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 2015 | ||
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 2015 was
Ordinary Shares of 11 17/43 pence each | 3,891,691,900 |
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 2015 and is dated 5 June 2015. Details of events occurring subsequent to the approval of the annual report on 20 May 2015 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 |
190-191 | ||||||
Strategic ReportFinancial review |
20-23 | |||||||
Financial StatementsUnaudited commentary on consolidated statement of financial positionNet debt |
91 | |||||||
Financial StatementsUnaudited commentary on the consolidated cash flow statementNet debt |
93 | |||||||
Additional InformationOther unaudited financial informationReconciliations of adjusted profit measures |
186 | |||||||
Additional InformationShareholder informationExchange rates |
180 | |||||||
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 InformationThe business in detailRisk factors |
173-176 | ||||||
4 |
Information on the company |
|||||||
4A History and development of the company |
Want more information or help? |
|
196-
Back cover |
|
||||
Additional InformationThe business in detailKey milestones |
164 | |||||||
Strategic ReportChief Executives review |
4-5 | |||||||
Strategic ReportOur vision and strategy |
14-15 | |||||||
Strategic ReportOperating environment |
6-7 | |||||||
Additional InformationShareholder informationArticles of Association |
177-178 | |||||||
Financial StatementsConsolidated statement of financial positionUnaudited commentary on consolidated statement of financial positionProperty, plant and equipment |
91 | |||||||
Financial StatementsConsolidated cash flow statementUnaudited commentary on the consolidated cash flow statementNet capital expenditure |
93 | |||||||
Additional InformationOther unaudited financial informationCommentary on consolidated financial statements for the year ended 31 March 2014 |
187-189 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysis(c) Capital expenditure, depreciation and amortisation |
98 | |||||||
Strategic ReportHow our strategy creates value |
15 | |||||||
4B Business overview |
Additional InformationThe business in detailWhere we operate |
165 | ||||||
Strategic ReportOperating environment |
6-7 | |||||||
Strategic ReportWhat we do Electricity; |
8-9 |
i
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
What we do Gas; Our Business model; Our vision and strategy and |
|
10-11
12-13 14-19 |
|
|||||
How our strategy creates value |
15 | |||||||
Strategic ReportPrincipal operations |
27-36 | |||||||
Strategic ReportDelivering our strategy key performance indicators |
16-19 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysis and unaudited commentary on the results of our principal operations by segment |
96-100 | |||||||
Additional InformationInternal control and risk factorsRisk factorsInfrastructure and IT systemsWe may suffer a major network failure or interruption, or may not be able to carry out critical operations due to the failure of infrastructure, data, technology or a lack of supply; Law and RegulationChanges 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 |
|
174
174 176 |
|
|||||
Additional InformationThe business in detailUK regulation; US regulation; and Summary of US price controls and rate plans |
166-172 | |||||||
Strategic ReportOur Business model |
12-13 | |||||||
4C Organizational structure |
Financial StatementsNotes to the consolidated financial statements32. Subsidiary undertakings, joint ventures and associatesPrincipal subsidiary undertakings |
150 | ||||||
4D Property, plants and equipment |
Additional InformationThe business in detailWhere we operate and Property, plant and equipment |
|
165
185 |
|
||||
Strategic ReportWhat we do Electricity; What we do Gas; and |
8-11 | |||||||
Our Business model; |
12-13 | |||||||
Strategic ReportPrincipal operations |
27-36 | |||||||
Strategic ReportOur vision and strategyEmbed sustainability and Drive growth |
14 | |||||||
Strategic ReportOperating environmentChanging energy mix; Energy policy; Regulation; and Innovation and technology |
6-7 | |||||||
Financial StatementsConsolidated statement of financial positionUnaudited commentary on consolidated statement of financial positionProperty, plant and equipment |
91 | |||||||
Additional InformationOther disclosuresProperty, plant and equipment |
185 | |||||||
Financial StatementsNotes to the consolidated financial statements11. |
115-116 |
ii
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
Property, plant and equipment |
||||||||
Financial StatementsNotes to the consolidated financial statements19. Borrowings |
123-125 | |||||||
4A |
Unresolved staff comments |
Additional InformationOther disclosuresUnresolved SEC staff comments |
185 | |||||
5 |
Operating and financial review and prospects |
|||||||
5A Operating results |
Strategic ReportFinancial review |
20-23 | ||||||
Strategic ReportOperating environment |
6-7 | |||||||
Additional InformationThe business in detailUK regulation; US regulation; and Summary of US price controls and rate plans |
166-172 | |||||||
Strategic ReportPrincipal operations |
27-36 | |||||||
Financial StatementsConsolidated income statementUnaudited commentary on the consolidated income statement |
87 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysisUnaudited commentary on the results of our principal operations by segment |
99 | |||||||
Additional InformationOther unaudited financial information |
186-189 | |||||||
Financial StatementsNotes to the consolidated financial statements30. Financial risk management(d) Currency risk |
144-145 | |||||||
5B Liquidity and capital resources |
Strategic ReportFinancial review |
20-23 | ||||||
Corporate GovernanceGoing concern |
54 | |||||||
Financial StatementsConsolidated cash flow statement |
92-93 | |||||||
Additional InformationInternal control and risk factorsRisk factorsFinancing and liquidityAn inability to access capital markets at commercially acceptable interest rates could affect how we maintain and grow our businesses |
176 | |||||||
Financial StatementsNotes to the consolidated financial statements2. Segmental analysisUnaudited commentary on the results of our principal operations by segment |
99 | |||||||
Financial StatementsNotes to the consolidated financial statements26. Net debt |
134-135 | |||||||
Financial StatementsNotes to the consolidated financial statements19. Borrowings |
123-125 | |||||||
Financial StatementsNotes to the consolidated financial statements15. Derivative financial instruments |
118-120 | |||||||
Additional InformationThe business in detailFERCShort-term borrowing authorisation |
171 | |||||||
Additional InformationShareholder informationMaterial interests in shares |
180-181 | |||||||
Material Interests in Shares and Material |
Further Information |
iii
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
interest in American Depositary Shares |
||||||||
5C Research and development, patents and licenses, etc. |
Additional InformationOther disclosuresResearch and development |
185 | ||||||
5D Trend information |
Strategic ReportFinancial review |
20-23 | ||||||
Strategic ReportPrincipal operations |
27-36 | |||||||
Strategic ReportOperating environment |
6-7 | |||||||
5E Off-balance sheet arrangements |
Financial StatementsUnaudited commentary on consolidated statement of financial conditionOff balance sheet items |
91 | ||||||
5F Tabular disclosure of contractual obligations |
Financial StatementsNotes to the consolidated financial statements27. Commitments and contingencies |
136 | ||||||
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 InformationShareholder InformationBoard biographies |
178-179 | |||||||
6B Compensation |
Corporate GovernanceDirectors Remuneration Report |
60-75 | ||||||
Financial StatementsNotes to the consolidated financial statements3. Operating costs(c) Key management compensation |
102 | |||||||
Financial StatementsNotes to the consolidated financial statements22. Pensions and other post-retirement benefits |
126-129 | |||||||
Financial StatementsNotes to the consolidated financial statements29. Actuarial information on pensions and other post-retirement benefits |
137-140 | |||||||
Share Ownership |
Further Information | |||||||
6C Board practices |
Corporate GovernanceOur Board |
43-49 | ||||||
Additional InformationShareholder information |
177-179 | |||||||
Additional InformationOther disclosures Conflict of interest; and Directors indemnity |
184-185 | |||||||
Corporate GovernanceOur Board and its committeesAudit Committee; Finance Committee; Safety, Environment and Health Committee; Nominations Committee; Executive Committee; Management committees |
49-59 | |||||||
Corporate GovernanceDirectors Remuneration ReportAnnual statement from the Remuneration Committee chairman |
60-61 | |||||||
Corporate GovernanceDirectors Remuneration ReportApproved policy table Executive Directors |
62-65 | |||||||
Corporate Governance Directors Remuneration ReportApproved policy table Non-executive Directors (NEDs) |
65 | |||||||
Corporate GovernanceDirectors Remuneration ReportService contracts |
67 |
iv
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
and policy on payment for loss of office and Dates of Directors service contracts/letters of appointment |
||||||||
6D Employees |
Financial StatementsNotes to the consolidated financial statements3. Operating costs(b) Number of employees |
101 | ||||||
Additional InformationOther disclosuresEmployees |
185 | |||||||
6E Share ownership |
Corporate GovernanceDirectors Remuneration ReportShareholding requirement and Differences in remuneration policy for all employees |
66 | ||||||
Corporate GovernanceDirectors Remuneration ReportStatement of Directors shareholdings and share interests (audited information) |
72-73 | |||||||
Corporate GovernanceDirectors Remuneration ReportAnnual report on remuneration |
69-75 | |||||||
Additional InformationOther disclosuresAll-employee share plans |
184 | |||||||
Share ownership |
Further Information | |||||||
7 |
Major shareholders and related party transactions |
|||||||
7A Major shareholders |
Additional InformationShareholder informationMaterial interests in shares |
180-181 | ||||||
Material interests in shares and Material interest in American Depositary Shares |
Further Information | |||||||
7B Related party transactions |
Financial StatementsNotes to the consolidated financial statements28. Related party transactions |
137 | ||||||
7C Interests of experts and counsel |
Not applicable |
| ||||||
8 |
Financial information |
|||||||
8A Consolidated statements and other financial information |
||||||||
Financial StatementsReport of Independent Registered Public Accounting FirmAudit opinion for Form 20-F |
85 | |||||||
Financial StatementsNotes to the consolidated financial statements1. Basis of preparation and recent accounting developments |
94-96 | |||||||
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 |
86-93 | |||||||
Financial StatementsNotes to the consolidated financial statements analysis of items in the primary statements |
94-135 | |||||||
Financial StatementsNotes to the consolidated financial statements supplementary information |
136-158 | |||||||
Strategic ReportChairmans statement |
2-3 | |||||||
8B Significant changes |
Subsequent Events |
Further Information |
v
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
9 |
The offer and listing |
|||||||
9A Offer and listing details |
Additional InformationShareholder informationExchange Rates, Share price, Price History |
|
180-182
Further Information |
|
||||
9B Plan of distribution |
Not applicable |
|||||||
9C Markets |
Additional InformationShareholder informationShare price |
181-182 | ||||||
9D Selling shareholders |
Not applicable |
| ||||||
9E Dilution |
Not applicable |
| ||||||
9F Expenses of the issue |
Not applicable |
| ||||||
10 |
Additional information |
|||||||
10A Share capital |
Not applicable |
| ||||||
10B Memorandum and articles of association |
Additional InformationShareholder InformationArticles of Association |
177-178 | ||||||
Additional Information Other disclosuresCorporate governance practices: differences from New York Stock Exchange (NYSE) listing standards |
184 | |||||||
Additional InformationShareholder informationShare capital |
181 | |||||||
10C Material contracts |
Additional InformationOther disclosuresMaterial contracts |
185 | ||||||
10D Exchange controls |
Additional InformationShareholder informationExchange controls |
180 | ||||||
10E Taxation |
Additional InformationShareholder informationTaxation |
182-183 | ||||||
10F Dividends and paying agents |
Not applicable |
| ||||||
10G Statement by experts |
Not applicable |
| ||||||
10H Documents on display |
Additional InformationShareholder informationDocuments on display |
180 | ||||||
10I Subsidiary information |
Not applicable |
| ||||||
11 |
Quantitative and qualitative disclosures about market risk |
|||||||
11A Quantitative information about market risk |
Financial StatementsNotes to the consolidated financial statements15. Derivative financial instruments |
118-120 | ||||||
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 |
141-148 | |||||||
Strategic ReportFinancial review |
20-23 | |||||||
11B Qualitative information about market risk |
Financial StatementsNotes to the consolidated financial statements15. Derivative financial instruments |
118-120 | ||||||
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 |
141-148 | |||||||
Strategic ReportFinancial review |
20-23 |
vi
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
Additional InformationInternal Control and Risk factorsRisk Factors |
173-176 | |||||||
12 |
Description of securities other than equity securities |
|||||||
12A Debt securities |
Not applicable |
| ||||||
12B Warrants and rights |
Not applicable |
| ||||||
12C Other securities |
Not applicable |
| ||||||
12D American depositary shares |
Additional InformationShareholder informationDescription of securities other than equity securities: depositary fees and charges |
180 | ||||||
Additional InformationShareholder informationDepositary payments to the Company |
180 | |||||||
Additional InformationDefinitions and glossary of terms |
192-195 | |||||||
13 |
Defaults, dividend arrearages and delinquencies |
Not applicable |
| |||||
14 |
Material modifications to the rights of security holders and use of proceeds |
Not applicable |
| |||||
15 |
Controls and procedures |
Additional InformationInternal control and risk factorsDisclosure controls and Internal control over financial reporting |
173 | |||||
16 |
16A Audit committee financial expert |
Corporate GovernanceAudit CommitteeExperience |
51 | |||||
16B Code of ethics |
Additional InformationOther disclosuresCode of Ethics |
184 | ||||||
16C Principal accountant fees and services |
Corporate GovernanceAudit CommitteeExternal audit |
52 | ||||||
Financial StatementsNotes to the consolidated financial statements3. Operating costs(e) Auditors remuneration |
102 | |||||||
16D Exemptions from the listing standards for audit committees |
Not applicable |
| ||||||
16E Purchases of equity securities by the issuer and affiliated purchasers |
Not applicable |
| ||||||
16F Change in registrants certifying accountant |
Not applicable |
| ||||||
16G Corporate governance |
Additional InformationOther disclosuresCorporate governance practices: differences from New York Stock Exchange (NYSE) listing standards |
184 | ||||||
16H Mine safety disclosure |
Not applicable |
| ||||||
17 |
Financial statements |
Not applicable |
| |||||
18 |
Financial statements |
Financial StatementsCompany accounting policies |
159 | |||||
Financial StatementsNotes to the consolidated financial statements1. Basis of preparation and recent accounting developments |
94-96 | |||||||
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 |
86-93 | |||||||
Financial StatementsNotes to the |
94-135 |
vii
Item |
Form 20-F caption | Location in the document | Page(s) | |||||
consolidated financial statements analysis of items in the primary statements |
||||||||
Financial StatementsNotes to the consolidated financial statements supplementary information |
136-158 | |||||||
Financial StatementsReport of Independent Registered Public Accounting FirmAudit opinion for Form 20-F |
85 | |||||||
19 |
Exhibits |
Filed with the SEC |
|
viii
national grid
Connecting to life
Annual Report and Accounts 2014/15
|
||||
Overview | ||||
About National Grid | 01 | |||
|
||||
Strategic Report pages 0241 |
||||
Chairmans statement | 02 | |||
Chief Executives review | 04 | |||
Operating environment | 06 | |||
What we do | 08 | |||
Our business model | 12 | |||
Our vision and strategy | 14 | |||
Delivering our strategy key performance indicators | 16 | |||
Financial review | 20 | |||
Our people | 24 | |||
Principal operations | 27 | |||
Internal control and risk management | 38 | |||
|
||||
Corporate Governance pages 4275 |
||||
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. | ||||
Corporate Governance contents | 42 | |||
Directors Report and other disclosures | 59 | |||
Directors Remuneration Report | 60 | |||
|
||||
Financial Statements pages 76163 |
||||
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. | ||||
Financial Statements contents | 76 | |||
Introduction to the financial statements | 77 | |||
Statement of Directors responsibilities | 78 | |||
Independent auditors report | 79 | |||
Report of Independent Registered Public
Accounting Firm |
85 | |||
Additional Information pages 164inside back cover |
||||
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. | ||||
Additional Information contents | 164 | |||
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 for this information. |
||||
Definitions and glossary of terms | 192 | |||
Want more information or help? | 196 | |||
Online |
||||
For a full search facility, please go to the pdf of our Annual Report and Accounts 2014/15 in the investor relations section of our website (www.nationalgrid.com) and use a word search. | ||||
|
About National Grid
Our job is to connect people to the energy they
use, safely. We are at the heart of one of the greatest challenges facing our society delivering clean energy to support our world long into the future.
Financial
highlights
Adjusted operating profit1 Adjusted earnings per share1 Operating profit Earnings per share
£3,863m 58.1p £3,780m 53.6p
+5% +9% +1% -18%
2013/14: £3,664m 2013/14: 53.5p2 2013/14: £3,735m 2013/14: 65.7p2
Group return on equity Regulated
assets Cash generated from operations Ordinary dividends
11.8% £37.0bn £5,350m 42.87p
+4% +7% +21% +2%
2013/14: 11.4% 2013/14: £34.7bn 2013/14: £4,419m 2013/14: 42.03p
24,274 £3.5bn 0.13IFR 7.3 75%
Employees Capital investment Best overall group safety
performance to date Greenhouse gas emissions (million tonnes
carbon dioxide equivalent) Best employee engagement score to date
Our principal operations
UK Electricity Transmission UK Gas Transmission UK Gas Distribution US Regulated Adjusted
operating
We own and operate an electricity transmission network and electricity and gas distribution networks serving consumers across the northeastern US.
profit %
We own and maintain the high voltage electricity transmission network in England and Wales, balancing
supply with demand on a minute-by-minute basis.
All gas in the UK passes through National Grids national transmission system on its way to consumers.
We own and operate four of the eight regional gas distribution networks in Great Britain.
5 32 30 11 22
UK Electricity Transmission
UK Gas Transmission
UK Gas Distribution
US Regulated
Other
activities
See page 28 See page 29 See page 30 See pages 3335
1. Excludes the impact of
exceptional items, remeasurements and stranded cost recoveries. See page 186 for more information about these adjusted profit measures.
Important notice
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. For a description of factors that could affect future results, please refer to the full cautionary statement on the inside
back cover and to the risk factors section on pages 173 to 176.
2. Comparative earnings per share (EPS) data has been restated for the impact of the scrip dividend issues.
Our financial results are reported in sterling. The average exchange rate, as detailed on page 87, was $1.58 to £1 in 2014/15 compared with the average rate of
$1.62 to £1 in 2013/14. Except as otherwise noted, the figures in this Report are stated in sterling or US dollars.
All references to dollars or $ are to the US
currency.
Acting responsibly
We have won Business in the Communitys highest award,
Responsible Business of the Year 2014. This accolade acknowledges all of our efforts in getting involved with the things that really matter to us and to society, and doing the right things in the right way.
RESPONSIBLE BUSINESS OF THE YEAR 2014
BUSINESS IN THE COMMUNITY
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15
01
|
||||
Chairmans statement
|
||||
Its been a challenging year for the energy sector. Energy policies in the UK and US have continued to evolve against a backdrop of political uncertainty, seeking an acceptable balance between affordability to consumers, security of supply and sustainability considerations. |
In focus:
|
In the UK, we saw debate around the cost of living lead to a sharper focus on the costs of energy and the competitiveness of energy markets. This focus has included an Energy and Climate Change Select Committee inquiry into energy network costs, as well as an investigation by the Competition and Markets Authority into the supply and acquisition of energy in Great Britain.
In the UK, Electricity Market Reform |
|||
The Board is proposing a recommended full-year dividend of
42.87p (2013/14: 42.03p)
|
||||
(EMR) was implemented successfully, and we saw developments in significant interconnector projects (see page 27). In the US, there were mid-term US congressional and gubernatorial elections and debate continued on essential infrastructure, resilience and sustainability. |
||||
Transparency |
||||
In January we announced our decision to stop publishing formal Interim Management Statements (IMSs), following the changes in legislation that removed this requirement. Mandatory requirements to publish information can frequently provide an unnecessary focus on matters of little relevance to a long-term business such as National Grid.
|
||||
Alongside our major announcements at the half year and full year we will continue to provide updates covering market and Company developments.
|
||||
We also continue to provide commentary on both our IFRS reported results and underlying economic (regulatory) performance, including reconciliations between the key metrics for both results. To help explain this more fully, we have increased the commentary on our regulatory performance on page 23, and have included further analysis of our regulatory performance by segment on page 100. We support the development of an accounting standard for rate-regulated activities, which would reduce the need for additional explanations of our results, and submitted a response to the IASBs project in January this year.
|
||||
Dividend |
||||
The Board has recommended an increase in the final dividend to 28.16 pence per ordinary share ($2.1866 per American Depositary Share). If approved, this will bring the full-year dividend to 42.87 pence per ordinary share ($3.3584 per American Depositary Share), an increase of 2.0% over the 42.03 pence per ordinary share in respect of the financial year ending 31 March 2014.
|
||||
In August 2014 we began a share buyback programme designed to operate alongside our scrip dividend option, which we offered for the interim dividend and will offer again for the full-year dividend. The buyback programme, which operates under authorities granted at our 2014 AGM, is designed to balance shareholders appetite for the scrip dividend option with our desire to operate an efficient balance sheet with appropriate leverage.
|
||||
Effective governance |
||||
In July 2014, John Pettigrew, who joined the Board in April 2014, became Executive Director, UK and Nick Winser and Maria Richter both stepped down from the Board. |
02
Philip Aiken stepped down from the Board in February 2015 before his appointment as Balfour Beattys new Chairman. He was a National Grid Non-executive Director for six years and played an important role in chairing our Safety, Environment and Health Committee. Following Philips departure, Paul Golby was appointed as chairman of the Safety, Environment and Health Committee, as well as a member of the Audit Committee. Paul remains a member of the Nominations and Remuneration Committees.
Tom King stepped down from the Board and left the Company on 31 March 2015. He was succeeded by Dean Seavers, who joined the Company in December 2014 and, following a thorough handover, joined the Board as Executive Director, US with effect from 1 April 2015.
John and Deans appointments bring fresh perspective, experience and challenge to our Board. Dean joined us after a career that has included business leadership roles of major divisions within GE, United Technologies and Tyco. In particular, he has led major change and performance improvement programmes that have improved operational efficiency and customer satisfaction important priorities for our US business.
I would like to thank Nick, Tom, Philip and Maria for their commitment to the Board and the very valuable contribution they have made.
National Grids UK regulated entities appointed Catherine Bell and Clive Elphick as Non-executive Directors with effect from 1 April 2014. The appointment of two Non-executive Directors is a new requirement promoted by Ofgem, which has termed the appointments Sufficiently Independent Directors. The arrangements are designed to enhance the financial ring-fencing conditions that already exist in the companies licences.
Responsible business At National Grid, we believe that what we do and how we do it are equally important. In July 2014, National Grid was named Responsible Business of the Year 2014 by Business in the Community (BITC). To win this award we had to demonstrate how we operate responsibly in everything we do, and how we are improving the outcomes for society through our work.
|
As you can read on page 17, we are adding new KPIs to our reporting, so we can more fully reflect the issues that really matter to the Company and our stakeholders. For our 2014/15 Report, we have included workforce diversity as a new KPI and you can read more about our approach to this on pages 18 and 19, as well as progress in relation to our Board diversity policy on page 58.
You can find more information about our approach to being a responsible business, including our Total Contribution Report, on our website.
Looking ahead We will face both opportunities and challenges over the coming year. For example, in the UK Ofgem has concluded its Integrated Transmission Planning and Regulation project. As part of this, the System Operator is expected to undertake a number of new advisory roles. We have a long track record in successfully managing potential conflicts of interest from our System Operator role and will work closely with Ofgem to make sure this continues.
In the US we expect to file important applications for new rate plans you can read more about this on page 169. We will continue to work with policymakers, customers, and stakeholders to transform the energy industry through initiatives in Massachusetts, New York, and Rhode Island (see pages 33 to 35).
We must adapt to developments in corporate governance requirements. For example, the updated UK Corporate Governance Code enhances the quality of information investors can expect to receive about the long-term health and strategy of listed companies, and encourages companies to be more transparent about risk management and internal control.
Finally, I am confident that our people will continue to help make National Grid a company we can all be proud of and I thank all our employees for their hard work and commitment to our success.
Sir Peter Gershon
|
|
||||||
I was delighted that the judging panel commended our long-term vision based on trust and connectivity. They noted our foresight in using technology and innovation to develop solutions that protect our employees, customers and wider society; and recognised our appetite to inspire others.
|
|
|||||||
In the UK, we are in discussions with the Living Wage Foundation about the opportunity to become a fully accredited Living Wage employer. We can confirm that all our UK employees fulfil the criteria for accreditation. We are also working through the Living Wage Charter to understand the impact it would have on our supply chain, including the companies our suppliers use as sub-contractors, should we decide to adopt it. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 03 |
|
||||
Chief Executives review
|
||||
Im really proud of our performance this year. Overall, our businesses in both the UK and US achieved a strong operating performance. |
In focus:
|
In the UK, there has been a lot of public focus on how secure and reliable our energy supply is, particularly on tighter margins between electricity supply and demand in the winter. Despite tighter margins than previous years, we were able to operate the system without calling upon our additional reserve. This was because of stronger than expected plant availability, mild weather, |
|||
Employee engagement score
75% (2013/14: 71%)
|
||||
healthy wind output and consistent interconnector imports from France and the Netherlands.
We also tendered the two new balancing services for additional reserves of supply. Although these additional reserves were not used, this was a sensible precaution in case of colder weather or a series of unexpected plant shutdowns. |
||||
In the US, we saw an extremely harsh and prolonged period of plunging temperatures and record levels of snowfall in parts of New England, particularly in February and March. Again, our network resilience held up well. We have invested millions of dollars in both our electricity and gas infrastructure to improve resilience and help reduce the impact of service interruptions. |
||||
In December 2014 we received an award for excellence in energy efficiency from Platts Global Energy. Platts commended us for ongoing initiatives to upgrade equipment, reduce emissions, and improve safety and network efficiency. And in March 2015, the Edison Electric Institute presented us with its Emergency Recovery Award for our power restoration efforts following the severe ice storm in northern New York in December 2013. |
||||
Safety Safety remains a hugely important priority for us. Regrettably, there were two fatalities during the year a member of the public in the UK who fell when climbing on one of our pipelines, and a contractor at our Rhode Island gas distribution business. Despite these incidents, we achieved our best-ever Group safety performance during 2014/15. We can never be complacent about our performance and must continually strive to improve. |
||||
Our operations We have continued to provide good value and reliability for customers while keeping our element of bills as low as possible.
|
||||
We are totally committed to providing the best value we can for our customers, investors and other stakeholders, so were working hard to make sure we are being as efficient as possible in everything we do. To help achieve this, we have continued to develop a way of working we call Performance Excellence, which you can read about on page 27. We also reorganised our UK business to increase clarity around what we do and who is accountable.
|
||||
In the US, we finally completed the stabilisation work on our new financial systems (see page 34). This fixed a number of long-standing problems, such as inefficient payroll processing, which had previously required expensive manual interventions. Long term, |
04
the robust data we can produce with the new systems is an essential foundation to the future performance improvements and regulatory filings that we need for profitable growth in the US.
It is increasingly recognised in the US that investment levels in some areas will need to rise compared with the earlier part of this decade, and we have seen increased activity this year, making it our highest ever year of US investment.
In December 2014 the NYPSC approved $200 million gas infrastructure investment in Long Island to speed up the replacement of ageing pipe and extend the use of natural gas to more customers.
The NYPSC also published the results of the regulatory audit of our New York gas companies. These audits are a regular feature of the New York regulatory process. The audit was broadly supportive of our performance and structure and, as is usual, made some helpful recommendations for further improvement. We have responded with an implementation plan to provide these benefits on behalf of New York customers.
