount payable upon redemption under the Conditions may become repayable in accordance with the Conditions) the amount payable upon redemption under the Conditions in respect of the Instruments represented by this Certificate and (unless the Instrument(s) represented by this Certificate do not bear interest) to pay interest in respect of such Instruments from the Interest Commencement Date in arrear at the rates, in the amounts and on the dates for payment provided for in the Conditions together with such other sums and additional amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.
For the purposes of this Certificate, (a) the holder of the Instrument(s) represented by this Certificate is bound by the provisions of the Agency Agreement, (b) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Instrument(s) represented by this Certificate, (c) this Certificate is evidence of entitlement only, (d) title to the Instrument(s) represented by this Certificate passes only on due registration on the Register, and (e) only the holder of the Instrument(s) represented by this Certificate is entitled to payments in respect of the Instrument(s) represented by this Certificate.
This Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.
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In witness whereof the Issuer has caused this Certificate to be signed on its behalf.
Dated as of the Issue Date.
[NATIONAL GRID USA
By:
]
[NATIONAL GRID NORTH AMERICA INC.
By:
]
CERTIFICATE OF AUTHENTICATION
This Certificate is authenticated
by or on behalf of the Registrar.
THE BANK OF NEW YORK MELLON (LUXEMBOURG) S.A.
as Registrar
By:
Authorised Signatory
For the purposes of authentication only.
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On the back:
Terms and Conditions of the Instruments
[The Terms and Conditions that are set out in Schedule 2 to the Trust Deed as amended by and incorporating any additional provisions forming part of such Terms and Conditions and set out in Part A of the relevant Final Terms shall be set out here.]
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Form of Transfer
For value received the undersigned transfers to
|
|
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[ ] nominal amount of the Instruments represented by this Certificate, and all rights under them.
Dated |
|
|
Signed |
Certifying Signature |
Notes:
(i) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Instruments represented by this Certificate or (if such signature corresponds with the name as it appears on the face of this Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(i) |
A representative of the Instrumentholder should state the capacity in which he signs. |
Unless the context otherwise requires capitalised terms used in this Form of Transfer have the same meaning as in the Trust Deed dated 20 December 2012 between the Issuer and the Trustee, [OTHER].
[TO BE COMPLETED BY TRANSFEREE:
[INSERT ANY REQUIRED TRANSFEREE REPRESENTATIONS, CERTIFICATIONS, ETC.]]
ISSUING AND PAYING AGENT, TRANSFER AGENT AND REGISTRAR
ISSUING AND PAYING AGENT
The Bank of New York Mellon
One Canada Square
London E14 5AL
REGISTRAR
The Bank of New York Mellon (Luxembourg) S.A.
Vertigo Building - Polaris
2-4 rue Eugène Ruppert
L-2453 Luxembourg
PAYING AGENTS AND TRANSFER AGENTS
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KBL European Private Bankers S.A.
43 Boulevard Royal
L-2955 Luxembourg
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Schedule 2
Terms and Conditions of the Instruments
The full text of these terms and conditions together with the relevant provisions of Part A of the Final Terms shall be endorsed on the Certificates relating to the Instruments. All capitalised terms which are not defined in these terms and conditions will have the meanings given to them in the Trust Deed or Part A of the relevant Final Terms. Those definitions will be endorsed on the Certificates. References in these terms and conditions to Instruments (as defined below) are to the Instruments of one Series only of the relevant Issuer (as defined below), not to all Instruments that may be issued under the Programme. In the case of PSM Instruments issued under the Programme, references to the Final Terms in these Conditions shall be construed as references to the Pricing Supplement.
National Grid USA ( NGUSA ) and National Grid North America Inc. ( NGNA ) have established a Euro Medium Term Note Programme (the Programme ) for the issuance of up to Euro 4,000,000,000 in aggregate principal amount of debt instruments (the Instruments ). References in these conditions to the Issuer shall be to NGUSA or NGNA. The Instruments are constituted by an amended and restated Trust Deed (as amended or supplemented from time to time, the Trust Deed ) dated 20 December 2013 between each of the Issuers and The Law Debenture Trust Corporation p.l.c. (the Trustee , which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Instrumentholders (as defined below). These terms and conditions (the Conditions ) include summaries of, and are subject to, the detailed provisions of the Trust Deed which includes the form of the Certificates. An amended and restated Agency Agreement (as amended or supplemented from time to time, the Agency Agreement ) dated 20 December 2012 has been entered into in relation to the Instruments between the Issuers, the Trustee, The Bank of New York Mellon as initial issuing and paying agent, The Bank of New York Mellon (Luxembourg) S.A. as the registrar and the other agent(s) named in it. The issuing and paying agent, the paying agent(s), the registrar, the transfer agents and the calculation agent(s) for the time being (if any) are referred to below respectively as the Issuing and Paying Agent , the Paying Agents (which expression shall include the Issuing and Paying Agent), the Registrar , the Transfer Agents (which expression shall include the Registrar) and the Calculation Agent(s) . Copies of the Trust Deed and the Agency Agreement are available for inspection by prior appointment during usual business hours at the registered office of the Trustee (as at 20 December 2013 at Fifth Floor, 100 Wood Street, London EC2V 7EX) and at the specified offices of the Paying Agents.
1 |
Form, Denomination and Title |
The Instruments are issued in registered form in the Specified Denomination(s) specified in the relevant Final Terms and are serially numbered. Instruments of one Specified Denomination are not exchangeable for Instruments of another Specified Denomination.
This Instrument is a Fixed Rate Instrument, a Floating Rate Instrument, a Zero Coupon Instrument, or a combination of any of the preceding kinds of Instruments, depending upon the Interest and Redemption Basis specified in the relevant Final Terms.
Instruments are represented by registered certificates ( Certificates ) and, save as provided in Condition 17(a), each Certificate shall represent the entire holding of Instruments by the same holder. Certificates will initially be represented by a Temporary Global Certificate. Beneficial interests in a Temporary Global Certificate will be exchangeable for a Permanent Global Certificate not earlier than 40 days after the issue date upon certification of non-U.S. beneficial ownership.
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Title to the Instruments shall pass by registration in the register (the Register ) that the Issuer shall procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement. Except as ordered by a court of competent jurisdiction or as required by law, the Issuer and the Paying Agents shall be entitled to treat the holder (as defined below) of any Instrument as the absolute owner of that Instrument, whether or not it is overdue and regardless of any notice of ownership, trust or an interest in it, any writing on it (or on the Certificate representing it) or its theft or loss (or that of the related Certificate) and shall not be required to obtain any proof of ownership as to the identity of the holder.
In these Conditions, Instrumentholder and holder means the person in whose name an Instrument is registered and capitalised terms have the meanings given to them herein, the absence of any such meaning indicating that such term is not applicable to the Instruments.
2 |
Status and Negative Pledge |
2.1 |
Status |
The Instruments constitute direct, unconditional and unsecured obligations of the Issuer and rank pari passu without any preference or priority among themselves. The payment obligations of the Issuer under the Instruments shall, subject to such exceptions as are from time to time applicable under the laws of England, rank equally with all other present and future unsecured obligations (other than subordinated obligations, if any) of the Issuer.
2.2 |
Negative Pledge |
So long as any Instrument remains outstanding (as defined in the Trust Deed) the Issuer will not create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest (Security) upon the whole or any part of its undertaking, assets or revenues present or future to secure any Relevant Indebtedness, or any guarantee of or indemnity in respect of any Relevant Indebtedness unless, at the same time or prior thereto, the Issuers obligations under the Instruments and the Trust Deed (a) are secured equally and rateably therewith or benefit from a guarantee or indemnity in substantially identical terms thereto, as the case may be, in each case to the satisfaction of the Trustee, or (b) have the benefit of such other security, guarantee, indemnity or other arrangement as the Trustee in its absolute discretion shall deem to be not materially less beneficial to the Instrumentholders or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Instrumentholders.
For the purposes of these Conditions, Relevant Indebtedness means any present or future indebtedness in the form of, or represented by, bonds, notes, debentures, loan stock or other securities which are for the time being, or are intended, with the agreement of the Issuer, to be quoted, listed or ordinarily dealt in on any stock exchange.
3 |
Interest |
3.1 |
Interest on Fixed Rate Instruments |
Each Fixed Rate Instrument bears interest on its outstanding nominal amount from the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest, payable in arrear on each Interest Payment Date. The amount of Interest payable shall be determined in accordance with Condition 3.4.
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If a Fixed Coupon Amount or a Broken Amount is specified in the relevant Final Terms, the amount of interest payable on each Interest Payment Date will amount to the Fixed Coupon Amount, or, if applicable, the Broken Amount so specified and in the case of a Broken Amount will be payable on the particular Interest Payment Date(s) specified in the relevant Final Terms.
3.2 |
Interest on Floating Rate Instruments |
3.2.1 |
Interest Payment Dates |
Each Floating Rate Instrument bears interest on its outstanding nominal amount from the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest, such interest being payable in arrear on each Interest Payment Date. The amount of Interest payable shall be determined in accordance with Condition 3.4. Such Interest Payment Date(s) is/are either specified in the relevant Final Terms as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are specified in the relevant Final Terms, Interest Payment Date shall mean each date which falls the number of months or other period shown on this Instrument as the Interest Period after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.
3.2.2 |
Business Day Convention |
If any date which is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is (a) the Floating Rate Convention, such date shall be postponed to the next day which is a Business Day unless it would then fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (b) the Following Business Day Convention, such date shall be postponed to the next day which is a Business Day, (c) the Modified Following Business Day Convention, such date shall be postponed to the next day which is a Business Day unless it would then fall into the next calendar month, in that event such date shall be brought forward to the immediately preceding Business Day or (d) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day.
3.2.3 |
Rate of Interest for Floating Rate Instruments |
The Rate of Interest in respect of Floating Rate Instruments for each Interest Accrual Period shall be determined in the manner specified in the relevant Final Terms and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply, depending upon which is specified on this Instrument.
(a) |
ISDA Determination for Floating Rate Instruments: Where ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each |
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Interest Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this sub-paragraph (a), ISDA Rate for an Interest Accrual Period means a rate equal to the Floating Rate which would be determined by the Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA Definitions and under which: |
(i) |
the Floating Rate Option is as specified in the relevant Final Terms; |
(ii) |
the Designated Maturity is a period specified in the relevant Final Terms; and |
(iii) |
the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise specified in the relevant Final Terms. |
For the purposes of this sub-paragraph (a), Floating Rate, Calculation Agent, Floating Rate Option, Designated Maturity, Reset Date and Swap Transaction have the meanings given to those terms in the ISDA Definitions.
(b) |
Screen Rate Determination for Floating Rate Instruments: |
(i) |
Where Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period will, subject as provided below, be either: |
(x) |
the offered quotation; or |
(y) |
the arithmetic mean of the offered quotations, |
(expressed as a percentage rate per annum) for the Reference Rate (being either LIBOR or EURIBOR, as specified in the applicable Final Terms) which appears or appear, as the case may be, on the Relevant Screen Page (or such replacement page on that service which displays the information) as at either 11.00 a.m. (London time in the case of LIBOR or Brussels time in the case of EURIBOR) on the Interest Determination Date in question as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean of such offered quotations.
(ii) |
if the Relevant Screen Page is not available or if, sub-paragraph (i)(x) applies and no such offered quotation appears on the Relevant Screen Page or if sub-paragraph (i)(y) above applies and fewer than three such offered quotations appear on the Relevant Screen Page in each case as at the time specified above, subject as provided below, the Calculation Agent shall request, if the Reference Rate is LIBOR, the principal London office of each of the Reference Banks or, if the Reference Rate is EURIBOR, the principal Euro-zone office |
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of each of the Reference Banks, to provide the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate if the Reference Rate is LIBOR, at approximately 11.00 a.m. (London time), or if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time) on the Interest Determination Date in question. If two or more of the Reference Banks provide the Calculation Agent with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean of such offered quotations as determined by the Calculation Agent; and |
(iii) |
if paragraph (ii) above applies and the Calculation Agent determines that fewer than two Reference Banks are providing offered quotations, subject as provided below, the Rate of Interest shall be the arithmetic mean of the rates per annum (expressed as a percentage) as communicated to (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them, at which such banks were offered, if the Reference Rate is LIBOR, at approximately 11.00 a.m. (London time) or, if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time) on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in, if the Reference Rate is LIBOR, the London inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the case may be, or, if fewer than two of the Reference Banks provide the Calculation Agent with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, or the arithmetic mean of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at which, if the Reference Rate is LIBOR, at approximately 11.00 a.m. (London time) or, if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time), on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Trustee and the Issuer suitable for such purpose) informs the Calculation Agent it is quoting to leading banks in, if the Reference Rate is LIBOR, the London inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the case may be, provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual Period, in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding Interest Accrual Period). |
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(c) |
Linear Interpolation: Where Linear Interpolation is specified hereon as applicable in respect of an Interest Accrual Period, the Rate of Interest for such Interest Accrual Period shall be calculated by the Calculation Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified hereon as applicable) or the relevant Floating Rate Option (where ISDA Determination is specified hereon as applicable), one of which shall be determined as if the Applicable Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Accrual Period and the other of which shall be determined as if the Applicable Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Accrual Period provided however that if there is no rate available for the period of time next shorter or, as the case may be, next longer, then the Calculation Agent shall determine such rate at such time and by reference to such sources as it determines appropriate. |
Applicable Maturity means, in relation to Screen Rate Determination, the period of time designated in the Reference Rate.
3.3 |
Zero Coupon Instruments |
Where an Instrument, the Interest Basis of which is specified to be Zero Coupon, is repayable prior to the Maturity Date and is not paid when due, the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount of such Instrument. As from the Maturity Date, the Rate of Interest for any overdue principal of such an Instrument shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as defined in Condition 4.4.1(b)).
3.4 |
Accrual of Interest |
Interest shall cease to accrue on each Instrument on the due date for redemption unless, upon due presentation, payment is improperly withheld or refused, in which event interest shall continue to accrue (as well after as before judgment) at the Rate of Interest in the manner provided in this Condition 3 to the Relevant Date (as defined in Condition 6).
3.5 |
Margin, Maximum/Minimum Rates of Interest, Redemption Amounts and Rounding |
(i) |
If any Margin is specified in the relevant Final Terms (either (x) generally, or (y) in relation to one or more Interest Accrual Periods), an adjustment shall be made to all Rates of Interest, in the case of (x), or the Rates of Interest for the specified Interest Accrual Periods, in the case of (y), calculated in accordance with Condition 3.2.3(b) above, by adding (if a positive number) or subtracting (if a negative number) the absolute value of such Margin, subject always to the next paragraph. |
(ii) |
If any Maximum or Minimum Rate of Interest, or Redemption Amount is specified in the relevant Final Terms, then any Rate of Interest, or Redemption Amount shall be subject to such maximum or minimum, as the case may be. |
(iii) |
For the purposes of any calculations required pursuant to these Conditions (unless otherwise specified), (x) all percentages resulting from such calculations shall be rounded, if necessary, to the nearest one hundred thousandth of a percentage point |
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|
(with halves being rounded up), (y) all figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with halves being rounded up), save in the case of yen, which shall be rounded down to the nearest yen. For these purposes unit means the lowest amount of such currency which is available as legal tender in the country of such currency. |
3.6 |
Calculations |
The amount of interest payable per Calculation Amount in respect of any Instrument for any Interest Accrual Period shall be equal to the product of the Rate of Interest, the Calculation Amount as specified in the relevant Final Terms, and the Day Count Fraction for such Interest Accrual Period, unless an Interest Amount (or a formula for its calculation) is applicable to such Interest Accrual Period, in which case the amount of interest payable per Calculation Amount in respect of such Instrument for such Interest Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for which interest is required to be calculated, the provisions above shall apply save that the Day Count Fraction shall be for the period for which interest is required to be calculated.
3.7 |
Determination and Publication of Rates of Interest, Interest Amounts, Final Redemption Amounts, Early Redemption Amounts and Optional Redemption Amounts |
The Calculation Agent shall as soon as practicable on each Interest Determination Date or such other time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain any quotation or make any determination or calculation, determine such rate and calculate the Interest Amounts for the relevant Interest Accrual Period, calculate the Redemption Amount, obtain such quote or make such determination or calculation, as the case may be, and cause the Rate of Interest and the Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date and, if required to be calculated, the Final Redemption Amount, Early Redemption Amount, or any Optional Redemption Amount to be notified to the Trustee, the Issuer, each of the Paying Agents, the Instrumentholders, any other Calculation Agent appointed in respect of the Instruments that is to make a further calculation upon receipt of such information and, if the Instruments are listed on a stock exchange and the rules of such exchange so require, such exchange as soon as possible after their determination but in no event later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification to such exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth Business Day after such determination. Where any Interest Payment Date or Interest Period Date is subject to adjustment pursuant to Condition 3.2.3(b)(ii), the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If the Instruments become due and payable under Condition 8, the accrued interest and the Rate of Interest payable in respect of the Instruments shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest or the Interest Amount so calculated need be made unless the
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Trustee otherwise requires. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties.
3.8 |
Determination or Calculation by Trustee |
If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Accrual Period or any Interest Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount the Trustee shall do so (or shall appoint an agent on its behalf to do so) and such determination or calculation shall be deemed to have been made by the Calculation Agent. In doing so, the Trustee shall apply the preceding provisions of this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances.
3.9 |
Definitions |
In these Conditions, unless the context otherwise requires, the following defined terms shall have the meanings set out below:
Business Day means:
(a) |
in the case of a currency other than Euro, a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such currency; and/or |
(b) |
in the case of Euro, a day on which the TARGET System is operating (a TARGET Business Day); and/or |
(c) |
in the case of a currency and/or one or more Business Centres as specified in the relevant Final Terms, a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency or, if no currency is indicated, generally in each of the Business Centres. |
Day Count Fraction means, in respect of the calculation of an amount of interest on any Instrument for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period or Interest Accrual Period, the Calculation Period):
(a) |
if Actual/Actual or Actual/Actual-ISDA is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 365 (or, if any portion of that Calculation Period falls in a leap year, the sum of (i) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); |
(b) |
if Actual/365 (Fixed) is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 365; |
(c) |
if Actual/360 is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 360; |
(d) |
if 30/360 , 360/360 or Bond Basis is specified in the relevant Final Terms, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: |
Day Count Fraction = |
[360 x (Y 2 Y 1 )] + [30 x (M 2 M 1 )]+ (D 2 D 1 ) |
|||
360 |
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where:
Y1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y2 is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
M1 is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
M2 is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
D 1 is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D 1 will be 30; and
D 2 is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D 1 is greater than 29, in which case D 2 will be 30;
(e) |
if 30E/360 or Eurobond Basis is specified in the relevant Final Terms, the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: |
Day Count Fraction = |
[360 x (Y 2 Y 1 )] + [30 x (M 2 M 1 )]+ (D 2 D 1 ) |
|||
360 |
where:
Y1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y2 is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
M1 is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
M2 is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
D1 is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and
D2 is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30;
if 30E/360 (ISDA) is specified in the relevant Final Terms, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction = |
[360 x (Y 2 Y 1 )] + [30 x (M 2 M 1 )]+ (D 2 D 1 ) |
|||
360 |
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where:
Y1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y2 is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
M1 is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
M2 is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
D1 is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
D2 is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30; and
(f) |
if Actual/Actual-ICMA is specified in the relevant Final Terms: |
(i) |
if the Calculation Period is equal to or shorter than the Determination Period during which it falls, the actual number of days in the Calculation Period divided by the product of (x) the actual number of days in such Determination Period and (y) the number of Determination Periods in any year; and |
(ii) |
if the Calculation Period is longer than one Determination Period, the sum of: |
(A) |
the actual number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (a) the actual number of days in such Determination Period and (b) the number of Determination Periods in any year; and |
(B) |
the actual number of days in such Calculation Period falling in the next Determination Period divided by the product of (a) the actual number of days in such Determination Period and (b) the number of Determination Periods in any year, |
where:
Determination Period means the period from and including a Determination Date in any year to but excluding the next Determination Date; and
Determination Date means the date specified as such in the relevant Final Terms or, if none is so specified, the Interest Payment Date.
Euro-zone means the region comprising of member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community as amended.
Interest Accrual Period means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period Date and each successive period beginning on (and including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date.
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Interest Amount means:
(a) |
in respect of an Interest Accrual Period, the amount of interest payable per Calculation Amount for that Interest Accrual Period and which, in the case of Fixed Rate Instruments, and unless otherwise specified in the relevant Final Terms, shall mean the Fixed Coupon Amount or Broken Amount specified in the relevant Final Terms as being payable on the Interest Payment Date ending the Interest Period of which such Interest Accrual Period forms part; and |
(b) |
in respect of any other period, the amount of interest payable per Calculation Amount for that period. |
Interest Commencement Date means the Issue Date or such other date as may be specified in the relevant Final Terms.
Interest Determination Date means, with respect to a Rate of Interest and Interest Accrual Period, the date specified as such in the relevant Final Terms or, if none is so specified, (a) the first day of such Interest Accrual Period if the Specified Currency is Sterling or (b) the day falling two Business Days in London prior to the first day of such Interest Accrual Period if the Specified Currency is neither Sterling nor Euro or (c) the day falling two TARGET Business Days prior to the first day of such Interest Accrual Period if the Specified Currency is Euro.
Interest Payment Date means the date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms, as the same may be adjusted in accordance with the relevant Business Day Convention.
Interest Period means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date.
Interest Period Date means each Interest Payment Date unless otherwise specified in the relevant Final Terms.
ISDA Definitions means the 2006 ISDA Definitions as published by the International Swaps and Derivatives Association, Inc.
Rate of Interest means the rate of interest payable from time to time in respect of this Instrument and that is either specified on, or calculated in accordance with the provisions of, the relevant Final Terms.
Redemption Amount means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of the relevant Final Terms.
Reference Banks means, in the case of a determination of LIBOR, the principal London office of four major banks in the London inter-bank market and, in the case of a determination of EURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bank market, in each case selected by the Calculation Agent.
Reference Rate means the rate specified as such in the relevant Final Terms.
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Relevant Screen Page means such page, section, caption, column or other part of a particular information service as may be specified in the relevant Final Terms.
Specified Currency means the currency specified as such in the relevant Final Terms or, if none is specified, the currency in which the Instruments are denominated.
TARGET System means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor to it.
3.10 |
Calculation Agent |
The Issuer shall procure that there shall at all times be one or more Calculation Agents if provision is made for them in the relevant Final Terms and for so long as any Instrument is outstanding. Where more than one Calculation Agent is appointed in respect of the Instruments, references in these Conditions to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under these Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest Period or Interest Accrual Period or to calculate any Interest Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be, or to comply with any other requirement, the Issuer shall (with the prior approval of the Trustee) appoint a leading bank or financial institution engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) which is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as specified in this paragraph.
4 |
Redemption, Purchase and Options |
4.1 |
Final Redemption |
Unless previously redeemed, purchased and cancelled as provided below, this Instrument will be redeemed at its Final Redemption Amount (which, unless otherwise provided, is its nominal amount) on the Maturity Date specified in the relevant Final Terms.
4.2 |
Redemption for Taxation Reasons |
If, on the occasion of the next payment in respect of the Instruments the Issuer satisfies the Trustee immediately before the giving of the notice referred to below that it would be unable to make such payment without having to pay additional amounts as described in Condition 6, and such requirement to pay such additional amounts arises by reason of a change in the laws of the United States of America or any political sub-division of the United States of America or any authority in or of the United States of America having power to tax or in the interpretation or application of the laws of the United States of America or any political sub-division of the United States of America or any authority in or of the United States of America having power to tax or in any applicable double taxation treaty or convention, which change becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Instruments, and such requirement cannot be avoided by the Issuer taking reasonable measures (such measures not involving any material additional payments by, or expense for, the Issuer), the Issuer may, at its option, at any time, having given not less than 30 nor more than 45 days notice to the
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Instrumentholders in accordance with Condition 13, redeem all, but not some only, of the Instruments at their Early Redemption Amount together with interest accrued to the date of redemption provided that the date fixed for redemption shall not be earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts or make such withholding or deduction, as the case may be, were a payment in respect of the Instruments then due. Prior to the publication of any notice of redemption pursuant to this Condition 4.2, the Issuer shall deliver to the Trustee a certificate signed by two directors of the Issuer stating that the requirement referred to above cannot be avoided by the Issuer taking reasonable measures available to it and the Trustee shall be entitled to accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out above in which event it shall be conclusive and binding on Instrumentholders
4.3 |
Purchases |
The Issuer and any of its Subsidiaries may at any time purchase Instruments in the open market or otherwise at any price.
Subsidiary means any corporation a majority of the outstanding voting stock of which is owned, directly or indirectly, by the Issuer.
4.4 |
Early Redemption |
4.4.1 |
Zero Coupon Instruments |
(a) |
The Early Redemption Amount payable in respect of any Zero Coupon Instrument upon redemption of such Instrument pursuant to Condition 4.2 or upon it becoming due and payable as provided in Condition 8 shall be the Amortised Face Amount (calculated as provided below) of such Instrument. |
(b) |
Subject to the provisions of sub-paragraph (c) below, the Amortised Face Amount of any such Instrument shall be the scheduled Final Redemption Amount of such Instrument on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which, if none is specified in the relevant Final Terms, shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Instruments if they were discounted back to their issue price on the Issue Date) compounded annually. |
(c) |
If the Early Redemption Amount payable in respect of any such Instrument upon its redemption pursuant to Condition 4.2 or, if applicable, Condition 4.5 or upon it becoming due and payable as provided in Condition 8, is not paid when due, the Early Redemption Amount due and payable in respect of such Instrument shall be the Amortised Face Amount of such Instrument as defined in sub-paragraph (b) above, except that such sub-paragraph shall have effect as though the reference in that sub-paragraph to the date on which the Instrument becomes due and payable was replaced by a reference to the Relevant Date as defined in Condition 6. The calculation of the Amortised Face Amount in accordance with this sub-paragraph shall continue to be made (as well after as before judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in which case the amount due and payable shall be the scheduled Final Redemption Amount of such Instrument on the Maturity Date together with any interest that may accrue in accordance with Condition 3.2. |
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|
Where such calculation is to be made for a period of less than one year, it shall be made on the basis of the Day Count Fraction specified in the relevant Final Terms. |
4.4.2 |
Other Instruments |
|
The Early Redemption Amount payable in respect of any Instrument (other than Instruments described in Condition 4.4.1), upon redemption of such Instrument pursuant to this Condition 4.4 or upon it becoming due and payable as provided in Condition 8, shall be the Final Redemption Amount unless otherwise specified in the relevant Final Terms. |
4.5 |
Redemption at the Option of the Issuer and Exercise of Issuers Options |
4.5.1 |
If (i) Residual Holding Call Option is specified in the relevant Final Terms, and (ii) if at any time the Residual Holding Percentage or more of the aggregate nominal amount of Instruments originally issued shall have been redeemed or purchased and cancelled, the Issuer shall have the option to redeem such outstanding Instruments in whole, but not in part, at their Residual Holding Redemption Amount. Unless otherwise specified in the relevant Final Terms, the Residual Holding Redemption Amount will be calculated by the Calculation Agent by discounting the outstanding nominal amount of the Instruments and the remaining interest payments (if applicable) to the Maturity Date by a rate per annum (expressed as a percentage to the nearest one hundred thousandth of a percentage point (with halves being rounded up)) equal to the Benchmark Yield, being the yield on the Benchmark Security at the close of business on the third Business Day prior to the date fixed for such redemption, plus the Benchmark Spread. Where the specified calculation is to be made for a period of less than one year, it shall be calculated using the Benchmark Day Count Fraction. The Issuer will give not less than 15 nor more than 30 days irrevocable notice to the Instrumentholders and the Trustee of any such redemption pursuant to this Condition 4.5.1. |
4.5.2 |
If Call Option is specified in the relevant Final Terms, the Issuer may, on giving not less than 15 nor more than 30 days irrevocable notice to the Instrumentholders (or such other notice period as may be specified in the relevant Final Terms), redeem, or exercise any Issuers option in relation to, all or, if so provided, some of such Instruments on any Optional Redemption Date or Option Exercise Date, as the case may be. Any such redemption of Instruments shall be at their Optional Redemption Amount together with interest accrued to the date fixed for redemption. Any such redemption or exercise must relate to Instruments of a nominal amount at least equal to the minimum nominal amount (if any) permitted to be redeemed specified in the relevant Final Terms and no greater than the maximum nominal amount (if any) permitted to be redeemed specified in the relevant Final Terms. |
All Instruments in respect of which any such notice is given shall be redeemed, or the Issuers option shall be exercised, on the date specified in such notice in accordance with this Condition.
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In the case of a partial redemption or a partial exercise of the Issuers option, the notice to Instrumentholders shall also specify the nominal amount of Instruments drawn and the holder(s) of such Instruments, to be redeemed, which shall have been drawn in such place as the Trustee may approve and in such manner as it deems appropriate, subject to compliance with any applicable laws, listing authority and stock exchange requirements.
4.6 |
Redemption at the Option of Instrumentholders |
If Put Option is specified in the relevant Final Terms, the Issuer shall, at the option of any Instrumentholder, upon such Instrumentholder giving not less than 15 nor more than 30 days notice to the Issuer (or such other notice period as may be specified in the relevant Final Terms) redeem such Instrument on the Optional Redemption Date(s) (as specified in the relevant Final Terms) at its Optional Redemption Amount (as specified in the Final Terms) together with interest accrued to the date fixed for redemption.
To exercise such option (which must be exercised on an Option Exercise Date) the holder must deposit the Certificate representing the Instrument(s) with the Registrar or any Transfer Agent at its specified office, together with a duly completed option exercise notice ( Exercise Notice ) in the form obtainable from any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the Instrumentholders Option Period (as specified in the Final Terms). No Instrument so deposited and option exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer.
4.7 |
Cancellation |
All Instruments redeemed pursuant to any of the foregoing provisions will be cancelled forthwith. All Instruments purchased by or on behalf of the Issuer or any of its Subsidiaries may, at the option of the Issuer be held by or may be surrendered for cancellation, but may not be resold and when held by the Issuer or any of its Subsidiaries shall not entitle the holder to vote at any meeting of Instrumentholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of Instrumentholders or for the purposes of Condition 10. Instruments may be surrendered for cancellation by surrendering the Certificate representing such Instruments to the Registrar and, in each case, if so surrendered, shall, together with all Instruments redeemed by the Issuer, be cancelled forthwith.
5 |
Payments |
5.1 |
Payments in respect of Instruments |
Payments of principal in respect of Instruments shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in paragraph (ii) below.
Interest on Instruments shall be paid to the person shown on the Register at the close of business on the fifteenth day before the due date for payment thereof (the Record Date). Payments of interest on each Instrument shall be made in the relevant currency by cheque drawn on a Bank and mailed to the holder (or to the first named of joint holders) of such Instrument at its address appearing in the Register. Upon application by the holder to the specified office of the Registrar or any Transfer Agent before the Record Date, such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a Bank.
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5.2 |
Payments subject to Fiscal Laws etc. |
All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 6. No commission or expenses shall be charged to the Instrumentholders in respect of such payments.
5.3 |
Appointment of Agents |
The Issuing and Paying Agent, the Paying Agents and the Calculation Agent initially appointed by the Issuer and their respective specified offices are listed below. The Issuing and Paying Agent, the Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent act solely as agents of the Issuer and do not assume any obligation or relationship of agency or trust for or with any holder. The Issuer reserves the right at any time with the approval of the Trustee to vary or terminate the appointment of the Issuing and Paying Agent, any other Paying Agent, the Registrar, any Transfer Agent or the Calculation Agent and to appoint additional or other Paying Agents or Transfer Agents, provided that the Issuer shall at all times maintain (a) an Issuing and Paying Agent, (b) a Paying Agent having its specified office in a major European city, (c) a Calculation Agent where the Conditions so require one, (d) so long as the Instruments are listed on any stock exchange or admitted to listing by any other relevant authority, a Paying Agent having a specified office in such place as may be required by the rules and regulations of any other relevant stock exchange or other relevant authority, (e) to the extent that the Issuer is able to do so and not provided for by the foregoing provisions of this Condition 5.3, a Paying Agent with a specified office in a European Union member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any law implementing, or introduced in order to conform to any such Directive and (f) a Registrar and a Transfer Agent. As used in these Conditions, the terms Issuing and Paying Agent , Calculation Agent , Registrar , Transfer Agent and Paying Agent include any additional or replacement Issuing and Paying Agent, Calculation Agent, Registrar, Transfer Agent or Paying Agent appointed under this Condition.
Notice of any such change or any change of any specified office shall promptly be given to the Instrumentholders in accordance with Condition 13.