As you can read on pages 18 and 19, our customer satisfaction scores were mixed. We exceeded our UK electricity and gas transmission targets. However, we did not meet our US targets and I recognise this is an area in which we must improve.
Responsible Business of the Year As Sir Peter has described in his statement, National Grid was named Responsible Business of the Year 2014, which is BITCs top award. I am extremely proud of this achievement, which is terrific recognition of how we are running a responsible and sustainable business, bringing long-term benefits to society. Although BITC is a UK body, the award was given to the entire Company and recognises the excellent work were doing across our entire service area in the UK and US.
For example, in the UK we are completing a test line for the T-pylon at our training academy. It is smaller than the existing lattice towers and provides communities with added choice. Our property business entered into a new arrangement with the Berkeley Group to develop a number of our sites in London and the surrounding area. The first phase of investments could lead to the development of over 7,000 new homes, including affordable housing, alongside schools and public spaces.
Our EmployAbility programme provides supported internship opportunities for students with additional learning needs. Now into its second year, we have extended the programme and will continue to do this across more of our UK sites.
We are helping schools, parents and children see engineering as a modern, dynamic, desirable sector with a great future. Our careers education programmes in the UK include Careers Lab, an initiative we developed that has now been taken up by BITC. It links working professionals with schools |
to bring the world of work to life for secondary school children. Our US initiatives include partnering with seven local community colleges to deliver energy utility technology training programmes that are designed to equip people for jobs in the energy industry. We are doing a great deal of work in this area, as you can read on page 24.
All this is business as usual for us the BITC recognition is not the result of any special new initiative we have done to win the award. But it would not have been possible without the efforts of our employees. I was delighted to see that the results of our 2015 employee opinion survey a good measure of how satisfied employees are with their employer included an engagement score of 75% our highest since we started conducting Group-wide employee opinion surveys.
I would like to thank all our people for making a positive impact, through their work for National Grid, their volunteering and fundraising achievements, and by getting involved in activities that really matter to us and to society.
Priorities for 2015/16 Safety: continue to build on our strong performance so we can achieve a consistent world-class safety performance;
Customers and stakeholders: improve the service we provide for our customers and continue to build trust among our stakeholders;
Performance Excellence: focus on being efficient in our end-to-end processes so we can continue to improve our overall performance and efficiency; and
Regulatory filings: prepare and file applications for new rate plans in New York, Long Island and Massachusetts.
Steve Holliday
|
|||||||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 05 |
|
||
Operating environment
|
||
The UK economy has been recovering steadily in the past year, with 2.6% economic growth, falling unemployment and falling inflation. |
Growth in the fourth quarter of 2014, however, dropped to 0.5% as sluggish eurozone growth depressed exports and wider geopolitical events increased the perceived risk of investment. In the US, employment levels have continued to rise. The Federal Reserve ended its quantitative easing programme of bond purchases, though treasury yields continue to be at or near |
historical lows. GDP increased 2.4% in 2014, although growth in the first quarter of 2015 was only 0.2%.
Below, we highlight our main market drivers and the impact they have on our business. |
Market driver
|
Impact
|
|||
Changing energy mix Changing fuel costs and environmental programmes are affecting traditional electricity generation UK In February 2015 DECC announced the results of the first Contracts for Difference (CfD) auction allocation rounds, with wind technology making up the bulk of contracted generation. Continued support for solar PV through Feed in Tariffs (FiTs) and the Renewables Obligation contributed to growth in installed solar PV.
Older fossil fuel plants continue to face the challenge of environmental regulations while the new nuclear plant at Hinkley received State Aid approval from the European Commission in October 2014.
US In the US, shale gas development has continued to keep national wholesale prices low.
Environmental Protection Agency regulations have led to generator retirements or increased costs for compliance.
Renewables are growing their share of electricity generation and account for a significant amount of newly installed capacity. Distributed generation, such as rooftop solar, has grown substantially in our service territory. |
This could lead to significant network investment opportunities UK Increasing deployment of large-scale wind, large-scale solar PV and nuclear will require more investment in transmission networks to connect new plant and reinforce the network. Variable output from solar PV and wind makes balancing demand and supply more challenging.
More interconnection between the UK and adjacent European markets will deliver net benefits to the UK.
US Lower national wholesale gas prices have increased the amount of gas used for electric generation, causing constraints into the northeast US.
Oil to gas conversions will continue as gas maintains its price advantage. New interstate gas pipeline capacity is needed to overcome growing gas demand.
The electric transmission system will need upgrades and rebalancing due to generation retirements and to connect new renewable sources. Increasing amounts of distributed generation, particularly solar, will require investment in the electric distribution network.
|
|||
Energy policy
|
||||
Sustainability, security of supply and affordability underpin EU policy Against a difficult economic and financial background, the EUs energy policy is underpinned by sustainability, security of supply and affordability. In October 2014 the EU heads of state agreed the EUs 2030 Climate Change and Energy Framework. This includes a 40% reduction target for carbon emissions, alongside other objectives for renewables, energy efficiency and interconnections.
Negotiations for a new international agreement on climate change continued at the twentieth session of the Conference of Parties (COP20) in Lima in December 2014. Nations are looking to the Paris worldwide conference in 2015 as the next opportunity to work out a new climate change deal.
Finally, the creation of a genuine energy union was highlighted as one of the main priorities of the new European Commission, which took office in November 2014.
|
Policy decisions can affect our investment needs and compliance obligations Greater levels of market integration, interconnection and renewable generation are fundamental to achieving the EUs policy objectives.
While European developments present challenges, the significant level of investment required will create opportunities for growth. For example, potential future interconnector opportunities include connections between the UK and France, Ireland, Denmark and Iceland. Such opportunities would help the EU achieve its interconnection targets. See page 27 for more information about our interconnector projects. |
|||
UK energy policies are attracting investment and there is significant political focus on reducing costs for consumers 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 EMR, and puts in place measures to attract the investment needed. The run-up to the General Election in May 2015, saw a sharp focus on the costs of energy and the competitiveness of energy markets.
|
National Grid is central to the delivery of EMR and active on driving down costs National Grid has been performing its role as delivery body for the Government on EMR, as described on page 39.
The focus on the cost of energy is important to National Grid. We are working hard to highlight to our stakeholders how the RIIO regulatory framework is helping us to reduce costs for consumers while creating incentives for vital investment.
|
|||
06 |
Market driver
|
Impact
|
|||||||
US policy is evolving to meet environmental and energy diversity goals 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.
|
Options for increased renewable and distributed generation are being explored 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.
|
|||||||
Regulation |
||||||||
Infrastructure investment needs must be balanced with affordability | We must accommodate customers cost concerns and also provide safe, up-to-date systems | |||||||
Regulators acknowledge that there is a significant need for infrastructure investment. However, affordability continues to be a primary concern.
Ageing gas mains can be riskier to use and can contribute to greenhouse gas emissions through leaks. Regulators and policymakers are asking utilities to put plans in place to strengthen their networks ability to withstand the effects of severe weather.
|
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 In the UK, the regulatory focus during the year has been on the RIIO price controls which give greater focus to incentives and innovation than the previous regulatory regime.
We continue to be engaged in the debate on the regulatory approach to electricity transmission investment, stemming from the projected increase in offshore wind generation and interconnection.
|
This is driving them to favour more market competition 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.
For more information about network efficiency and innovation, see pages 27 to 31. |
|||||||
In the UK, Ofgem is reviewing the arrangements for planning and delivering Britains transmission networks We are facing new challenges from an ageing infrastructure and a changing energy mix. Technical developments and innovation also mean that there could be opportunities to coordinate and integrate those investments.
The Integrated Transmission Planning and Regulation (ITPR) project is looking at long-term challenges such as ageing infrastructure, the changing energy mix, technical developments and innovation, to assess whether the regulatory arrangements currently in place are sufficient to ensure coordination and efficiency in the future planning of electricity transmission.
|
We need to make sure the network is planned in an economic, efficient and coordinated way Ofgem has proposed enhancing our role as System Operator (SO) so that the SO has a greater role in system planning. No organisation is currently responsible for taking an overarching view of system development, so opportunities for coordination can potentially be missed. We are working with Ofgem to develop the framework for how the system will be planned and how assets will be managed. |
|||||||
US regulators are focused on system modernisation and integration of new distributed energy resources State officials in Massachusetts and New York have approved gas system investment programmes to accelerate replacement of ageing infrastructure. The Massachusetts Grid Modernization proceeding and New Yorks Reforming the Energy Vision effort both focus on deploying advanced electric grid capabilities to improve reliability, more fully exploit distributed energy resources, and provide new opportunities for customers to control their energy use.
|
Investments to modernise networks and integrate distributed resources will offer new options and value to customers We are expanding gas system enhancement investment programmes and are developing electric grid modernisation plans. Through our regulatory efforts and stakeholder engagement we are seeking to create a regulatory framework that integrates distributed energy resources into the electric grid in a way that is cost effective and delivers benefits to customers. |
|||||||
In the US, FERC is reforming transmission planning and promoting competition in the transmission industry FERC issued Order 1000 in 2011 to improve transmission planning and increase competition in the transmission industry. Policies to comply with the Order took effect in New York and New England in 2014 and 2015, respectively.
|
Competitive transmission planning provides opportunities for us Order 1000 has opened our service territory to competition from non-incumbent transmission developers and also created opportunities for us to compete for transmission projects outside of our current geographic footprint.
|
|||||||
Innovation and technology |
||||||||
Performance improvements and cost declines have led to continued growth in new technologies Distributed generation of solar power has grown significantly due to price declines and tax incentives. Energy storage is growing in the US as certain states set goals and other utilities announce investment plans for storage capacity.
The UK hit a record high for wind generation in 2014 of 28 terawatt hours (TWh), 15% greater than the previous year.
Plug-in electric vehicle sales in the US and worldwide grew, even as gasoline prices dropped throughout the past year.
|
Further investment in electricity distribution networks may be necessary to integrate these new technologies Investment in renewable energy continues to grow. Regulatory proceedings are underway to enhance the value of distributed resources to the grid and give customers more control over their energy use.
These could require significant network investment in order to integrate new and variable resources and provide customers with more information on their usage. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 07 |
What we do Electricity
The electricity industry connects generation sources to homes and businesses through transmission and distribution networks. Companies that pay to use transmission networks buy electricity from generators and sell it to consumers.
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 are SO 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.
As electricity transmission SO, 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.
|
will deliver significant benefits to consumers. These include opportunities for interconnection with Iceland, Denmark and a further link with France. |
|
||||||||
We also jointly own and operate a 224 kilometre interconnector between New England in the US and Canada. |
||||||||||
We sell capacity on our UK interconnectors through auctions and on our US interconnector through wholesale markets and bilateral contracts. |
||||||||||
Transmission systems generally include overhead lines, underground cables and substations. They connect generation and interconnectors to the distribution system. |
||||||||||
We own and operate the transmission network in England and Wales. We operate but do not own the Scottish networks. We are also working in a joint venture with Scottish Power Transmission to construct an interconnector to reinforce the GB transmission system between Scotland and England and Wales. |
||||||||||
Generation is the production of electricity from fossil fuel and nuclear power stations, as well as renewable sources such as wind and solar. In the US, we own and operate 50 fossil fuel-powered stations on Long Island and 4.6 MW of solar generation in Massachusetts. We do not own or operate any electricity generation in the UK.
We sell the electricity generated by our plants on Long Island to LIPA under a long-term power supply agreement. The contract allows us to recover our efficient operating costs and provides a return on equity on our investment in the generation assets.
For solar generation, we recover our costs and a reasonable return from customers in Massachusetts through a solar cost adjustment factor. This is added to the electricity rate, net of revenues earned from the solar assets.
Transmission grids are often interconnected so that energy can flow from one country or region to another. This helps provide a safe, secure, reliable and affordable energy supply for citizens and society across the region. Interconnectors also allow power suppliers to sell their energy to customers in other countries.
Great Britain is linked via interconnectors with France, Ireland, Northern Ireland and The Netherlands. National Grid owns part of the interconnectors with France and The Netherlands. We are also now entering the construction phase for two new interconnectors, between the UK and Belgium and Norway. We are continuing to work on developing additional interconnector projects, which we believe |
In the US, we jointly own and operate transmission facilities spanning upstate New York, Massachusetts, New Hampshire, Rhode Island and Vermont.
Distribution systems carry lower voltages than transmission systems over networks of overhead lines, underground cables and substations. They take over the role of transporting electricity from the transmission network, and deliver it to consumers at a voltage they can use.
We do not own or operate electricity distribution networks in the UK.
In the US, our distribution networks serve around 3.5 million customers in upstate New York, Massachusetts and Rhode Island.
The supply of electricity involves buying electricity and selling it on to customers. It also involves customer services, billing and the collection of customer accounts.
We do not sell electricity to consumers in the UK.
All our customers in the US can select a competitive supplier for the supply component of electricity utility services. Where customers choose National Grid, they pay us for distribution and electricity costs. Where they choose to buy electricity from third parties, they pay us for distribution only and pay the third-party supplier for the electricity. Our base charges for electricity supply are calculated to recover the purchased power costs. |
|||||||||
|
08 |
Strategic Report
3.8 GW
Generation produced in the US
1 Generation
260 km
Approximate length of BritNed interconnector
2 Interconnectors
3 Transmission
99.99999%
Electricity transmission reliability in England and Wales
30 TWh
Approximate amount of electricity we forecast, plan for and procure annually across three states in the US
4 Distribution
3.5 million
US electricity customers
ELECTRICITY
5
Supply
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 09
Strategic Report
4 Supply
3.6 million
US gas customers
7,660 km
of high pressure pipeline in the UK
3 Distribution
2 Transmission
26,882
New gas heating
customers in the US
10.9 million
Customers serviced in the UK
1 Production and importation
14.9%
Approximate percentage of UK gas from LNG imports
10
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. |
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.
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.
|
We are the sole owner and operator of gas transmission infrastructure in Great Britain.
In the US, we hold a minority interest in two interstate pipelines: Millennium Pipeline Company and Iroquois Gas Transmission System. Interstate pipelines are regulated by the Federal Energy Regulatory Commission (FERC).
In the UK, gas leaves the transmission system and enters the distribution networks at high pressure. It is then transported through a number of reducing pressure tiers until it is finally delivered to consumers.
There are eight regional gas distribution networks in the UK, four of which are owned by National Grid. In the US, gas is delivered by the interstate pipeline companies to local distribution networks. Each local distribution company has a geographically defined service territory and is the only local distribution company within that territory. Local distribution companies are regulated by the relevant local states utility commission.
Our networks deliver gas to 10.9 million consumers in the UK and 3.6 million customers in the US.
Pipeline shippers bring gas from producers to suppliers, who in turn sell it to customers.
We do not supply gas in the UK. However, we own National Grid Metering, which provides meters and metering services to supply companies, under contract.
In the UK, customers pay the supplier for the cost of gas and for its transportation. We transport the gas through our network on behalf of shippers, who pay us transportation charges.
In the US, gas distribution companies, including National Grid, sell gas to consumers connected to their distribution systems.
In most cases in the US, where customers choose National Grid, they pay us for distribution and gas costs. Where they choose to buy gas from third parties, they pay us for distribution only and pay the third-party supplier for the gas and upstream transportation capacity.
Also in the US, except for residential consumers in Rhode Island, customers may purchase their supply from independent providers with the option of billing for those purchases to be provided by us. |
|
||||||||
Gas used in the UK is mainly sourced from gas fields in the North and Irish seas, piped from Europe and imported as LNG.
There are seven gas reception terminals, three LNG importation terminals and three interconnectors connecting Great Britain via undersea pipes with Ireland, Belgium and the Netherlands. Importers bring LNG from the Middle East, the Americas and other places.
Gas used in the US is produced mainly in North America. We import LNG from a number of countries.
We do not produce gas in either the UK or US.
In the UK, we own and operate Grain LNG, an importation terminal and storage facility at the Isle of Grain in Kent, which charges customers under long-term contracts for various services. These include access to our importation terminal, storage facilities and capacity rights.
In the US, we own and operate LNG storage and vaporisation facilities, as well as an LNG storage facility in Providence, Rhode Island, where we store gas for third parties for a fee. We also buy gas directly from producers and LNG importers for resale to our customers.
The transmission systems generally include pipes, compressor stations and storage facilities, including LNG storage. They connect production through terminals to the distribution systems.
In the UK, gas enters the transmission system through importation and reception terminals and interconnectors and may include gas previously held in storage.
Compressor stations located along the network play a vital role in keeping large quantities of gas flowing through the system, particularly at times of high demand.
The gas transmission system has to be kept constantly in balance, which is achieved by buying, selling and using stored gas. This means that, under normal circumstances, demand can be met.
|
||||||||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 11 |
|
12 |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 13 |
Our vision and strategy
Our vision describes our intentions and aspirations at the highest level. Our strategic objectives set out what we believe we need to achieve to deliver our vision and be recognised as a leader in the development and operation of safe, reliable and resilient energy infrastructure.
Strategic objective
|
Description |
How we deliver |
||||||||||
Deliver
|
Achieve world-class levels of safety, reliability, security and customer service. |
Our customers, communities and other stakeholders demand safe, reliable and secure supply of their energy. This is reflected in our regulatory contracts where we are measured and rewarded on the basis of meeting our commitments to customers and other stakeholders.
Pursuing excellence in all our operational processes will allow us to manage our assets efficiently, deliver network improvements quickly and provide services that meet the changing demands of our customers.
|
||||||||||
Engage
|
Create an inclusive, high-performance culture by developing all our employees. |
It is through the hard work of our employees that we will achieve our vision, respond to the needs of our stakeholders and create a competitive advantage. Encouraging engaged and talented teams that are in step with our strategic objectives is vital to our success.
Our presence within the communities we serve, the people we work with and our opportunities to grow both individually and as a business are all important to making National Grid a great place to work.
|
||||||||||
Stimulate
|
Promote new ideas to work more efficiently and effectively. |
Our commitment to innovation allows us to run our networks more efficiently and effectively and achieve our regulatory incentives. Across our business, we explore new ways of thinking and working to benefit every aspect of what we do.
Embedding innovation and new technology into our operations helps us deliver continuous improvements in the quality and cost of our services.
|
||||||||||
Engage
|
Work with external stakeholders to shape UK, EU and US energy policy. |
Policy decisions by regulators, governments and others directly affect our business. We engage widely in the energy policy debate, so our position and perspective can influence future policy direction. We also engage with our regulators to help them provide the right mechanisms so we can deliver infrastructure that meets the changing needs of our stakeholders.
|
||||||||||
Embed
|
Integrate sustainability into our decision making to create value, preserve natural resources and respect the interests of our communities.
|
Our long-term sustainability strategy sets our ambition to deliver these aims and to embed a culture of sustainability within our organisation.
That culture will allow us to make decisions that protect and preserve natural resources and benefit the communities in which we operate. We remain committed to our targets of a 45% reduction in Scope 1 and 2 greenhouse gas emissions by 2020 and 80% by 2050. |
||||||||||
Drive growth
|
Grow our core businesses and develop future new business options. |
We continue to maximise value from our existing portfolio, while exploring and evaluating opportunities for growth. Making sure our portfolio of businesses maintains the appropriate mix of growth and cash generation is necessary to meet the expectations of our shareholders.
We review investment opportunities carefully and will only invest where we can reasonably expect to earn acceptable returns.
Combining this disciplined approach with operational and procurement efficiencies gives us the best possible opportunity to drive strong returns and meet our commitments to investors.
|
14 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 15 |
Delivering our strategy key performance indicators
The Board uses a range of financial and non-financial metrics, reported periodically, against which we measure Group performance.
KPI and definition
|
Our performance
|
|||||||||
Adjusted EPS
Adjusted earnings represent profit for the year attributable to equity shareholders. This excludes exceptional items, remeasurements and stranded cost recoveries (see pages 103 and 104).
Adjusted earnings per share provides a measure of shareholder return that is comparable over time.
|
Adjusted EPS pence 1
1. Comparative amounts have been restated to reflect the impact of additional shares issued as scrip dividends.
|
|||||||||
Group return on equity (RoE)
We measure our performance in generating value for our shareholders by dividing our annual return by our equity base.
This 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.
|
Group return on equity %
|
|||||||||
Regulated asset growth
Maintaining efficient growth in our regulated assets ensures we are well positioned to provide consistently high levels of service to our customers and increases our revenue allowances in future years.
|
Total regulated assets and regulated asset growth £bn
1. US base rate calculated as at 31 December 2010 in this year. 2. Estimated figure until the conclusion of the regulatory reporting cycle.
|
|||||||||
Value added
Reflects value to shareholders of dividend and growth in National Grids assets, net of the growth in overall debt. |
Value added £bn
|
|||||||||
Employee lost time injury frequency rate
Number of employee lost time injuries per 100,000 hours worked in a 12 month period.
Our ambition is to achieve a world-class safety performance of below 0.1.
|
Employee lost time injury frequency rate per 100,000 hours worked
|
16 |
We are adding new KPIs to better reflect the issues that matter most to our Company and our stakeholders. For this 2014/15 Report, we have included information about workforce diversity, as set out on pages 18 and 19. We aim to include two further new KPIs in our 2015/16 Report. These relate to community engagement and investment in education, skills and capabilities. Executive remuneration is linked to some of our KPIs.
|
Commentary
|
Target | |||||
For the year ended 31 March 2015, adjusted earnings attributable to equity shareholders increased by £174 million to £2,189 million. This increase in earnings resulted in an adjusted earnings per share of 58.1 pence, an increase of 9% on 2013/14.
The earnings increase was driven by a £199 million increase in adjusted operating profit. With the exception of our UK Gas Distribution business, we saw increases in adjusted operating profit across all of our business segments.
|
Overall adjusted net finance costs reduced by £75 million across the Group which was broadly offset by a higher adjusted tax charge of £114 million reflecting the increase in profits across the Group.
See page 20 |
The adjusted EPS target set as part of executive remuneration for APP was more than met with 100% of maximum achieved (see page 70). |
||||
Group RoE has increased during the year to 11.8%, from 11.4% in 2013/14.
The UK regulated businesses delivered good returns of 13.7% in aggregate in the second year of their new price controls, including the assumed 3% long run average RPI inflation.
|
US returns of 8.4% were slightly down on last year, reflecting the additional costs incurred on gas leak repair and compliance and the increased level of rate base growth since 2013.
See page 21 |
The Group RoE target set as part of executive remuneration for APP was more than met with 100% of maximum achieved (see page 70). |
||||
Our regulated assets have increased by 7% (£2.3 billion) to £37.0 billion. This reflects the continued high levels of investment in our networks in both the UK and US, together with the impact of the stronger US dollar.
The rate of growth at constant currency was 3%. |
The UK regulatory asset value (RAV) increased by £0.5 billion, reflecting significant capital expenditure, together with inflation, although at 0.9% RPI, this has had a smaller impact than in recent years. US rate base has increased by £1.8 billion this year. Of this, £1.2 billion was due to foreign exchange movements increasing the rate base reported in sterling. Excluding foreign exchange, rate base increased by £0.6 billion, reflecting a record year of US investment.
See page 21
|
No specific target. Our overall aim is to increase regulated asset growth above the underlying rate of inflation. |
||||
Value added in the year was lower than 2013/14, primarily due to the impact of lower RPI on UK regulated asset growth. RPI inflation for March 2015 was 0.9% compared with 2.5% in March 2014 and National Grids long run assumption of 3%. |
Of the £1.7 billion value added in 2014/15, £1,271 million was paid to shareholders as cash dividends and £335 million as share repurchases (offsetting the scrip issuance during the year), with £79 million retained in the business.
See page 21
|
No specific target. Our overall aim is to sustainably grow value added over the long term while maintaining performance of our other financial KPIs. |
||||
In the UK we maintained a world-class employee safety performance during 2014/15, with an employee injury frequency rate of 0.09. Our US business improved its safety performance, with an employee injury frequency rate of 0.15. |
Overall, our Company-wide injury frequency rate of 0.13 is better than last year and means that we bettered our target of 0.15. However, we did not meet our ambition to reach a world-class level by 2015.
See UK Principal operations: pages 2731 and US Principal operations: pages 3335
|
We achieved our Company-wide employee IFR target of 0.15. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 17 |
Strategic Report
|
||
Delivering our strategy key performance indicators continued
|
||
18 |
Commentary
|
Target
|
|||||||
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. In the UK, our networks performed well. Despite tighter winter margins than previous years, we were able to operate the system without calling upon our additional reserve. |
In the US, despite low temperatures and record levels of snowfall in parts of New England our network resilience held up well. We invested millions of dollars in both our electricity and gas infrastructure to improve resilience and help reduce the impact of service interruptions.
See UK Principal operations: pages 2731 and US Principal operations: pages 3235
|
We achieved our targets, which are set out in the table for our UK networks, and are set individually for each of our US jurisdictions. |
||||||
Our customer satisfaction KPI comprises seven components: Ofgems UK electricity transmission, gas transmission and gas distribution customer satisfaction scores; and four J.D. Power and Associates customer satisfaction surveys in the US.
We have exceeded the two UK electricity and gas transmission targets; the outcome for the third UK KPI component will be published later this year (see note opposite). |
In the US, we did not achieve our targets. Customers were concerned about higher-than-normal winter bills as a result of electricity commodity price increases and higher gas usage due to cold weather. In an effort to rebuild trust and customer satisfaction, we put in place a customer outreach and education programme that focused on energy saving solutions and bill management.
See UK Principal operations: pages 2731 and US Principal operations: pages 3235
|
Our targets for each business area are set out in the table. We achieved our UK transmission targets, but did not achieve our US targets. |
||||||
We measure employee engagement through our employee opinion survey. The results of our 2015 survey, which was completed by 83% 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 four points to 75%, 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.
See Our people: pages 2425 |
We achieved our target of increasing engagement compared with the previous year. |
||||||
Our Scope 1 and 2 greenhouse gas emissions (excluding electricity transmission and distribution line losses) for 2014/15 equate to 7.3 million tonnes carbon dioxide equivalent; a 63% reduction against our 1990 baseline. These emissions are equivalent to an intensity of around 478 tonnes per £million of revenue.
We measure and report our greenhouse gas emissions in accordance with the World Resources Institute and World Business Council on Sustainable Development
|
Greenhouse Gas Protocol: Corporate Accounting and Reporting Standard (Revised Edition) for all six Kyoto gases, using the operational approach for emissions accounting. Those 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. |
Our target, described on the facing page, is in progress. |
||||||
During 2014/15, the percentage of both women and ethnic minorities in our workforce increased slightly. For more details about the breakdown by gender at different levels of the organisation, as well as information relating to subsidiary directors, see page 25. During 2014/15 we were recognised as a Times Top 50 Employer for Women for 2015 and reached the Gold level in our benchmarking with both Race for
|
Opportunity and Opportunity Now. In the UK and US, our Employee Resource Groups continue to support our business goals and inclusion and diversity initiatives.
See Our people: pages 2425 |
No specific target set. We aim to develop and operate a business that has an inclusive and diverse culture. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 19 |
|
||||
Financial review
|
||||
We have delivered another year of strong financial performance in the UK and solid performance in the US with record investment levels. |
Additional commentary on financial KPIs Adjusted operating profit Adjusted operating profit for the year ended 31 March 2015 was £3,863 million, up £199 million (5%) from last year. With the exception of our UK Gas Distribution business, we saw increases in operating profit in all of our business segments.
Adjusted operating profit by segment £m
For the year ended 31 March 2015, adjusted operating profit in the UK Electricity Transmission segment increased by £150 million. Net regulated income after pass-through costs was £230 million higher, principally reflecting increases in allowed transmission owner revenues this year and a £43 million benefit relating to legal settlements. This was partially offset by under-recoveries of allowed revenue in the year of £89 million compared with under-recoveries of £60 million in the prior year. Regulated controllable costs were £14 million higher due to inflation, organisational change costs and additional tower maintenance costs. Depreciation and amortisation was £33 million higher reflecting the continued capital investment programme, and other costs were £4 million higher than prior year.
UK Gas Transmission adjusted operating profit increased by £20 million to £437 million. Net regulated income after pass-through costs was £42 million higher due to earned gas permit and constraint management incentives. In addition, under-recoveries of allowed revenue in the year of £18 million were £3 million favourable to last years under-recoveries of £21 million. Partially offsetting the revenue gains, regulated controllable costs were £8 million higher, including additional system operator costs relating to EU work. Other operating costs were also £17 million higher, including decommissioning costs of the Avonmouth LNG plant.
UK Gas Distribution adjusted operating profit decreased to £826 million from £904 million in 2013/14. Net regulated income after pass-through costs was £11 million lower, reflecting changes in allowed revenues for repex expenditure. Timing differences reduced net revenues by a further £16 million, with £13 million over-recoveries in 2014/15 compared with a £29 million over-recovery in the prior year. Regulated controllable costs were £22 million higher primarily due to inflation and organisational change costs. Depreciation and amortisation was £15 million higher reflecting the continued capital investment programme, and other costs were £14 million higher than prior year, including provision for additional asset protection costs. |
Within our US Regulated businesses, adjusted operating profit increased by £39 million to £1,164 million. The stronger dollar increased operating profit in the year by £30 million. Excluding the impact of foreign exchange, net regulated income increased by £81 million, reflecting increased revenue allowances under the Niagara Mohawk three year rate plan and other regulated revenue increases, partially offset by the impact of the end of LIPA management services agreement (MSA) in December 2013. In addition, over-recoveries of allowed revenues in the year of £30 million were £20 million favourable to last years over-recoveries of £10 million. Regulated controllable costs increased by £17 million excluding the impact of foreign exchange, as a result of increased gas leak and compliance work and additional costs incurred to improve data quality to bring regulatory filings up to date. This was partly offset by the removal of costs associated with the LIPA MSA activities. Following last years exceptionally cold winter, bad debt costs were £62 million higher excluding the impact of foreign exchange. There were no major storms affecting our operations in the years ended 31 March 2014 and 2015.
Adjusted operating profit in Other activities was £68 million higher at £199 million. Operating profit in the French interconnector was £18 million higher as a result of strong auction revenues this year. In the US, corporate and other activities losses were £63 million lower, mainly as a result of the completion of the enterprise resource planning system stabilisation in the first half of the year.
Adjusted earnings For the year ended 31 March 2015, adjusted net finance costs were £75 million lower than 2013/14 at £1,033 million, mainly as a result of lower average gross debt through the year, lower RPI rates in the UK and refinancing debt at lower rates.
The adjusted tax charge was £114 million higher than 2013/14. This was mainly due to higher profits before tax and the non-recurrence of one-off items that benefited the prior year. As a result of this, the effective tax rate for 2014/15 was 24.2% (2013/14: 22.5%).
The earnings performance described above has translated into adjusted earnings of £2,189 million, up £174 million on last year. This equates to adjusted earnings per share (EPS) of 58.1 pence, up 4.6 pence (9%) on 2013/14.
Scrip restatement 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.
Measurement of financial performance We describe and explain our results principally on an adjusted basis and explain the rationale for this on page 186. We present results on an adjusted basis before exceptional items, remeasurements and stranded cost recoveries. See page 186 for further details and reconciliations from the adjusted profit measures to IFRS, under which we report our financial results and position. |
|||||||||
20 |
This section provides additional commentary on our KPIs and other performance metrics we use to monitor our business performance. Analysis of our financial performance and position as at 31 March 2015, including detailed commentary on the performance of our operating segments, is located in the financial statements. However, this analysis still forms part of our Strategic Report financial review. See page 77 for further information. See pages 187 to 189 for commentary on our financial performance and position for the year ended 31 March 2014 compared with 31 March 2013. We have also included analysis of our UK regulated financial performance by segment on page 100.
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 21 |
Strategic Report
|
||
Financial review continued
|
||
UK return on equity %
US regulated return on equity The US RoE has decreased 60bps to 8.4%, reflecting the additional costs incurred this year as a result of the severe winter weather and the additional gas mains leak investigation and repair work required, together with rate base growth.
US return on equity 1 %
1. Calculated on a calendar year basis.
Cash generated from operations Cash generated from operations was £5,350 million (2013/14: £4,419 million). Changes in working capital improved by £360 million over the prior year, principally in the US (£441 million) due to the collection of high winter 2014 billings and other settlements including Superstorm Sandy reinsurance claims and LIPA receipts. Cash outflows relating to exceptional items were £133 million lower, as the prior year included reorganisation costs in the UK and LIPA MSA transition costs in the US.
Net debt and credit metrics Our net debt levels will 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 the level of net debt remains appropriate for our business.
During 2014/15, net debt has increased by £2.7 billion. This is predominantly due to movements in foreign exchange rates as the US dollar strengthened against sterling. Gross borrowings are relatively consistent year on year, reflecting the current year net refinancing of maturities and bond repurchases, while cash and investment levels have been actively managed down.
With the commencement of the RIIO price controls in 2013 and the slow down in our planned near-term UK capital investment programme as the industry assesses the impact of Electricity Market Reform, we reviewed and restructured the Group debt portfolio. The review resulted in a £924 million bond repurchase programme, of which £295 million was achieved through a cash tender offer for five bonds. The net repurchase cost of £131 million has been presented as exceptional finance costs in the income statement, as noted on page 104. |
A key measure we use to monitor financial discipline is retained cash flow divided by adjusted net debt (RCF/net debt). This is a measure of the operating cash flows we generate, before capital investment but after dividends paid to shareholders, compared with the level of debt we hold. The principal adjustment made to net debt is to include pension deficits. RCF/net debt was 11.2% for the year (2013/14: 10.5%; 2012/13: 11.4%). For the current year we have used this measure to actively manage scrip uptake through buying back shares when supported by sufficient headroom. Deducting the cost of buying back these shares reduces RCF/net debt to 9.9% for the year.
Our long-term target range for RCF/net debt is to exceed 9.0%, which is consistent with the A3 rating threshold used by Moodys, the rating agency. |
|
||||||
We additionally monitor interest cover, which is a measure of the cash flows we generate compared with the net interest cost of servicing our borrowings. Interest cover for the year was 5.1 times (2013/14: 4.1 times; 2012/13: 3.9 times). Our target long-term rate for interest cover is in excess of 3 times.
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 monitor our portfolio of businesses. The table below shows our RoCE for our businesses over the last five years:
Return on capital employed %
The UK RoCE has increased from 8.0% to 8.6% in 2014/15. This reflects the strong incentive performance in Gas Transmission and further totex outperformance in Electricity Transmission, together with one-off benefits of legal settlements in the year.
US RoCE has decreased by 40bps in the year to 6.0%, as a result of the additional maintenance to improve reliability and safety and bring regulatory filings up to date, together with rate base growth driven by capital expenditure spend.
Capital expenditure For the year ended 31 March 2015, capital expenditure of £3,470 million was at a similar level to last year, with reductions in spend in UK Electricity Transmission being offset by increases in capital spend in our US Regulated businesses.
The reduction in spend in UK Electricity Transmission reflected delays in the manufacture of cable for the Western HVDC link and a reduced level of overhead line work, with a number of projects having completed over the last two years. In addition |
22 |
|
||
|
||
we continue to look for innovative ways to reduce total expenditure (totex) under our RIIO regulatory arrangements while still delivering agreed outputs.
Within our US Regulated businesses, capital expenditure was higher year on year reflecting higher levels of mains replacement work, gas system reinforcement and growth spend, electricity capacity spend and progress on the New England East-West Solution (NEEWS) electricity transmission project.
Capital expenditure £m
Dividend growth We remain committed to our dividend policy to grow the dividend at least in line with the rate of average RPI inflation each year for the foreseeable future.
During the year we generated £2.1 billion of business net cash flow after our capital expenditure programmes. This has enabled the growth of the dividend in line with average RPI, being 2.0% (2013/14: 2.9%; 2012/13: 4.0%), taking into account the recommended final dividend of 28.16 pence.
During the year, the Company has repurchased shares in the market with the overall goal being to reduce the dilutive effect of the scrip as much as possible to the extent that is consistent with maintaining the Groups strong financial position as reflected in its credit rating.
Regulatory financial performance Timing and regulated revenue adjustments As described on pages 166 to 172, 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 £64 million (2013/14: £42 million under-collection). Our closing balance at 31 March 2015 was £27 million under-recovered.
In the UK, there was a cumulative under-recovery of £177 million at 31 March 2015 (2014: under-recovery of £83 million). All other things being equal, the balance will start to be recovered from customers in the year ending 31 March 2016.
In the US, cumulative timing over-recoveries at 31 March 2015 were £150 million (2014: £117 million over-recovery). The majority of that balance will be returned to customers next year.
In addition to the timing adjustments described above, as part 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 these amounts that will need to be repaid or 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 £174 million in the year (2013/14: £106 million). 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 £1,528 million at 31 March 2015 (2014: £1,024 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 2015, these extend until 2071.
Major storms Despite the very cold winter across much of the US including record snowfall in parts of New England, there were no major storms in 2014/15 or 2013/14. |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 23 |
|
||
Our people
|
||
If we are to achieve our strategic objectives, we need to make sure our employees have the right skills and capabilities.
|
|
Safeguarding the future There is a significant skills challenge facing the engineering profession in the UK. Research by EngineeringUK has highlighted a need for 1.8 million engineers, technicians and crafts people over the period 20122022. Around 60% of all new jobs in this period will need science, technology, engineering and maths (STEM) qualifications, yet not enough school children succeed in these areas.
There is a similar challenge in the US where the number of scientists and engineers needed to meet growth and net replacement needs between 2012 and 2022 is 2.3 million, including 1.2 million in the computer occupations and more than 540,000 engineers.
We are helping schools, parents and children see engineering as a modern, dynamic, desirable career with a great future. Our employees act as education ambassadors who volunteer their time for a range of activities in the classroom and at science and engineering fairs, most notably on STEM enrichment, careers education and work experience programmes.
Our careers education programmes in the UK include Careers Lab, an initiative we developed that was taken up by the charity Business in the Community in November 2014. It links working professionals from a range of sectors with schools to bring the world of work to life for secondary school children. A further initiative is the Engineer Your Future exhibition at Londons Science Museum, which opened in December 2014 and explores engineering challenges through interactive games and digital experiences.
During 2014/15, we have expanded our residential work experience programme (balanced 50/50 between girls and boys) to include a non-residential programme for students aged 1619 who are in sixth form or college and do not have an existing relationship with an employer.
This year, we invested nearly £900,000 in our education outreach, bringing benefits to 70 schools and more than 9,000 students who receive at least one hour of STEM/careers experience with our education ambassadors. We expect this to grow considerably in the UK through Careers Lab.
In the US, we continue to partner with seven local community colleges to deliver energy utility technology training programmes, designed to equip people for jobs in the energy industry. These programmes currently focus on future line workers. We plan to expand them to include technical skills for the gas industry.
We are continuing our partnership with the Center for Energy Workforce Development on its energy industry fundamentals, and we work with veterans through the US Troops to Energy Jobs programme. This is designed to help veterans make the transition from military service to the energy/utility industry. |
We completed the fifth year of our Engineering Pipeline Program. This is a developmental programme designed to inspire promising students to become engineers and provide them an opportunity for fast tracked employment with National Grid.
We are working with the State University of New York and its network of colleges and universities. The aim is to prepare students for careers in the energy and utilities industry by improving the educational opportunities available to them. We expect this partnership to increase the volume of qualified entry-level candidates looking to join National Grid.
Our US work experience opportunities include six to eight week summer internships for college students, so they can gain work experience with National Grid. A number of these interns start their journey into the energy industry through our Engineering Our Future programme and go on to join our Company.
In the UK, we offer summer internships and also 12 month industrial placements to undergraduates in their penultimate year. These programmes offer students the opportunity to experience the culture, working and ethical practices of National Grid before they make the all-important decision to join the organisation as graduates.
Building skills and expertise During 2014/15, we have worked on boosting the capabilities of our employees in the areas of Performance Excellence (see page 27), stakeholder engagement, customer focus and contract management. We see these capabilities as being crucial in helping us improve our performance and meet regulatory and customer expectations.
More than 900 employees have attended our Performance Excellence programmes; more than 650 employees have attended our stakeholder engagement and customer focus programmes; and around 250 employees have attended our contract management programmes.
Our executive team and senior leaders in the UK and US are participating in a programme to develop performance leadership skills. To prepare for our future engineering skills needs, we have built a T-pylon development facility at our Eakring learning centre in the UK.
We remain committed to investing in our people, providing the training and other support necessary for them to build, maintain and operate our networks safely and reliably, and this year we provided more than one million learner hours of training across our UK and US businesses.
|
24 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 25 |
Inspiring future engineers
Connecting to life:
Engineer Your Future
We are part of a business consortium supporting Engineer Your Future at the
UKs Science Museum in London. The exhibition will run until the end of 2017 and is designed to inspire and engage young people about the exciting world of engineering. This complements the work we are doing with young people and
organisations like VEX Robotics, shown above.
The exhibition features a series of interactive hands-on exhibits, including FutureVille, a vibrant futuristic cityscape
controlled by the visitors smartphone. The Science Museum is using Engineer Your Future to pledge support to the UK Governments Your Life campaign, which aims to boost the number of young people in the UK studying physics and
mathematics. nationalgridconnecting.com/inspiring-for-the-future sciencemuseum.org.uk/engineeryourfuture
26
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 27 |
Strategic Report
|
||
Principal operations continued
|
||
UK Electricity Transmission |
28 |
|
||
|
||
UK Gas Transmission |
In focus:
|
What we do |
the remainder coming from Norway, continental Europe, or further afield via shipped imports of LNG.
Overall, supply capacity now exceeds peak demand by more than 25%, giving our customers significant flexibility over which sources of gas they choose to meet demand. Newer sources of supply, such as LNG importation terminals and storage sites, can respond to demand more quickly than traditional UKCS supplies. Our network therefore needs to be able to respond to changing day-to-day supply and demand patterns.
We also need to prepare for an uncertain energy landscape in the long term. UK reliance on imported gas supplies will vary depending on the level of gas supply from the UKCS and the development of indigenous gas sources.
We are working closely with our customers and stakeholders to meet these operational challenges. We are focused on continuing to develop our network and services to meet their needs safely, reliably and efficiently.
|
||
40 times
The gas national transmission system operates at pressures up to 94barg around 40 times the pressure of an everyday car tyre.
|
We own and operate the gas national transmission system in Great Britain, with day-to-day responsibility for balancing supply and demand. Our network comprises | |||
|
approximately 7,660 kilometres (4,760 miles) of high pressure pipe and 24 compressor stations. In 2014/15 the gas throughput across the system was over 80 billion cubic metres.
Market context The UKs gas market and sources of gas are changing. Domestic demand has fallen over the last five years and a significant increase is not expected in future years. The UK continental shelf (UKCS) now makes up less than half our total gas supply, with
|
|||
|
||||
What weve achieved in 2014/15 We delivered a strong safety performance, particularly in our operations business where we have achieved 24 months (from April 2013) without a single lost time injury suffered by our employees or contractors.
We reached record levels of compressor availability in our network. Operational availability was at 100% several times during the winter, with an average of 96%. This is |
To meet the stricter environmental limits imposed by the Industrial Emissions Directive (IED), our larger gas turbines will need modifying or replacing. We have sought feedback from our stakeholders on the impact of the IED, adapting our proposed solutions in response. This has helped us develop investment options to make sure the network can meet the future needs of our customers and operate as efficiently as possible. |
|||
a rise of 7% on the average for winter 2013/14. It follows targeted investment in our fleet of compressors and improvements to our planning process, maintenance and repair methods.
We received £5.7 million from Ofgem following a successful bid in the Network Innovation Competition for designing and building a robotic device that can inspect below-ground pipework at high pressure installations. The device will help us to better assess asset condition, so we can focus expenditure where it is needed, benefiting gas consumers. |
Priorities for the year ahead Safety: Sustain and improve our safety performance by implementing a new safety culture improvement programme across UK Gas Transmission.
Reliability: Build on improvements we have made this year in compressor availability, extending this across other critical assets in our network to further improve the service we deliver to our customers.
Efficiency: Continue improving end-to-end processes and deliver greater value for |
|||
|
customers by being more efficient. Where we create additional capacity, we will look to insource some maintenance work and increase specialist pipeline services for customers.
Innovation: Use the innovation opportunities available through the Network Innovation Competition and Network Innovation Allowance funding. This will help us to create value for customers and the industry, and to achieve our RIIO-T1 commitments.
Emissions compliance projects: Continue work on existing emissions compliance projects and secure funding for continued works over the remainder of the RIIO-T1 period and beyond. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 29 |
Strategic Report
Principal operations continued
UK Gas Distribution
In focus:
|
What we do
|
Ofgem is able to make comparisons across all eight networks. It establishes outputs they are expected to deliver so that we all maintain a safe and reliable network; make a positive contribution to sustainability and protect the environment; provide connections to supply new consumers and support new gas entry points into the network; meet their social obligations; and provide an agreed standard of service to consumers and other stakeholders.
We collaborate with the industry on issues that are common to all networks and customers, such as innovation, safety and the future of networks to deliver outcomes that customers value.
Gas remains an important part of the current and future energy mix and we are working with our customers and stakeholders to develop our networks to accommodate gas from new sources, such as bio-methane. |
||
Gas consumption in our networks was 260 TWh in 2014/15.
|
We own and operate four gas distribution networks comprising approximately 131,000 kilometres (82,000 miles) of pipeline. We transport gas from the national transmission system to around |
|||
We manage the National Gas Emergency number (0800 111 999) on behalf of all gas distribution networks. |
10.9 million consumers on behalf of 37 shippers.
Market context We manage our networks to keep our customers safe and warm. We are incentivised through RIIO |
|||
We handled nearly 2.4 million calls during 2014/15 across the emergency number, enquiry lines, appliance repair helpline and meter enquiry service.
|
to operate efficiently and deliver services that our customers and stakeholders value.
|
|||
What weve achieved during 2014/15 We believe we are making progress towards our ambition to be the best gas distribution business in Britain by 2017. We understand where we need to |
However, against a backdrop of increased customer complaints across the industry, our volumes have also increased. To help improve this, a particular focus this year has been on simplifying the process |
|||
focus to deliver our RIIO outputs and deliver better customer service.
We are investing in our networks to make sure we meet customer and stakeholder needs. This includes replacing approximately 1,450 kilometres of old metal pipelines with more durable materials as part of our mains replacement programme developed with the HSE and Ofgem. In London, we have replaced around 300 kilometres of iron mains, including projects in Battersea and around the City.
We have also completed ten commercial bio-methane connections, more than any other UK gas distribution network, including the first 100% food waste plant and the first commercial sewerage connection with Severn Trent Water.
Overall, we have delivered successfully against our targets to deliver world-class levels of safety performance across our combined field workers and contractor workforce. In terms of cable strikes and injuries to members of the public, although we have missed our targets, we have increased our efforts to make improvements. We have also used innovative technology that has helped reduce excavation volumes, so we can minimise disruption. We have also been helping stakeholders such as landowners and the construction industry understand how we protect pipelines and how they can operate safely around them.
During 2014/15, we were recognised by Ofgem as the best performing gas distribution network in understanding our customer and stakeholder needs for the previous year. Our focus in this area has seen over 1,200 fuel poor customers benefiting from an alternative, more affordable method of heating their homes since we have connected them to our gas networks. |
for customers who want to connect to our networks by improving our website experience and providing them with a single point of contact.
We have invested in new mobile technology for our field workforce to increase productivity and provide our supervisors with real-time information. This has also helped improve employee engagement scores and the desire to drive better outcomes for our customers; our field workforce now compares favourably with industry benchmarks.
|
|||
Priorities for the year ahead Improve our safety performance by further reducing cable strikes, injuries to members of the public and preventing third-party encroachment. This will continue to be an important area of focus.
Continue to use innovative technology to deliver better services that reduce the impact on customers bills and minimise disruption caused by our work.
Improve our customers experience of planned replacement work projects by working with our partners to improve our processes, data capture and how we communicate and engage with our customers.
Continue to work with government and industry on setting out the vision for the future role of gas in the UKs energy mix and policies that support this role, while considering how domestic smart meters can create value for customers.
Motivate and equip our workforce with the tools and knowledge they need to deliver the services and outcomes our customers value, while increasing productivity. |
||||
30
Capital investment in the pipeline
Connecting to life:
London gas mains replacement
We are investing nearly £1 billion over an eight year period to 2021 in
Londons gas distribution network. In particular, were replacing and upgrading more than 2,500 kilometres of gas mains. The work will provide vital infrastructure, supporting Londons economic growth by continuing to provide a
safe and reliable gas supply.
We own and maintain more than 20,000 kilometres of gas distribution pipeline under Londons streets. Our use of innovative
technologies, like Core&Vac keyhole technology, helps us to keep disruption to a minimum, allowing the City to go about its daily business while we improve the network for the future. nationalgrid.com/LondonGasMainsReplacement
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15
Strategic Report
31
A network fit for the future
Connecting to life:
Improved reliability for Aquidneck Island
The electrical system that serves Aquidneck Island, part of the State of
Rhode Island, is antiquated and currently stretched to its limits. The forecasted future demand peaks at 167 MW, which is 20 MW more than the current system can deliver. Our customers, like Judy Crosby of Island Books, rely on power for
their livelihood. The $93 million Aquidneck Island Reliability Project will bring more reliable power to the nearly 32,000 homes and businesses in Portsmouth, Middletown and Newport.
The project includes two state-of-the-art substations, reconfiguration of two transmission lines, local distribution work, and retirement of five substations on the island.
onislandngrid.com
32
Principal operations continued |
US Regulated |
What we do and where we do it
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 33 |
Strategic Report
|
||
Principle operations continued
|
||
US Regulated continued |
Principal risks As described in the Internal controls and risk management section (pages 38 to 41), we identify, monitor and manage risks at various levels within our Company. The key risks our US business faces are organised into a US regional risk profile which is regularly reviewed by the US senior leadership. The main risk themes currently featured in this profile are:
● our ability to manage data integrity 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; ● our ability to enhance our US business structure and end-to-end processes to support an evolved jurisdictional performance environment; and ● safety performance and network reliability, security and resilience.
What weve achieved During 2014/15, we delivered a solid performance and continued with high levels of investment in our networks. As described on pages 18 and 19, we achieved our reliability KPI targets but we still have work to do if we are to improve our customer satisfaction target scores.
We finally completed the stabilisation work on our new enterprise resource planning system. This fixed a number of long-standing problems, such as inefficient payroll processing, which had previously required expensive manual interventions. Long term, the data we can produce with the new systems are an essential foundation to the future performance improvements and regulatory filings that we need for profitable growth in the US.
In 2010, the Massachusetts Department of Public Utilities (MADPU) approved a power purchase agreement between National Grid and Cape Wind for a proposed large-scale, offshore wind farm in Nantucket Sound. In 2014, Cape Wind did not satisfy certain critical milestone deadlines set out in the power purchase agreement and did not post collateral to extend the deadlines in the power purchase agreement. As a result, the power purchase agreement was terminated in January of 2015. We continue to believe the solution to New Englands energy challenge is a diversity of energy sources, which is why we support renewable projects consistent with our goal of reducing emissions while minimising the cost impact on our customers.
In a joint programme with Earth Networks, we purchased 55 Weatherbug stations to donate to our communities in Massachusetts, New York and Rhode Island. These stations provide customers with more localised weather information and we use them to better prepare for and respond to storms. They also contribute to STEM education in giving free real-time local weather data to schools and emergency responders.
We continue to invest more in reinforcing the electricity distribution system and also in replacing |
gas mains. The NYPSC approved $414 million gas infrastructure investment in Long Island to speed up the replacement of ageing pipe and extend the use of natural gas to more customers.
The NYPSC also published the results of the regulatory audit of our New York gas companies. These audits are a regular feature of the New York regulatory process. The audit was broadly supportive of our performance and structure and, as is usual, made some recommendations for further improvement. It specifically recommended stronger local leadership and a number of more cost-effective and customer-focused operational enhancements. We have responded with an implementation plan to provide these benefits on behalf of New York customers.
Last year, regulatory audits in New York also identified an unacceptable number of violations of the regulations relating to our gas operations. To improve our regulatory compliance performance, we are investing in compliance monitoring systems, adding compliance personnel, and enhancing our training and safety protocols.
Our regulators and customers have heightened expectations around safety and compliance for all gas utilities. We are committed to doing everything we can to meet their expectations and making sure sufficient resources are dedicated to support this priority.
Building on performance improvements in 2013/14, we saw a reduction in safety incidents in 2014/15. In the past year, there has been a 7% reduction in the number of injuries requiring medical attention and a 26% reduction in the number of cases requiring employees to stay out of work. These reductions result from programmes and initiatives based on risk areas, improved incident investigations and root cause analysis. There is still much work to do as we strive for zero injuries. Soft tissue injury prevention, safety observations, road traffic collisions and slips, trips and falls will remain a focus for us in 2015/16.
Each of our jurisdictions has projects under way to develop economic and environmental health in three ways: by driving economic growth; providing cleaner energy; and advancing innovative technologies. We have highlighted some of our 2014/15 achievements below.
Massachusetts We are preparing to file a grid modernisation plan a blueprint for the modernisation of the electric system with MADPU in August 2015.
We have announced plans to build, own, and operate an additional 16 MW of solar generation, bringing total solar capabilities in the state to 21 MW.
As of late 2014, we had installed 39.9 miles of new gas mains and added more than 8,400 new natural gas customers. |
|
Our Sustainability Hub in Worcester, MA.
|
34 |
New York We are helping to shape new energy policy in the state through our REV filings. REV is aimed at transforming the electricity energy industry and regulatory practices in New York State.
We are adding new electricity capacity and infrastructure to RiverBend, Buffalo, a former industrial brownfield that is bringing growth and jobs to the state. Companies including Solar City and Soraa will bring investment, much needed jobs, and new and advanced energy technologies that could make this region a hub for energy development regionally, nationally and internationally.
We are negotiating a power purchase agreement with ReEnergy under which we intend to purchase excess energy from a 55 MW biomass generating facility at Fort Drum in Watertown. This will be the largest renewable energy project in the history of the US Army.