5.4 |
Non-business days |
If any date for payment in respect of any Instrument is not a business day, the holder shall not be entitled to payment until the next following business day nor to any interest or other sum in respect of such postponed payment. In this paragraph, business day means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the place in which the specified office of the Registrar is located, in such jurisdictions as shall be specified as Financial Centres in the relevant Final Terms and:
5.4.1 |
(in the case of a payment in a currency other than Euro) where payment is to be made by transfer to an account maintained with a bank in the relevant currency, on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency; or |
5.4.2 |
(in the case of a payment in Euro) which is a TARGET Business Day. |
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6 |
Taxation |
All payments of principal and interest by or on behalf of the Issuer in respect of the Instruments will be made without withholding or deduction for or on account of, any present or future taxes or duties of whatever nature imposed or levied by or on behalf of the United States of America or any political sub-division of the United States of America or any authority in or of the United States of America having power to tax, unless such withholding or deduction is compelled by law. In that event, the Issuer will pay such additional amounts of principal and interest as will result in the payment to the Instrumentholders of the amounts which would otherwise have been receivable in respect of the Instruments had no withholding or deduction been made, except that no such additional amounts shall be payable in respect of any Instrument (or the Certificate representing it) presented for payment:
(a) |
by or on behalf of, a person who is liable to such taxes or duties in respect of such Instrument (or the Certificate representing such Instrument) by reason of his having some connection with the United States of America other than the mere holding of such Instrument (or the Certificate representing such Instrument); or |
(b) |
by or on behalf of a person who would not be liable or subject to such deduction or withholding by making a declaration of non-residence or other claim for exemption to a tax authority; or |
(c) |
more than 30 days after the Relevant Date except to the extent that the holder would have been entitled to such additional amounts on presenting the same (or in respect of which the Certificate representing it is presented) for payment on such 30th day; or |
(d) |
by a holder which is or was a controlled foreign corporation, personal holding company or passive foreign investment company with respect to the United States or a corporation that accumulates earnings to avoid United States federal income tax; or |
(e) |
if such tax is an estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment, or governance charge; or |
(f) |
by or on behalf of a holder which is or has been a 10 per cent. shareholder of the obligor of the Instruments as defined in Section 871(h)(3) of the United States Internal Revenue Code of 1986 (the Code) or any successor provisions; or |
(g) |
by or on behalf of a holder who would have been able to avoid such withholding or deduction by satisfying any statutory or procedural requirements (including, without limitation, the provision of information or a United States Internal Revenue Service Form W-8 or Form W-9 (or a successor form)) including any requirements imposed by Sections 1471 to 1474 (inclusive) of the Code, any United States Treasury Regulations or other guidance thereunder, any successor, substitute or similar legislation or law, or any law implementing an intergovernmental approach thereto; or |
(h) |
in the case of any combination of items (a) to (g) above. |
As used in these Conditions, Relevant Date in respect of any Instrument means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount
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outstanding is made or (if earlier) the date on which notice is duly given to the Instrumentholders in accordance with Condition 13 that, upon further presentation of the Instrument being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon such presentation. References in these Conditions to (a) principal shall be deemed to include any premium payable in respect of the Instruments, all Final Redemption Amounts, Early Redemption Amounts, Optional Redemption Amounts, Amortised Face Amounts and all other amounts in the nature of principal payable pursuant to Condition 4 or any amendment or supplement to it, (b) interest shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 3 or any amendment or supplement to it and (c) principal and/or interest shall be deemed to include any additional amounts which may be payable under this Condition or any undertaking given in addition to or in substitution for it under the Trust Deed.
7 |
Prescription |
Claims against the Issuer for payment in respect of the Instruments shall be prescribed and become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of them.
8 |
Events of Default |
If any of the following events (each an Event of Default ) occurs and is continuing, the Trustee at its discretion may, and if so requested by the holders of at least one-quarter in nominal amount of the Instruments then outstanding or if so directed by an Extraordinary Resolution shall (subject in each case to being indemnified and/or secured and/or prefunded to its satisfaction), give notice to the Issuer at its registered office that the Instruments are, and they shall accordingly immediately become due and repayable at their Redemption Amount together with accrued interest (if any) to the date of payment:
(a) |
Non-Payment |
there is default for more than 30 days in the payment of any principal or interest due in respect of the Instruments; or
(b) |
Breach of Other Obligations |
there is default in the performance or observance by the Issuer of any other obligation or provision under the Trust Deed or the Instruments (other than any obligation for the payment of any principal or interest in respect of the Instruments) which default is incapable of remedy or, if in the opinion of the Trustee capable of remedy, is not remedied within 90 days after notice of such default shall have been given to the Issuer by the Trustee; or
(c) |
Cross-Acceleration |
if (i) any other present or future Relevant Indebtedness of the Issuer or a Principal Subsidiary becomes due and payable prior to its stated maturity by reason of any actual event of default or (ii) any amount in respect of such Relevant Indebtedness is not paid when due or, as the case may be, within any applicable grace period, provided that the aggregate amount of the Relevant Indebtedness in respect of which one or more of the events mentioned above in this paragraph (c) have occurred equals or exceeds U.S.$100,000,000 for the period up to and including 31 March 2017 and, thereafter, U.S.$200,000,000 or
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(d) |
Winding-up |
a resolution is passed, or a final order of a court in the United States of America is made and, where possible, not discharged or stayed within a period of 90 days, that the Issuer be wound up or dissolved; or
(e) |
Enforcement Proceedings |
attachment is made of the whole or substantially the whole of the assets or undertakings of the Issuer and such attachment is not released or cancelled within 90 days or an encumbrancer takes possession or an administrative or other receiver or similar officer is appointed of the whole or substantially the whole of the assets or undertaking of the Issuer or an administration or similar order is made in relation to the Issuer and such taking of possession, appointment or order is not released, discharged or cancelled within 90 days; or
(f) |
Insolvency |
the Issuer ceases to carry on all or substantially all of its business or is unable to pay its debts; or
(g) |
Bankruptcy |
the Issuer is adjudged bankrupt or insolvent by a court of competent jurisdiction in the United States of America,
provided that in the case of paragraph (b) the Trustee shall have certified that in its opinion such event is materially prejudicial to the interests of the Instrumentholders.
For the purposes of this Condition 8, Principal Subsidiary means KeySpan Corporation, KeySpan Energy Delivery New York, KeySpan Energy Delivery Long Island, Niagara Mohawk Power Corporation, Massachusetts Electric Company, the Narragansett Electric Company and New England Power Company, and includes any successor entity thereto or any member of the group of companies comprising NGUSA or NGNA and each of their subsidiaries (the Group) to which all or substantially all of the assets of a Principal Subsidiary are transferred. In the event that all or substantially all of the assets of a Principal Subsidiary are transferred to a member of the Group as described above, the transferor of such assets shall cease to be deemed to be a Principal Subsidiary for the purposes of this Condition.
9 |
Enforcement |
The Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer as it may think fit to enforce any obligation, condition or provision binding on the Issuer under the Instruments or under the Trust Deed, but shall not be bound to do so unless:
(a) |
it has been so directed by an Extraordinary Resolution or in writing by the holders of at least one-quarter of the principal amount of the Instruments outstanding; and |
(b) |
it has been indemnified to its satisfaction. |
No Instrumentholder shall be entitled to institute proceedings directly against the Issuer unless the Trustee, having become bound to proceed as specified above, fails to do so within a reasonable time and such failure is continuing.
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10 |
Meetings of Instrumentholders, Modifications and Substitution |
10.1 |
Meetings of Instrumentholders |
The Trust Deed contains provisions for convening meetings of Instrumentholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution (as defined in the Trust Deed) of a modification of any of these Conditions or any provisions of the Trust Deed. An Extraordinary Resolution duly passed at any such meeting shall be binding on Instrumentholders (whether or not they were present at the meeting at which such resolution was passed) except that any Extraordinary Resolution proposed, inter alia, (a) to amend the dates of maturity or redemption of the Instruments or any date for payment of interest on the Instruments, (b) to reduce or cancel the nominal amount of or any premium payable on redemption of the Instruments, (c) to reduce the rate or rates of interest in respect of the Instruments or to vary the method or basis of calculating the rate or rates or amount of interest or the basis for calculating any Interest Amount in respect of the Instruments, (d) if a Minimum and/or a Maximum Rate of Interest is shown on the face of the Instrument, to reduce any such Minimum and/or Maximum Rate of Interest, (e) to vary any method of calculating the Final Redemption Amount, the Early Redemption Amount or the Optional Redemption Amount, (f) to take any steps that as specified in this Instrument may only be taken following approval by an Extraordinary Resolution to which the special quorum provisions apply, and (g) to modify the provisions concerning the quorum required at any meeting of Instrumentholders or the majority required to pass the Extraordinary Resolution will only be binding if passed at a meeting of the Instrumentholders (or at any adjournment of that meeting) at which a special quorum (as defined in the Trust Deed) is present. A resolution in writing signed by the holders of not less than 95 per cent. in nominal amount of the Instruments will be binding on all Instrumentholders. The Issuer may convene a meeting of the holders of any or all Instruments issued pursuant to the Agency Agreement and not forming a single series with the Instruments to which meeting the provisions referred to above apply as if all such Instruments formed part of the same series, provided that the proposals to be considered at such meeting affect the rights of the holders of the Instruments of each series attending the meeting in identical respects (save insofar as the Conditions applicable to each such series are not identical).
10.2 |
Modification of the Trust Deed |
The Trustee may agree, without the consent of the Instrumentholders to (a) any modification of any of the provisions of the Trust Deed that is of a formal, minor or technical nature or is made to correct a manifest error, and (b) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed that is in the opinion of the Trustee not materially prejudicial to the interests of the Instrumentholders. Any such modification, authorisation or waiver shall be binding on the Instrumentholders and, if the Trustee so requires, such modification shall be notified to the Instrumentholders as soon as practicable.
10.3 |
Substitution |
The Trust Deed contains provisions permitting the Trustee to agree, subject to such amendment of the Trust Deed and such other conditions as the Trustee may require, but without the consent of the Instrumentholders, to the substitution of any other company in place of the Issuer or of any previous substituted company, as principal debtor under the
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Trust Deed and the Instruments. In the case of such a substitution the Trustee may agree, without the consent of the Instrumentholders, to a change of the law governing the Instruments and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Instrumentholders.
10.4 |
Entitlement of the Trustee |
In connection with the exercise of its functions (including but not limited to those referred to in this Condition) the Trustee shall have regard to the interests of the Instrumentholders as a class and shall not have regard to the consequences of such exercise for individual Instrumentholders and the Trustee shall not be entitled to require, nor shall any Instrumentholder be entitled to claim, from the Issuer any indemnification or payment in respect of any tax consequence of any such exercise upon individual Instrumentholders.
11 |
Replacement of Certificates |
If a Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced, subject to applicable laws, listing authority and stock exchange regulations, at the specified office of the Registrar or such other Paying Agent or Transfer Agent, as the case may be, as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Instrumentholders, in each case on payment by the claimant of the fees and costs incurred in connection with that replacement and on such terms as to evidence, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Certificate is subsequently presented for payment there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such Certificates and otherwise as the Issuer may require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.
12 |
Further Issues |
The Issuer may from time to time without the consent of the Instrumentholders create and issue further instruments having the same terms and conditions as the Instruments and so that such further issue shall be consolidated and form a single series with such Instruments.
References in these Conditions to the Instruments include (unless the context requires otherwise) any other instruments issued pursuant to this Condition and forming a single series with the Instruments. Any such further instruments forming a single series with Instruments constituted by the Trust Deed or any deed supplemental to it shall, and any other instruments may (with the consent of the Trustee), be constituted by the Trust Deed.
The Trust Deed contains provisions for convening a single meeting of the Instrumentholders and the holders of instruments of other series if the Trustee so decides.
13 |
Notices |
Notices to the Instrumentholders shall be mailed to them at their respective addresses shown in the Register and shall be deemed to have been given on the fourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing.
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14 |
Indemnification of Trustee |
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including but not limited to provisions relieving it from any obligation to (a) appoint an independent financial adviser and (b) take proceedings to enforce repayment unless indemnified to its satisfaction. The Trustee is entitled to enter into business transactions with the Issuer or any of its subsidiary undertakings, parent undertakings, joint ventures or associated undertakings without accounting for any profit resulting from these transactions and to act as trustee for the holders of any other securities issued by the Issuer or any of its subsidiary undertakings, parent undertakings, joint ventures or associated undertakings.
15 |
Contracts (Rights of Third Parties) Act 1999 |
No person shall have any right to enforce any term or condition of the Instruments under the Contracts (Rights of Third Parties) Act 1999.
16 |
Governing Law and Jurisdiction |
16.1 |
Governing Law |
The Instruments and any non-contractual obligations arising out of or in connection with the Instruments are governed by, and shall be construed in accordance with, English law.
16.2 |
Jurisdiction |
The courts of England have exclusive jurisdiction to settle any dispute (a Dispute ), arising from or connected with the Instruments. The Issuer agrees that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue to the contrary. Nothing in this Condition 16 prevents the Trustee or any Instrumentholder from taking proceedings relating to a Dispute ( Proceedings ) in any other courts with jurisdiction. To the extent allowed by law, the Trustee or Instrumentholders may take concurrent Proceedings in any number of jurisdictions.
16.3 |
Process Agent |
The Issuer has irrevocably appointed National Grid plc at its registered office for the time being, currently at 1-3 Strand, London WC2N 5EH as its agent in England to receive, for it and on its behalf, service of process in any Proceedings in England. Nothing herein or in the Trust Deed shall affect the right to serve process in any other manner permitted by law.
17 |
Transfers of Instruments |
(a) |
Transfers of Instruments |
One or more Instruments may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Instruments to be transferred, together with the form of transfer endorsed on such Certificate (or another form of transfer substantially in the same form and containing the same representations and certifications (if any), unless otherwise agreed by the Issuer), duly completed and executed and any other evidence as the Registrar or such Transfer Agent may reasonably require. In the case of a transfer of part only of
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a holding of Instruments represented by one Certificate, a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. All transfers of Instruments and entries on the Register will be made subject to the detailed regulations concerning transfers of Instruments scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Registrar and the Trustee. A copy of the current regulations will be made available by the Registrar to any Instrumentholder upon request.
(b) |
Exercise of Options or Partial Redemption |
In the case of an exercise of an Issuers or Instrumentholders option in respect of, or a partial redemption of, a holding of Instruments represented by a single Certificate, a new Certificate shall be issued to the holder to reflect the exercise of such option or in respect of the balance of the holding not redeemed. In the case of a partial exercise of an option resulting in Instruments of the same holding having different terms, separate Certificates shall be issued in respect of those Instruments of that holding that have the same terms. New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Instruments to a person who is already a holder of Instruments, a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.
(c) |
Delivery of New Certificates |
Each new Certificate to be issued pursuant to Conditions 17(a) or (b) shall be available for delivery within three business days of receipt of the form of transfer or Exercise Notice and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such form of transfer, Exercise Notice or Certificate shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant form of transfer, Exercise Notice or otherwise in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 17(c), business day means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).
(d) |
Transfers Free of Charge |
Transfers of Certificates on registration, transfer, exercise of an option or partial redemption shall be effected without charge by or on behalf of the Issuer, the Registrar or any Transfer Agent, but upon payment of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity as the Registrar or the relevant Transfer Agent may require).
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(e) |
Closed Periods |
No Instrumentholder may require the transfer of an Instrument to be registered (i) during the period of 15 days ending on the due date for redemption of that Instrument, (ii) during the period of 15 days prior to any date on which Instruments may be called for redemption by the Issuer at its option pursuant to Condition 4.5, (iii) after any such Instrument has been called for redemption or (iv) during the period of seven days ending on (and including) any Record Date.
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Schedule 3
Provisions for Meetings of Instrumentholders
Interpretation
1 |
In this Schedule: |
1.1 |
references to a meeting are to a meeting of Instrumentholders of a single Series of Instruments issued by the Issuer and include, unless the context otherwise requires, any adjournment; |
1.2 |
references to Instruments and Instrumentholders are only to the Instruments of the Series in respect of which a meeting has been, or is to be, called, and to the holders of these Instruments, respectively; |
1.3 |
agent means a holder of a voting certificate or a proxy for, or representative of, an Instrumentholder; |
1.4 |
Extraordinary Resolution means a resolution passed at a meeting duly convened and held in accordance with this Trust Deed by a majority of at least 75 per cent. of the votes cast; |
1.5 |
voting certificate means a certificate issued in accordance with paragraphs 5, 6, 7 and 14; and |
1.6 |
references to persons representing a proportion of the Instruments are to Instrumentholders or agents holding or representing in the aggregate at least that proportion in nominal amount of the Instruments for the time being outstanding. |
Powers of meetings
2 |
A meeting shall, subject to the Conditions and without prejudice to any powers conferred on other persons by this Trust Deed, have power by Extraordinary Resolution: |
2.1 |
to sanction any proposal by the relevant Issuer or the Trustee for any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Instrumentholders against such Issuer whether or not those rights arise under this Trust Deed; |
2.2 |
to sanction the exchange or substitution for the Instruments of, or the conversion of the Instruments into, shares, bonds or other obligations or securities of the relevant Issuer or any other entity; |
2.3 |
to assent to any modification of this Trust Deed or the Instruments proposed by the relevant Issuer or the Trustee; |
2.4 |
to authorise anyone to concur in and do anything necessary to carry out and give effect to an Extraordinary Resolution; |
2.5 |
to give any authority, direction or sanction required to be given by Extraordinary Resolution; |
2.6 |
to appoint any persons (whether Instrumentholders or not) as a committee or committees to represent the Instrumentholders interests and to confer on them any powers or discretions which the Instrumentholders could themselves exercise by Extraordinary Resolution; |
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2.7 |
to approve a proposed new Trustee and to remove a Trustee; |
2.8 |
to approve the substitution of any entity for the relevant Issuer (or any previous substitute) as principal debtor under this Trust Deed; and |
2.9 |
to discharge or exonerate the Trustee from any liability in respect of any act or omission for which it may become responsible under this Trust Deed or the Instruments , |
provided that the special quorum provisions in paragraph 18 shall apply to any Extraordinary Resolution (a special quorum resolution ) for the purpose of sub-paragraph 2.2 or 2.8, any of the proposals listed in Condition 10.1 or any amendment to this proviso.