We have begun a two year plan to replace ageing pipes and expand the use of natural gas on Long Island and the Rockaway Peninsula to more than 20,000 new customers. This accelerates the replacement of ageing pipes from the current 50-mile requirement to 95 miles by 2016.
We are partnering with New York City to accelerate the phase out of heavy oils in around 800 buildings. Since the programmes launch in 2011, we have converted over 500 heavy oil buildings. We continue our efforts to convert the few remaining clean heat eligible buildings on Staten Island.
Rhode Island The $93 million Aquidneck Island Reliability Project, known as OnIsland, will bring more reliable power to the nearly 32,000 homes and businesses in Portsmouth, Middletown, and Newport. The project includes two substations, reconfiguration of two transmission lines, local distribution work, and retirement of five substations on the island.
We have been working with Toray Plastics, one of the largest employers in the state, on customised energy solutions. In 2014 the company opened its second cogeneration system at its 70-acre campus in North Kingstown and we supported them with an energy efficiency incentive of $15.9 million.
We are building a new state-of-the-art substation to replace the existing ageing infrastructure at the current South Street Substation, which powers downtown Providence. This coincides with a $206 million redevelopment of South Street Landing that will turn the vacant former South Street Power Station into teaching and administrative space for Brown University, Rhode Island College and the University of Rhode Island.
FERC We are part of a joint venture to form New York Transco. This aims to construct, own, and operate incremental electric transmission assets in New York State to improve reliability and reduce congestion. |
It is initially pursuing five projects that support public policy objectives and provide broad-based benefits across the state. New York Transco filed with FERC in December 2014 for rate recovery and cost allocation for proposed transmission projects, estimated at $1.7 billion.
We have joined Spectra Energys $3 billion proposed Access Northeast pipeline project that aims to significantly increase natural gas capacity to generators in New England. Our three New England electric distribution companies have established memoranda of understanding with project developers to explore the development of an innovative tariff that would enable them to take capacity from the pipeline and release it into the market as needed to mitigate wholesale electricity price spikes.
In December 2014, we announced we had joined forces with Anbaric Transmission to develop large-scale HVDC transmission projects to deliver a combination of domestic wind energy and Canadian hydropower to New England load centres. We are currently developing a 1,000 MW hybrid land and sea HVDC project from northern Maine to Greater Boston and a 400 MW underground HVDC project from upstate New York to Vermont under Lake Champlain.
We are working with Eversource Energy in implementing the Greater Boston and New Hampshire Solution to address critical grid reliability needs. We will be investing approximately $190 million in the Solution for new infrastructure in southern New Hampshire, northern Massachusetts, and the Greater Boston area. We expect the Solution to be in service by 2019.
|
|||||||||||
Priorities for the year ahead We continue our Connect21 journey with these four priorities for 2015/16: Performance Excellence; local operating model; talent and capabilities; and future energy networks.
Performance Excellence: We will improve the way we work as teams to become more efficient, innovative, and responsive to our customers needs in end-to-end processes that include: meter to cash; emergency response; deliver gas and electric; maintain gas and electric; and operate gas and electric. |
||||||||||||
Local operating model: We will continue to drive greater accountability and customer service by delivering the services and obligations expected by the 14 operating companies and four jurisdictions that comprise our US business at a cost and performance level agreed upon by each jurisdictions management team.
Talent and capabilities: We will provide employees with the tools and resources they need to achieve the performance measures required by our customers and shareholders.
Future energy networks: We will update and create new electricity and gas networks through design, operational, and regulatory innovations. |
Upgrading the power lines in Rhode Island.
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/2015 | 35 |
Strategic Report
Principal operations continued
Other activities
In focus: |
Grain LNG | timescale). Intraday markets help | ||||||
14.9%
Approximate percentage of UK gas from LNG imports, up from 9.7% in 2013/14. |
Grain LNG is one of three LNG importation facilities in the UK. It operates under long-term contracts with customers and provides importation services of ship berthing, temporary storage and re-gasification in to the national transmission system.
This year, we have continued to explore |
market participants adjust their positions better over short time periods.
Metering National Grid Metering (NGM) provides installation and maintenance services to energy suppliers in the regulated market |
||||||
developments to our LNG services to increase | in Great Britain. It maintains an asset | |||||||
revenue, including the potential to offer ship | base of around 14.1 million domestic, | |||||||
reloading. | industrial and commercial meters. | |||||||
We have started a ship cool-down service. This process helps ships that have been out of service or having maintenance to reload full LNG cargo.
In 2015/16, we will also commission and launch our LNG road tanker loading facility. This will provide tankered LNG to off-grid customers and operators of heavy goods vehicles.
Interconnectors The England-France interconnector (IFA) 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. The interconnectors availability continued to improve this year following a significant valve replacement programme. Average availability for 2014/15 was 90.62%, up from 83.84% in 2013/14. 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 owns and operates a 1,000 MW HVDC link between England and the Netherlands. As with IFA, a substantial proportion of the flow is in the import direction from the Netherlands to Great Britain.
Throughout 2014/15, both IFA and BritNed have operated as part of the North West Europe market region. The creation of this region is part of the ongoing development of the EUs Internal Energy Market. IFA and BritNed have entered this region voluntarily ahead of the introduction of new EU-wide rules for cross-border electricity trading.
IFA and BritNed are also involved in the next phase of this regional market that will cover the intraday market timescale (currently it only covers the day ahead
|
The domestic traditional gas metering business continues to operate in its role as the National Metering Manager, pending the start of the smart metering mass roll-out. This role means customers have a point of contact if they require a meter up until the start of the smart metering roll-out. Tariff caps agreed with Ofgem as part of this role, which took effect on 1 April 2014, will continue to apply until at least the end of the transition to smart metering.
Customer satisfaction scores for NGM remain positive for both its domestic, and industrial and commercial businesses, but we continue to work with our customers on areas for improvement. In our industrial and commercial business we have implemented new software that allows remote customer self-serve access for some services and is expected to improve efficiency. We are also responding to the rapidly changing non-domestic sector by exploring additional products and services.
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 2014/15, we entered into a joint venture with the Berkeley Group, known as St William, to develop surplus land for residential use in London and the South East. We have also sold 42 sites and exchanged on several high-profile land disposal agreements with joint venture partners. Our holder demolition and contaminated land clean-up programmes are progressing well, and we are in the process of retendering our estate management outsourcing agreement.
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. Xoserve celebrated its 10 year anniversary as a company on 1 May 2015.
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 (our minority equity interests in these are not regulated) 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. |
36 |
Internal control and risk management
The Board is committed to protecting and enhancing our reputation and assets,
while safeguarding the interests of our shareholders. It has overall responsibility
for the Companys system of risk management and internal control.
38
Our principal risks Accepting that it is not possible to identify, anticipate or eliminate every risk that may arise and that risk is an inherent part of doing business, our risk management process aims to provide reasonable assurance that we understand, monitor and manage the main uncertainties that we face in delivering our objectives.
This includes consideration of inherent risks, which exist because of the nature of day-to-day operations in our industry, and financial risks, which exist because of our financing activities. An overview of the key inherent risks we face is provided on pages 173 to 176, |
as well as an overview of our key financial risks, which is incorporated within the Notes to our consolidated financial statements on pages 94 to 158.
Our corporate risk profile contains the principal risks that the Board considers to be the main uncertainties currently faced by the Company as we endeavour to achieve our strategic objectives. An overview of these risks is provided below, together with examples of the relevant controls and current mitigating actions we are taking. |
|||||||||||||
Strategic objective
|
Risk description
|
Example of mitigations | ||||||||||||
Drive growth |
Failure to identify and execute the right opportunities to deliver our growth strategy.
Failure to sufficiently grow our core business and have viable options for new business over the longer term would negatively affect the Groups credibility and jeopardise the achievement of intended financial returns.
Our ability to achieve our ambition for growth is subject to a wide range of external uncertainties, including the availability of potential investment targets and attractive financing and the impact of competition for onshore transmission in both the UK and US; and internal uncertainties, such as the performance of our operating businesses and our business planning model assumptions.
|
● We regularly monitor and analyse market conditions, competitors and their potential strategies, the advancement and proliferation of new energy technologies, as well as the performance of our Group portfolio. We are also looking to access new sources of finance and capabilities through partnering. ● We have internal processes for reviewing and approving investments in new businesses, disposals of existing ones and organic growth investment opportunities. These processes are reviewed regularly to make sure our approach supports our short- and long-term strategies. We undertake due diligence exercises on investment or partnering opportunities and carry out post-investment reviews to make sure we learn lessons for the future. |
||||||||||||
|
||||||||||||||
Engage externally |
Inability to influence future energy policy.
Policy decisions by regulators, governments and others directly affect our business. We must engage widely in the energy policy debate, making sure our position and perspective help to shape future policy direction. |
● In the UK, we are continuing to work closely with DECC and Ofgem on Electricity Market Reform (EMR) plans. We successfully implemented the first Capacity Market Auction and Contracts for Difference Allocation process and are working with the Regulator to finalise the enduring EMR Business Plan to ensure we continue to deliver value under RIIO. We continue to maintain strong relationships with government, engage in consultations, and develop comprehensive stakeholder communication plans. The Board is also continuing to monitor the increasing public debate around the cost, availability, security and sustainability of UK energy supplies. |
● | In the US, we are engaging our external stakeholders about the role of the utility company of the future, under the banner of Connect21. We believe this conversation will help shape the regulatory and fiscal regime in the US in the future. Regulatory proceedings related to utility of the future have been launched in New York (Reforming the Energy Vision) and Massachusetts (Grid Modernization) and our Connect21 aligns well with them. We are continuing to strengthen our jurisdictional focus and are improving our rate case filing capabilities so our businesses can continue to earn a fair and reasonable rate of return. Our rate filings include structural changes where appropriate, such as revenue decoupling mechanisms, capital trackers, commodity-related bad debt true-ups and pension and other post-employment benefit true-ups, as described on pages 169 and 172. | |||||||||||||
|
● |
We maintain and monitor a reputation watch list at both Company and regional levels to support awareness and proactive management of issues that could cause us reputational harm.
|
||||||||||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 39 |
Strategic Report
Internal control and risk management continued
Strategic objective
|
Risk description
|
Example of mitigations
|
||||||||||
Engage our people |
Inability to secure the business capacity, appropriate leadership capability and employee engagement levels required to deliver our vision and strategy.
It is through the high-quality work of our employees that we will achieve our vision, respond to the changing needs of our stakeholders and create a competitive advantage. Obtaining and fostering an engaged and talented team that has the knowledge, training, skills and experience to deliver on our strategic objectives is vital to our success. We must attract, integrate and retain the talent we need at all levels of the business.
|
● We have identified the core capabilities that align with our strategic ambition and defined our set of leadership standards. ● We have filled key leadership roles with a mix of internal and external hires. ● We are involved in a number of initiatives to help secure the future engineering talent required (see page 24). ● We continue to develop our succession plans for key roles, including leadership. ● We continue to actively promote inclusion and diversity. ● We monitor employee engagement and formally solicit employee opinions via a Company-wide employee survey annually. |
||||||||||
|
||||||||||||
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 Performance Excellence framework is firmly established to deliver sustainable and innovative performance improvements. ● 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 actively engage with local communities and non-governmental actors. ● We monitor network reliability and customer satisfaction as KPIs, as described on pages 18 and 19.
|
||||||||||
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.
|
● We implemented a new US enterprise resource planning system at the end of 2012. After a significant effort to combat programme difficulties, the system is now stabilised and enhancements to drive business value are under way. ● 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 completed a data assurance programme last year and actions to improve our data quality and integrity processes based on the results are being managed by the business functions.
|
|||||||||||
We experience a catastrophic/major cyber security breach.
Due to the nature of our business we recognise that our critical national infrastructure (CNI) 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 CNI security strategy and our involvement in the US with developing the National Institute of Standards and Technology Cyberspace Security Framework.
|
|||||||||||
|
Failure to prevent a significant process safety event.
Safety is paramount. Some of the assets owned and operated by National Grid are inherently hazardous and process safety incidents, whilst extremely unlikely, can occur.
|
● We continue to commit significant resources and financial investment to maintain the integrity of our assets and we strive to continuously improve our key process safety controls. ● We continue to implement our Group-wide process safety management system to ensure a robust and consistent framework of risk management exists across our higher hazard asset portfolio.
|
40 |
Strategic objective
|
Risk description
|
Example of mitigations
|
||||||||
Deliver operational excellence continued
|
Our objective is to be an industry leader in managing the process safety risks from our assets to protect our employees, contractors and the communities in which we operate. We operate in compliance with local legislation and regulation. In addition we identify and adopt good practices for safety management.
|
● We are developing a suite of risk models to assess the risk of specific asset types and support targeted investment to reduce risk. ● We monitor a mix of leading and lagging process safety indicators and test the effectiveness of our controls with periodic audits. |
Our internal control process We have a number of processes to support our internal control environment. These processes are managed by dedicated specialist teams, including risk management, ethics and compliance management, corporate audit and internal controls, and safety, environment and health. 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 42 to 59.
Reviewing the effectiveness of our internal control and risk management Each year the Board reviews the effectiveness of our internal control systems and risk management process covering all material systems, including financial, operational and compliance controls, to make sure they remain robust. The latest review covered the financial year to 31 March 2015 and the period to the approval of this Annual Report and Accounts. It included:
● the Certificate of Assurance for noting following consideration by the Audit Committee to provide overall assurance around the effectiveness of our 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.
The Board evaluated the effectiveness of managements processes for monitoring and reviewing internal control and risk management, noting that no significant failings or weaknesses had been identified by the review and confirmed that it was satisfied the systems and processes were functioning effectively.
Our internal control and risk management processes comply with the Turnbull guidance on internal control and the requirements of the UK Corporate Governance Code and the Financial Reporting |
Councils Guidance on Risk Management, Internal Control and Related Financial and Business Reporting.
They are also the basis of our compliance with obligations set by the Sarbanes-Oxley Act 2002 and other internal assurance activities. The New Code, published in September 2014, contained changes related to risk management. These changes have been reviewed against our risk management and internal control systems and processes. Refinements will be implemented, as appropriate, over the coming year.
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 in the prior year, we identified a number of weaknesses in our US financial control framework. We are making progress in remediating these weaknesses. For more information, including our opinion on internal control over financial reporting, see page 173. |
|||||||||
The Strategic Report was approved by the Board of Directors on 20 May 2015 and signed on its behalf by:
Alison Kay Group General Counsel & Company Secretary 20 May 2015
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 41 |
|
Dear Shareholders, Our Board is responsible for shaping the culture, values and ethics of National Grid, both within the boardroom and across the organisation, by setting the tone from the top and establishing high standards of behaviour.
The changes introduced in 2014 to the UK Corporate Governance Code and the Financial Reporting Council guidance on risk management have highlighted the need for the Board to consider if the current risk management and internal control practices and culture of the Company support the spirit of the changes, not just the letter.
The updates to the New Code have been considered by the Board and refinements approved so we can report on compliance next year as required. It is the intention of the Board that any changes to the frequency and level of reporting received by the Board and Audit Committee in relation to risk management, compliance and internal control as a result of these updates, will also add value to the business.
A review of our compliance procedures is also underway to make sure that we continue to develop and improve our compliance with external reporting obligations. In order to further develop our internal assurance programme, we formed the Engineering Assurance Committee to promote the application of common, consistent, engineering assurance methodologies across the Company.
The Board received an in-depth presentation on security and cyber security which provided a framework for discussion around the threats we face and the effectiveness of our strategy to mitigate the inherent risks. We have made a significant investment over the last five years to improve our capabilities in this area so we can adapt to and address an ever-changing threat landscape. Following this session, we agreed that responsibility for making sure we have an effective process for managing cyber security risk should be delegated to the Audit Committee. You can read more about this on page 50. The Board will continue to receive an annual in-depth presentation on information systems and security, including cyber security.
This year, in addition to Nick Winser and Maria Richter stepping down at the 2014 AGM, we have said goodbye to Philip Aiken and Tom King and have welcomed John Pettigrew and Dean Seavers as Executive Directors in the UK and US respectively. In my role as Chairman and leader of the Board I am responsible for ensuring effectiveness in all aspects of its role. This includes promoting effective relationships and open communication between Directors and encouraging active engagement by all members. This is particularly important as the membership of the Board changes and new relationships are formed. I am pleased to report that the positive outcome of the Board and Committee evaluation process reflects this effectiveness. You can read more about this on page 46 and the rigorous selection process prior to Deans appointment on page 58.
Clear and concise communications with our shareholders remain a focus for the Board and we hope that the overview of our business model on page 12 helps to articulate how we create value for you, our shareholders, as well as our other stakeholders.
Sir Peter Gershon Chairman |
42
Our Board
|
|
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 43 |
Corporate Governance
|
||
Corporate Governance continued
|
||
|
||
Compliance statement The Board considers that it complied in full with the provisions of the UK Corporate Governance Code 2012 (the Code) during the financial year being reported, see page 53 for our explanation in relation to external audit tendering. |
||
This report explains the main features of the Companys governance structure to give a greater understanding of how the main principles of the Code have been applied. The report also includes items required by the Disclosure and Transparency Rules. The index on page 59 sets out where to find each of the disclosures required in the Directors Report and in respect of Listing Rule 9.8.4, together with the Boards sign-off on the report.
UK Corporate Governance Code 2014 The new UK Corporate Governance Code 2014 (the New Code) applies to the Company for the next financial year, 2015/16. In March, the Board considered the current governance arrangements and approved refinements to support compliance with the New Code. Details will be provided in the 2015/16 Annual Report and Accounts.
Fair, balanced and understandable The requirement for Directors to state that they consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable remains a key consideration in the drafting and review process. The coordination and review of the Annual Report follows a well-established and documented process, which is conducted in parallel with the formal audit process undertaken by the external auditors and the review by the Board and its committees (of relevant sections).
This process gives the Board comfort that all material statements are accurate and that the Annual Report gives sufficient prominence to negative as well as positive information. The drafting and assurance process supports the Audit Committee and Boards assessment of the overall fairness, balance and clarity of the Annual Report and the Directors statement on page 78.
Our current Board membership is set out on the previous page, with biographical details of Directors on pages 178 to 179. The Directors in place during the year are set out on page 49, together with details of Board meeting attendance. Committee membership during the year and attendance at meetings is set out in each of the individual committee reports later in this report. For further details about the Directors service contracts and letters of appointment, see page 67 of the Directors Remuneration Report.
Role of our Board Our Board is collectively responsible for the effective oversight of the Company and its businesses. It also determines the strategic direction, business plan, objectives and governance structure that will help achieve the long-term success of the Company and deliver sustainable shareholder value.
The Board sets the risk appetite for the Company and takes the lead in areas such as safeguarding the reputation of the Company and financial policy, as well as making sure we maintain a sound system of internal control and risk management (see pages 38 to 41).
The Boards full responsibilities are set out in the matters reserved for the Board, which were updated in January 2015. These are available on our website, together with other governance documentation.
|
Our Chairman is responsible for the leadership and management of the Board and its governance. He ensures the Board is effective in its role by promoting a culture of openness and debate, facilitating the effective contribution of all Directors and helping to maintain constructive relations between Executive and Non-executive Directors.
Our Chief Executive is responsible for the executive leadership and day-to-day management of the Company, to ensure the delivery of the strategy agreed by the Board. Through his leadership of the Executive Committee, he demonstrates commitment to safety, operational and financial performance.
Our Senior Independent Director acts as a sounding board for the Chairman and serves as an intermediary for the other Directors, as well as shareholders when required.
Independent of management, our Non-executive Directors bring diverse skills and experience, vital to constructive challenge and debate. Exclusively, they form the Audit, Nominations and Remuneration Committees, and have an important role in developing proposals on strategy.
|
||
Examples of Board focus during the year: Board strategy session. In addition to time allocated during the year at Board meetings, in January the Board took part in a half-day interactive strategy session, involving a combination of full Board discussions and breakout groups. The Board considered questions raised by the business plan and recent strategic analysis, future opportunities for the Company including business development, mergers and acquisitions and how our core capabilities could be exploited.
The Board found the additional session extremely useful and suggested that further regular updates and discussions would help consolidate its thinking, in particular in relation to the development of a longer-term perspective on potential growth in other geographical areas.
European energy policy. The Board received updates on how changes in the EU will affect and influence the UK energy policy, including Electricity Market Reform, support for interconnectors and Carbon Capture and Storage.
The 2014 UK Winter Outlook. This annual publication confirmed that the Company was in a strong position in respect of gas in the UK, with no heightened concerns, but for electricity, margins were expected to be tight. Updates to the Board confirmed that the UK business had a good understanding of the issues and risks. A robust mitigation strategy, agreed with the UK Government, was approved and implemented.
Interconnector projects. In January, the Board received a presentation on Great Britains interconnector market and our pipeline of opportunities, including an overview of our two most advanced projects; potential new links to Belgium and Norway. Following feedback provided, the Board approved the final investment decision in relation to the Belgium interconnector in February 2015 and the interconnector with Norway in March 2015.
Emerging risks. The Board received a risk update paper including an overview of the framework that has been developed to track emerging risks and the resulting opportunities and/or threats. Additionally, the Board received an update on three themes that had emerged from the 2014 risk workshop to make sure that we were sufficiently prepared for black swan events (catastrophic events of extremely high impact and extremely low likelihood). |
|
44 |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 45 |
Corporate Governance
|
||
Corporate Governance continued
|
||
46
Area | Actions from last years review | Commentary | ||||||
Decision making |
All important matters requiring approval are to be brought to the Board for early input before a decision is needed. Responsibility: Chairman and Chief Executive |
Sir Peter Gershon and Steve Holliday have regularly reviewed the forward business schedule with the Group General Counsel & Company Secretary over the year. The schedule is also included with the papers for each Board meeting to ensure Directors are aware of forthcoming topics for discussion. Following the thinking styles session in February 2015, the schedule was also reviewed to consider if any items could be brought forward early to allow Directors to contribute to thinking and direction at a preliminary stage of the debate.
|
||||||
Board discussions |
Greater clarity about the scope of Board discussions to be provided in advance and Board members to be encouraged to question if not clear. Responsibility: Chairman |
The Company Secretariat team engaged with external specialists in effective reporting to support the development of the information that goes to the Board. The new reporting framework has resulted in clearer, more concise papers, which has supported improved Board discussion and decision making. Following the successful implementation of the new reporting framework at Board level it has also been rolled out to the Board committees and the Executive Committee.
|
||||||
Degree of challenge |
The Executive Directors to speak to the Chairman about what would make them feel more comfortable to challenge and debate, both with the Non-executive Directors and with their fellow Executive Directors at Board meetings. Responsibility: Executive Directors
|
In February, the Board reviewed progress against the 2013/14 action plan and noted that all Executive Directors felt empowered to input freely at Board meetings and that there was open and honest dialogue. The Chairman will continue to monitor this on an ongoing basis. |
||||||
Board focus |
A number of topics were identified that Directors felt needed additional focus by the Board at its meetings, for example cyber risk and the UK political landscape. Ways to improve the focus on each of these topics were discussed at the March 2014 Board meeting and specific actions were agreed and allocated. Responsibility: various Board members |
The Board has taken into account the need for additional focus in certain areas and this has been reflected in the meeting agendas.
Strategy: several papers focusing on strategy and growth have been received by the Board over the year in addition to the Board strategy session. Topics included: review of the UK gas market; US and other market opportunities; exploitation of core capabilities; expansion in and outside our core geographies; and a general update on the interconnectors.
Political risk: political updates are provided in the Chief Executives report to the Board as appropriate. Additional papers on the politics of UK and US energy and a general update on politics in Europe have been presented to the Board and updates will continue to be provided as appropriate.
Cyber risk: an update on cyber risk and security went to the Board and Audit Committee in September. At this meeting, the Board decided that responsibility for making sure there is an effective process for managing cyber security risk should be undertaken by the Audit Committee. The Board is scheduled to receive an in-depth presentation in November 2015.
Relationship with UK and US regulators: updates on the meetings that take place between our Chairman and the Chairman of Ofgem are provided to the Board. Updates on US regulation and the meetings that take place with the US regulators are also provided to the Board in the Chief Executives report.
|
||||||
Effectiveness of the Board |
Actions to improve Board effectiveness were proposed, for example: continue to improve the quality of Board papers; make sure in-depth items for Board consideration highlight the important issues to be discussed; and encourage reporting from management that incorporates more input from the Executive Directors. Responsibility: Chairman, Chief Executive and Group General Counsel & Company Secretary as appropriate
|
The new reporting framework described above will also help improve the effectiveness of the Board. As part of the new framework, executive owners of papers on the Board agenda have a greater input in to and ownership for the preparation of papers. Management are encouraged to meet with the executive owner at the start of the drafting process to discuss the framework for the paper and owners are required to review and sign off on the final paper prior to submission to the Board or committee. |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 47 |
Corporate Governance
|
||
Corporate Governance continued
|
||
We believe it is important to maintain effective channels of communication with our debt and equity institutional investors and individual shareholders. This helps us to understand their views about the Company and allows us to make sure they are provided with timely and appropriate information on our strategy, performance, objectives, financing and other developments.
Institutional investors We carry out a comprehensive engagement programme for institutional investors and research analysts. This includes meetings, presentations, webinars, attendance at investor conferences across the UK and US, and holding road shows in major investor centres across Europe, the US and Asia Pacific.
The programme provides the opportunity for our current and potential investors to meet with executive and operational management.
In the past year, our engagement programme has focused on clarifying our Group growth expectations and explaining to investors how we expect the Company to continue to perform under the RIIO price controls in the UK. These areas of focus have been reflected in our regular results presentations as well as in more detail during an investor seminar at our Castle Donington site.
In addition to these engagement activities, we also held a stewardship meeting in July last year. The event provided major investors with an understanding of our performance and an insight into the operation of our Board with a particular focus on the work of our Remuneration and Audit Committees. The event also provided the opportunity for attendees to ask questions and meet members of the Board and for our Non-executive Directors to further develop their understanding of our shareholders views and concerns. A copy of the presentation given on the day is available in the Investors section of our website.
Sir Peter also contacted our major shareholders in April 2015 to offer them the opportunity to meet him or the chairman of the Remuneration Committee, Jonathan Dawson, to discuss the Board changes that have taken place during the year and the associated remuneration arrangements.
The Board receives regular feedback on investor perceptions and opinions about the Company. Specialist advisors and the Director of Investor Relations provide updates on market sentiment.
Each year, the Board receives the results of an independent audit of investor perceptions. Interviews with key investors were carried out to establish their views on the performance of the business and management. The findings and recommendations of the audit were discussed in depth by the Board. |
Debt investors Over the last year representatives from our treasury team, together with other senior managers from across the business, have met with debt investors in Europe, Canada and the US to discuss various topics such as the full-year results.
We also communicate with our debt investors through regular announcements and the debt investor section of our website. This contains bond prospectuses, credit ratings, materials relating to the retail bond issued in 2011 and subsidiary year-end reports. The website also contains information about the long-term debt maturity profile, so investors can see our future refinancing needs.
Individual shareholders Engagement with individual shareholders, who represent more than 95% of the total number of shareholders on our share register, is led by the Group General Counsel & Company Secretary. Shareholders are invited to learn more about the Company through the exhibits at our AGM and the shareholder networking programme.
The shareholder networking programme includes visits to UK operational sites and presentations by senior managers and employees over two days. UK resident shareholders can apply to take part online via the Investors section of our website.
Annual General Meeting (AGM) Our AGM will be held on Tuesday 21 July 2015 at The International Convention Centre in Birmingham and broadcast via our website. The Notice of Meeting for the 2015 AGM, available on our website, sets out in full the resolutions for consideration by shareholders, together with explanatory notes and further information on the Directors standing for election and re-election.
The Chairman sets the Boards agenda in line with its responsibilities as set out in the matters reserved for the Board. Consideration is also given to the main challenges and opportunities facing the Company, making sure adequate time is available to discuss all items, including strategic issues.
To support discussion and decision making, Board and committee members receive papers sufficiently in advance of meetings so that they can prepare for and consider agenda items. Additionally, the Chairman holds a short meeting with the Non-executive Directors before each Board meeting to discuss the focus of the upcoming meeting as well as afterwards to share feedback and discuss the dynamics of the meeting. Similarly, the Chief Executive holds a short meeting with the Executive Directors and other senior management in attendance and shares the feedback from these meetings with the Chairman.
As set out in the table of actions from last years Board and committee evaluation process, during the year we engaged external specialists to review our current papers and develop a new reporting framework for the Board and its committees. This has resulted in clearer more concise reports, allowing more time for discussion and questions.
|
48 |
Board membership and attendance 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 2015.
|
|
The Board delegates authority to its committees to carry out certain tasks on its behalf, so that it can operate efficiently and give the right level of attention and consideration to relevant matters.
The role and responsibilities of the committees are set out in their respective terms of reference, available on our website. The committee structure, delegation and reporting lines are set out in the diagram below.
In addition to the vertical lines of responsibility and reporting, the committees communicate and work together where required. For example, on some risk matters the SEH Committee collaborates with the Audit Committee. These lines of communication are shown in the diagram below.
Committee agendas and schedules of items to be discussed at future meetings are prepared in line with the terms of reference of each committee and take account of other topical matters.
At committee meetings, items are discussed and, as appropriate, matters are endorsed, approved or recommended to the Board by the committee. Following meetings, the chairman of each committee provides the Board with a summary of the main decisions and discussion points so the non-committee members are kept up to date.
Below the Board committees are a number of management committees, including the Executive Committee.
The Executive Committee has responsibility for making management and operational decisions about the day-to-day running of the Company. Further information on some of the management committees, including the membership and operation of the Executive Committee, is set out on pages 58 and 59.
Reports from each of the Board committees together with details of their activities during the year, are set out on the following pages. |
||||||||||||
Name | Attendance | |||||||||||||
|
||||||||||||||
Sir Peter Gershon |
10 of 10 | |||||||||||||
Steve Holliday |
10 of 10 | |||||||||||||
Andrew Bonfield |
10 of 10 | |||||||||||||
Tom King 1 |
10 of 10 | |||||||||||||
John Pettigrew |
10 of 10 | |||||||||||||
Nora Mead Brownell |
10 of 10 | |||||||||||||
Jonathan Dawson |
10 of 10 | |||||||||||||
Therese Esperdy |
10 of 10 | |||||||||||||
Paul Golby |
10 of 10 | |||||||||||||
Ruth Kelly |
10 of 10 | |||||||||||||
Mark Williamson |
10 of 10 | |||||||||||||
|
||||||||||||||
Nick Winser 2 |
3 of 3 | |||||||||||||
Philip Aiken 3 |
9 of 9 | |||||||||||||
Maria Richter 2 |
3 of 3 | |||||||||||||
|
||||||||||||||
1. Tom King stepped down from the Board with effect from 31 March 2015. 2. Nick Winser and Maria Richter stepped down from the Board with effect from 28 July 2014. 3. Philip Aiken stepped down from the Board on 25 February 2015. Dean Seavers was appointed to the Board with effect from 1 April 2015.
Committee membership during the year and attendance at meetings is set out in each of the individual committee reports later in this report.
Should any Director not be able to attend a Board or committee meeting, the Chairman and committee chairman are informed and the absent Director is encouraged to communicate opinions and comments on the matters to be considered. |
|
|||||||||||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 49 |
Corporate Governance
|
||
Corporate Governance continued
|
||
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 Challenging management on the action they are taking to continue to improve the US financial controls environment has remained a focus for the Committee over the past 12 months. Although there is work still to do, I am pleased to report we are now seeing steady progress in this area.
The US leadership team has been strengthened with the appointment of a new US Chief Financial Officer (CFO). The Finance Director and the US CFO have continued to keep the Committee up to date on progress with regular reports throughout the year on further proposed improvements and priorities.
The past year has also seen two other key appointments a new Head of Corporate Audit (approved by the Committee in accordance with its terms of reference) and a new Head of Assurance. The Committee has received reports from both individuals on their initial observations of their respective functions and proposed changes and priorities for the year.
Following the delegation by the Board for oversight of risk management in relation to cyber security, the Committee received its first update from internal (corporate) audit on the process for identifying, mitigating, monitoring and responding to cyber security risks in March.
The Committee has been briefed on the changes to the regulatory environment, in particular the audit tender regulations published by the Financial Reporting Council, the implications of the Competition and Market Authority Order and the final European Commission regulations. We discussed and considered the timing of a tender for the external audit and agreed that an audit tender process should be run later this year. See page 53 for further details.
Committee membership has also undergone some changes. Maria Richter stepped down from the Board at the 2014 AGM. In 2015 we have said goodbye to Philip Aiken and welcomed Paul Golby and Therese Esperdy to the Committee in February and April respectively. I would like to thank Phil for his contribution and support to the Committee over the last six years. We are looking forward to working with Paul and Therese over what will be another busy year. |
Significant issues The most significant issue the Audit Committee considered in relation to the financial statements during the year were the US financial controls. The Committee also considered the presentation of exceptional items, the treatment of the liability management programme costs and accounting for agreed legal settlements. More detail is provided later in the report.
Other matters reviewed Examples of other matters the Audit Committee reviewed:
The new Group consolidation system. Regular progress updates on the implementation which is expected to go live later this year.
Lessons learnt from the March 2014 year-end audit. The Committee noted the detailed plans produced by management and the external auditors to deliver a more efficient March 2015 year-end process, including the timing of certain audit testing and the approach to subsidiary statutory and regulatory accounts.
Sarbanes-Oxley Act 2002 testing and attestations. The Committee received regular updates on the status of testing and considered the impact of deficiencies reported at the May 2014 meeting. During the year, the Company adopted the revised framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Subsequently, a review of all internal controls of financial reporting was undertaken to ensure compliance with the updated framework. See page 41 for the Companys statement on the effectiveness of internal control over financial reporting.
Accounting for rate regulated activities. The Committee endorsed managements response to the discussion paper issued by the International Accounting Standards Board in September 2014 and believe that guidance should be introduced that results in the IFRS financial statements of the Company more closely reflecting its economic performance and position.
Fair, balanced and understandable. The requirement of the Code to ensure that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable in the context of the applicable accounting standards and confirmed this view to the Board.
Interim Management Statements (IMS). The Boards decision to cease the publication of an IMS and the impact on the traditional role of the Committee. Depending on the content of future market updates, the Committee will review these prior to publication.
Cyber security risk management. A paper from internal (corporate) audit on the status of our cyber security risk management and external good practice in September 2014. In setting the scope of its new responsibilities, the Committee considered the level of assurance currently provided by internal (corporate) audit and other assurance providers and the frequency and extent of information received. Subsequently, the Committees terms of reference were amended to include this additional responsibility in relation to the review of the governance processes over cyber security risk and the Committee now receives a regular update from the Head of Corporate Audit.
Risk management. Half-yearly updates on the management of key risks faced by the Company including changes to the corporate risk profile to reflect Executive Committee risk management discussions.
|
50 |
Committee membership and attendance table 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 2015. Biographical details and experience of Committee members are set out on pages 178 and 179.
|
Summarised below are the issues which attracted the most focus, and time, of the Committee in relation to the financial statements during the year.
US financial controls. The Committee has continued to devote a significant amount of time challenging management on the action they are taking to continue to improve the US finance control environment. There has been continued focus on embedding the enterprise resource planning system in the US and the benefits this system now brings. The Committee has received regular updates from management on progress against the measures taken to remediate US financial control deficiencies.
In October, a new US CFO was appointed to lead the US finance team. She initiated a granular review of the US finance function to understand the current service levels and key learnings from prior initiatives, including the successes as well as initiatives that did not fully achieve their goals.
The outputs from this review were incorporated into a new US finance function initiative which is intended to address the root cause of issues identified by the review and simplify and standardise processes.
In January 2015, the Committee received a presentation on the initiative to understand the approach being taken, the stages involved and the underlying issues that the initiative was aiming to resolve. Management sought input and feedback from the Committee on the direction, focus and timing of the proposed initiative. The Committee discussed the proposal and asked questions about the initiative before approving the approach. Regular updates will be provided to the Committee through the year so that progress can be monitored.
During the year, the Committee challenged management in the US on its regulatory filing obligations, noting that due to the system implementation issues, not all filings were made on time. Management presented and, during the course of the year, delivered on a detailed plan to complete the filings and remediate the process. All regulatory filings are now up to date and management communicated with the regulators throughout the process.
Presentation of exceptional items. At the half year and year end, the Committee examined an analysis of items to be classified as exceptional to make sure the items did not include income or costs relating to the underlying business performance.
In particular, the Committee considered the treatment of the liability management programme costs at the year end. Management proposed that the costs associated with the debt redemptions should be treated as exceptional as they were one-off, significant and outside the ordinary course of business. To include this cost in underlying finance costs would otherwise distort users understanding of the business performance. This proposal was in line with the exceptional items accounting policy in the Annual Report and Accounts and the historical treatment of debt redemption costs.
The Committee agreed that the classification of this item was appropriate. See note 4 footnote 8 on page 104.
|
|||||||||
Name | Attendance | |||||||||
|
||||||||||
Mark Williamson (chairman) |
8 of 8 | |||||||||
Paul Golby 1 |
1 of 1 | |||||||||
Ruth Kelly |
8 of 8 | |||||||||
|
||||||||||
Philip Aiken 2 |
7 of 7 | |||||||||
Maria Richter 3 |
4 of 4 | |||||||||
|
||||||||||
1. Paul Golby joined the Committee on 25 February 2015. 2. Philip Aiken stepped down from the Board with effect from 25 February 2015. 3. Maria Richter stepped down from the Board with effect from 28 July 2014. Therese Esperdy was appointed to the Committee with effect from 22 April 2015.
Experience The Board has determined that Mark: ● 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.
Financial reporting The Committee monitors the integrity of the Companys financial information and other formal documents relating to its financial performance and 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 considers the estimates and judgements made by management when accounting for non-standard transactions, including the treatment of exceptional items. Two examples of these are set out below.
These considerations are supported by input from other assurance providers such as the group controls, risk management and ethics and compliance teams, the 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 59 for more information on the role of the Disclosure Committee.
The Committee reviews and approves the external audit plan annually (see page 53) and, as part of this, considers the significant risks upon which the external auditors will focus their audit. The independent auditors report (pages 79 to 84) highlights areas of focus, including some of the issues that the Committee discussed during the year.
Other risks, including the accuracy and valuation of treasury derivative transactions, accounting for pension obligations, accuracy of capital expenditure, revenue recognition and valuation of environmental provisions were not considered in detail by the Committee during the year as nothing significant arose that warranted Committee attention. |
||||||||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 51 |
Corporate Governance
Corporate Governance continued
|
Accounting for agreed legal settlements. During the year, the Company reached negotiated settlement agreements in a legal case. The Company was awarded a total of £113 million (including allowance for legal costs incurred). Due to the size of the impact on the income statement, the Committee agreed with managements decision that this was not considered to be exceptional for the year. The Committee reviewed and challenged the classification of the settlements and agreed that £56 million be recognised in the income statement in the year, with the remainder credited to property, plant and equipment. Management is waiting for confirmation from Ofgem of the regulatory treatment of these awards under RIIO.
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 on whether our existing control and governance frameworks are operating effectively in order to meet our strategic objectives. Assurance work is conducted and managed in accordance with the Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing and Code of Ethics.
To keep the Committee informed of trends identified from the assurance work and to update on the progress against the corporate audit plan, the Head of Corporate Audit reports to the Committee at least twice each year. These reports present information on specific audits, as appropriate, summarise common control themes arising from the work of the team and update on progress with implementing management actions. Where control issues are identified, senior leaders may be invited to attend Committee meetings to provide a commentary around the actions they are taking to improve the control environment within their area of responsibility.
In order to meet the responsibility and objectives set out in the Corporate Audit Charter, audits of varying types and scopes are performed as part of the annual corporate audit plan. The audit plan is based on a combination of risk-based and cyclical reviews, together with a small amount of work that is mandated, typically by US regulators.
Inputs to the audit plan include risk registers, corporate priorities, external research of emerging risks and trends and discussions with senior management to ensure that the plan aligns with the Committee and Companys view of risk. The audit plan is considered and approved by the Committee annually. |
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 102.
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 in line with our internal code; | |||||||||||
● | monitoring the changes in legislation related to auditor objectivity and independence to help ensure we remain compliant; | |||||||||||
● | providing a business conduct helpline that employees can use to report any concerns, including those relating to the relationships between Company personnel and the external auditor; | |||||||||||
● | the rotation of the lead engagement partner at least every five years; | |||||||||||
● | PwCs internal independence rules and processes which have been designed to exceed professional standards and focus on both personal independence and scope of services; | |||||||||||
● | independent reporting lines from PwC to the Committee and the opportunity to meet with the Committee independently; and | |||||||||||
● | an annual review by the Committee of the structures, policies and practices in place to make sure the external auditors objectivity and independence is maintained. | |||||||||||
A new lead engagement partner will be appointed for the 2015/16 financial year following the completion of the current lead audit partners tenure. |
||||||||||||
52 |
Non-audit services provided by the external auditors In accordance with our policy, non-audit services provided by the external auditors above a threshold of £50,000 require approval in advance by the Committee.
Below this threshold, all requests are approved in advance by the Finance Director and do not require Committee pre-approval. This reduces the administrative burden on the Committee. A full list of all Committee and Finance Director approved non-audit work requests is presented to the Committee annually to ensure the Committee is aware of all non-audit services provided.
Additionally, the Committee receives quarterly reports from management on non-audit services and other consultants fees to monitor the types of services being provided and fees incurred.
Approval for the provision of non-audit services 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 Sarbanes-Oxley Act 2002.
Total non-audit services provided by PwC during the year ended 31 March 2015 were £0.9 million (2014: £1.7 million), which comprised 7% (2014: 13%) of total audit and audit-related fees (see note 3(e)).
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 Sarbanes-Oxley Act attestation. Non-audit fees represent all other services provided by PwC not included in the above.
Non-audit services provided by PwC in the year included tax compliance services in territories other than the US (£0.4 million), the significant majority of which relates to the UK.
The Committee 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.
|
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:
● audit quality and the external audit process globally; ● the auditors performance and delivery against the audit plan; ● the expertise of the firm and our relationship with them including the level of challenge; and ● the results of online questionnaires completed by the Chairman, Committee members, Executive Directors and senior representatives from the finance team. The questions focused on: the quality of service; sufficiency of resources; planning and execution of the audit; communication and interaction; and overall satisfaction. No material issues were identified.
Following this years annual review, the Committee was satisfied with the effectiveness, independence and objectivity of the external auditors, and recommended 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 2015 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.
The Committee discussed the implications of the Competition and Market Authority Order requiring FTSE 350 companies to hold an audit tender every 10 years as well as the final European Commission (EC) regulations, which came into EU legislation in June 2014. The Committee noted that based on the EC transitional arrangements, the final year in which PwC can be appointed as the Groups auditors is for the year ended 31 March 2020.
At its meeting in May 2015, the Committee considered the timing of a potential tender for the external audit. The Committee considered the continued US financial controls improvement programme and the services we currently receive from other external audit firms that may be considered in a tender process. It concluded that, firstly, in order to ensure an orderly transition and secondly, to ensure compliance with the EC regulations on the provision of prohibited services, an audit tender process will be run later this year for the audit of the year ending 31 March 2018. PwC will not be invited to tender.
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. |
|||||||||
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 including the scope and materiality to make sure that PwC have identified all key risks and developed robust audit procedures and communication plans.
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. |
||||||||||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 53 |
Corporate Governance
Corporate Governance continued |
Risk management and internal control The Audit Committee monitors the effectiveness of the risk management and internal control processes during the year through the biannual reports it receives and reports to the Board on the outcome. The review covers all material controls, including financial, operational and compliance controls. Please see page 41 for further details about the review of effectiveness.
In support of our compliance with the New Code, reporting to the Audit Committee on risk management and internal control has been reviewed by the Board and refinements will be adopted for the financial year 2015/16.
Details of our internal control systems, including those relating to the financial reporting process, can be found on pages 38 to 41 and page 173.
Risk management The Executive Committee discusses the principal risks faced by the Company and updates the corporate risk profile every six months. The approved profile is subsequently shared with the Audit Committee, along with US and UK regional risk profiles, as part of our continuous risk management process.
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 COSO and the international risk standard ISO 31000 continue to inform the principles of our risk management process.
During the year, we adopted the revised framework issued by the COSO for our internal controls over financial reporting. This introduced specific principles to cover fraud risk assessment and information technology. We also reviewed the procedures for the identification, assessment, mitigation and reporting of risks.
Further details of our risk management systems can be found on pages 38 to 41 and our risk factors are described in full on pages 173 to 176.
Compliance management Compliance management has been integrated into a new Global Assurance team which incorporates ethics, risk management, licence management and records management with a view to improving visibility and reporting in all areas.
Biannual reports to the Committee focus on compliance with external legal obligations and regulatory commitments. During the year, the Committee requested that additional detail be added to the reports against each of the actual or potential non-compliance items identified to show the person responsible and provide a summary of the actions being taken to resolve the actual or potential non-compliance.
The Committee also received 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 Our going concern 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 November 2014 and March 2015 respectively. The Finance Committee provides ongoing oversight of our liquidity policy, which requires us to maintain sufficient liquidity for a rolling 12 month period.
Given our business model, current regulatory clarity and other factors impacting our operating environment, and the robustness of our business planning process and scenario analysis, we have concluded the going concern assessment period is the five years ending 31 March 2019, in line with our business plan. 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. 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.
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 period of the going concern assessment. 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.
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.
|
|||||||||||||
54 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 55 |
Corporate Governance
|
||
Corporate Governance continued
|
||
|
||||||||||||
Matters considered | ||||||||||||
Role The Committee reviews the strategies, policies, initiatives, risk exposure, targets and performance of the Company and, where appropriate, of its suppliers and contractors in relation to safety, environment and health. It monitors the resources we use for compliance and driving improvement in these areas and reviews investigations into major incidents.
Review of the year Following Philip Aikens departure from the Board at the end of February, I have taken over as chairman of the Committee. I have been a member of the Committee for the last three years and over this time we have seen the Company make significant progress in process safety management and the safety performance of both the UK and US businesses, with the US closing the gap on the UK in terms of employee and contractor LTIs. I hope to see further progress in these areas going forwards.
We welcomed Andrew Bonfield to the Committee at the beginning of the year. Andrew is a member of the Chief Financial Officers Leader Group of the Accounting for Sustainability (A4S) project, which challenges organisations to demonstrate the commercial rationale for incorporating sustainability into decision making and to manage the related risks and opportunities. He also chairs the Companys Engineering Assurance Committee, which now reports on a six monthly basis to the Committee.
We have continued to focus on process safety and establishing a safety management system across both our UK and US businesses. We have spent time looking at the risks relating to our US LNG assets and the measures being introduced to address these (see The Committee in action below).
Following a fatality involving a contractor at our Rhode Island gas distribution business, we spent time with senior local management considering the causes of the incident and how best to ensure that safety procedures are understood and complied with at all times, by both employees and contractors.
In terms of environmental matters, we have continued to monitor our strategy and approach to sustainability. In particular, we have looked at how we are working with governments and bodies such as the US Environmental Protection Agency to influence regulations that directly impact on our business.
We also considered the Health and Wellbeing strategy and the work being done on data management, improved line management training and providing support and guidance to employees to address levels of absenteeism. |
Examples of matters the SEH Committee reviewed during the year include:
|
|
||||||||||
● ongoing monitoring of safety performance and significant incidents in both the US and the UK; |
|
|||||||||||
● lessons learnt and steps taken following a fatality of a member of the public in the UK in April 2014 and a contractor fatality in the US in November 2014; |
|
|||||||||||
● in-depth reviews of incidents in both the UK and US gas businesses where failure to follow due process led to high pressure releases placing the employees involved in potential danger; |
|
|||||||||||
● compliance with US gas pipeline safety regulations in the light of new regulations and evolving enforcement policies by our regulators; |
|
|||||||||||
● review of the role and set up of the Engineering Assurance Committee which was formed last year to promote the application of common, consistent, engineering assurance methodologies across the Company; |
|
|||||||||||
● conclusion of a review of the interfaces between our IT systems and safety processes; |
|
|||||||||||
● the use of bars in the UK gas distribution business for the break up and removal of gas mains below 6 in diameter, looking at safety issues and available alternatives; and |
|
|||||||||||
● climate change strategy, including performance against emissions targets and carbon budgets. |
|
|||||||||||
Committee membership and attendance |
|
|||||||||||
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 2015.
|
|
|||||||||||
Name | Attendance | |||||||||||
|
||||||||||||
Paul Golby (chairman) 1 |
|
5 of 5 |
|
|||||||||
Andrew Bonfield |
|
4 of 5 |
|
|||||||||
Nora Mead Brownell |
|
5 of 5 |
|
|||||||||
|
||||||||||||
Philip Aiken 2 |
|
5 of 5 |
|
|||||||||
|
||||||||||||
1. Chairman from 25 February 2015. |
|
|||||||||||
2. Philip Aiken stepped down from the Board with effect from 25 February 2015.
|
|
|||||||||||
The Committee in action US LNG assets As part of its focus on process safety and the management of major hazard assets, the Committee has spent time with the US business looking at the risks surrounding its LNG assets, as a number of these assets are located close to areas that have pockets of relatively dense population.
The Committee considered the possible risk reduction measures for two key sites, Commercial Point in Massachusetts and Providence in Rhode Island, where the risk levels had been established to be highest. Philip Aiken visited both sites and members of the Committee received additional training on LNG process safety risks and the relevant risk assessment methodologies.
Over the following 12 months the Committee, through regular reports, oversaw the implementation of the measures proposed, including the installation of automatic shutdown mechanisms which was completed at these plants in June 2014. The Committee also reviewed the proposed timetable for dike redesign and construction to improve containment of LNG escapes in the event of an incident and recommended completion be brought forward by several months.
|
|
56 |
Matters considered | ||||||||||||
|
Examples of matters the Nominations Committee considered during the year include: | |||||||||||
● Director appointments and leavers, see page 58 for details of the Executive Director appointment process; |
|
|||||||||||
● Board and committee membership following changes to the composition of the Board; |
|
|||||||||||
● the executive succession planning focusing on the identification, development and readiness of successors to the Executive Committee in particular; |
|
|||||||||||
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 Sir Peters performance as Chairman, led by Mark Williamson, the SID; |
|
||||||||||
● the proposed structure for the UK business; |
|
|||||||||||
● feedback on the key issues to be covered by the talent update paper to the Board to provide focus for the discussion; and |
|
|||||||||||
● the Committees performance; see The Committee in action below. |
|
|||||||||||
Review of the year Succession planning continues to be an important responsibility of this Committee, and is reflected in the time spent on the topic this year. The process of building a strong and effective Board requires a good balance of continuity and refreshment.
As described in my foreword to the Corporate Governance report, during the year we have undertaken a rigorous recruitment process to select Dean Seavers as a successor to Tom King, a key appointment to the Board. Details of our process are included later in this report on page 58.
Balance is an important consideration in recruitment, not only in terms of the number of Executive and Non-executive Directors, but also in terms of the range of expertise and backgrounds. In setting the specification of the role, we reviewed the existing skills, experience and diversity of the Board, including diversity of thinking styles, and identified areas that were essential or highly desirable in potential candidates.
The fit with current membership and how the individuals combine to add value was also taken in to account in the decision making process. Dean brings valuable skills and experience that complement the existing Board members and provides a fresh perspective and challenge to Board discussions.
Last year we set out eight measurable objectives to support our Board diversity policy. We have conducted our annual review of the policy and I am pleased to report that we are on track against the objectives we set.
We currently have 27.3% women on our Board and 24.1% in our senior management population. We have included examples of how the Company supports women throughout our businesses on page 25.
Following the changes in Board membership, the composition of the committees was also reviewed. Paul Golby has become chairman of the SEH Committee and joined the Audit Committee as a member in place of Philip Aiken to maintain continuity between the two committees.
The Committee also considers succession planning over the long-term, for both Executive and Non-executive positions, to ensure that we have the right mix of skills and experience as the Company evolves and so that change can be effectively managed. |
Committee membership and attendance |
|
||||||||||
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 2015.
|
|
|||||||||||
Name | Attendance | |||||||||||
|
||||||||||||
Sir Peter Gershon (chairman) |
|
5 of 5 |
|
|||||||||
Nora Mead Brownell |
|
5 of 5 |
|
|||||||||
Jonathan Dawson |
|
5 of 5 |
|
|||||||||
Therese Esperdy |
|
5 of 5 |
|
|||||||||
Paul Golby |
|
5 of 5 |
|
|||||||||
Ruth Kelly |
|
5 of 5 |
|
|||||||||
Mark Williamson |
|
5 of 5 |
|
|||||||||
|
||||||||||||
Philip Aiken 1 |
|
4 of 4 |
|
|||||||||
Maria Richter 2
|
|
1 of 1
|
|
|||||||||
|
||||||||||||
1. Philip Aiken stepped down from the Board with effect from 25 February 2015. |
|
|||||||||||
2. Maria Richter stepped down from the Board with effect from 28 July 2014.
|
|
|||||||||||
The Committee in action Evaluation of Committee performance The Nominations Committee performance evaluation process took a slightly different approach to the evaluations for the Board and other committees. Committee members were asked to provide feedback on how effectively it had dealt with the main topics considered in the last year and its duties and responsibilities; how it had worked together as a unit; and the strengths and weaknesses of the Committee and how these could be addressed by the action plan.
Following consideration of the Committees performance over the year and the above questions, the Committee concluded that it had operated effectively throughout the year and agreed an action plan for 2015/16, which included refinements to the appointment process of future non-executive and executive directors to make sure that we continuously improve our robust approach, including briefings for Non-executive Directors on their role in the selection and appointment of executive directors.
Additionally, the time spent discussing senior executive succession planning will be reviewed to make sure that Committee input continues to be provided, as appropriate, to support senior appointments.
An update on the evaluation including the draft Committee action plan was reported to the Board in May 2015.
|
|
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 57 |
Corporate Governance
Corporate Governance continued
58 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 59 |
Annual statement from the Remuneration Committee chairman Overview Last year, over 96% of shareholders voted to approve a new remuneration policy for National Grid. Although the policy is not subject to shareholder vote again this year, we have reprinted it on pages 62 to 68 for ease of reference. The new policy followed an extensive review by the Remuneration Committee to assess how the remuneration framework needed to change to reflect developments in National Grids business the introduction of a new eight year regulatory framework in the UK (RIIO), and the continued evolution of our US business.