Convening a meeting
3 |
The relevant Issuer or the Trustee may at any time convene a meeting. If it receives a written request by Instrumentholders holding at least 10 per cent. in nominal amount of the Instruments of any Series for the time being outstanding and is indemnified to its satisfaction against all costs and expenses, the Trustee shall convene a meeting of the Instrumentholders of that Series. Every meeting shall be held at a time and place approved by the Trustee. |
4 |
At least 21 days notice (exclusive of the day on which the notice is given and of the day of the meeting) shall be given to the Instrumentholders. A copy of the notice shall be given by the party convening the meeting to the other parties. The notice shall specify the day, time and place of meeting and, unless the Trustee otherwise agrees, the nature of the resolutions to be proposed and shall explain how Instrumentholders may appoint proxies or representatives, obtain voting certificates and use block voting instructions and the details of the time limits applicable. |
Arrangements for voting
5 |
If a holder of an Instrument wishes to obtain a voting certificate in respect of it for a meeting, he must deposit it for that purpose at least 48 hours before the time fixed for the meeting with a Paying Agent or to the order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the purpose. The Paying Agent shall then issue a voting certificate in respect of it. |
6 |
A voting certificate shall: |
6.1 |
be a document in the English language; |
6.2 |
be dated; |
6.3 |
specify the meeting concerned and the serial numbers of the Instruments deposited; and |
6.4 |
entitle, and state that it entitles, its bearer to attend and vote at that meeting in respect of those Instruments. |
7 |
Once a Paying Agent has issued a voting certificate for a meeting in respect of an Instrument, it shall not release the Instrument until either: |
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7.1 |
the meeting has been concluded; or |
7.2 |
the voting certificate has been surrendered to the Paying Agent. |
8
8.1 |
A holder of an Instrument may, by an Instrument in writing in the form available from the specified office of a Transfer Agent in the English language executed by or on behalf of the holder and delivered to the Transfer Agent at least 24 hours before the time fixed for a meeting, appoint any person (a proxy ) to act on his behalf in connection with that meeting. A proxy need not be an Instrumentholder. |
8.2 |
A corporation which holds an Instrument may, by delivering to a Transfer Agent at least 24 hours before the time fixed for a meeting a certified copy of a resolution of its directors or other governing body (with, if it is not in English, a certified translation into English), authorise any person to act as its representative (a representative ) in connection with that meeting. |
Chairman
9 |
The chairman of a meeting shall be such person as the Trustee may nominate in writing, but if no such nomination is made or if the person nominated is not present within 15 minutes after the time fixed for the meeting the Instrumentholders or agents present shall choose one of their number to be chairman, failing which the relevant Issuer may appoint a chairman. The chairman need not be an Instrumentholder or agent. The chairman of an adjourned meeting need not be the same person as the chairman of the original meeting. |
Attendance
10 |
The following may attend and speak at a meeting: |
10.1 |
Instrumentholders and agents; |
10.2 |
the chairman; |
10.3 |
the relevant Issuer and the Trustee (through their respective representatives) and their respective financial and legal advisers; and |
10.4 |
the Dealers and their advisers. |
No one else may attend or speak.
Quorum and Adjournment
11 |
No business (except choosing a chairman) shall be transacted at a meeting unless a quorum is present at the commencement of business. If a quorum is not present within 15 minutes from the time initially fixed for the meeting, it shall, if convened on the requisition of Instrumentholders or if the relevant Issuer and the Trustee agree, be dissolved. In any other case it shall be adjourned until such date, not less than 14 nor more than 42 days later, and time and place as the chairman may decide. If a quorum is not present within 15 minutes from the time fixed for a meeting so adjourned, the meeting shall be dissolved. |
12 |
Two or more Instrumentholders or agents present in person shall be a quorum: |
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12.1 |
in the cases marked No minimum proportion in the table below, whatever the proportion of the Instruments which they represent; and |
12.2 |
in any other case, only if they represent the proportion of the Instruments shown by the table below. |
Column 1 |
Column 2 |
Column 3 |
||
Purpose of meeting |
Any meeting except one referred to in column 3 |
Meeting previously adjourned through want of a quorum |
||
Required proportion |
Required proportion |
|||
To pass a special quorum resolution |
Two thirds |
One third |
||
To pass any other Extraordinary Resolution |
A clear majority |
No minimum proportion |
||
Any other purpose |
10 per cent. |
No minimum proportion |
13 |
The chairman, may with the consent of (and shall if directed by) a meeting, adjourn the meeting from time to time and from place to place. Only business which could have been transacted at the original meeting may be transacted at a meeting adjourned in accordance with this paragraph or paragraph 18. |
14 |
At least 10 days notice of a meeting adjourned through want of a quorum shall be given in the same manner as for an original meeting and that notice shall state the quorum required at the adjourned meeting. However, no notice need otherwise be given of an adjourned meeting. |
Voting
15 |
Each question submitted to a meeting shall be decided by a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by the chairman, the relevant Issuer, the Trustee or one or more persons holding one or more Instruments or voting certificates or representing 2 per cent. of the Instruments. |
16 |
Unless a poll is demanded a declaration by the chairman that a resolution has or has not been passed shall be conclusive evidence of the fact without proof of the number or proportion of the votes cast in favour of or against it. |
17 |
If a poll is demanded, it shall be taken in such manner and (subject as provided below) either at once or after such adjournment as the chairman directs. The result of the poll shall be deemed to be the resolution of the meeting at which it was demanded as at the date it was taken. A demand for a poll shall not prevent the meeting continuing for the transaction of business other than the question on which it has been demanded. |
18 |
A poll demanded on the election of a chairman or on a question of adjournment shall be taken at once. |
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19 |
On a show of hands every person who is present in person and who produces a Certificate of which he is the registered holder or a voting certificate or is a proxy or representative has one vote. On a poll every such person has one vote in respect of each integral currency unit of the Specified Currency of such Series of Instruments so produced or represented by the voting certificate so produced or for which he is a proxy or representative. Without prejudice to the obligations of proxies, a person entitled to more than one vote need not use them all or cast them all in the same way. |
20 |
In case of equality of votes the chairman shall both on a show of hands and on a poll have a casting vote in addition to any other votes which he may have. |
Effect and Publication of an Extraordinary Resolution
21 |
An Extraordinary Resolution shall be binding on all the Instrumentholders, whether or not present at the meeting, and each of them shall be bound to give effect to it accordingly. The passing of such a resolution shall be conclusive evidence that the circumstances justify its being passed. The relevant Issuer shall give notice of the passing of an Extraordinary Resolution to Instrumentholders within 14 days but failure to do so shall not invalidate the resolution. |
22 |
A resolution in writing signed by or on behalf of the holders of not less than 95 per cent. in nominal amount of the Instruments who for the time being are entitled to receive notice of a meeting in accordance with the provisions of this Schedule shall for all purposes be as valid and effectual as an Extraordinary Resolution passed at a meeting of such Instrumentholders duly convened and held in accordance with the provisions of this Schedule. Such resolution in writing may be contained in one document or several documents in similar form each signed by or on behalf of one or more of the Instrumentholders. |
Minutes
23 |
Minutes shall be made of all resolutions and proceedings at every meeting and, if purporting to be signed by the chairman of that meeting or of the next succeeding meeting, shall be conclusive evidence of the matters in them. Until the contrary is proved every meeting for which minutes have been so made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted. |
Trustees Power to Prescribe Regulations
24 |
Subject to all other provisions in this Trust Deed the Trustee may without the consent of the Instrumentholders prescribe such further regulations regarding the holding of meetings and attendance and voting at them as it in its sole discretion determines including (without limitation) such requirements as the Trustee thinks reasonable to satisfy itself that the persons who purport to make any requisition in accordance with this Trust Deed are entitled to do so and as to the form of voting certificates or block voting instructions so as to satisfy itself that persons who purport to attend or vote at a meeting are entitled to do so. |
25 |
The holder of a Global Certificate shall (unless such Global Certificate represents only one Instrument) be treated as two persons for the purposes of any quorum requirements of a meeting of Instrumentholders. |
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26 |
The above provisions of this Schedule shall have effect subject to the following provisions: |
26.1 |
Meetings of Instrumentholders of separate Series will normally be held separately. However, the Trustee may from time to time determine that meetings of Instrumentholders of separate Series shall be held together. |
26.2 |
A resolution that in the opinion of the Trustee affects one Series alone shall be deemed to have been duly passed if passed at a separate meeting of the Instrumentholders of the Series concerned. |
26.3 |
A resolution that in the opinion of the Trustee affects the Instrumentholders of more than one Series but does not give rise to a conflict of interest between the Instrumentholders of the different Series concerned shall be deemed to have been duly passed if passed at a single meeting of the Instrumentholders of the relevant Series provided that for the purposes of determining the votes an Instrumentholder is entitled to cast pursuant to paragraph 19, each Instrumentholder shall have one vote in respect of each whole Euro 1.00 nominal amount of Instruments held, converted, if such Instruments are not denominated in Euro, in accordance with Clause 8.13 (Currency Conversion). |
26.4 |
A resolution that in the opinion of the Trustee affects the Instrumentholders of more than one Series and gives or may give rise to a conflict of interest between the Instrumentholders of the different Series concerned shall be deemed to have been duly passed only if it shall be duly passed at separate meetings of the Instrumentholders of the relevant Series. |
26.5 |
To all such meetings as previously set out all the preceding provisions of this Schedule shall mutatis mutandis apply as though references therein to Instruments and to Instrumentholders were references to the Instruments and Instrumentholders of the Series concerned. |
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In witness of which this Trust Deed is delivered on the date stated at the beginning.
NATIONAL GRID USA |
||
By: |
/s/ MALCOLM COOPER |
|
NATIONAL GRID NORTH AMERICA INC. |
||
By: |
/s/ MALCOLM COOPER |
EXECUTED AS A DEED BY AFFIXING THE COMMON SEAL OF THE LAW DEBENTURE TRUST CORPORATION p.l.c.
acting by: |
Director |
/s/ DENYSE ANDERSON |
Authorised Signatory: |
/s/ CAROL MORIS |
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Exhibit 4(C).5
Dated 28 February 2014
NATIONAL GRID ELECTRICITY TRANSMISSION PLC
and
JOHN MARK PETTIGREW
SERVICE AGREEMENT
Linklaters LLP
One Silk Street
London EC2Y 8HQ
Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222
This Agreement is made on 28 February 2014 between
(1) |
NATIONAL GRID ELECTRICITY TRANSMISSION PLC incorporated in England and Wales whose registered office is at 1-3 Strand, London WC2N 5EH (the Company ); and |
(2) |
JOHN MARK PETTIGREW of 41 Binswood Avenue, Leamington Spa, Warwickshire CV32 5SE (the Executive ). |
This agreement records the terms on which the Executive will serve as an Executive Director of National Grid plc and an employee of the Company.
1 |
Interpretation |
In this agreement:
1.1 |
Definitions |
Board means the board of directors of National Grid plc at any time or any person or committee nominated by the board of directors as its representative for the purposes of this agreement;
Employment means the employment governed by this agreement;
Group means National Grid plc, , the Companys ultimate holding company from time to time, and its s associates (as defined in section 435 of the Insolvency Act 1986) from time to time which shall include the Company;
Group Company means a member of the Group and Group Companies will be interpreted accordingly;
holding company has the meaning given in section 1159 of the Companies Act 2006;
Listing Rules means the listing rules made by the Financial Conduct Authority in exercise of its functions as a competent authority pursuant to Part VI of the Financial Services and Markets Act 2000
Parent Company means National Grid plc;
Remuneration Committee means the remuneration committee of the Board; and
Termination Date means the date on which the Employment terminates.
2 |
Commencement of Employment |
2.1 |
The Employment will start on 1 April 2014 (the Commencement Date ). The Employment will continue until termination in accordance with the provisions of this agreement. The Executives period of continuous service started on 16 September 1991. |
2.2 |
The Executive warrants that he is not prevented from taking up the Employment or from performing his duties in accordance with the terms of this agreement by any obligation or duty owed to any other party, whether contractual or otherwise. |
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3 |
Appointment and Duties of the Executive |
3.1 |
The Executive will serve as Executive Director of the Parent Company or in any other executive capacity as the Executive and the Company may agree from time to time. |
3.2 |
The Executive will: |
3.2.1 |
devote the whole of his time, attention and skill to the Employment; |
3.2.2 |
properly perform his duties and exercise his powers; |
3.2.3 |
accept any offices or directorships as reasonably required by the Board; |
3.2.4 |
comply with all rules and regulations issued by the Parent Company as amended from time to time, including without limitation, the Code of Employee Conduct and the Standards of Ethical Business Conduct; |
3.2.5 |
obey the directions of the Board; and |
3.2.6 |
use his best endeavours to promote the interests and reputation of every Group Company. |
3.3 |
The Executive accepts that with his consent (which he will not unreasonably withhold or delay): |
3.3.1 |
the Company may require him to perform duties for any other Group Company whether for the whole or part of his working time. In performing those duties clause 3.2.4 will apply as if references to the Company are to the appropriate Group Company. The Company will remain responsible for the payments and benefits he is entitled to receive under this agreement; and |
3.3.2 |
the Company may appoint any other person to act jointly with him; and |
3.3.3 |
the Company may transfer the Employment to any other Group Company. |
3.4 |
The Executive will keep the Board (and, where appropriate the board of directors of any other Group Company) fully informed of his conduct of the business, finances or affairs of the Company or any other Group Company in a prompt and timely manner. He will provide information to the Board in writing if requested. |
3.5 |
The Executive will promptly disclose to the Board full details of any wrongdoing by any employee of any Group Company where that wrongdoing is material to that employees employment by the relevant company or to the interests or reputation of any Group Company. |
3.6 |
At any time during the Employment the Company may require the Executive to undergo a medical examination by a medical practitioner appointed by the Company. The Executive authorises that medical practitioner to disclose to the Company any report or test results prepared or obtained as a result of that examination and to discuss with it any matters arising out of the examination which are relevant to the Employment or which might prevent the Executive properly performing the duties of the Employment. |
3.7 |
The Executive is required to comply with the Parent Companys policies and procedures which may be amended or introduced from time to time, these are available on the Parent Company intranet. If there is any conflict between those polices and this agreement, the terms of this agreement shall prevail. |
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4 |
Hours |
4.1 |
The Executive will comply with the Companys normal hours of work and will also work any additional hours which may be reasonably necessary to perform his duties to the satisfaction of the Board. He will not receive any further remuneration for any hours worked in addition to the normal working hours. |
4.2 |
The Executive and the Company agree that the Executive is a managing executive of the Parent Company for the purposes of the Working Time Regulations 1998 (the Regulations) and is able to determine the duration of his working time himself. As such, the exemptions in Regulation 20 of the Regulations will apply to the Employment. |
4.3 |
The Executive agrees to keep records of his working hours as reasonably required by the Company from time to time in order to comply with its obligations under the Regulations. |
5 |
Interests of the Executive |
5.1 |
The Executive will disclose promptly in writing to the Board all his interests (for example, shareholdings or directorships) whether or not of a commercial or business nature except his interests in any Group Company. The Executive confirms he has no such interests at the date of this agreement. |
5.2 |
Subject to clause 5.3, during the Employment the Executive will not be directly or indirectly engaged or concerned in the conduct of any activity which is similar to or competes with any activity carried on by any Group Company (except as a representative of the Company or with the written consent of the Board). |
5.3 |
The Executive may not hold or be interested in investments which amount to more than three per cent of the issued investments of any class of any one company whether or not those investments are listed or quoted on any recognised Stock Exchange or dealt in on the Alternative Investments Market. |
5.4 |
The Executive will (and will procure that his spouse and dependent children) comply with all rules of law, including Part V of the Criminal Justice Act 1993, the Model Code as set out in the annex to Chapter 9 of the Listing Rules as amended from time to time and rules or policies applicable to the Company from time to time in relation to the holding or trading of securities. |
6 |
Location |
6.1 |
The Executive will work atNational Grid House, Warwick Technology Park, Gallows Hill, Warwick CV34 6DA or anywhere else within the United Kingdom required by the Board. He may be required to travel and work outside the United Kingdom from time to time but, unless otherwise agreed with the Board, will not be required to live outside the United Kingdom. |
7 |
Base salary and Benefits |
7.1 |
From the Commencement Date the Company will pay the Executive a base salary of £475,000 per annum. Base salary will be paid in equal monthly instalments, partly in arrears and partly in advance, by bank credit transfer on or about the 15th day of each month and will accrue from day to day. Base salary will be reviewed annually. The review |
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will usually take place in June, with the first such review for the Executive being in June 2015. The Company is under no obligation to award an increase following a salary review. There will be no review of salary after notice has been given by either party to terminate this agreement under clause 11. |
7.2 |
The base salary referred to in clause 7.1 includes directors fees from the Group Companies and any other companies in which the Executive is required to accept a directorship under the terms of this Employment. To achieve this: |
7.2.1 |
the Executive will repay any fees he receives to the Company; or |
7.2.2 |
his base salary will be reduced by the amount of those fees; or |
7.2.3 |
a combination of the methods set out in clauses 7.2.1 and 7.2.2 will be applied. |
7.3 |
The Executive may, at the discretion of the Remuneration Committee, be invited to participate in any bonus plan operated by the Parent Company and as introduced or amended from time to time. If so invited, the Executives participation in such bonus plan and the amount (if any) payable under it will be at the discretion of the Remuneration Committee and/or in accordance with the rules of any such plan in force from time to time. Participation in a bonus plan for one year does not entitle the Executive to participation in any bonus plan for any other year. |
7.4 |
The Company will provide a car for the Executives use in accordance with the rules of the Company car scheme, as amended, from time to time. |
7.5 |
The Executive is currently a member of the Companys defined benefit pension scheme, titled the National Grid Electricity Group of the Electricity Supply Pension Scheme (the Scheme ) and the National Grid UK Supplementary Benefits Scheme ( the Unfunded Scheme ) subject to the trust deed and the rules of these Schemes as amended from time to time. |
7.5.1 |
On his appointment to the Board the Executives salary for pension purposes will be £475,000 and increases to this salary will be capped for the purposes of his pension entitlements under the Scheme and the Unfunded Scheme, for past and future service with the Company or any Group Company. The cap to salary increases, for the purposes of the Scheme and the Unfunded Scheme, will be at a maximum of the lower of the annual increase in RPI (see 7.5.2) and 3% per annum. This will be the Executives Capped Salary . |
7.5.2 |
The RPI the Company will use to calculate the Executives Capped Salary each year will be the figure for the March All Items Retails Price Index published by the Office for National Statistics ( ONS ) in April each year. In the event that RPI is varied or abolished by the ONS, the replacement will be the ONSs successor formula to RPI or such alternative as National Grid considers appropriate which is as close as possible to RPI. |
7.5.3 |
Should the Governments proposals to introduce a new State Pension go ahead, the Executives regular contributions to the Scheme will increase by no more than 2% of the Capped Salary per annum from April 2016. |
7.6 |
Subject to the arrangements regarding holiday which are set out at clause 7.8 below and which take precedence, the Executive is eligible to participate in the Companys flexible benefits scheme as introduced or amended from time to time, currently Your Flexible Benefits, which provides access to a range of optional benefits. The Executive should note |
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that some of the benefits provided under the scheme may be taxable benefits. The Executive should note the range of flexible benefits offered and the flexible benefits package itself does not form part of the Executives contract of employment and the Company reserves the right, at any time, to withdraw and/or amend the flexible benefits scheme and the benefits provided under it at its absolute discretion. |
7.7 |
If the Executive complies with any eligibility requirements or other conditions set by the Company and any insurer appointed by the Company ( Insurer ), the Executive and his spouse and children under 21 years of age who reside with the Executive or in full time education up to the age of 24 may participate in the Companys private health insurance arrangements at the Companys expense and subject to the terms of those arrangements in force from time to time. The Company reserves the right at any time to withdraw this benefit or to amend the terms upon which it is provided. The Executive understands and agrees that if the Insurer fails or refuses to provide him with any benefit under the insurance arrangement provided by the Company, the Executive will have no right of action against the Company in respect of such failure or refusal. |
7.8 |
The Executive is entitled to 28 days paid holiday each year (in addition to English bank and other public holidays) subject to any election the Executive may choose to make pursuant to the Companys flexible benefits scheme. Any election the Executive may choose to make pursuant to the Companys flexible benefits scheme to increase his holiday entitlement will be subject to prior Board or Chief Executive of the Parent Companys approval. All holiday must be taken at times approved in advance by the Board or by the Parent Companys Chief Executive. The Executives holiday year commences in the month of his birth and ends on the preceding month in the following year. Holidays may not be carried forward from one holiday year to the next without the Boards prior approval. The Executive agrees the provisions of Regulations 15(1)-(4) inclusive of the Regulations (dates on which leave is taken) do not apply to the Employment. |
Holiday entitlement will accrue from day to day. For part years, the Executives holiday entitlement for the year will be pro-rated to the length of his service in that year. The Executive will be paid for any accrued holiday not taken at the Termination Date unless the Employment is terminated for gross misconduct or in accordance with clause 11.6. The Company may require the Executive to take any accrued holiday during any notice period. If on the Termination Date the Executive has exceeded his accrued holiday entitlement, the excess may be deducted from any sums due to him. The formula for calculating the amount of holiday due to the Executive and any payments or repayments to be made is 1/260 of the Executives annual base salary.
7.9 |
The rules governing sickness absence are set out in the Companys Sickness Absence Policy which is available on the intranet. The Executive must comply with these rules. Without prejudice to any right of the Company to terminate the Employment at any time pursuant to clause 11, if the Executive is absent from work as a result of sickness or injury then provided that the rules are complied with, the Executive shall be entitled to sick pay in accordance with the rules of the Company sick pay scheme as detailed below: |
7.9.1 |
As the Executive has at least twelve months continuous service: |
(i) |
an allowance equal to base salary will be paid for the first six months of such absence; |
(ii) |
after the expiration of the six month period, an allowance equal to half of base salary will be paid for a further period of up to six months. |
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7.9.2 |
The amount of any benefit which the Executive is entitled to claim during that period of absence under any Social Security or National Insurance Scheme in England and Wales and/or any scheme of which the Executive is a non-contributory member by virtue of the Employment will be deducted from any base salary paid to him. The Company will pay the Executive statutory sick pay under the Social Security Contributions and Benefits Act 1992 (as amended) ( SSP ) and any base salary paid to him will be deemed to include statutory sick pay. The Company reserves the right to offset the amount of these benefits against base salary paid to the Executive even if the Executive has not recovered them. |
7.9.3 |
Any sick pay or allowances in excess of SSP paid after the end of the periods referred to above is entirely at the Companys discretion. |
7.10 |
If the Executive is absent from work due to sickness or injury which is caused by the fault of another person, and as a consequence recovers from that person or another person any sum representing compensation for loss of base salary under this agreement, the Executive will repay to the Company any money it has paid to him as base salary in respect of the same period of absence. |
7.11 |
Notwithstanding any other provision in this agreement, any payments to be made, and benefits to be provided under this agreement or otherwise in relation to the Employment, may be subject to shareholder approval and will be subject to compliance with the Parent Companys remuneration policy as approved by shareholders from to time. To the extent that any such shareholder approval is needed, the Company will seek it at the next scheduled Annual General Meeting and any deadline in relation to the delivery of such payments or benefits will be delayed accordingly |
8 |
Expenses |
8.1 |
The Company will refund to the Executive all reasonable expenses properly incurred by him in performing his duties under this agreement, provided that these are incurred in accordance with Company policy in force from time to time. The Company will require the Executive to produce receipts or other documents as proof that he has incurred any expenses he claims. |
8.2 |
If the Executive is provided with a credit or charge card by the Company this must normally be used for expenses which he incurs in performing the duties of the Employment. It may be used for personal expenses only in exceptional circumstances. |
9 |
Confidentiality |
9.1 |
Without prejudice to the common law duties which he owes to the Company the Executive agrees that he will not, except in the proper performance of his duties, copy, use or disclose to any person any of the Companys trade secrets or confidential information. This restriction will continue to apply after the termination of the Employment without limit in time but will not apply to trade secrets or confidential information which become public other than through unauthorised disclosure by the Executive. The Executive will use his best endeavours to prevent the unauthorised copying use or disclosure of such information. |
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For the purposes of this agreement, trade secrets and confidential information include but will not be limited to technical data, know-how, information technology and know-how relating to the Company, customer lists, pricing information, information relating to the Companys marketing and financial strategies, marketing materials, financial information and any other information concerning the affairs of the Company which is for the time being confidential, which the Executive is told is confidential or which by its nature is obviously confidential and whether such information is in written, oral, visual, electronic or any other form.
9.2 |
In the course of the Employment the Executive is likely to obtain trade secrets and confidential information belonging or relating to other Group Companies, in particular the Parent Company, and other persons. He will treat such information as if it falls within the terms of clause 9.1 and clause 9.1 will apply with any necessary amendments to such information. If requested to do so by the Company the Executive will enter into an agreement with other Group Companies and any other persons in the same terms as clause 9.1 with any amendments necessary to give effect to this provision. |
9.3 |
Nothing in this agreement will prevent the Executive from making a protected disclosure in accordance with the provisions of the Employment Rights Act 1996. |
10 |
Intellectual Property Rights |
For the purposes of this clause, Intellectual Property means patents, trade marks, service marks, registered designs (including applications for and rights to apply for any of them), inventions, unregistered design rights, logos, trade or business names, copyrights, database rights, confidential information, knowhow and any similar rights in any country.
10.1 |
The Executive acknowledges that (i) it is part of his normal duties to develop the products and services of the Company; and (ii) because of the nature of his position he has a special obligation to further the interests of the Company. All Intellectual Property which the Executive develops or produces in the course of his employment duties, or outside such duties but relating to the business of the Company, will be owned by the Company to the fullest extent permitted by law. The Executive agrees, at the Companys expense, to sign all documents and carry out all such acts as will be necessary to vest such Intellectual Property in the Company, and to obtain protection and enforce the Companys rights anywhere in the world. The Executive also hereby waives all moral rights in all Intellectual Property which is owned by the Company, or will be owned by the Company, further to this clause. The Executive will not copy, disclose or make use of any Intellectual Property belonging to the Company (whether or not subject to this clause) except to the extent necessary for the proper performance of his duties. Rights and obligations under this clause will continue after the termination of this agreement in respect of all Intellectual Property arising during the Employment. |
10.2 |
The Executive must disclose immediately to the Company any discovery or invention, secret process or improvement in procedure made or discovered by the Executive during his employment in connection with or in any way affecting or relating to the business of the Company or any Group Company or capable of being used or adapted for use in or in connection with any such company ( Inventions ) which Inventions will belong to and be the absolute property of the Company or such other person, firm, company or organisation as the Company may require. |
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10.3 |
If requested by the Board (whether during or after the termination of his employment) the Executive will, at the expense of the Company, apply or join in applying for letters patent or other similar protection in the United Kingdom or any other part of the world for all Inventions and will do everything necessary (including executing documents) for vesting letters patent or other similar protection when obtained; and all rights and title to and interest in all Inventions in the Company absolutely and as sole beneficial owner or in such other person, firm, company or organisation as the Company may require. |
10.4 |
The Executive will (both during and after the termination of his employment) at the Companys expense anywhere in the world and at any time promptly do everything (including executing documents) that may be required by the Board to defend or protect for the benefit of the Company all Inventions and the right and title of the Company to them. |
10.5 |
The provisions of clause 10.1 to 10.4 (inclusive) are without prejudice to the provisions of the Patents Act 1977. |
10.6 |
The entire copyright and all similar rights (including future copyright, the right to register trade marks or service marks and the right to register designs and design rights) throughout the world in works of any description produced by the Executive in the course of or in connection with his employment ( Works ) will vest in and belong to the Company absolutely throughout the world for the full periods of protection available in law including all renewals and extensions. |
10.7 |
The Executive will (both during and after the termination of his employment) at the Companys request and expense anywhere in the world and at any time promptly do everything (including executing documents) that may be required by the Board to assure, defined or protect the rights of the Company in all Works. |
10.8 |
For the purposes of this clause 10 the Executive hereby irrevocably and unconditionally waives in favour of the Company the moral rights conferred on the Executive by Chapter IV Part 1 of the Copyright Designs and Patents Act 1988 in respect of any Inventions or Works in which the copyright is vested in the Company under this clause 10 or otherwise. |
10.9 |
The Executive will not make copies of any computer files belonging to any Group Company or their service providers and will not introduce any of his own computer files into any computer used by any Group Company in breach of any Group Company policy, unless he has obtained the consent of the Board. |
10.10 |
By entering into this agreement the Executive irrevocably appoints the Company to act on his behalf to execute any document and do anything in his name for the purpose of giving the Company (or its nominee) the full benefit of the provision of clause 10 or the Companys entitlement under statute. If there is any doubt as to whether such a document (or other thing) has been carried out within the authority conferred by this clause 10.10, a certificate in writing (signed by any director or the secretary of the Company) will be sufficient to prove that the act or thing falls within that authority. |
11 |
Termination and Suspension |
11.1 |
The Employment will continue until terminated by either party giving written notice as set out in clause 11.2. |
11.2 |
Either party may terminate the Employment by giving not less than 12 months written notice to the other. |
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11.3 |
Notwithstanding the other provisions of this agreement and in particular clause 11.2, the Employment will terminate automatically on the Executives 65th birthday, subject always to the Executives rights under the Employment Equality (Age) Regulations 2006. |
11.4 |
The Company may at its sole and absolute discretion pay base salary alone (as referred to in clause 7.1, at the rate in force at the time such payment is made) in lieu of any unexpired period of notice (less any deductions the Company is required by law to make). For the avoidance of doubt, the Executive is not entitled to participate in or benefit from any severance, termination or redundancy plan operated by any member of the Group. The Company may pay any sums to you under this clause in equal monthly instalments until the date on which the notice period under clause11.2 would have expired if full notice had been given. The Executive shall be under an obligation to seek alternative income during such period and notify the Company of any income received during this period. Any monthly instalments shall be reduced by the amount of any such alternative income which the Executive receives during or in relation to such part. |
11.5 |
The Company may terminate the Employment by giving written notice to take immediate effect whether or not the Executives entitlement to sick pay, contractual or otherwise, has been exhausted if the Executive does not perform the duties of the Employment for a period of 364 days (whether or not consecutive) in any period of 2 years. This notice can be given whilst the Executive continues not to perform his duties or on expiry of the 364 day period. In this clause, days includes Saturdays, Sundays and public holidays. |
11.6 |
The Company may terminate the Employment by giving written notice to take immediate effect if the Executive: |
11.6.1 |
has not performed his duties under this agreement to the standard required by the Board; or |
11.6.2 |
commits any serious or persistent breach of his obligations under this agreement; or |
11.6.3 |
does not comply with any term of this agreement; or |
11.6.4 |
does not comply with any lawful order or direction given to him by the Board; or |
11.6.5 |
is guilty of any gross misconduct or conducts himself (whether in connection with the Employment or not) in a way which is harmful to any Group Company; or |
11.6.6 |
is guilty of or confesses to dishonesty or is convicted of or confesses to an offence (other than a motoring offence which does not result in imprisonment) whether in connection with the Employment or not; or |
11.6.7 |
commits (or is reasonably believed by the Board to have committed) a breach of any legislation in force which may affect or relate to the business of any Group Company; or |
11.6.8 |
becomes of unsound mind, bankrupt or has a receiving order made against him or makes any general composition with his creditors or takes advantage of any statute affording relief for insolvent debtors; or |
11.6.9 |
becomes disqualified from being a director of a company or the Executives directorship of the Parent Company terminates without the consent or concurrence of the Company; or |
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11.6.10 |
fails to maintain or becomes disqualified from maintaining registration with any regulatory body, membership of which is reasonably required by the Company for the Executive to carry out his duties. |
11.7 |
Where the Company terminates the Employment by giving written notice to take immediate effect in accordance with either clause 11.5 or 11.6, for the avoidance of doubt there is no obligation to give notice as set out in clause 11.1 or any other period of notice or to make any payment in lieu of notice. |
11.8 |
The Executive will have no claim for damages or any other remedy against the Parent Company or Company if the Employment is terminated for any of the reasons set out in clause 11.5 or 11.6. |
11.9 |
When the Employment terminates the Company may deduct from any money due to the Executive (including remuneration) any amount which he owes to any Group Company. |
11.10 |
The Company may suspend the Executive from the Employment on full base salary at any time, and for any reason for a reasonable period to investigate any matter in which the Executive is implicated or involved (whether directly or indirectly) and to conduct any related disciplinary proceedings. |
12 |
Garden Leave |
12.1 |
Neither the Company nor any Group Company is under any obligation to provide the Executive with any work. At any time after notice to terminate the Employment is given by either party under clause 11 above, or if the Executive resigns without giving due notice and the Company does not accept his resignation, the Company may, at its absolute discretion, require the Executive to take a period of absence called garden leave for a maximum period of 6 months (the Garden Leave Period ). The provisions of this clause shall apply to any Garden Leave Period. |
12.2 |
The Company may require that the Executive will not, without prior written consent of the Board, be employed or otherwise engaged in the conduct of any activity, whether or not of a business nature during the Garden Leave Period. Further, if so requested by the Company, the Executive will not: |
12.2.1 |
enter or attend the premises of the Company or any other Group Company; or |
12.2.2 |
contact or have any communication with any customer or client of the Company or any other Group Company in relation to the business of the Company or any other Group Company (other than purely social contact); or |
12.2.3 |
contact or have any communication with any employee, officer, director, agent or consultant of the Company or any other Group Company in relation to the business of the Company or any other Group Company (other than purely social contact); or |
12.2.4 |
remain or become involved in any aspect of the business of the Company or any other Group Company except as required by such companies; or |
12.2.5 |
access the Companys or any Group Companys information technology systems. |
12.3 |
The Company may require the Executive: |
12.3.1 |
to comply with the provisions of clause 15, save that he will not be required to return any Company car during any Garden Leave Period; and |
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12.3.2 |
to immediately resign from any directorship, trusteeships or other offices which he holds in the Company, any other Group Company or any other company where such directorship or other office is held as a consequence or requirement of the Employment, unless he is required to perform duties to which any such directorship, trusteeship or other office relates in which case he may retain such directorships, trusteeships or other offices while those duties are ongoing. The Executive hereby irrevocably appoints the Company to be his attorney to execute any instrument and do anything in his name and on his behalf to effect his resignation if he fails to do so in accordance with this clause 12.3.2. |
12.4 |
During the Garden Leave Period, the Executive will be entitled to receive his base salary and all contractual benefits in accordance with the terms of this agreement, save that he will not accrue any bonuses or be entitled to receive any new grants or awards under any long term incentive arrangements. Any unused holiday accrued at the commencement of the Garden Leave Period and any holiday accrued during any such period will be deemed to be taken by the Executive during the Garden Leave Period. |
12.5 |
At the end of or at any time during the Garden Leave Period, the Company may, at its sole and absolute discretion, pay the Executive base salary alone (as defined in clause 7.1) in lieu of the balance of any period of notice given by the Company or the Executive (less any deductions the Company is required by law to make). |
12.6 |
During the Garden Leave Period: |
12.6.1 |
the Executive shall provide such assistance as the Company or any Group Company may require to effect an orderly handover of his responsibilities to any individual or individuals appointed by the Company or any Group Company to take over his role or responsibilities; |
12.6.2 |
the Executive shall make himself available to deal with requests for information, provide assistance, be available for meetings and to advise on matters relating to work (unless the Company has agreed that the Executive may be unavailable for a period); and |
12.6.3 |
the Company may appoint another person to carry out his duties in substitution for the Executive. |
12.7 |
All duties of the Employment (whether express or implied), including without limitation the Executives duties of fidelity, good faith and exclusive service, shall continue throughout the Garden Leave Period save as expressly varied by this clause 12. |
12.8 |
The Executive agrees that the exercise by the Company of its rights pursuant to this clause 12 shall not entitle the Executive to claim that he has been constructively dismissed. |
13 |
Restrictions after Termination of Employment |
13.1 |
In this clause: |
Prohibited Area means the United Kingdom, New York State, Rhode Island, Massachusetts and any other country in the world or US State in which the Company or any Group Company has material business interests in the period of 12 months ending on the Relevant Date;
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Relevant Date means the Termination Date or, if earlier, the date on which the Executive commences any Garden Leave Period; and
Restricted Period means the period of 12 months less any Garden Leave Period commencing on the Termination Date.