National Grids shareholder returns are earned progressively through two main contributing factors. First, through careful management of long-term assets and their financing; and second, by building for future returns through a substantial, continuing and well-executed programme of long-term capital investment in regulated and non-regulated operations. Our aim was to make sure that shareholders and executives longer-term interests are clearly aligned through properly focused incentive plans and by requiring executives to have a significant shareholding in the Company. In summary, we concluded that:
● there should be a significant weighting towards longer-term incentives and longer-term shareholding exposure for senior management through a reduction in the potential maximum Annual Performance Plan (APP) level, and an increase in the potential maximum Long Term Performance Plan (LTPP) level; ● the bulk of remuneration should be paid in National Grid shares; ● senior executives should be required to have a significant mandatory shareholding (500% of pre-tax salary for the CEO and 400% for other Executive Directors) and that no shares could be sold (except for meeting the tax on vesting) until the mandatory shareholding level was attained; ● shares that vested under the LTPP, following the three year performance measurement period, had to be retained for a further two years, irrespective of whether the mandatory shareholding level had been attained; and ● the metrics for LTPP performance should change to Return on Equity (RoE) and value growth. RoE provides a measurement of managements performance in generating profit from the business, and value growth captures managements longer-term performance in creating shareholder value.
We were clear that the new arrangements must only deliver higher rewards when executives had achieved a commensurately stronger performance. We believe that we have set threshold, target and stretch levels of performance accordingly. We also wanted to make sure that our commitment to increasing the annual dividend by at least RPI for the foreseeable future an important element in shareholders total return was linked to executive remuneration. The Committee, therefore, made it explicit that it had the power to reduce LTPP vesting if the Company failed to honour the dividend commitment, irrespective of the level of vesting resulting from the performance against the LTPP targets set by the Committee. |
The Remuneration Committee believes that the policy endorsed last year by shareholders is fully aligned with the Companys strategy and with the experience of shareholders in general. It also believes that, based on our appraisal of performance against our demanding targets to date, the policy is not inflationary compared with previous arrangements. We will, however, continue to reassess remuneration policy and targets for future awards so that we can remain confident they are still meeting the objectives set by the Committee.
Performance for the year APP National Grid has achieved another year of strong financial performance in the UK and solid performance in the US with record investment levels. The financial measures for the APP were adjusted EPS and either Group RoE, UK or US RoE depending on role. At 60.6 pence, the adjusted EPS figure for APP was up 6.3 pence (12%) on 2013/14. The EPS figure used for the APP calculation differs slightly to the reported EPS figure of 58.1 pence as it is adjusted for the impact of timing and actuarial assumptions on pensions and other post-employment benefits (OPEB). Group RoE was 11.8%, ahead of last years 11.4% result. Our UK RoE was 14.3%, including the benefit of a legal settlement referred to in the report of the Audit Committee on page 52. In the US, our RoE was 8.4%, which was slightly down on last year. As a result, in respect of financial metrics for the APP (representing 70% of the value of the award), we have made awards of between 50% and 100% of the maximum potential to the Executive Directors. The balance of the APP award is represented by performance against personal objectives set by the Remuneration Committee. As a result, we have made APP awards to the Executive Directors of between 64% and 119% of salary. Details of each Executive Directors APP award are set out on page 70. This is the first year of the new policy for maximum APP payments, with the maximum being reduced from 150% of salary (for the 2013/14 awards) to 125%.
LTPP 2014 was the first year in which the maximum potential for the LTPP awarded during the year was increased in line with the new remuneration policy from 225% to 350% of salary for the Chief Executive and 200% to 300% of salary for the other Executive Directors. This is a three year plan and the performance outcomes will only be determined in July 2017. In 2014/15, Group RoE and value growth were both on target in relation to the 2014 LTPP parameters, with UK RoE around stretch, and US RoE below threshold.
The LTPP that vested during 2014/15 was that awarded in 2011. This included three performance measures: adjusted EPS; relative total shareholder return (TSR); and UK and US returns. The EPS measure vested at 31%, reflecting EPS growth just above the threshold target for this measure. The TSR measure vested at 98.3%, which reflects an annualised return to shareholders of 18.9% over the period. The UK and US returns measures are expected to vest at 100% and 25.9% respectively, reflecting strong operational performance in the UK, including the first two years of RIIO, and the impact of rate base growth and higher winter related costs in the US. As a result, the 2011 LTPP vested at between 46% and 66% for the Executive Directors. Details of each Executive Directors vested LTPP are set out on pages 70 and 71.
Future targets Details of future targets and historical performance are disclosed each year in respect of the LTPP. Details of historical performance against targets are disclosed each year in respect of the APP. We provide these details on pages 70 to 72 and page 74. Taking account of this years performance, as well as the challenges |
60 |
|
||
|
||
ahead, after careful consideration the Committee has decided to retain the same weighting of performance metrics and the same targets for the 2015 LTPP as last year and the same framework of metrics for the 2015/16 APP awards. The Committee believes that the targets for these metrics set appropriately demanding levels for executive performance. For the 2015 LTPP, the maximum payout will require an average annual Group RoE of 12.5% and an average annual value growth of 12% over the three year performance period. We will again review performance against metrics next year to judge whether any changes should be made to the weighting of the metrics or to the targets underlying the incentive in future awards.
Executive Director shareholdings Executive Directors are now required to build up and hold a significant shareholding in the Company (500% of gross salary for the CEO and 400% for the other Executive Directors). Steve Hollidays current shareholding is significantly above his shareholding requirement. The other Executive Directors, due to their relatively short time in the role, have not yet reached their increased level of shareholding requirement. On current projections, Andrew Bonfield and John Pettigrew should reach their required shareholding in 2017 and 2018 respectively. As Dean Seavers was only appointed to the Board on 1 April 2015, he is expected to take somewhat longer to reach his required shareholding.
Executive Director changes Nick Winser stepped down from the Board at the 2014 AGM and will leave the Company at the end of July 2015 when his role will be redundant. Details of his termination payments are summarised on page 72. In October last year, it was announced that Tom King would also leave the Company at the end of March 2015 and would be succeeded as an Executive Director and President of National Grids US business by Dean Seavers. Tom Kings termination payments are also detailed on page 72. I confirm that all such payments to Nick Winser and to Tom King are in line with approved policy.
Dean Seavers joined the Company on 1 December 2014, and joined the Board on 1 April 2015, with a starting salary of US$1,000,000. He will be eligible for a prorated APP in respect of 2014/15 and also received an award of 300% of salary in respect of the 2014 LTPP. In addition to his starting package, he also received compensation for bonuses from his former employer that have been foregone amounting to US$250,000 paid on joining and a further US$250,000 to be paid one year later. He is a member of the US Defined Contribution Core Plan with Company contributions based on a percentage of salary and his APP award and a 401(k) plan match. All of these arrangements are in line with the approved policy on recruitment remuneration.
Salaries For the year ahead, the Committee has awarded a salary increase of just below 1% to both Steve Holliday and Andrew Bonfield which is less than the 1.9% annual salary budget agreed for the 2015 managerial salary review in the UK. Dean Seavers will not receive any salary increase from 1 June 2015 which reflects the decision to have a 0% annual salary budget for the 2015 managerial salary review in the US.
John Pettigrew joined the Board on 1 April 2014 with a starting salary of £475,000 and he did not receive any salary increase from 1 June 2014. In line with the policy on recruitment remuneration, his salary was set below the market rate for equivalent roles. In the report last year, the Committee indicated that it would exercise its discretion in line with the policy to increase his salary towards market level by way of future increases in excess of those awarded |
to the wider workforce and inflation, subject to his performance. The Committee has decided to award him a 7% increase in salary from 1 June 2015 with further above inflation increases planned in the future to bring him closer to the market rate for his role, subject to his ongoing performance.
Conclusion The Committee considers that the remuneration earned last year by Executive Directors is a fair reflection of the value achieved for shareholders. Their remuneration is, however, in a transitional phase since the APP outturn reflects a lower maximum potential (125% of salary versus 150% previously) while the level of LTPP vesting reflects both the previous policy limits and also the previous bases of measurement. This transitional phase will continue until 2017 when the last element of the 2013 LTPP finally vests and the 2014 LTPP (under the new policy) matures. We will report in detail on each element during this period to give shareholders as clear a view as is possible about the underlying performance of the new policy. This year the Committee is not seeking any changes to remuneration policy, so the only shareholder vote on remuneration is an advisory vote on the Directors Remuneration Report (Resolution 16). We believe we have correctly and fairly implemented the approved policy during the past year. We also believe that, while it is too early to be definitive, the new incentive arrangements that we initiated last year are beginning to prove their merits. On behalf of the Committee, I commend this report to you and ask for your support for the resolution at the Annual General Meeting.
Directors remuneration policy approved by shareholders in 2014 The full Directors remuneration policy approved for three years from the date of the 2014 AGM held on 28 July 2014 is shown on pages 62 to 68 for ease of reference only. A shareholder vote on remuneration policy is not required in 2015. Please note that the information shown has been updated to take account of the fact that the policy is now approved and current rather than proposed. The tables showing the total remuneration opportunity on page 68 have also been updated to take account of Board departures and joiners and June 2015 salary levels. A copy of the remuneration policy is available on the Company website at investors.nationalgrid.com/reports/2013-14 (pages 60 to 66).
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, 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 came into effect.
|
|||||
Our peer group The Committee benchmarks its remuneration policy against appropriate peer groups annually to make sure 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.
|
||||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 61 |
Corporate Governance
|
||
Directors Remuneration Report continued
|
||
62 |
|
||
|
||
Pension |
Purpose and link to strategy: to reward sustained contribution and assist attraction and
|
|||||||||||
Operation
|
Maximum levels
|
Performance metrics, weighting and time period applicable
|
||||||||||
Pension for a new Executive Director will reflect whether they are internally promoted or externally appointed.
If internally promoted:
● retention of existing DB benefits without enhancement, except for capping of pensionable pay increases following promotion to Board; or ● retention of existing UK DC benefits or equivalent cash in lieu; or ● retention of existing US DC benefits plus 401(k) plan match, provided through 401(k) plan and non-qualified plans.
If externally appointed:
● UK DC benefits or equivalent cash in lieu; or ● US DC benefits plus 401(k) plan match.
Andrew Bonfield, John Pettigrew and Dean Seavers are treated in line with the above policy.
Steve Holliday and Nick Winser are provided with final salary pension benefits. For service prior to 1 April 2013, pensionable pay is normally the base salary in the 12 months prior to leaving the Company. For service from 1 April 2013 increases to pensionable pay are capped at the lower of 3% or the increase in inflation. The pension scheme rules allow for indexed prior salaries to be used for all members. They participate in the unfunded scheme in respect of benefits in excess of the Lifetime Allowance.
Tom King participated in a qualified pension plan and in an Executive Supplemental Retirement Plan. These plans were non-contributory, cash balance and final average pay plans. Toms benefits included compensation to buy out entitlements from his former employer that were lost on recruitment to National Grid.
In line with market practice, pensionable pay for UK-based Executive Directors includes salary only and for US-based Executive Directors it includes salary and APP award.
|
UK DB: a maximum pension on retirement, at age 60, of two thirds final capped pensionable pay or up to one thirtieth accrual. On death in service, a lump sum of four times pensionable pay and a two thirds dependants pension is provided.
UK DC: annual contributions of 30% of salary. Life assurance provision of four times pensionable salary and a spouses pension equal to one third of the Directors salary are provided on death in service.
US DB: an Executive Supplemental Retirement Plan provides for an unreduced pension benefit at age 62 (at age 55 in Tom Kings case). For retirements at age 62 with 35 years of service, the pension benefit would be approximately two thirds of pensionable pay. Upon death in service, the spouse would receive 50% of the pension benefit (100% if the participant died while an active employee after the age of 55).
US DC: 9% of base salary plus APP with additional 401(k) plan match of up to 4%. |
Not applicable. |
||||||||||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 63 |
Corporate Governance
|
||
Directors Remuneration Report continued
|
||
64 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 65 |
Corporate Governance
|
||
Directors Remuneration Report continued
|
||
Shareholding requirement The requirement of Executive Directors to build up and hold a relatively high value of National Grid shares ensures they share a significant level of risk with shareholders and their interests are aligned.
From 2014/15, Executive Directors are required to build up and retain shares in the Company. The level of holding required is 500% of salary for the CEO and 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.
|
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. |
|||||||
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 62.
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. |
||||||||
|
66 |
|
||
|
||
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. 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
|
|||||||||
Date of service contract/appointment
|
||||||||||
|
||||||||||
Executive Directors |
||||||||||
Andrew Bonfield |
1 November 2010 |
|||||||||
Steve Holliday |
1 April 2006 |
|||||||||
John Pettigrew |
1 April 2014 |
|||||||||
Dean Seavers |
1 December 2014 (appointed as |
|||||||||
Executive Director 1 April 2015)
|
||||||||||
|
||||||||||
Non-executive Directors |
||||||||||
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 |
|||||||||
Mark Williamson
|
3 September 2012
|
|||||||||
|
||||||||||
Please note that the information shown above is different to that contained in the approved policy as it has been updated to take account of Board departures and joiners during the year.
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. |
||||||||||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 67 |
Corporate Governance
|
||
Directors Remuneration Report continued
|
||
68 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 69 |
Corporate Governance
|
||
Directors Remuneration Report continued
|
||
Performance measure | Threshold 25% vesting |
Maximum 100% vesting |
Actual/expected vesting |
Actual/expected proportion of maximum achieved |
||||||||
|
||||||||||||
TSR ranking (25% weighting) |
Ranked at median of the comparator group (FTSE 100)
|
7.5 percentage points or more above median | 7.33 percentage points above median | 98.3% | ||||||||
Adjusted EPS (50% weighting) | EPS growth exceeds RPI increase by 3 percentage points | EPS growth exceeds RPI increase by 8 percentage points or more | Exceeded RPI increase by 3.4 percentage points | 31.0% | ||||||||
UK RoE (12.5% weighting for the CEO and Group Finance Director; 25% weighting for the UK Executive Director)
|
RoE is equal to the average allowed regulatory return | RoE is 2 percentage points or more above the average allowed regulatory return | Exceeded average allowed regulatory return by 3.1 percentage points | 100% | ||||||||
US RoE (12.5% weighting for the CEO and Group Finance Director; 25% weighting for the US Executive Director) | RoE is 1 percentage point below the average allowed regulatory return | RoE is 1 percentage point or more above the average allowed regulatory return | 0.98 percentage points below the average allowed regulatory return | 25.9% | ||||||||
|
70 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 71 |
Corporate Governance
|
||
Directors Remuneration Report continued
|
||
72 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 73 |
Corporate Governance
|
||
Directors Remuneration Report continued
|
||
74 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 75 |
76
I ntroduction to the 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 provided plain English explanations of the disclosures and why they are important to the understanding of our financial performance and position. In places we have also highlighted Our strategy in action, drawing out the key elements of our business model (set out in the Strategic Report on pages 12 to 13), and showing how the disclosures reflect this strategy.
|
||||
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 audit opinion as required under our UK listing (starting on page 79) continues to provide more detail as to how our auditors 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. |
||||
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 (note 1) provides details of accounting policies that apply to transactions and balances in general. There are also additional specific disclosure requirements due to our US listing which are included in the notes.
|
||||
Unaudited commentary We have presented with the financial statements certain analysis as part of the Strategic Report of our Annual Report. This approach provides a clearer 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 86 to 93. 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 87 to 89, 91, 93, 99 to 100, 110, 112 and 125.
|
||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 77 |
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 European Union, 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 European Union 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.
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. |
|||||
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 European Union 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 position and performance, business model and strategy. |
||||||
By order of the Board
Alison Kay Group General Counsel & Company Secretary 20 May 2015 Company number: 4031152 |
||||||
78 |
|
||
|
||
[INTENTIONALLY LEFT BLANK]
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 79 |
[INTENTIONALLY LEFT BLANK]
80
|
||
|
||
[INTENTIONALLY LEFT BLANK]
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 81 |
[INTENTIONALLY LEFT BLANK]
82
|
||
|
||
[INTENTIONALLY LEFT BLANK]
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 83 |
[INTENTIONALLY LEFT BLANK]
84
Audit opinion for Form 20-F In our opinion, the accompanying consolidated statement of financial position and the related consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow statement and consolidated statement of changes in equity, present fairly, in all material respects, the financial position of National Grid plc and its subsidiaries at 31 March 2015 and 31 March 2014, and the results of their operations and their cash flows for each of the three years in the period ended 31 March 2015 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 2015, based on criteria established in Internal Control Integrated Framework (2013) 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 173 of the 2015 Annual Report and Accounts.
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. |
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 20 May 2015 |
|||
|
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 85 |
|
Consolidated income statement
|
for the years ended 31 March |
86 |
|
||
|
||
Unaudited commentary on the consolidated income statement
The consolidated income statement shows all revenue earned and costs incurred in the year, with the difference being the overall profit for the year.
|
Revenue
Revenue for the year ended 31 March 2015 increased by £392m to £15,201m. This increase was driven by higher revenues in our UK Electricity Transmission business, reflecting increases in allowed Transmission Owner revenues, and higher core allowances and pass-through costs in UK Gas Transmission. Revenues in our UK Gas Distribution business were slightly lower as a result of changes in allowed revenues for replacement expenditure (repex). Our US Regulated businesses revenues were also lower, as a result of the end of the LIPA Management Services Agreement (MSA) last year, partially offset by revenue increases from existing rate plans, including capex trackers, together with additional income from gas customer growth and the impact of the strengthening US dollar.
Operating costs
Operating costs for the year ended 31 March 2015 of £11,421m were £347m higher than the prior year. This increase in costs included a £154m year on year impact of changes in exceptional items, remeasurements and stranded cost recoveries, which is discussed below. Excluding exceptional items, remeasurements and stranded cost recoveries, operating costs were £193m higher, principally due to: increases in controllable costs, including the impact of inflation and additional costs incurred in the US to improve data quality and bring regulatory filings up to date; higher US bad debt costs following last years exceptionally cold winter; and higher depreciation and amortisation as a result of continued investment programmes. These cost increases were partly offset by a reduction in spend on US financial systems implementation and stabilisation upgrades, with the project completing in the first half of this year.
Net finance costs
For the year ended 31 March 2015, net finance costs before exceptional items and remeasurements were £75m lower than 2013/14 at £1,033m, mainly as a result of lower average gross debt through the year, lower RPI in the UK and refinancing debt at lower rates.
Tax
The tax charge on profit before exceptional items, remeasurements and stranded cost recoveries was £114m higher than 2013/14. This was mainly due to higher profits before tax and the non-recurrence of one-off items that benefited the prior year.
Exceptional items, remeasurements and stranded cost recoveries
Operating profit for the year ended 31 March 2015 included an £83m loss (2013/14: £16m gain) on remeasurement of commodity contracts. The year ended 31 March 2014 also included a net £55m gain on exceptional items, including a net gain on the LIPA MSA transition in the US of £254m; restructuring costs of £136m, primarily in the UK as we reorganised certain parts of our business to deliver under the new RIIO price controls; and a £79m provision for the demolition of UK gas holders that are no longer required.
Finance costs for the year ended 31 March 2015 included exceptional debt redemption costs of £131m and a loss of £34m on financial remeasurements, relating to net losses on derivative financial instruments.
Exceptional tax for 2014/15 of £78m primarily represents tax credits on the exceptional items and remeasurements described above.
Adjusted earnings and EPS
The following chart shows the five year trend in adjusted profit attributable to equity shareholders of the parent (adjusted earnings) and adjusted earnings per share. See page 186 for a reconciliation of adjusted basic EPS to EPS.
Adjusted earnings and adjusted EPS 1
1. Adjusted earnings and adjusted EPS are attributable to equity shareholders of the parent.
The above earnings performance translated into adjusted EPS growth in 2014/15 of 4.6p (9%).
In accordance with IAS 33, all earnings per share and adjusted earnings per share amounts for comparative periods have been restated for shares issued via scrip dividends.
Exchange rates
Our financial results are reported in sterling. Transactions for our US operations are denominated in dollars, so the related amounts that are reported in sterling depend on the dollar to sterling exchange rate.
2014/15 | 2013/14 | % change | ||||
|
||||||
Weighted average (income statement) |
1.58 | 1.62 | (2)% | |||
Year end (balance sheet) |
1.49 | 1.67 | (11)% | |||
|
If 2013/14 results had been translated at 2014/15 exchange rates, revenue, adjusted operating profit and operating profit reported in sterling would have been £212m, £25m and £32m higher respectively.
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 87 |
Notes |
2015
£m |
2014
£m |
2013 £m |
|||||||||||||||
|
||||||||||||||||||
Profit for the year |
2,011 | 2,464 | 2,154 | |||||||||||||||
Other comprehensive (loss)/income |
||||||||||||||||||
Items that will never be reclassified to profit or loss: |
||||||||||||||||||
Remeasurements of net retirement benefit obligations |
22 | (771 | ) | 485 | (714) | |||||||||||||
Tax on items that will never be reclassified to profit or loss |
6 | 299 | (172 | ) | 179 | |||||||||||||
|
||||||||||||||||||
Total items that will never be reclassified to profit or loss |
(472 | ) | 313 | (535) | ||||||||||||||
|
||||||||||||||||||
Items that may be reclassified subsequently to profit or loss: |
||||||||||||||||||
Exchange adjustments |
175 | (158 | ) | 117 | ||||||||||||||
Net (losses)/gains in respect of cash flow hedges |
(154 | ) | 63 | (31) | ||||||||||||||
Transferred to profit or loss in respect of cash flow hedges |
13 | 27 | 73 | |||||||||||||||
Net gains on available-for-sale investments |
41 | 6 | 20 | |||||||||||||||
Transferred to profit or loss on sale of available-for-sale investments |
(8 | ) | (14 | ) | (10) | |||||||||||||
Tax on items that may be reclassified subsequently to profit or loss |
6 | 11 | (2 | ) | (15) | |||||||||||||
|
||||||||||||||||||
Total items that may be reclassified subsequently to profit or loss |
78 | (78 | ) | 154 | ||||||||||||||
|
||||||||||||||||||
Other comprehensive (loss)/income for the year, net of tax |
(394 | ) | 235 | (381) | ||||||||||||||
|
||||||||||||||||||
Total comprehensive income for the year |
1,617 | 2,699 | 1,773 | |||||||||||||||
|
||||||||||||||||||
Attributable to: |
||||||||||||||||||
Equity shareholders of the parent |
1,624 | 2,711 | 1,772 | |||||||||||||||
Non-controlling interests |
(7 | ) | (12 | ) | 1 | |||||||||||||
|
||||||||||||||||||
1,617 | 2,699 | 1,773 | ||||||||||||||||
|
Unaudited commentary on consolidated statement of comprehensive income
The consolidated statement of comprehensive income records certain items as prescribed by the accounting rules. For us, the majority of the income or expense included here relates to movements in actuarial assumptions on pension schemes and the associated tax impact. These items are not part of profit for the year, yet are important to allow the reader to gain a more comprehensive picture of our performance as a whole.
|
Remeasurements of net retirement benefit obligations
We had a net loss after tax of £472m (2013/14: net gain of £313m) on our pension and other post-retirement benefit schemes which is due to changes in key assumptions made in the valuation calculation of pension liabilities and differences between the expected and actual pension asset returns.
Exchange adjustments
Adjustments are made when we translate the results and net assets of our companies operating outside the UK, as well as debt we have issued in foreign currencies. The net movement for the year resulted in a gain of £175m (2013/14: £158m loss).
Net (losses)/gains in respect of cash flow hedges
The value of derivatives held to hedge cash flows is impacted by changes in expected interest rates and exchange rates. The net loss for the year was £154m (2013/14: £63m gain).
88 |
Unaudited commentary on consolidated statement of changes in equity
The consolidated statement of changes in equity shows additions and reductions to equity. For us, the main items are profit earned and dividends paid in the year.
|
Dividends
The Directors are proposing a final dividend of 28.16p, bringing the total dividend for the year to 42.87p, a 2.0% increase on 2013/14. The Directors intend to continue the dividend policy of increasing the annual dividend by at least the rate of RPI inflation for the foreseeable future.
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 89 |
90 |
|
||
|
||
Unaudited commentary on consolidated statement of financial position
The consolidated statement of financial position shows all of the Groups assets and liabilities at the year end. As a capital-intensive business, we have significant amounts of physical assets and corresponding borrowings.
|
Goodwill and other intangible assets
Goodwill and intangibles increased by £684m to £5,947m as at 31 March 2015. This increase primarily relates to foreign exchange movements of £602m and software additions of £207m, partially offset by software amortisation of £121m.
Property, plant and equipment
Property, plant and equipment increased by £3,544m to £40,723m as at 31 March 2015. This was principally due to capital expenditure of £3,263m on the renewal and extension of our regulated networks and foreign exchange movements of £1,703m, offset by depreciation of £1,361m in the year. See page 22 for further details of our capital expenditure.
Investments and other non-current assets
Investments in joint ventures and associates, financial and other investments and other non-current assets have increased by £6m to £728m. This is primarily due to a decrease in investments in joint ventures of £33m, which includes dividends received of £79m, partially offset by our share of post-tax results for the year of £46m, more than offset by an increase in available-for-sale investments of £46m.
Inventories and current intangible assets, and trade and other receivables
Inventories and current intangible assets, and trade and other receivables have increased by £53m to £3,176m as at 31 March 2015. This is due to an increase in inventories and current intangible assets of £72m, offset by a net decrease in trade and other receivables of £19m. The £19m decrease consists of an increase in foreign exchange of £211m due to the stronger US dollar against sterling and a decrease in the underlying balances of £229m, reflecting collection of large prior year balances, including LIPA MSA and Superstorm Sandy re-insurance receivables.
Trade and other payables
Trade and other payables have increased by £261m to £3,292m, primarily due to foreign exchange movements of £161m and an increase in VAT liability following a change in regulations on wholesale gas and electricity trading.
Current tax balances
Current tax balances have decreased by £33m to £124m as at 31 March 2015. This is primarily due to the tax payments made in 2014/15 being only partially offset by a smaller current year tax charge.
Deferred tax balances
Deferred tax balances have increased by £215m to £4,297m as at 31 March 2015. This was primarily due to the impact of the £299m deferred tax credit on actuarial losses (a £172m tax charge in 2013/14) being offset by the impact of the reduction in the UK statutory tax rate, foreign exchange movements of £203m and the reduction in prior year charges.
Provisions and other non-current liabilities
Provisions (both current and non-current) and other non-current liabilities increased by £168m to £3,654m as at 31 March 2015.
Total provisions increased by £90m in the year. The underlying movements include additions of £105m relating to an increase to the provision for the estimated environmental restoration and remediation costs for a number of sites and other provision increases of £57m, together with foreign exchange movements of £133m, offset by utilisation of £209m in relation to all classes of provisions.
Net debt
Net debt is the aggregate of cash and cash equivalents, current financial and other investments, borrowings, and derivative financial assets and liabilities. See further analysis with the consolidated cash flow statement on page 92.
Net pension and other post-retirement obligations
A summary of the total UK and US assets and liabilities and the overall net IAS 19 (revised) accounting deficit is shown below:
Net plan liability |
UK £m |
US £m |
Total £m |
|||||||||
|
||||||||||||
As at 1 April 2014 |
(753 | ) | (1,658 | ) | (2,411) | |||||||
Exchange movements |
| (236 | ) | (236) | ||||||||
Current service cost |
(70 | ) | (116 | ) | (186) | |||||||
Net interest cost |
(27 | ) | (74 | ) | (101) | |||||||
Curtailments and other |
(34 | ) | (27 | ) | (61) | |||||||
Actuarial gains/(losses) |
||||||||||||
on plan assets |
1,929 | 225 | 2,154 | |||||||||
on plan liabilities |
(1,975 | ) | (950 | ) | (2,925) | |||||||
Employer contributions |
258 | 250 | 508 | |||||||||
|
||||||||||||
As at 31 March 2015 |
(672 | ) | (2,586 | ) | (3,258) | |||||||
|
||||||||||||
Represented by: |
||||||||||||
Plan assets |
19,453 | 6,955 | 26,408 | |||||||||
Plan liabilities |
(20,125 | ) | (9,541 | ) | (29,666) | |||||||
|
||||||||||||
(672 | ) | (2,586 | ) | (3,258) | ||||||||
|
The principal movements in net obligations during the year include net actuarial losses of £771m and employer contributions of £508m. Net actuarial losses include actuarial losses on plan liabilities of £2,746m arising as a consequence of increases in the UK real discount rate and the nominal discount rate in the US. This is partially offset by actuarial gains of £2,154m arising on plan assets.
Further information on our pension and other post-retirement obligations can be found in notes 22 and 29 to the consolidated financial statements.
Off balance sheet items
There were no significant off balance sheet items other than the contractual obligations shown in note 30(b) to the consolidated financial statements, and the commitments and contingencies discussed in note 27.
Through the ordinary course of our operations, we are party to various litigation, claims and investigations. We do not expect the ultimate resolution of any of these proceedings to have a material adverse effect on our results of operations, cash flows or financial position.
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 91 |
2015 | 2014 | 2013 | ||||||||||||||||
Notes | £m | £m | £m | |||||||||||||||
|
||||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||
Total operating profit |
2(b) | 3,780 | 3,735 | 3,749 | ||||||||||||||
Adjustments for: |
||||||||||||||||||
Exceptional items, remeasurements and stranded cost recoveries |
4 | 83 | (71) | (110) | ||||||||||||||
Depreciation, amortisation and impairment |
1,494 | 1,417 | 1,361 | |||||||||||||||
Share-based payment charge |
20 | 20 | 20 | |||||||||||||||
Changes in working capital |
301 | (59) | (410) | |||||||||||||||
Changes in provisions |
(41) | (150) | (53) | |||||||||||||||
Changes in pensions and other post-retirement benefit obligations |
(270) | (323) | (408) | |||||||||||||||
Cash flows relating to exceptional items |
(17) | (150) | (112) | |||||||||||||||
|
||||||||||||||||||
Cash generated from operations |
5,350 | 4,419 | 4,037 | |||||||||||||||
Tax paid |
(343) | (400) | (287) | |||||||||||||||
|
||||||||||||||||||
Net cash inflow from operating activities |
5,007 | 4,019 | 3,750 | |||||||||||||||
|
||||||||||||||||||
Cash flows from investing activities |
||||||||||||||||||
Acquisition of investments |
| (4) | (14) | |||||||||||||||
Proceeds from sale of investments in subsidiaries |
| | 183 | |||||||||||||||
Purchases of intangible assets |
(207) | (179) | (175) | |||||||||||||||
Purchases of property, plant and equipment |
(3,076) | (2,944) | (3,214) | |||||||||||||||
Disposals of property, plant and equipment |
9 | 4 | 32 | |||||||||||||||
Dividends received from joint ventures |
79 | 38 | 21 | |||||||||||||||
Interest received |
37 | 35 | 29 | |||||||||||||||
Net movements in short-term financial investments |
1,157 | 1,720 | (2,992) | |||||||||||||||
|
||||||||||||||||||
Net cash flow used in investing activities |
(2,001) | (1,330) | (6,130) | |||||||||||||||
|
||||||||||||||||||
Cash flows from financing activities |
||||||||||||||||||
Purchase of treasury shares |
(338) | | | |||||||||||||||
Proceeds from issue of treasury shares |
23 | 14 | 19 | |||||||||||||||
Purchase of own shares |
(7) | (5) | (6) | |||||||||||||||
Proceeds received from loans |
1,534 | 1,134 | 5,062 | |||||||||||||||
Repayment of loans |
(2,839) | (2,192) | (1,210) | |||||||||||||||
Net movements in short-term borrowings and derivatives |
623 | 37 | 452 | |||||||||||||||
Interest paid |
(826) | (901) | (792) | |||||||||||||||
Exceptional finance costs on the redemption of debt |
(152) | | | |||||||||||||||
Dividends paid to shareholders |
(1,271) | (1,059) | (810) | |||||||||||||||
|
||||||||||||||||||
Net cash flow (used in)/from financing activities |
(3,253) | (2,972) | 2,715 | |||||||||||||||
|
||||||||||||||||||
Net (decrease)/increase in cash and cash equivalents |
26(a) | (247) | (283) | 335 | ||||||||||||||
Exchange movements |
24 | (26) | 14 | |||||||||||||||
Net cash and cash equivalents at start of year |
339 | 648 | 299 | |||||||||||||||
|
||||||||||||||||||
Net cash and cash equivalents at end of year 1 |
18 | 116 | 339 | 648 | ||||||||||||||
|
||||||||||||||||||
1. Net of bank overdrafts of £3m (2014: £15m; 2013: £23m).
|
92 |
|
|
Unaudited commentary on the consolidated cash flow statement
The consolidated cash flow statement shows how the cash balance has moved during the year. Cash inflows and outflows are presented to allow users to understand how they relate to the day-to-day operations of the business (Operating activities); the money that has been spent or earned on assets in the year, including acquisitions of physical assets or other businesses (Investing activities); and the cash raised from debt or share issues and other loan borrowings or repayments (Financing activities).
|
Reconciliation of cash flow to net debt
2015 £m |
2014 £m |
|||||||
|
||||||||
Cash generated from operations |
5,350 | 4,419 | ||||||
Net capital expenditure |
(3,274) | (3,119) | ||||||
|
||||||||
Business net cash flow |
2,076 | 1,300 | ||||||
Net interest paid (including exceptional interest) |
(941) | (866) | ||||||
Tax paid |
(343) | (400) | ||||||
Net acquisitions and disposals |
| (4) | ||||||
Dividends paid |
(1,271) | (1,059) | ||||||
Other cash movements |
(243) | 47 | ||||||
Non-cash movements |
(2,003) | 1,221 | ||||||
|
||||||||
(Increase)/decrease in net debt |
(2,725) | 239 | ||||||
|
||||||||
Opening net debt |
(21,190) | (21,429) | ||||||
|
||||||||
Closing net debt |
(23,915) | (21,190) | ||||||
|
Cash generated from operations
Cash generated from operations £m
Cash flows from our operations are largely stable when viewed over the longer term. Our electricity and gas transmission and distribution operations in the UK are subject to multi-year rate agreements with regulators. In the UK, we have largely stable inter-year cash flows. However, in the US our short-term cash flows are dependent on the price of gas and electricity and the timing of customer payments. The regulatory mechanisms for recovering costs from customers can result in significant cash flow swings from year to year. Changes in volumes in the US, for example as a consequence of abnormally mild or extreme weather can affect cash flows, particularly in the winter months.
For the year ended 31 March 2015, cash flow from operations increased by £931m to £5,350m.
Changes in working capital improved by £360m over the prior year, principally in the US (£441m) due to the collection of high winter 2014 billings and other settlements including Hurricane Sandy re-insurance claims and LIPA receipts. Cash outflows relating to exceptional items were £133m lower, as the prior year included reorganisation costs in the UK and LIPA MSA transition costs in the US.
Net capital expenditure
Net capital expenditure in the year of £3,274m was £155m higher than the prior year. This was a result of higher spend in our US regulated businesses, reflecting a record year of investment, partially offset by lower spend in our UK regulated businesses.
Net interest paid
Net interest paid and exceptional finance costs in 2014/15 were £941m, £75m higher than 2013/14 due to £152m debt redemption cash outflows.
Tax paid
Tax paid in the year to 31 March 2015 was £343m, £57m lower than prior year. This reflected repayments received in the US during the period.
Dividends paid
Dividends paid in the year ended 31 March 2015 amounted to £1,271m. This was £212m higher than 2013/14, reflecting the increase in the final dividend for the year ended 31 March 2014 paid in August 2014, together with a lower average scrip dividend take-up in the year.
Other cash movements
Other cash flows principally arise from dividends from joint ventures and movements in treasury shares, including the cost of repurchasing shares as part of the share buyback programme (£338m).
Non-cash movements
The non-cash movements are predominantly due to the strengthening of the US dollar against sterling, resulting in movements in foreign exchange arising on net debt held in currencies other than sterling. In the year, the dollar strengthened from $1.67 at 31 March 2014 to $1.49 at 31 March 2015.
Other non-cash movements are from changes in fair values of financial assets and liabilities and interest accretions and accruals.
Net debt
Net debt at 31 March £m
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 93 |
Notes to the consolidated financial statements
analysis of items in the primary statements
94 |
|
|
1. Basis of preparation and recent accounting developments continued | ||||
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 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. | ||||
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 and the definition of adjusted earnings notes 4 and 7; and | |||
● | energy purchase contracts 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: | ||||
● | 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; 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. |
||||
New IFRS accounting standards and interpretations adopted in 2014/15 | ||||
The following standards, interpretations and amendments, issued by the IASB and by the IFRS Interpretations Committee (IFRIC), are effective for the year ended 31 March 2015. None of the pronouncements has had a material impact on the Companys consolidated results or assets and liabilities for the year ended 31 March 2015. | ||||
● | IFRIC 21 Levies; | |||
● | amendments to IAS 32 Financial Instruments: Presentation in respect of offsetting financial assets and financial liabilities; | |||
● | amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements in respect of investment entities; | |||
● | amendments to IAS 36 Impairment of Assets in respect of recoverable amount disclosures for non-financial assets; and | |||
● | amendments to IAS 39 Financial Instruments: Recognition and Measurement, in respect of novation of derivatives and continuation of hedge accounting. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 95 |
Financial Statements
|
Notes to the consolidated financial statements
|
analysis of items in the primary statements continued |
1. Basis of preparation and recent accounting developments continued | ||
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, effective for periods beginning after 1 January 2018. We are assessing the likely impact of this standard on the Companys financial statements. | ||
IFRS 15 Revenue from Contracts with Customers was issued by the IASB in May 2014. Subject to EU endorsement, it is effective for accounting periods beginning on or after 1 January 2017. The new standard provides enhanced detail on the principle of recognising revenue to reflect the transfer of goods and services to customers at a value which the Company expects to be entitled to receive. | ||
The Group has completed an initial impact assessment of the new standard by completing a survey of all businesses identifying the likely impact of IFRS 15. This was a tailored questionnaire based on the known impacts of the new standard on power and utility companies. Whilst no material differences were identified as part of the questionnaire process, further follow-up work will be required to determine the impact, if any, on certain revenue items including, but not limited to, variable consideration contracts, take or pay arrangements and performance obligations where multiple goods or services are provided in individual contracts. | ||
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. | ||
|
||
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 businesses with high levels of investment and growth (such as UK Electricity Transmission) to cash generative developed assets with minimal investment requirements (such as National Grid Metering, included within Other activities). |
||
We generate 95% of our revenue from our regulated operating segments 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 Other activities 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 Other activities 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. 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 a regulatory agreement, 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. | ||
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 of Directors 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). | ||
There have been no changes to our reporting structure for the year ended 31 March 2015. |
96 |
|
||
|
||
(a) Revenue
|
||||||||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||||
Total sales £m |
Sales
between segments £m |
Sales
to third
£m |
Total sales £m |
Sales
between segments £m |
Sales
to
third
£m |
Total sales £m |
Sales
between segments £m |
Sales
to
third
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||
Operating segments: |
||||||||||||||||||||||||||||||||||||||
UK Electricity Transmission |
3,754 | (12 | ) | 3,742 | 3,387 | (14 | ) | 3,373 | 3,110 | (15 | ) | 3,095 | ||||||||||||||||||||||||||
UK Gas Transmission |
1,022 | (107 | ) | 915 | 941 | (104 | ) | 837 | 1,118 | (89 | ) | 1,029 | ||||||||||||||||||||||||||
UK Gas Distribution |
1,867 | (43 | ) | 1,824 | 1,898 | (49 | ) | 1,849 | 1,714 | (47 | ) | 1,667 | ||||||||||||||||||||||||||
US Regulated |
7,986 | | 7,986 | 8,040 | | 8,040 | 7,918 | | 7,918 | |||||||||||||||||||||||||||||
Other activities |
762 | (28 | ) | 734 | 736 | (26 | ) | 710 | 678 | (28 | ) | 650 | ||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||
15,391 | (190 | ) | 15,201 | 15,002 | (193 | ) | 14,809 | 14,538 | (179 | ) | 14,359 | |||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||
Geographical areas: |
||||||||||||||||||||||||||||||||||||||
UK |
7,191 | 6,759 | 6,421 | |||||||||||||||||||||||||||||||||||
US |
8,010 | 8,050 | 7,938 | |||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||
15,201 | 14,809 | 14,359 | ||||||||||||||||||||||||||||||||||||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 97 |
Financial Statements
|
Notes to the consolidated financial statements
|
analysis of items in the primary statements continued |
98 |
Unaudited commentary on the results of our principal operations by segment
As a business, we have three measures of operating profit that are used on a regular basis and disclosed in this Annual Report.
Statutory operating profit: This is operating profit as calculated under International Financial Reporting Standards (IFRS). Statutory operating profit by segment is shown in note 2 on page 98.
Adjusted operating profit: Adjusted operating profit (business performance) excludes items that if included could distort understanding of our performance for the year and the comparability between periods. Further details of items that are excluded in adjusted operating profit are shown in note 4 on page 103.
Regulatory financial performance: This is particularly relevant for our UK operations and is a measure of operating profit that reflects the impact of the businesses regulatory arrangements when presenting financial performance.
Reconciliations between statutory and adjusted operating profit can be found on page 186. Reconciliations between adjusted operating profit and regulatory financial performance for UK Electricity Transmission, UK Gas Transmission and UK Gas Distribution can be found on page 100.
Commentary on segmental adjusted operating profit results
We have summarised the results of our principal operating segments here by segment to provide direct reference to the results as disclosed in note 2. This analysis has been prepared based on adjusted operating profit (operating profit before exceptional items, remeasurements and stranded cost recoveries) as set out in note 2(b).
|
UK Electricity Transmission
For the year ended 31 March 2015, revenue in the UK Electricity Transmission segment was £367m higher at £3,754m, and adjusted operating profit increased by £150m to £1,237m.
Net regulated income after pass-through costs was £230m higher, principally reflecting increases in allowed Transmission Owner revenues this year and a £43m benefit relating to legal settlements. This was partially offset by under-recoveries of allowed revenue in the year of £89m compared with under-recoveries of £60m in the prior year. Regulated controllable costs were £14m higher due to inflation, organisational change costs and additional tower maintenance costs. Depreciation and amortisation was £33m higher reflecting the continued capital investment programme (investment in the year was £1,074m). Other costs were £4m higher than prior year.
UK Gas Transmission
Revenue in the UK Gas Transmission segment increased by £81m in 2014/15 to £1,022m and adjusted operating profit increased by £20m to £437m.
Net regulated income after pass-through costs was £42m higher due to earned gas permit and constraints management incentives. In addition, under-recoveries of allowed revenue in the year of £18m
were £3m favourable to last years under-recoveries of £21m. Partially offsetting the revenue gains, regulated controllable costs were £8m higher, mainly as a result of additional system operator costs relating to EU work and some organisation change costs.
Other operating costs were also £17m higher, including a £13m provision for decommissioning the Avonmouth LNG plant.
Capital investment remained around the same level as last year at £184m.
UK Gas Distribution
UK Gas Distribution revenue decreased by £31m in 2014/15 to £1,867m, and adjusted operating profit decreased by £78m to £826m.
Net regulated income after pass-through costs was £11m lower, reflecting changes in allowed revenues for replacement expenditure (repex). Timing differences reduced net revenues by a further £16m, with £13m over-recoveries in 2014/15, compared with a £29m over-recovery in the prior year. Regulated controllable costs were £22m higher primarily due to inflation and some organisation change costs. Depreciation and amortisation was £15m higher reflecting the continued capital investment programme (investment in the year was £498m). Other costs were £14m higher, reflecting a provision for additional asset protection costs.
US Regulated
Revenue in our US Regulated businesses was £54m lower in 2014/15 at £7,986m, while adjusted operating profit increased by £39m to £1,164m.
The stronger dollar increased operating profit in the year by £30m. Excluding the impact of foreign exchange, net regulated income increased by £81m, reflecting increased revenue from existing rate plans, including capex trackers, together with additional income from gas customer growth, partially offset by the impact of the end of LIPA management services activities (MSA) in December 2013. In addition, over-recoveries of allowed revenues in the year of £30m were £20m favourable to last years over-recoveries of £10m. Regulated controllable costs increased by £17m excluding the impact of foreign exchange, as a result of increased gas leak and compliance work and additional costs incurred to improve data quality and bring regulatory filings up to date, partly offset by the cessation of costs associated with the LIPA MSA activities. Bad debt costs were £62m higher excluding the impact of foreign exchange, following last years exceptionally cold winter. There were no major storms affecting our operations in the years ended 31 March 2014 and 2015.
Our capital investment programme continues in the US, with a further £1,501m invested in 2014/15, including gas leak reduction programmes and electricity capacity and reinforcement work.
Other activities
Revenue in Other activities increased by £26m to £762m in the year ended 31 March 2015. Adjusted operating profit was £68m higher at £199m.
Operating profit in the French interconnector was £18m higher as a result of strong auction revenues this year. In the US, corporate and other activities losses were £63m lower, mainly as a result of our finance system upgrade completing in the first half of this year. Capital investment in our Other activities was £33m higher at £213m.
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 99 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
Unaudited commentary on the results of our principal operations by segment continued
Commentary on UK regulated financial performance
The regulated financial performance calculation provides a measure of the performance of the regulated operations before the impacts of interest and taxation. It adjusts reported operating profit under IFRS to reflect the impact of the businesses regulatory arrangements when presenting financial performance.
|
Adjustments in calculating regulatory financial performance
The principal adjustments from reported operating profit to UK regulated financial performance are:
Movement in UK regulatory IOUs: Revenue related to performance in one year may be recovered in later years. Revenue may be recovered in one year but be required to be returned to customers in future years. IFRS recognises these revenues when they flow through invoices to customers and not in the period to which they relate.
Performance RAV: UK performance efficiencies are in part remunerated by the creation of additional RAV which is expected to result in future earnings under regulatory arrangements.
Pension adjustment: Cash payments against pension deficits in the UK are recoverable under regulatory contracts.
3% RAV indexation: Future UK revenues expected to be set using an asset base adjusted for inflation. This will be billed in future periods and recognised under IFRS at that time.
UK deferred taxation adjustment: Future UK revenues are expected to recover cash taxation cost including the unwinding of deferred taxation balances created in the current year.
Regulatory depreciation: US and UK regulated revenues include allowance for a return of regulatory capital in accordance with regulatory assumed asset lives. This return does not form part of regulatory profit.
Fast/slow money adjustment: The regulatory remuneration of costs incurred is split between in year revenue allowances and the creation of additional RAV. This does not align with the classification of costs as operating costs and fixed asset additions under IFRS accounting principles.
UK Electricity Transmission
Regulated financial performance for UK Electricity Transmission increased to £1,232m from £1,066m, up 16%. The year on year movement reflected the higher opening regulated asset value and the higher achieved operational return on equity. There was also a one-off benefit of £56m from legal settlements. These were partially offset by a reduced price control tracker cost of debt allowance.
Reconciliation of regulated financial performance to operating profit |
2015
£m |
2014
£m |
%
change |
|||||||||
|
||||||||||||
Reported operating profit |
1,237 | 1,087 | 14 | |||||||||
Movement in regulatory IOUs |
(130 | ) | (19 | ) | ||||||||
Deferred taxation adjustment |
88 | 53 | ||||||||||
RAV indexation (average 3% long-run inflation) |
326 | 301 | ||||||||||
Regulatory vs IFRS depreciation difference |
(352 | ) | (337 | ) | ||||||||
Fast/slow money adjustment |
34 | (2 | ) | |||||||||
Pensions |
(48 | ) | (47 | ) | ||||||||
Performance RAV created |
77 | 30 | ||||||||||
|
||||||||||||
Regulated financial performance |
1,232 | 1,066 | 16 | |||||||||
|
UK Gas Transmission
Regulated financial performance for UK Gas Transmission increased to £648m from £552m, up 17%. This reflected improved operational return on equity, mainly as a result of incentive performance, and the increase in underlying revenues associated with increased regulated asset value. This was partly offset by lower allowed cost of debt (2.72% real compared with 2.92% real in 2013/14).
Reconciliation of regulated financial performance to operating profit |
2015
£m |
2014
£m |
%
change |
|||||||||
|
||||||||||||
Reported operating profit |
437 | 417 | 5 | |||||||||
Movement in regulatory IOUs |
(16 | ) | (28 | ) | ||||||||
Deferred taxation adjustment |
85 | 12 | ||||||||||
RAV indexation (average 3% long-run inflation) |
166 | 162 | ||||||||||
Regulatory vs IFRS depreciation difference |
(22 | ) | (2 | ) | ||||||||
Fast/slow money adjustment |
54 | 44 | ||||||||||
Pensions |
(49 | ) | (46 | ) | ||||||||
Performance RAV created |
(7 | ) | (7 | ) | ||||||||
|
||||||||||||
Regulated financial performance |
648 | 552 | 17 | |||||||||
|
UK Gas Distribution
Regulated financial performance for UK Gas Distribution decreased to £819m from £855m. The year on year movement in regulated financial performance reflected an increase in underlying revenues associated with increased regulated asset value, more than offset by lower allowed cost of debt and a slightly reduced achieved return on equity.
Reconciliation of regulated financial performance to operating profit |
2015
£m |
2014
£m |
% change |
|||||||||
|
||||||||||||
Reported operating profit |
826 | 904 | (9) | |||||||||
Movement in regulatory IOUs |
(28 | ) | (59 | ) | ||||||||
Deferred taxation adjustment |
60 | 85 | ||||||||||
RAV indexation (average 3% long-run inflation) |
255 | 252 | ||||||||||
Regulatory vs IFRS depreciation difference |
(148 | ) | (149 | ) | ||||||||
Fast/slow money adjustment |
(182 | ) | (197 | ) | ||||||||
Pensions |
(5 | ) | (9 | ) | ||||||||
Performance RAV created |
41 | 28 | ||||||||||
|
||||||||||||
Regulated financial performance |
819 | 855 | (4) | |||||||||
|
100 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 101 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
102 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 103 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
104 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 105 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
|
||
Tax is payable in the territories where we operate, mainly the UK and the US. This note gives further details of the total 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 the accounting and tax bases of profit.
|
||
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 tax 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 the 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 tax authority and the Company and its subsidiaries intend to settle their current tax assets and liabilities on a net basis. |
||
106 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 107 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
108 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 109 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
Unaudited commentary on tax
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. As a regulated public utility we are very conscious of the need to manage our tax affairs responsibly in the eyes of our stakeholders. 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
This is the third year we have disclosed additional information in respect of our total UK tax contribution for consistency and to aid transparency in an area in which there remains significant public interest. As was the case in prior years, 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 other taxes paid such as business rates and taxes on employment together with employee taxes and other indirect taxes.
For 2014/15 our total tax contribution to the UK Exchequer was £1.5bn (2013/14: £1.4bn). Taxes borne in 2015 were £761m, a 4% increase on taxes borne in 2014 of £733m and primarily due to higher corporation tax payments in the current year. Our 2013/14 total tax contribution of £1.4bn resulted in National Grid being the 13th highest contributor of UK taxes based on the results of the Hundred Groups 2014 Total Tax Contribution Survey, a position commensurate with the size of our business and capitalisation relative to other contributors to the Survey. In 2013 we were in 17th position. In 2014 we ranked 9th in respect of taxes borne.
National Grids contribution to the UK economy is again broader than just the taxes it pays over to and collects on behalf of HMRC. The Hundred Groups 2014 Total Tax Contribution Survey ranks National Grid in 4th place in respect of UK capital expenditure on fixed assets. For instance, National Grids economic contribution also supports a significant number of UK jobs in our supply chain.
The most significant amounts making up the 2014/15 total tax contribution were as follows:
UK total tax contribution 2014/15
Tax transparency
The UK tax charge for the year disclosed in the financial statements 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 2014/15.
The tax charge for the Group as reported in the income statement is £617m (2013/14: £284m). The UK tax charge is £437m (2013/14: £51m) and UK corporation tax paid was £353m (2013/14: £329m), 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 |
2015
£m |
2014
£m |
||||||
|
||||||||
Total UK tax charge (current tax £307m (2014: £346m) and deferred tax £130m (2014: £295m credit)) |
437 | 51 | ||||||
Adjustment for non-cash deferred tax (charge)/credit |
(130 | ) | 295 | |||||
Adjustments for current tax credit in respect of prior years |
2 | 9 | ||||||
|
||||||||
UK current tax charge |
309 | 355 | ||||||
UK corporation tax instalment payments not payable until the following year |
(127 | ) | (179) | |||||
UK corporation tax instalment payments in respect of prior years paid in current year |
171 | 153 | ||||||
|
||||||||
UK corporation tax paid |
353 | 329 | ||||||
|
Tax losses
We have total unrecognised deferred tax assets in respect of losses of £255m (2013/14: £280m) of which £250m (2013/14: £274m) are capital losses in the UK as set out above. 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 tax and its economic impact by contributing to the funding of the Oxford University Centre for Business Tax 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 Group Finance Director is Chairman of its Tax Committee. This helps to ensure that we are engaged at the earliest opportunity on tax issues which affect our business. In the current year we have reviewed and responded to a number of HMRC consultations, the subject matter of which directly impacts taxes borne or collected by our business.
110 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 111 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
Unaudited commentary on dividends
Following the announcement of our dividend policy in March 2013, the Board remains confident that National Grid is able to support a dividend growing at least in line with RPI inflation for the foreseeable future, while continuing to invest as required in our regulated assets.
With the exception of the 2013/14 interim dividend paid in January 2014, a scrip option has been offered for all interim and final dividends in the last four years. The scrip take-up as a percentage of total shares outstanding (excluding treasury shares) since 2012/13 was as follows: 2014/15 interim 5%; 2013/14 final 28%; 2013/14 interim n/a; 2012/13 final 46%; and 2012/13 interim 35%.