13.2 |
The Executive is likely to obtain trade secrets and confidential information and personal knowledge of and influence over customers clients and employees of the Group during the course of the Employment. To protect these interests of the Company, the Executive agrees with the Company that he will be bound by the following covenants: |
13.2.1 |
during the Restricted Period and within the Prohibited Area he will not be engaged in, employed in, act as a consultant to or agent for or carry on for his own account or for any other person, whether directly or indirectly, (or be a director of any company engaged in) any business which, by virtue of its location or otherwise, is or is about to be in competition with any business of the Company or any other Group Company being carried on by such company at the Relevant Date provided he was concerned or involved with that business to a material extent at any time during the 12 months prior to the Relevant Date; and |
13.2.2 |
during the Restricted Period he will not (either on his own behalf or for or with any other person, whether directly or indirectly), entice or try to entice away from the Company or any other Group Company any person who was senior employee, director, officer, agent, senior consultant or senior associate of such a company at the Termination Date and who had been senior employee, director, officer, agent, senior consultant or senior associate at any time during the six months prior to the Relevant Date and with whom he had worked closely at any time during that period. |
13.3 |
Each of the paragraphs contained in clause 13.2 constitutes an entirely separate and independent covenant. If any covenant is found to be invalid this will not affect the validity or enforceability of any of the other covenants. |
13.4 |
Following the Termination Date, the Executive will not represent himself as being in any way connected with the businesses of the Company or of any other Group Company (except to the extent agreed by such a company). |
13.5 |
Any benefit given or deemed to be given by the Executive to any Group Company under the terms of clause 13 is received and held on trust by the Company for the relevant Group Company. The Executive will enter into appropriate restrictive covenants directly with other Group Companies if asked to do so by the Company. |
14 |
Offers on Liquidation |
The Executive will have no claim against the Parent Company or the Company if the Employment is terminated by reason of liquidation in order to reconstruct or amalgamate the Company or by reason of any reorganisation of the Company and the Executive is offered employment with the company succeeding to the Company upon such liquidation or reorganisation and the new terms of employment offered to the Executive are no less favourable to him than the terms of this agreement.
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15 |
Return of Company Property |
15.1 |
At any time during the Employment (at the request of the Company) and in any event when the Employment terminates, the Executive will immediately return to the Company: |
15.1.1 |
all documents and other materials (whether originals or copies) made or compiled by or delivered to the Executive during the Employment and concerning all the Group Companies. The Executive will not retain any copies of any materials or other information; and |
15.1.2 |
all other property belonging or relating to any of the Group Companies. |
15.2 |
When the Employment terminates the Executive will immediately return to the Company any car provided to the Executive which is in the possession or under the control of the Executive. The Company car must be returned in good condition (allowing for fair wear and tear). |
15.3 |
If the Executive commences Garden Leave in accordance with clause 12 he may be required to comply with the provisions of clause 15.1. |
16 |
Directorships |
16.1 |
The Executives office as a director of the Parent Company or any other Group Company is subject to the Articles of Association of the relevant company (as amended from time to time). If the provisions of this agreement conflict with the provisions of the Articles of Association, the Articles of Association will prevail. |
16.2 |
The Executive must promptly resign from any office held in any Group Company if he is asked to do so by the Company. |
16.3 |
If the Executive does not resign as an officer of a Group Company, having been requested to do so in accordance with clause 16.2, the Company will be appointed as his attorney to effect his resignation. By entering into this agreement, the Executive irrevocably appoints the Company as his attorney to act on his behalf to execute any document or do anything in his name necessary to effect his resignation in accordance with clause 16.2. If there is any doubt as to whether such a document (or other thing) has been carried out within the authority conferred by this clause 16.3, a certificate in writing (signed by any director or the secretary of the Company) will be sufficient to prove the act or thing falls within that authority. |
16.4 |
The termination of any directorship or other office held by the Executive will not terminate the Executives employment or amount to a breach of terms of this agreement by the Company. |
16.5 |
During the Employment the Executive will not do anything which could cause him to be disqualified from continuing to act as a director of any Group Company. |
16.6 |
The Executive must not resign his office as a director of any Group Company without the agreement of the Company. |
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17 |
Notices |
17.1 |
Any notices given under this agreement must be given by letter or fax. Notice to the Company must be addressed to its registered office at the time the notice is given. Notice to the Executive must be given to him personally or sent to his last known address. |
17.2 |
Except for notices given by hand, notices given by post will be deemed to have been given on the next working day after the day of posting and notices given by fax will be deemed to have been given in the ordinary course of transmission. |
18 |
Statutory Particulars |
18.1 |
The written particulars of employment which the Executive is entitled to receive under the provisions of Part I of the Employment Rights Act 1996 are set out below, insofar as they are not set out elsewhere in this agreement. |
18.1.1 |
The Companys disciplinary rules and dismissal, disciplinary and grievance procedures as set out in the Staff Handbook and as amended from time to time are applicable to the Executive. The disciplinary rules are contractual. The dismissal, disciplinary and grievance procedures are non-contractual. |
18.1.2 |
The Companys normal hours of work are 9.00am to 5.00pm Monday to Friday. |
18.1.3 |
There are no terms and conditions relating to collective agreements or to the requirement to work outside the United Kingdom. |
19 |
Data Protection Act 1998 |
19.1 |
For the purposes of the Data Protection Act 1998 (the Act ) the Executive gives his consent to the holding, processing and disclosure of personal data (including sensitive data within the meaning of the Act) provided by the Executive to the Company for all purposes relating to the performance of this agreement including, but not limited to: |
19.1.1 |
administering and maintaining personnel records; |
19.1.2 |
paying and reviewing base salary and other remuneration and benefits; |
19.1.3 |
providing and administering benefits (including if relevant, pension, life assurance, permanent health insurance and medical insurance); |
19.1.4 |
undertaking performance appraisals and reviews; |
19.1.5 |
maintaining sickness and other absence records; |
19.1.6 |
taking decisions as to the Executives fitness for work; |
19.1.7 |
providing references and information to future employers, and if necessary, governmental and quasi-governmental bodies for social security and other purposes, the Inland Revenue and the Contributions Agency; |
19.1.8 |
providing information to future purchasers of the Parent Company or of the business in which the Executive works; and |
19.1.9 |
transferring information concerning the Executive to a country or territory outside the EEA. |
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19.2 |
The Executive acknowledges that during his Employment he will have access to and process, or authorise the processing of, personal data and sensitive personal data relating to employees, customers and other individuals held and controlled by the Parent Company or the Company. The Executive agrees to comply with the terms of the Act in relation to such data and to abide by the Parent Companys data protection policy issued and updated from time to time. |
20 |
Contracts (Rights of Third Parties) Act 1999 |
20.1 |
To the extent permitted by law, no person other than the parties to this agreement and the Group Companies shall have the right to enforce any term of this agreement under the Contracts (Rights of Third Parties) Act 1999. For the avoidance of doubt, save as expressly provided in this clause the application of the Contracts (Rights of Third Parties) Act 1999 is specifically excluded from this agreement, although this does not affect any other right or remedy of any third party which exists or is available other than under this Act. |
21 |
Miscellaneous |
21.1 |
This agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any party may enter into this agreement by executing any such counterpart. |
21.2 |
This agreement may only be modified by the written agreement of the parties. |
21.3 |
The Executive cannot assign this agreement to anyone else. |
21.4 |
References in this agreement to rules, regulations, policies, handbooks or other similar documents which supplement it, are referred to in it or describe any pensions or other benefits arrangement are references to the versions or forms of the relevant documents as amended or updated from time to time. |
21.5 |
This agreement supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in it. It (together with the Parent Company rules and policies) contains the whole agreement between the parties relating to the Employment at the date the agreement was entered into (except for those terms implied by law which cannot be excluded by the agreement of the parties). The Executive acknowledges that he has not been induced to enter into this agreement by any representation, warranty or undertaking not expressly incorporated into it. The Executive agrees and acknowledges that his only rights and remedies in relation to any representation, warranty or undertaking made or given in connection with this agreement (unless such representation, warranty or undertaking was made fraudulently) will be for breach of the terms of this agreement, to the exclusion of all other rights and remedies (including those in tort or arising under statute). |
21.6 |
Neither partys rights or powers under this agreement will be affected if: |
21.6.1 |
one party delays in enforcing any provision of this agreement; or |
21.6.2 |
one party grants time to the other party. |
21.7 |
The Interpretation Act 1978 shall apply to this agreement in the same way as it applies to an enactment. |
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21.8 |
References to any statutory provisions include any modifications or re-enactments of those provisions. |
21.9 |
Headings will be ignored in construing this agreement. |
21.10 |
If either party agrees to waive his rights under a provision of this agreement, that waiver will only be effective if it is in writing and it is signed by him. A partys agreement to waive any breach of any term or condition of this agreement will not be regarded as a waiver of any subsequent breach of the same term or condition or a different term or condition. |
21.11 |
This agreement is governed by and will be interpreted in accordance with the laws of England and Wales. Each of the parties submits to the exclusive jurisdiction of the English Courts as regards any claim or matter arising under this agreement. |
EXECUTED as a DEED on behalf of
NATIONAL GRID ELECTRICITY TRANSMISSION
PLC
EXECUTED as a DEED by JOHN MARK PETTIGREW in the presence of:
Witnesss signature |
} |
/s/ J. Pettigrew
/s/ Alexandra Lewis |
||
Name |
Alexandra Lewis |
|||
Address |
38 Victoria Avenue Surbiton Surrey KT6 SDW |
|||
Occupation |
Global Head of Reward |
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Exhibit 4(c).14
20 March 2014
Therese Esperdy
34 Dominick Street,
New York,
NY 10013
Dear Therese
Appointment as Non-executive Director
Subject to final approval by the Board of National Grid plc (the Company ) on 17 March 2014, I am delighted to advise that your appointment as a Non-executive Director of the Company will be effective from 18 March 2014. This letter sets out the terms of your appointment. It is agreed that this is a contract for services and not a contract of employment.
Appointment
Your appointment, commencing on 18 March 2014, will be subject to your election by shareholders at the Companys Annual General Meeting (AGM) in 2014, following which it is expected that you will be subject to annual re-election by shareholders in accordance with our commitment to best practice, unless your appointment is otherwise terminated earlier in accordance with the Companys Articles of Association as amended from time to time (the Articles) or by and at the discretion of either the Board or you upon 1 months written notice. Continuation of your contract of appointment is therefore contingent on satisfactory performance and re-election by shareholders at forthcoming AGMs.
In the event that shareholders do not support your appointment or other shareholder action terminates your appointment you will not be entitled to receive damages for breach of contract and will not be entitled to any other compensation (or payment in lieu of notice).
Non-executive Directors are typically expected to serve two three-year terms, subject to the terms of this letter; any extension to this is subject to review by the Nominations Committee (prior to making recommendations to the Board) having regard to corporate governance best practice from time to time.
Time Commitment
Overall we anticipate a time commitment of approximately 2-2 1 / 2 days on average per month, after the induction phase, taking into account reading and preparation time for Board and Committee meetings. This will include attendance at Board meetings (estimated 10 scheduled meetings per year including Board strategy session(s) - of which currently 3 are held in the US) plus ad hoc and emergency meetings,
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Committee meetings, the AGM, any extraordinary general meetings. It is planned that certain Board meetings will be held at the Companys operational sites (in the UK and US).
Post induction, as a Non-executive Director you will also be expected to undertake at least one site visit per year to the business, the location to be agreed with myself or the Chief Executive.
In addition, you will be expected to devote appropriate preparation time ahead of each meeting and such other time as is reasonably required to discharge your duties as a Director (for example if the Company is involved in increased activity because it is involved in a major transaction).
If you are unable to attend a meeting, you should notify the Group General Counsel & Company Secretary and prior to the meeting communicate your opinions and comments on the matters to be considered to me or the relevant Committee chairman so they can be taken into account at the meeting.
By confirming this appointment, you have agreed that you are able to allocate sufficient time to meet the expectations of your role including appropriate preparation time. My agreement should be sought before accepting additional commitments that might affect the time you are able to devote to your role as a Non-executive Director of the Company.
Role
All Directors, both Non-executive and Executive, have the same general legal responsibilities to the Company. The Board as a whole is collectively responsible for debating and approving the strategic direction of the Company and for promoting the success of the Company for the benefit of its members by directing and supervising the Companys affairs. All Directors must therefore take decisions objectively in the interests of the Company, in compliance with their statutory and fiduciary duties, and not do anything which is harmful to the Company or its business.
All directors are expected to comply with the Companys policies, procedures, rules and regulations from time to time in force, including in particular, the Companys Standards of Ethical Business Conduct and its Share Dealing Code.
The Board:
|
provides effective business leadership of the Company within a framework of prudent and effective controls which enable risk to be assessed and managed; |
|
sets the Companys strategic aims, ensures that the necessary financial and human resources are in place for the Company to meet its objectives, and reviews management performance; and |
|
sets the Companys values and standards and ensures that its obligations to its shareholders and others are understood and met. |
In addition to these requirements of all Directors, the role of the Non-executive Director has the following key elements:
|
Strategy: Non-executive Directors should constructively challenge and contribute to the development of strategy; |
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|
Performance: Non-executive Directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance; |
|
Risk: Non-executive Directors should satisfy themselves that the financial function of the Company is professionally managed and that financial controls and systems of risk management are robust and defensible; and |
|
People: Non-executive Directors are responsible for determining appropriate levels of remuneration for Executive Directors and have a prime role in appointing, and where necessary removing, senior management, and in succession planning. |
You should also have regard to the Guidance on Board Effectiveness, issued by the Financial Reporting Council in March 2011, of which an extract summarising the role of a Non-executive Director is set out at Schedule 1 to this letter.
Committees
Initially, you have been invited to serve on the Finance Committee with the expectation that you will take over as chairman of the Finance Committee when Maria Richter steps down from the Board later this year. You have also been invited to attend the Audit Committee meetings as an attendee. This is subject to change from time to time, as determined by the Board.
In addition, all Non-executive Directors are members of the Nominations Committee, meetings of which are held on an ad hoc basis. No fee is paid for Nominations Committee attendance.
This letter refers to your appointment as a Non-executive Director of the Company. Terms of reference of all Board Committees are set out in the Directors information pack which will be sent to you shortly.
Fees
This letter sets out the only payments you will receive for performing your duties in accordance with this letter. Accordingly, no other remuneration or benefits will be provided and, in particular, you will not participate in any of the Companys remuneration or benefit programmes, arrangements, schemes or plans.
As a non UK-based Director, you will be paid £72,000 per annum and you will also be entitled to a Committee membership fee of £8,000 per annum, per Committee membership and, as chairman of the Finance Committee, an additional fee of £12,500 per annum. NB: The Committee membership fee does not apply to the Nominations Committee which meets on an ad hoc basis.
These payments will be made monthly on or around 15 th day of each month and will be pro-rated from the date of your appointment. You will not receive any further fees for membership of, or attendance at, any ad hoc Board or Committee meetings. If, for a reason related to illness, disability or injury, you are unable to carry out your duties, payment of any fee(s) during any period of incapacity will be at the discretion of the Board.
The Company will reimburse you, in accordance with the Articles and any expenses procedures from time to time in force, for any reasonable expenses properly incurred in performing your duties. All expenses must be properly documented. Details regarding travel are set out in the Travel Guidelines for Directors document in the Directors information pack, which may change from time to time.
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The Executive Committee and Board shall review the above fees from time to time and they are therefore subject to change. All fees and payments will be made subject to any tax or other deductions required to be made by the Company.
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Outside interests
It is accepted and acknowledged that you have business interests other than those of the Company. As a condition to your appointment commencing you are required to declare any such directorships, appointments and interests in writing.
In the event that you become aware of any potential conflicts of interest, these should be disclosed to me and/or the Group General Counsel & Company Secretary as soon as apparent. Additionally, if at any time you are considering acquiring any new business interest (including as described in the letter to you regarding initial disclosures on appointment), you should raise the matter initially with me and/or the Group General Counsel & Company Secretary. Where an interest may give rise to a conflict of interest with the Company or any of its subsidiaries or associate companies, the interest may need to be disclosed to the Board and its prior consent obtained.
Independent status
The Board has determined you to be independent according to the provisions of the UK Corporate Governance Code. As an independent Director it is important that you remain independent in character and judgement. If you become aware of anything that may affect, or could appear to affect, this determination of independence, this should be disclosed to me and/or the Group General Counsel & Company Secretary as soon as apparent.
Confidentiality
You will, naturally, during your appointment and following its termination not disclose or communicate to any person (except as required by law or in the course of the proper performance of your duties under this letter, or with the consent of the Board) nor use for your own account or advantage any private or confidential information in any form whatsoever relating to the Company or any of its subsidiaries or associate companies (Confidential Information) which you obtained during your appointment or otherwise. Additionally, you will use your best endeavours to prevent the unauthorised use or disclosure of any such Confidential Information.
This restriction will continue to apply after your appointment ends without limit in time but will not apply to information which becomes public, unless through unauthorised disclosure by you. After your appointment ends you will return all documents and information (whether written, visual or electronic) under your control which belong to the Company.
Your attention is also drawn to the requirements under both legislation and regulation together with Company policies and procedures as to the disclosure of inside or price sensitive information. Consequently you should avoid making any statements that might risk a breach of these requirements without prior clearance from me or the Group General Counsel & Company Secretary.
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Induction
You will be provided with a comprehensive, formal and tailored induction to the Company and its businesses based on your experience and background and on which Committees you are to serve. You will also receive a Directors information pack comprising information on the Companys businesses and operations together with matters relating to corporate governance and corporate responsibility. We will also arrange various site visits and meetings with senior and middle management and the Companys auditors. We will also arrange for you to meet major shareholders as appropriate.
Should you feel you require additional information on any area please contact the Group General Counsel & Company Secretary to arrange this.
Review Process
The performance of individual Directors, the Board and Board Committees is evaluated annually. If, in the interim, there are any matters which cause you concern in relation to your role you should discuss them with me as soon as is appropriate. I will also regularly review and agree your training and development needs.
Directors Indemnity and Liability Insurance
In the event that you are made a party or are threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that you are or were a director of the Company, the Company shall indemnify you against expenses (including legal fees) actually and reasonably incurred by you in connection with such action, suit or proceeding and against judgments, fines and amounts paid in settlement in connection with such action, suit or proceeding to the fullest extent permitted by the Companies Act 2006 as amended and any other applicable law or regulation, as from time to time in effect. Such right of indemnification shall be without prejudice to any other rights to which you may be entitled. The terms and conditions of this indemnity are set out in a separate deed of indemnity entered into or to be entered into between you and the Company.
The Company has Directors and Officers liability insurance and currently intends to maintain such cover for the full term of your appointment. A summary of the cover is included in your Directors information pack.
Independent Professional Advice
Occasions may arise when you consider that you need independent professional advice in the furtherance of your duties as a Director. Please advise me or the Group General Counsel and Company Secretary should you wish to seek such advice. The Company will reimburse the full cost of expenditure incurred in respect of such advice, in accordance with the UK Corporate Governance Code and any relevant Company policy.
Disclosure of interests in transactions and Dealings in Shares
Under the Companies Act 2006, where a Director of a company is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the Company or one that has been entered into by the Company, he must declare the nature and extent of that interest. You may give any such notice at a meeting of the Directors, in writing or by general notice.
6 of 9
During the continuance of your appointments you will be expected to comply (and to procure that your spouse and dependant children comply) where relevant with any rule of law or regulation of any competent authority or of the Company from time to time in force in relation to dealings in shares, debentures and other securities of the Company and unpublished price sensitive information affecting the shares, debentures and other securities of the Company. A copy of the Companys Share Dealing Code is provided in the Directors information pack.
You should also have regard to, and your appointment is subject to, your duties as a Director in light of the Articles, applicable general law, the Companies Act 2006, the Listing, Prospectus, Disclosure and Transparency Rules of the Financial Services Authority, the UK Corporate Governance Code and obligations arising as a result of the Companys American Depositary Shares being listed on the New York Stock Exchange, as set out in the relevant section of the Directors information pack.
The Company currently has no share ownership requirements for its non-executive directors.
Governing Law
The agreement contained in this letter and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with English law and shall be subject to the exclusive jurisdiction of the English courts.
Entire Agreement
This appointment letter represents the entire understanding, and constitutes the whole agreement, in relation to your appointment and supersedes any previous agreement between yourself and the Company with respect thereto.
On a personal level, I am delighted that you have agreed to accept this appointment to the Board of the Company and I look forward to our building a good working relationship.
7 of 9
Please acknowledge receipt and acceptance of the above terms by signing and returning the enclosed copy of this letter.
Yours sincerely
/s/ Peter Gershon
Sir Peter Gershon
Chairman
For and on behalf of National Grid plc
I hereby acknowledge receipt of and accept the terms set out in this letter.
Signed /s/ Therese Marie Esperdy
Therese Marie Esperdy
Dated 27 March 2014
8 of 9
Schedule 1
Guidance for Non-Executive Directors
(extracted from the March 2011 FRC Guidance on Board Effectiveness)
A non-executive director should, on appointment, devote time to a comprehensive, formal and tailored induction which should extend beyond the boardroom. Initiatives such as partnering a non-executive director with an executive board member may speed up the process of him or her acquiring an understanding of the main areas of business activity, especially areas involving significant risk. The director should expect to visit, and talk with, senior and middle managers in these areas.
Non-executive directors should devote time to developing and refreshing their knowledge and skills, including those of communication, to ensure that they continue to make a positive contribution to the board. Being well-informed about the company, and having a strong command of the issues relevant to the business, will generate the respect of the other directors.
Non-executive directors need to make sufficient time available to discharge their responsibilities effectively. The letter of appointment should state the minimum time that the non-executive director will be required to spend on the companys business, and seek the individuals confirmation that he or she can devote that amount of time to the role, consistent with other commitments. The letter should also indicate the possibility of additional time commitment when the company is undergoing a period of particularly increased activity, such as an acquisition or takeover, or as a result of some major difficultly with one or more of its operations.
Non-executive directors have a responsibility to uphold high standards of integrity and probity. They should support the chairman and executive directors in instilling the appropriate culture, values and behaviours in the boardroom and beyond.
Non-executive directors should insist on receiving high-quality information sufficiently in advance so that there can be thorough consideration of the issues prior to, and informed debate and challenge at, board meetings. High-quality information is that which is appropriate for making decisions on the issue at hand it should be accurate, clear, comprehensive, up-to-date and timely; contain a summary of the contents of any paper; and inform the director of what is expected of him or her on that issue.
Non-executive directors should take into account the views of shareholders and other stakeholders, because these views may provide different perspectives on the company and its performance.
9 of 9
Exhibit 8
List of Subsidiaries
As at 31 March 2014
Name |
Country of Incorporation |
|||
1. |
ASSETHALL LIMITED |
England & Wales |
||
2. |
BEEGAS NOMINEES LIMITED |
England & Wales |
||
3. |
BIRCH SITES LIMITED |
England & Wales |
||
4. |
BOSTON GAS COMPANY (incl Essex Gas Company) |
USA |
||
5. |
BRITISH TRANSCO CAPITAL INC |
USA |
||
6. |
BRITISH TRANSCO FINANCE (NO 1) LIMITED |
Cayman Islands |
||
7. |
BRITISH TRANSCO FINANCE (NO 2) LIMITED |
Cayman Islands |
||
8. |
BRITISH TRANSCO FINANCE (NO 3) LIMITED |
England & Wales |
||
9. |
BRITISH TRANSCO FINANCE (NO 5) LIMITED |
England & Wales |
||
10. |
BRITISH TRANSCO FINANCE INC |
USA |
||
11. |
BRITISH TRANSCO INTERNATIONAL FINANCE BV |
The Netherlands |
||
12. |
BRITNED DEVELOPMENT LIMITED (50%) |
England & Wales |
||
13. |
BROKEN BRIDGE CORP. |
USA |
||
14. |
CLEAN LINE ENERGY PARTNERS LLC (approximately 15% holding) |
USA |
||
15. |
COLONIAL GAS COMPANY |
USA |
||
16. |
CONNECTICUT YANKEE ATOMIC POWER COMPANY (19.5%) |
USA |
||
17. |
CORESO SA (22.485%%) |
Belgium |
||
18. |
DIRECT GLOBAL POWER, INC. (26%) |
USA |
||
19. |
ELEXON LIMITED (nominal interest only) |
England & Wales |
||
20. |
ENERGIS PLC (33.06%) |
England & Wales |
||
21. |
EUA ENERGY INVESTMENT CORPORATION |
USA |
||
22. |
EVIONYX, INC. (16%) |
USA |
||
23. |
GRIDAMERICA HOLDINGS INC |
USA |
||
24. |
GRIDCOM LIMITED |
England & Wales |
||
25. |
GREENERU INC (17%) |
USA |
||
26. |
INVERSIONES ABC LTDA (98.84%) |
Chile |
||
27. |
ICELINK INTERCONNECTOR LTD |
England & Wales |
||
28. |
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. (20.4%) |
USA |
||
29. |
IROQUOIS PIPELINE OPERATING COMPANY (effectively 20.4% via Iroquois Gas Transmission System, L.P. 100% ownership) |
USA |
||
30. |
ISLANDER EAST PIPELINE COMPANY, LLC (50%) |
USA |
||
31. |
JOINT RADIO COMPANY LIMITED (50%) |
England & Wales |
||
32. |
KEYSPAN (U.K.) |
England & Wales |
||
33. |
KEYSPAN C.I. II, LTD |
Cayman Islands |
||
34. |
KEYSPAN C.I., LTD |
Cayman Islands |
||
35. |
KEYSPAN CI MIDSTREAM LIMITED |
USA |
||
36. |
KEYSPAN CORPORATION |
USA |
||
37. |
KEYSPAN ENERGY CORPORATION |
USA |
||
38. |
KEYSPAN ENERGY DEVELOPMENT CO. |
Canadian (Providence Nova Scotia) |
||
39. |
KEYSPAN ENERGY SERVICES INC. |
USA |
||
40. |
KEYSPAN GAS EAST CORPORATION |
USA |
||
41. |
KEYSPAN INTERNATIONAL CORPORATION |
USA |
||
42. |
KEYSPAN MHK, INC. |
USA |
||
43. |
KEYSPAN MIDSTREAM INC. |
USA |
||
44. |
KEYSPAN PLUMBING SOLUTIONS, INC. |
USA |
||
45. |
KSI CONTRACTING, LLC |
USA |
||
46. |
KSI ELECTRICAL, LLC |
USA |
||
47. |
KSI MECHANICAL, LLC |
USA |
||
48. |
LAND MANAGEMENT AND DEVELOPMENT, INC |
USA |
||
49. |
LANDRANCH LIMITED |
England & Wales |
||
50. |
LANDWEST, INC |
USA |
||
51. |
LATTICE ENERGY SERVICES LIMITED |
England & Wales |
||
52. |
LATTICE GROUP EMPLOYEE BENEFIT TRUST LIMITED |
England & Wales |
||
53. |
LATTICE GROUP INTERNATIONAL HOLDINGS LIMITED |
England & Wales |
||
54. |
LATTICE GROUP PLC |
England & Wales |
||
55. |
LATTICE GROUP TRUSTEES LIMITED |
England & Wales |
||
56. |
LATTICE OPSCO LIMITED |
England & Wales |
Name |
Country of Incorporation |
|||
57. |
LATTICE TELECOM FINANCE (NO 1) LIMITED |
Isle of Man |
||
58. |
MAINE YANKEE ATOMIC POWER COMPANY (24%) |
USA |
||
59. |
MAINSTREAM FORTY-SEVEN LIMITED |
England & Wales |
||
60. |
MASSACHUSETTS ELECTRIC COMPANY |
USA |
||
61. |
MELMAR LIMITED |
Isle of Man |
||
62. |
METRO ENERGY, L.L.C. |
USA |
||
63. |
METROWEST REALTY LLC |
USA |
||
64. |
MILLENNIUM PIPELINE COMPANY, LLC (26.25%) |
USA |
||
65. |
MYHOMEKEY.COM, INC. (18.2%) |
USA |
||
66. |
MYSTIC STEAMSHIP CORPORATION |
USA |
||
67. |
NANTUCKET ELECTRIC COMPANY |
USA |
||
68. |
NATGRID FINANCE HOLDINGS LIMITED |
England & Wales |
||
69. |
NATGRID FINANCE LIMITED |
England & Wales |
||
70. |
NATGRID INVESTMENTS LIMITED |
England & Wales |
||
71. |
NATGRID LIMITED |
England & Wales |
||
72. |
NATGRID ONE LIMITED |
England & Wales |
||
73. |
NATGRIDTW1 LIMITED |
England & Wales |
||
74. |
NATIONAL GRID (IOM) UK LTD |
Isle of Man |
||
75. |
NATIONAL GRID (IRELAND) 1 LIMITED |
Republic of Ireland |
||
76. |
NATIONAL GRID (IRELAND) 2 LIMITED |
Republic of Ireland |
||
77. |
NATIONAL GRID (SOUTHALL) GENERAL PARTNER LIMITED |
England & Wales |
||
78. |
NATIONAL GRID (US) HOLDINGS LIMITED |
England & Wales |
||
79. |
NATIONAL GRID (US) INVESTMENTS |
England & Wales |
||
80. |
NATIONAL GRID (US) INVESTMENTS 2 LIMITED |
England & Wales |
||
81. |
NATIONAL GRID (US) INVESTMENTS 3 |
England & Wales |
||
82. |
NATIONAL GRID (US) INVESTMENTS 4 LIMITED |
England & Wales |
||
83. |
NATIONAL GRID (US) PARTNER 1 LIMITED |
England & Wales |
||
84. |
NATIONAL GRID (US) PARTNER 2 LIMITED |
England & Wales |
||
85. |
NATIONAL GRID AUSTRALIA PTY LIMITED |
Australia |
||
86. |
NATIONAL GRID BELGIUM LIMITED |
England & Wales |
||
87. |
NATIONAL GRID BLUE POWER FINANCE LIMITED |
England & Wales |
||
88. |
NATIONAL GRID BLUE POWER LIMITED |
England & Wales |
||
89. |
NATIONAL GRID BRAZIL B.V. |
The Netherlands |
||
90. |
NATIONAL GRID BRAZIL FINANCE |
England & Wales |
||
91. |
NATIONAL GRID CARBON LIMITED |
England & Wales |
||
92. |
NATIONAL GRID CHILE B.V. |
The Netherlands |
||
93. |
NATIONAL GRID COMMERCIAL HOLDINGS LIMITED |
England & Wales |
||
94. |
NATIONAL GRID DEVELOPMENT HOLDINGS CORP. |
USA |
||
95. |
NATIONAL GRID EIGHT |
England & Wales |
||
96. |
NATIONAL GRID EIGHTEEN LIMITED |
England & Wales |
||
97. |
NATIONAL GRID ELECTRIC SERVICES LLC |
USA |
||
98. |
NATIONAL GRID ELECTRICITY GROUP TRUSTEE LIMITED |
England & Wales |
||
99. |
NATIONAL GRID ELECTRICITY TRANSMISSION PLC |
England & Wales |
||
100. |
NATIONAL GRID ELEVEN |
England & Wales |
||
101. |
NATIONAL GRID ENERGY MANAGEMENT, LLC |
USA |
||
102. |
NATIONAL GRID ENERGY SERVICES, LLC |
USA |
||
103. |
NATIONAL GRID ENERGY TRADING SERVICES LLC |
USA |
||
104. |
NATIONAL GRID ENGINEERING & SURVEY INC. |
USA |
||
105. |
NATIONAL GRID FIFTEEN LIMITED |
England & Wales |
||
106. |
NATIONAL GRID FINANCE B.V. |
The Netherlands |
||
107. |
NATIONAL GRID FIVE LIMITED |
England & Wales |
||
108. |
NATIONAL GRID FOUR LIMITED |
England & Wales |
||
109. |
NATIONAL GRID FOURTEEN LIMITED |
England & Wales |
||
110. |
NATIONAL GRID GAS FINANCE (NO 1) PLC |
England & Wales |
||
111. |
NATIONAL GRID GAS HOLDINGS LIMITED |
England & Wales |
||
112. |
NATIONAL GRID GAS PLC |
England & Wales |
||
113. |
NATIONAL GRID GENERATION LLC |
USA |
Name |
Country of Incorporation |
|||
114. |
NATIONAL GRID GENERATION VENTURES LLC |
USA |
||
115. |
NATIONAL GRID GLENWOOD ENERGY CENTER, LLC |
USA |
||
116. |
NATIONAL GRID GOLD LIMITED |
England & Wales |
||
117. |
NATIONAL GRID GRAIN LNG LIMITED |
England & Wales |
||
118. |
NATIONAL GRID HOLDINGS B.V. |
The Netherlands |
||
119. |
NATIONAL GRID HOLDINGS LIMITED |
England & Wales |
||
120. |
NATIONAL GRID HOLDINGS ONE PLC |
England & Wales |
||
121. |
NATIONAL GRID IGTS CORP. |
USA |
||
122. |
NATIONAL GRID INDIA B.V. |
The Netherlands |
||
123. |
NATIONAL GRID INDUS B.V. |
The Netherlands |
||
124. |
NATIONAL GRID INSURANCE COMPANY (IRELAND) LIMITED |
Republic of Ireland |
||
125. |
NATIONAL GRID INSURANCE COMPANY (ISLE OF MAN) LIMITED |
Isle of Man |
||
126. |
NATIONAL GRID INTERCONNECTOR HOLDINGS LIMITED |
England & Wales |
||
127. |
NATIONAL GRID INTERCONNECTORS LIMITED |
England & Wales |
||
128. |
NATIONAL GRID INTERNATIONAL LIMITED |
England & Wales |
||
129. |
NATIONAL GRID ISLANDER EAST PIPELINE LLC |
USA |
||
130. |
NATIONAL GRID JERSEY HOLDINGS FIVE LIMITED |
Jersey |
||
131. |
NATIONAL GRID JERSEY INVESTMENTS LIMITED |
Jersey |
||
132. |
NATIONAL GRID LAND AND PROPERTIES LIMITED |
England & Wales |
||
133. |
NATIONAL GRID LAND DEVELOPMENTS LIMITED |
England & Wales |
||
134. |
NATIONAL GRID LAND INVESTMENTS LIMITED |
England & Wales |
||
135. |
NATIONAL GRID LNG GP LLC |
USA |
||
136. |
NATIONAL GRID LNG LLC |
USA |
||
137. |
NATIONAL GRID LNG LP LLC |
USA |
||
138. |
NATIONAL GRID MANQUEHUE B.V. |
The Netherlands |
||
139. |
NATIONAL GRID METERING LIMITED |
England & Wales |
||
140. |
NATIONAL GRID MIDDLE EAST FZCO |
United Arab Emirates |
||
141. |
NATIONAL GRID MILLENNIUM LLC |
USA |
||
142. |
NATIONAL GRID NE HOLDINGS 2 LLC |
USA |
||
143. |
NATIONAL GRID NEMO LINK LIMITED |
England & Wales |
||
144. |
NATIONAL GRID NETHERLANDS ONE BV |
The Netherlands |
||
145. |
NATIONAL GRID NETHERLANDS THREE BV |
The Netherlands |
||
146. |
NATIONAL GRID NETHERLANDS TWO BV |
The Netherlands |
||
147. |
NATIONAL GRID NINE LIMITED |
England & Wales |
||
148. |
NATIONAL GRID NINETEEN LIMITED |
England & Wales |
||
149. |
NATIONAL GRID NORTH AMERICA INC |
USA |
||
150. |
NATIONAL GRID NORTH EAST VENTURES INC |
USA |
||
151. |
NATIONAL GRID NSN LINK LIMITED |
England & Wales |
||
152. |
NATIONAL GRID OFFSHORE LTD |
England & Wales |
||
153. |
NATIONAL GRID ONE LIMITED |
England & Wales |
||
154. |
NATIONAL GRID OVERSEAS LIMITED |
England & Wales |
||
155. |
NATIONAL GRID OVERSEAS TWO LIMITED |
England & Wales |
||
156. |
NATIONAL GRID PLC |
England & Wales |
||
157. |
NATIONAL GRID POLAND B.V. |
The Netherlands |
||
158. |
NATIONAL GRID PORT JEFFERSON ENERGY CENTER, LLC |
USA |
||
159. |
NATIONAL GRID PROCUREMENT BV |
The Netherlands |
||
160. |
NATIONAL GRID PROPERTY (HIGH WYCOMBE) LIMITED |
England & Wales |
||
161. |
NATIONAL GRID PROPERTY (NORTHAMPTON) LIMITED |
England & Wales |
||
162. |
NATIONAL GRID PROPERTY (NORTHFLEET) LIMITED |
England & Wales |
||
163. |
NATIONAL GRID PROPERTY (TAUNTON) LIMITED |
England & Wales |
||
164. |
NATIONAL GRID PROPERTY (WARWICK) LIMITED |
England & Wales |
||
165. |
NATIONAL GRID PROPERTY DEVELOPMENTS LIMITED |
England & Wales |
||
166. |
NATIONAL GRID PROPERTY HOLDINGS LIMITED |
England & Wales |
||
167. |
NATIONAL GRID PROPERTY LIMITED |
England & Wales |
||
168. |
NATIONAL GRID SERVICES, INC. |
USA |
||
169. |
NATIONAL GRID SEVEN LIMITED |
England & Wales |
||
170. |
NATIONAL GRID SEVENTEEN LIMITED |
England & Wales |
Name |
Country of Incorporation |
|||
171. |
NATIONAL GRID SIX LIMITED |
England & Wales |
||
172. |
NATIONAL GRID SIXTEEN LIMITED |
England & Wales |
||
173. |
NATIONAL GRID TECHNOLOGIES INC. |
USA |
||
174. |
NATIONAL GRID TEN |
England & Wales |
||
175. |
NATIONAL GRID THIRTY LIMITED |
England & Wales |
||
176. |
NATIONAL GRID THREE LIMITED |
England & Wales |
||
177. |
NATIONAL GRID TRANSMISSION SERVICES CORPORATION |
USA |
||
178. |
NATIONAL GRID TWELVE LIMITED |
England & Wales |
||
179. |
NATIONAL GRID TWENTY EIGHT LIMITED |
England & Wales |
||
180. |
NATIONAL GRID TWENTY FOUR LIMITED |
England & Wales |
||
181. |
NATIONAL GRID TWENTY LIMITED |
England & Wales |
||
182. |
NATIONAL GRID TWENTY NINE LIMITED |
England & Wales |
||
183. |
NATIONAL GRID TWENTY ONE LIMITED |
England & Wales |
||
184. |
NATIONAL GRID TWENTY SEVEN LIMITED |
England & Wales |
||
185. |
NATIONAL GRID TWENTY THREE LIMITED |
England & Wales |
||
186. |
NATIONAL GRID TWENTY-FIVE LIMITED |
England & Wales |
||
187. |
NATIONAL GRID TWENTY-SIX LIMITED |
England & Wales |
||
188. |
NATIONAL GRID TWO LIMITED |
England & Wales |
||
189. |
NATIONAL GRID UK LIMITED |
England & Wales |
||
190. |
NATIONAL GRID UK PENSION SERVICES LIMITED |
England & Wales |
||
191. |
NATIONAL GRID US 6 LLC |
USA |
||
192. |
NATIONAL GRID US LLC |
USA |
||
193. |
NATIONAL GRID USA |
USA |
||
194. |
NATIONAL GRID USA SERVICE COMPANY, INC. |
USA |
||
195. |
NATIONAL GRID ZAMBIA LIMITED |
England & Wales |
||
196. |
NEES ENERGY, INC. |
USA |
||
197. |
NEW ENGLAND ELECTRIC TRANSMISSION CORPORATION |
USA |
||
198. |
NEW ENGLAND ENERGY INCORPORATED |
USA |
||
199. |
NEW ENGLAND HYDRO FINANCE COMPANY, INC. (53.704%) |
USA |
||
200. |
NEW ENGLAND HYDRO-TRANSMISSION CORPORATION (53.704%) |
USA |
||
201. |
NEW ENGLAND HYDRO-TRANSMISSION ELECTRIC COMPANY, INC. (53.704%) |
USA |
||
202. |
NEW ENGLAND POWER COMPANY |
USA |
||
203. |
NEWPORT AMERICA CORPORATION |
USA |
||
204. |
NG JERSEY LIMITED |
Jersey |
||
205. |
NG LEASING LIMITED |
England & Wales |
||
206. |
NG LUXEMBOURG 3 SARL |
Luxembourg |
||
207. |
NG LUXEMBOURG 4 SARL |
Luxembourg |
||
208. |
NG LUXEMBOURG 5 SARL |
Luxembourg |
||
209. |
NG LUXEMBOURG HOLDINGS LIMITED |
England & Wales |
||
210. |
NG LUXEMBOURG SA |
Luxembourg |
||
211. |
NG NOMINEES LIMITED |
England & Wales |
||
212. |
NG PROCUREMENT HOLDINGS LIMITED |
England & Wales |
||
213. |
NG VILLIERS LIMITED PARTNERSHIP |
England & Wales |
||
214. |
NGC EMPLOYEE SHARES TRUSTEE LIMITED |
England & Wales |
||
215. |
NGC INDUS LIMITED |
England & Wales |
||
216. |
NGC TWO LIMITED |
England & Wales |
||
217. |
NGC ZAMBIA LIMITED |
England & Wales |
||
218. |
NGET / SPT UPGRADES LTD (50%) |
England & Wales |
||
219. |
NGG FINANCE (NO 1) LIMITED |
England & Wales |
||
220. |
NGG FINANCE PLC |
England & Wales |
||
221. |
NGG TELECOMS HOLDINGS LIMITED |
England & Wales |
||
222. |
NGG TELECOMS LIMITED |
England & Wales |
||
223. |
NGM1 (GBR) LIMITED |
Gibraltar |
||
224. |
NGNE LLC |
USA |
||
225. |
NGP(IM7S) LIMITED |
Isle of Man |
||
226. |
NGRID INTELLECTUAL PROPERTY LIMITED |
England & Wales |
Name |
Country of Incorporation |
|||
227. |
NGT FIVE LIMITED |
Cayman Islands |
||
228. |
NGT FOUR LIMITED |
Cayman Islands |
||
229. |
NGT HOLDING COMPANY (ISLE OF MAN) LIMITED |
Isle of Man |
||
230. |
NGT LUXEMBOURG ONE LIMITED |
England & Wales |
||
231. |
NGT ONE LIMITED |
England & Wales |
||
232. |
NGT TELECOM NO. 1 LIMITED |
England & Wales |
||
233. |
NGT TELECOM NO. 2 LIMITED |
England & Wales |
||
234. |
NGT THREE |
England & Wales |
||
235. |
NGT TWO LIMITED |
England & Wales |
||
236. |
NIAGARA MOHAWK ENERGY, INC. |
USA |
||
237. |
NIAGARA MOHAWK HOLDINGS, INC. |
USA |
||
238. |
NIAGARA MOHAWK POWER CORPORATION |
USA |
||
239. |
NM PROPERTIES, INC. |
USA |
||
240. |
NMP LIMITED |
England & Wales |
||
241. |
NORTH EAST TRANSMISSION CO., INC. |
USA |
||
242. |
NYSEARCH RMLD LLC (22.63%) |
USA |
||
243. |
NYSEARCH ROBOTICS LLC (14.59%) |
USA |
||
244. |
OPINAC NORTH AMERICA, INC. |
USA |
||
245. |
PCC LAND COMPANY, INC. |
USA |
||
246. |
PHILADELPHIA COKE CO., INC. |
USA |
||
247. |
PORT GREENWICH LIMITED |
England & Wales |
||
248. |
PORT OF THE ISLANDS NORTH LLC |
USA |
||
249. |
SCC UNO SA |
Chile |
||
250. |
STARGAS NOMINEES LIMITED |
England & Wales |
||
251. |
SUPERGRID ELECTRICITY LIMITED |
England & Wales |
||
252. |
SUPERGRID ENERGY TRANSMISSION LIMITED |
England & Wales |
||
253. |
SUPERGRID LIMITED |
England & Wales |
||
254. |
TELECOM INTERNATIONAL HOLDINGS LIMITED |
England & Wales |
||
255. |
THAMESPORT INTERCHANGE LIMITED |
England & Wales |
||
256. |
THE BROOKLYN UNION GAS COMPANY |
USA |
||
257. |
THE NARRAGANSETT ELECTRIC COMPANY |
USA |
||
258. |
THE NATIONAL GRID GROUP QUEST TRUSTEE COMPANY LTD |
England & Wales |
||
259. |
THE NATIONAL GRID YOUPLAN TRUSTEE LIMITED |
England & Wales |
||
260. |
THE NATIONAL GRID INVESTMENTS COMPANY |
England & Wales |
||
261. |
TRANSCO LIMITED |
England & Wales |
||
262. |
TRANSGAS, INC. |
USA |
||
263. |
UNIT 40 SUBLESSOR LLC |
USA |
||
264. |
UPPER HUDSON DEVELOPMENT INC |
USA |
||
265. |
VALLEY APPLIANCE AND MERCHANDISING COMPANY |
USA |
||
266. |
VILLIERS FINANCE SA |
Luxembourg |
||
267. |
WAYFINDER GROUP, INC. |
USA |
||
268. |
XOSERVE LIMITED (56.5%) |
England & Wales |
||
269. |
YANKEE ATOMIC ELECTRIC COMPANY (34.5%) |
USA |
Exhibit 12.1
RULE 13a-14(a) CERTIFICATION
I, Steve Holliday, certify that:
1. | I have reviewed this annual report on Form 20-F of National Grid plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: 5 June 2014
/s/ Steve Holliday |
Steve Holliday |
Title: Chief Executive |
National Grid plc |
Exhibit 12.2
RULE 13a-14(a) CERTIFICATION
I, Andrew Bonfield, certify that:
1. | I have reviewed this annual report on Form 20-F of National Grid plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: 5 June 2014
/s/ Andrew Bonfield |
Andrew Bonfield |
Title: Finance Director |
National Grid plc |
EXHIBIT 13.1
RULE 13a-14(b) CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18 of the United States Code ) each of the undersigned officers of National Grid plc, a public limited company incorporated under the laws of England and Wales (the Company), hereby certifies to such officers knowledge, that:
The Annual Report on Form 20-F for the year ending 31 March 2014 (the Report) of the Company fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: 5 June 2014 |
/s/ Steve Holliday |
|||
Steve Holliday | ||||
Title: Chief Executive | ||||
National Grid plc | ||||
Date: 5 June 2014 |
/s/ Andrew Bonfield |
|||
Andrew Bonfield | ||||
Title: Finance Director | ||||
National Grid plc |
EXHIBIT 15
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-33094, 333-65968, 333-97249, 333-103768, 333-107727, 333-149828, 333-155527, 333-170716, 333-175852 and 333-184558) and form F-3 (No. 333-182769) of National Grid plc of our report dated May 21, 2014 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
|
/s/ PricewaterhouseCoopers LLP |
London, UK |
June 5, 2014 |