In August 2014 we began a share buyback programme that will allow us to offer the scrip dividend option for both the full-year and interim dividend. The buyback programme is designed to balance shareholders appetite for the scrip dividend option with our desire to operate an efficient balance sheet with appropriate leverage. |
Dividend cover Ratio of earnings cover over dividend paid to shareholders
|
112 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 113 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
114 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 115 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
116 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 117 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
118 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 119 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
120 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 121 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
122 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 123 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
124 |
Unaudited commentary on borrowings
|
||
As at 31 March 2015, total borrowings of £25,910m (2014: £25,950m) including bonds, bank loans, commercial paper, collateral, finance leases and other debt had decreased by £40m. This represents the ongoing refinancing of the debt portfolio. We expect to repay £3,028m of our total borrowings in the next 12 months including commercial paper, collateral and interest, and to fund this repayment through the capital and money markets. The average long-term debt maturity of the portfolio is 13 years (2014: 12 years).
|
||
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.
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 125 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
126 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 127 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
128 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 129 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
130 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 131 |
Financial Statements
Notes to the consolidated financial statements
analysis of items in the primary statements continued
132 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 133 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
analysis of items in the primary statements continued |
134 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 135 |
136 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 137 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
supplementary information continued |
29. Actuarial information on pensions and other post-retirement benefits continued
|
||
National Grid UK Pension Scheme | ||
The 2013 actuarial funding valuation showed that, based on long-term financial assumptions, the contribution rate required to meet future benefit accrual was 36% of pensionable earnings (currently 33% 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.
|
||
Following the 2013 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, payments of £60m were made in 2013/14 and £99m in 2014/15 and will thereafter rise in line with RPI until 2026/27. As part of the 2013 agreement, National Grid has established a security arrangement with a charge in favour of the Trustees. At 31 March 2015 the value of this was required to be £397m. This was provided via £300m in letters of credit and approximately £198m in UK Government bonds and cash. The assets held as security will be paid to the scheme in the event that National Grid Gas plc (NGG) is subject to an insolvency event, is given notice of less than 12 months that Ofgem intends to revoke its licence under the Gas Act 1986, or National Grid fails to make the required contributions in relation to the scheme. The assets held as security will be released back to National Grid if the scheme moves into surplus. In addition, National Grid will make a payment of £200m (increased in line with RPI) into the scheme if NGGs credit rating by two out of three specified agencies falls below certain agreed levels for a period of 40 days.
|
||
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 has since been replaced by The National Grid YouPlan (see below).
|
||
National Grid Electricity Group of the Electricity Supply Pension Scheme | ||
The 2013 actuarial funding valuation showed that, based on long-term financial assumptions, the contribution rate required to meet future benefit accrual was 33.4% of pensionable earnings (currently 27.5% by employers and an average of 5.9% by employees).
|
||
Following the 2013 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, a payment of £80m was made in 2013/14 and £46m in 2014/15. Thereafter annual payments are due of £47m in 2015/16 rising in line with RPI until 2026/27. As part of the 2013 agreement, National Grid has established security arrangements with a charge in favour of the Trustees. At 31 March 2015 the value of this was required to be £150m. This was provided via £150m in a letter of credit. In addition, approximately £36m in UK Government bonds and cash was held. The assets held as security 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 held as security 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 £500m 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 | ||
The National Grid YouPlan (YouPlan) is a DC scheme that was launched in 2013 and under the rules of the plan, National Grid double matches contributions to YouPlan up to a maximum of 6% of employee salary. YouPlan is the qualifying scheme used for automatic enrolment and new hires are enrolled into YouPlan.
|
||
US pension plans | ||
National Grid sponsors numerous non-contributory DB pension plans. The DB plans provide retirement benefits to vested union employees, as well as vested non-union employees hired before 1 January 2011. Benefits under these plans generally reflect age, years of service and compensation and are paid in the form of an annuity or lump sum. An independent actuary performs valuations annually. The Company funds the defined benefit plans by contributing no less than the minimum amount required, but no more than the maximum tax deductible amount allowed under US Internal Revenue Service regulations. The range of contributions based upon these regulations can vary significantly based upon the funded status of the plans. 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 the amounts collected in rates and capitalised in the rate base during the year, to the extent that the funding is no less than the minimum amount required. The assets of the plans are held in trusts and administered by fiduciary committees comprised of appointed employees of the Company.
|
||
National Grid also has several DC pension plans, primarily comprised of employee savings and Company matching contributions. Non-union employees hired after 1 January 2011 as well as new hires in 10 groups of represented union employees, receive a core contribution into the DC plan, irrespective of the employees contribution into the plan.
|
||
US retiree healthcare and life insurance plans | ||
National Grid provides healthcare and life insurance benefits to eligible retired US employees. Eligibility is based on certain age and length of service requirements and in most cases retirees contribute to the cost of their healthcare coverage. In the US, there is no governmental requirement to pre-fund post-retirement health and welfare plans. However, in general, the Companys policy for funding the US retiree healthcare and life insurance plans is to contribute amounts collected in rates and capitalised in the rate base during the year. |
138 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 139 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
supplementary information continued |
140 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 141 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
supplementary information continued |
|
142 |
|
||
|
||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 143 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
supplementary information continued |
|
144 |
|
||
|
||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 145 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
supplementary information continued |
146 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 147 |
Financial Statements
|
||
Notes to the consolidated financial statements
|
||
supplementary information continued |
148 |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 149 |
Financial Statements
Notes to the consolidated financial statements
supplementary information continued
150 |
|
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 151 |
Financial Statements
Notes to the consolidated financial statements
supplementary information continued
152 |
|
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 153 |
Financial Statements
Notes to the consolidated financial statements
supplementary information continued
154 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 155 |
Financial Statements
Notes to the consolidated financial statements
supplementary information continued
156 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 157 |
Financial Statements
Notes to the consolidated financial statements
supplementary information continued
158 |
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 actually those of National Grid plc (the Company) and the following disclosures provide additional information to shareholders.
|
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.
J. Directors remuneration Full details of directors remuneration are disclosed on pages 60 To 75. |
|||||
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 2014 comparative financial information has also been prepared on this basis.
These individual financial statements have been prepared on a going concern basis, which presumes that the Company has adequate resources to remain in operation, and that the Directors intend it to do so, for at least one year from the date the financial statements are signed. Further details of the Directors assessment are set out on page 54.
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. Tax 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 tax 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. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 159 |
Company balance sheet
at 31 March
Notes |
2015 £m |
2014 £m |
||||||||||||
|
||||||||||||||
Fixed assets |
||||||||||||||
Investments |
1 | 8,823 | 8,803 | |||||||||||
|
||||||||||||||
Current assets |
||||||||||||||
Debtors (amounts falling due within one year) |
2 | 11,767 | 9,312 | |||||||||||
Debtors (amounts falling due after more than one year) |
2 | 489 | 948 | |||||||||||
Investments |
5 | 750 | 1,504 | |||||||||||
Cash at bank and in hand |
| 1 | ||||||||||||
|
||||||||||||||
Total current assets |
13,006 | 11,765 | ||||||||||||
Creditors (amounts falling due within one year) |
3 | (12,607 | ) | (10,345) | ||||||||||
|
||||||||||||||
Net current assets |
399 | 1,420 | ||||||||||||
|
||||||||||||||
Total assets less current liabilities |
9,222 | 10,223 | ||||||||||||
Creditors (amounts falling due after more than one year) |
3 | (3,425 | ) | (4,029) | ||||||||||
|
||||||||||||||
Net assets |
5,797 | 6,194 | ||||||||||||
|
||||||||||||||
Capital and reserves |
||||||||||||||
Share capital |
7 | 443 | 439 | |||||||||||
Share premium account |
8 | 1,331 | 1,336 | |||||||||||
Cash flow hedge reserve |
8 | 17 | 20 | |||||||||||
Available-for-sale reserve |
8 | | 1 | |||||||||||
Other equity reserves |
8 | 280 | 260 | |||||||||||
Profit and loss account |
8 | 3,726 | 4,138 | |||||||||||
|
||||||||||||||
Total shareholders funds |
9 | 5,797 | 6,194 | |||||||||||
|
||||||||||||||
The notes on pages 161 to 163 form part of the individual financial statements of the Company, which were approved by the Board of Directors on 20 May 2015 and were signed on its behalf by: | ||||||||||||||
Sir Peter Gershon Chairman Andrew Bonfield Finance Director |
||||||||||||||
National Grid plc Registered number: 4031152 |
160 |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 161 |
Financial Statements
Notes to the Company financial statements
continued
162 |
|
||
|
||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 163 |
164
|
||
|
||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 165 |
Additional Information
|
||
The business in detail continued
|
||
Our licences are established under the Gas Act 1986 and Electricity Act 1989, as amended (the Acts). They 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. These include the right to bury our pipes or cables under public highways and the ability to use compulsory powers to purchase land so we can conduct our business.
Our networks are regulated by Ofgem, which has established price control mechanisms that set the amount of revenue that our regulated businesses can earn. Price control regulation is designed to make sure our interests, as a monopoly, are balanced with those of our customers. Ofgem allows us to charge reasonable, but not excessive, prices. This gives us a future level of revenue that is sufficient to meet our statutory duties and licence obligations, and makes a reasonable return on our investment.
The price control includes a number of mechanisms designed to help achieve its objectives. These include financial incentives that encourage us to: |
RIIO price controls On 1 April 2013, our UK regulator introduced a new regulatory framework called RIIO (revenue = incentives + innovation + outputs), which 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 influence the decisions. The clarity around outputs should lead to greater transparency in how we deliver them.
The six 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 Gas Distribution 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 we have submitted, along with independent assessments, determines the efficient level of expected costs necessary to deliver them. Under RIIO this is known as totex, which is total allowable expenditure, and is similar to the sum of what was controllable opex, capex (and repex for UK Gas Distribution) under the previous price control periods.
A number of assumptions are necessary in setting these outputs, such as certain prices or the volumes of work that will be needed. Consequently, 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. These mechanisms protect us and our customers from windfall gains and losses. |
|||||||
● |
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 developing the network in a way 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 carried out by National Grid Metering.
Interconnectors derive their revenues from congestion revenues. Congestion revenues depend 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 through auctions.
There are a range of different regulatory models available for interconnector projects. These involve various levels of regulatory insight ranging from fully merchant (the project is reliant on revenues selling interconnector capacity) to cap and floor (where revenues above the cap are returned to system users and revenues below the floor are topped by system users thus reducing the overall project risk).
|
|
166 |
|
||
|
||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 167 |
Additional Information
|
||
The business in detail continued
|
||
Regulators In the US, public utilities retail transactions are regulated by state utility commissions. The 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. They also serve the public interest by making sure utilities provide safe and reliable service at just and reasonable prices. The commissions establish service standards and approve public utility mergers and acquisitions.
Utilities are regulated at the federal level (FERC) for wholesale transactions, such as interstate transmission and wholesale electricity sales, including rates for these services. FERC also regulates public utility holding companies and centralised service companies, including those of our US businesses.
Regulatory process The US regulatory regime is premised on allowing the utility the opportunity to recover its cost of service and earn a reasonable return on its investments as determined by the commission. Utilities submit formal rate filings (rate cases) to the relevant state regulator when additional revenues are necessary to provide safe, reliable service to customers. Utilities can be compelled to file a rate case due to complaints filed with the commission or at the commissions own discretion.
The rate case is litigated with parties representing customer and other interests. In the states in which we operate, it can take nine to thirteen months for the commission to render a final decision. The utility is required to prove that the requested rate change is prudent and reasonable, and the requested rate plan 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.
Gas and electricity rates are established from a revenue requirement, or cost of service, equal to the utilitys total cost of providing distribution or delivery service to its customers, as approved by the commission in the rate case. This revenue requirement includes operating expenses, depreciation, taxes and a fair and reasonable return on shareholder capital invested in certain components of the utilitys regulated asset base, typically referred to as its rate base.
The final revenue requirement and rates for service are 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 and may include forecasted capital investments. These adjustments are intended to arrive at the total costs expected in the first year new rates will be in effect, or the rate year. |
US regulatory revenue requirement
|
|||||
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 networks (upstate New York, New York City, Long Island, Massachusetts (two), and Rhode Island).
Our operating companies have revenue decoupling mechanisms that de-link the companies revenues from the quantity of energy delivered and billed to customers. These mechanisms remove the natural disincentive utility companies have for promoting and encouraging customer participation in energy efficiency programmes that lower energy end use and thus distribution volumes.
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, achieved 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.
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. However, this measure cannot be used in isolation, as there are a number of factors that may prevent us from achieving that target. These factors include financial market conditions, regulatory lag and decisions by the regulator preventing cost recovery in rates from customers.
We work to increase achieved RoE through: productivity improvements; positive performance against incentives or earned savings mechanisms such as energy efficiency programmes, where available; and filing a new rate case when achieved returns are lower than the Company could reasonably expect to attain through a new rate case. |
||||||
|
168 |
Features of our rate plans We bill 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. With the exception of residential gas customers in Rhode Island, our customers are allowed to select an unregulated competitive supplier for the supply component of electricity and gas utility services. A substantial proportion of our costs, in particular electricity and gas commodity purchases, 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 make sure that any over- or under-recovery of these costs is returned to, or recovered from, our customers.
Our FERC-regulated transmission companies use formula rates (instead of rate cases) to set rates annually to recover their cost of service. Through the use of annual true-ups, formula rates recover our actual costs incurred and the allowed RoE based on the actual transmission rate base each year. The company must make annual formula rate filings documenting the revenue requirement, which customers can review and challenge.
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 15 year and 25 year power supply agreements, and within wholesale tariffs approved by FERC. Through the use of cost-based formula rates these long-term contracts provide a similar economic effect to cost of service rate regulation.
US regulatory filings The objectives of our rate case filings are to make sure we have the right cost of service with the ability to earn a fair and reasonable rate of return, while providing safe, reliable and economical 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 true-ups, separately from base rates. These terms are explained below the table on page 172.
Below we summarise significant developments in rate filings and the regulatory environment during the year. We completed the final stabilisation upgrade to our new financial systems in July 2014. The new systems will facilitate future regulatory filings and capture the benefit of the increased investments in asset replacement, network reliability and customer growth. Planning has started to prepare suitable test years to support new regulatory filings. We expect to make a number of such filings over the next two to three years to update the capital investment allowances and rate base across many of our businesses. Specifically, we anticipate that KEDLI, KEDNY, and Massachusetts Electric will file applications for new rate plans with their regulators during the 12 months ending 31 March 2016. Moreover, as part of current regulatory initiatives, we will file proposals for investments in grid modernisation in Massachusetts and for innovative technology deployments and service offerings as part of the Reforming the Energy Vision effort |
in New York. Effective 1 April 2015, we implemented changes to our US management structure to strengthen our jurisdictional focus and address recommendations made by our regulators, including giving jurisdictional presidents more authority over operations and other functions.
Massachusetts Capital investment programmes Most recently, on the electricity side, MADPU allowed approximately $12 million into rates effective from 1 March 2015, related to $170 million of plant investments made in 2013.
On the gas side, MADPU allowed approximately $15 million into rates effective from 1 November 2014, related to $134 million of plant investment made in 2013. Additionally, recent legislation in Massachusetts grants us greater ability to cost effectively accelerate the replacement of our ageing gas infrastructure by receiving concurrent cost recovery for eligible capital investments. We submitted a plan to MADPU on 31 October 2014 to replace all eligible ageing gas infrastructure on our system within 20 years by increasing the annual replacement rate by approximately 50% within the next 10 years, and then maintaining this replacement rate for the remainder of the programme. On 30 April 2015, MADPU approved our proposal to place an additional $9.7 million into rates effective from 1 May 2015, related to $175 million of anticipated investments in 2015 under this accelerated pipe replacement plan.
Solar investment legislation Recent legislation extended our ability to construct, own and operate a total of up to 25 MW of solar facilities within our electricity service territory if the facilities are constructed by 30 June 2016. On 28 June 2014, MADPU approved our proposal for up to 20 MW of solar facilities, in addition to the 4.6 MW of solar generation that we already own and operate under the same legislation. MADPU also pre-approved an amount not to exceed $97.6 million for ownership costs, lease expenses and property tax expenses associated with the solar facilities. We have entered into contracts with developers to deliver constructed solar generation facilities by 2015, and will petition MADPU for cost recovery in 2016 once the solar facilities become operational.
Storm fund recovery The Massachusetts electricity business collects $4.3 million annually in base rates to credit towards a storm fund devoted to fund major storm restoration efforts. 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 annually for three years, and an additional $7.3 million from 1 July 2014, towards the replenishment of the storm fund, subject to a review of the prudency of the underlying costs. That review is under way, with evidentiary hearings scheduled for May 2015. The funding of the remaining deficit will be addressed as part of the prudency review and in future rate proceedings, if necessary.
Storm management audit MADPUs December 2012 order regarding our performance during Tropical Storm Irene and the October 2011 snowstorm required us to undergo an independent audit regarding our storm management. MADPU adopted the auditors 30 recommendations, which included items such as improving emergency response training and tracking of training, designating additional personnel for storm roles, and considering the expanded use of technology and communication tools. The Company has already implemented 12 of the recommendations and is in the process of implementing the remaining recommendations. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 169 |
Additional Information
|
||
The business in detail continued
|
||
Grid modernisation MADPU is increasingly focused on improving service and reliability to customers, with a focus on greater choice for customers and integrating distributed energy resources. MADPU has directed the Company to file a grid modernisation plan in August 2015 that demonstrates how the Company will make measurable progress towards reducing the effect of outages, optimising demand, integrating distributed resources and improving workforce and asset management. The grid modernisation plan represents a new capital investment opportunity for the Company. MADPU established criteria that, if met, would allow the capital costs from the plan to be recovered through a separate capital recovery mechanism.
Additionally, the Companys Worcester, Massachusetts Smart Energy Solutions pilot began on 1 January 2015. The pilot is testing grid modernisation technologies for approximately 15,000 customers, with a goal of reducing peak and average loads by 5%. The Company has an opportunity to earn a performance incentive if load reduction exceeds 5%. The Company filed on 15 September 2014 to recover $11 million of costs incurred in 2012 and 2013 to implement this pilot. MADPU is currently reviewing the Companys request and a decision is expected in early 2016.
Service quality MADPU issued its final order and service quality guidelines for all gas and electricity companies on 22 December 2014. The order shifted the goal of the service quality guidelines from preventing the deterioration of performance to improved service quality. The reasons stated by MADPU included that: the companies are able to achieve higher levels of service quality than in 2002, when the guidelines were first implemented; customers expect improved levels of service quality; and advances in available technologies and the expected grid modernisation efforts of the electricity companies will help them meet the new standards and at a more reasonable cost. In shifting the goals of service quality, MADPU made changes to the current service quality structure, including removing financial offsets to penalties, setting state-wide benchmarks and changing the calculation of benchmarks and penalties. The new guidelines are effective from 1 January 2015. However, there is a motion for clarification and reconsideration currently pending before MADPU on this matter.
New York Upstate New York 2012 rate plan filing Effective from 1 April 2014, the upstate New York electricity and gas businesses entered the second year of their three year rate plan. The rate plan provides an increase in the electricity delivery revenue requirement of $51.4 million and $28.3 million for rate years two and three, respectively. For the gas operations, the rate plan provides an increase of $5.9 million and $6.3 million in rate years two and three, respectively.
Reforming the Energy Vision (REV) In April 2014, the NYPSC instituted the REV proceeding, which considers options for a new regulatory and operational model for electricity utilities that includes a greater emphasis on incorporating distributed energy resources (DER) via market mechanisms. The NYPSC envisions a new role for utilities as distributed system platform (DSP) providers who create markets for DER and more fully integrate DER in distribution system operations and planning. The REV proceedings objectives include: enhanced customer energy choices and control; improved electricity system efficiency, reliability, and resiliency; and cleaner more diverse electricity generation. In February 2015, the NYPSC issued an order addressing various technical, policy, and market design issues. |
The NYPSC is expected to address ratemaking issues in 2015. Implementation of the DSP role and greater DER integration will probably require incremental investments in utility infrastructure.
2013 New York gas management audit In October 2014, the NYPSC issued a report on the results of the 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 NYPSC audited Niagara Mohawks electricity business.
The audit found that our operations performed well in providing reliable gas service and noted strength in operations, network planning, project management, work management, load forecasting, supply procurement and customer systems support. The audit report offered 31 recommendations aimed at promoting improvement in the performance of our New York gas businesses, including recommendations around strengthening of the National Grid US jurisdictional operating model, enhancing the service level agreements between the operating companies and supporting functions and corporate governance. We generally accept the recommendations presented in the report, and are currently working to implement the recommendations in a manner that will deliver the greatest value to our gas customers. To address the recommendation that the National Grid USA Board include at least one independent director, Therese Esperdy was elected to the Board of Directors with effect from 1 May 2015. In our next major gas rate proceeding, the NYPSC will consider our effectiveness in implementing the audit recommendations and seek to reflect the costs and savings associated with the recommendations in rates.
KEDLI gas investment plan In June 2014, KEDLI petitioned the NYPSC for approval of a deferral mechanism related to a proposed gas infrastructure investment programme. In December 2014, the NYPSC approved two gas investment plans for calendar years 2015 and 2016, one for leak-prone pipe capital expenditures (capped at $211.7 million in total) and one for gas service expansion expenditures (capped at $202.9 million in total). The NYPSC approved a surcharge to begin recovery of the deferred leak-prone pipeline investment costs, allowing for the recovery up to a total of $23.4 million through a surcharge effective from 1 April 2015 until the end of 2016. KEDLI received approval to establish a new deferral accounting mechanism for the balance of the approved costs not covered by the surcharge.
KEDNY rate plan extension In June 2013, the NYPSC approved a two year extension of KEDNYs five year rate settlement, extending the rate plan until the end of 2014. The NYPSC modified KEDNYs capital tracker to be a downward-only net utility plant reconciliation mechanism, covering the cumulative two year term ending 31 December 2014. The extension of KEDNYs rate settlement included increased capital investment allowances for 2013 and 2014.
Rhode Island Rhode Island 2014/15 electricity and gas infrastructure, safety and reliability (ISR) plans State law provides our Rhode Island gas and electricity operating divisions with rate mechanisms that allow for the recovery of capital investment, including a return, and certain expenses outside base rate proceedings through the submission of annual ISR plans. |
|
170 |
|
||
|
||
In December 2014, we filed with the RIPUC for review and approval of our annual ISR plans for the electricity and gas systems. RIPUC approved the 2016 ISR plans on 31 March 2015. The electricity ISR plan encompasses a $73.3 million spending programme for capital investment and $12.1 million for operating and maintenance expenses for vegetation management and inspection and maintenance. The gas ISR plan encompasses $76.8 million for capital investment and incremental operation and maintenance expense for the hiring and training of additional personnel to support increases in leak-prone pipe replacement.
Rhode Island Renewable Energy Growth Program In June 2014, the Rhode Island legislature enacted legislation to facilitate and promote installation of distributed renewable energy generation. As a result, in November 2014, we filed with RIPUC a proposal to implement the Rhode Island Renewable Energy Growth Program, which replaces our current programme and will create a feed-in-tariff (FIT) programme to support a total of 160 MW of renewable distributed generation projects over a five year period. The FIT payments will be determined via competitive solicitations for larger projects. The current programme provides long-term contracts, or power purchase agreements, to renewable energy projects. RIPUC approved the new programme on 31 March 2015. Under Rhode Island law, we can recover the incremental costs associated with the programme and are entitled to earn incentives equal to 1.75% of the gross payments made under the FIT.
FERC Complaints on New England transmission allowed RoE In September 2011, December 2012 and July 2014, complaints were filed with FERC against certain transmission owners, including our New England electricity transmission business, to lower the base RoE from the FERC approved rate of 11.14%. In orders addressing the September 2011 complaint issued in June 2014, October 2014 and March 2015, FERC set the base RoE for the first complaints 15 month historical refund period and for a prospective period beginning in October 2014 at 10.57%. In these orders, FERC also found that the total or maximum RoE for our New England transmission business, including various RoE incentive adders authorised by FERC, cannot exceed 11.74% during these periods.
FERC has scheduled hearings on the December 2012 and July 2014 New England RoE complaints in June 2015, with non-binding preliminary findings due by the end of 2015. A FERC order acting on these preliminary findings is not expected until the end of 2016.
Complaints on New York transmission allowed RoE In September 2012, November 2012 and February 2014, complaints were filed with FERC against our New York electricity transmission subsidiary to lower the total RoE from the FERC approved rate of 11.5% and to modify certain other aspects of our New York transmission formula rates. In September 2014, FERC set these three complaints for settlement and hearing procedures. In December 2014, we reached a settlement agreement in principle with the complainants to resolve these complaints. In May 2015, FERC approved the uncontested settlement agreement.
Short-term borrowing authorisation In October 2014, National Grid filed an application with FERC on behalf of all electricity public utility subsidiaries, with the exception of Massachusetts Electric Company (MECo), seeking to re-establish the Commissions authorisation to issue short-term debt, as required by Section 204 of the Federal Power Act. National Grids short-term borrowing authorisation had expired on 30 November 2013, as issues related to the implementation of the US enterprise resource planning system had rendered National Grid temporarily unable to provide FERC with the financial reports |
required for such approval. FERC granted the application in December 2014. MECo was omitted from the application because it did not satisfy the interest coverage calculation typically required for approval. National Grid intends to file on behalf of MECo as soon as practicable, and in the interim MECos short-term cash needs will be met through capital contributions in the form of equity.
New York Transco On 14 November 2014, the four New York investor-owned utilities (IOUs), including Niagara Mohawk Power Corporation, formed NY Transco LLC, a New York company whose sole business will be to plan, develop, construct and own major new high voltage electricity transmission projects across New York State. In early December 2014, the four IOUs and NY Transco filed on behalf of NY Transco an application with FERC to establish a formula rate, rate incentives and cost allocation for a portfolio of five new transmission projects with a combined estimated total cost of over $1.7 billion. A number of entities intervened in the docket and challenged various aspects of the application. In April 2015, FERC approved certain elements of our filing (including some rate incentives), rejected others, and set the remainder for hearing and settlement.
New England gas and electricity interdependency The regions electricity and gas systems have become increasingly interdependent as the regions reliance on gas-fired electricity generation has grown without commensurate pipeline infrastructure expansion, resulting in severe constraints at certain times of the year. These constraints have restricted gas availability for generation and decreased electricity reliability. They have also resulted in significant increases to spot gas prices for electricity generation, driving significant increases to the regions wholesale and retail electricity costs. To address this challenge, New Englands governors have established an initiative envisaging coordinated strategic infrastructure investments focused on expanding the regions energy portfolio.
We are working with representatives from several states, other regional electricity and gas utilities, interstate gas pipelines, state regulators, and FERC in realising the governors goals. We have put forward structural proposals which would support the development of additional gas pipeline infrastructure to serve the regions needs and are also developing electricity transmission proposals to increase the ability to deliver clean low carbon energy to enable a balanced solution to the regions energy needs.
FERC Order 1000 Issued in 2011, Order 1000 was FERCs major policy order intended to foster regional and inter-regional transmission planning, address transmission needs driven by public policy requirements and increase competition in the electric transmission industry. In 2014 and 2015, FERC issued orders on filings made by the New York and New England system operators to comply with Order 1000 and continue to implement a package of reforms addressing transmission planning and cost allocation. A federal court upheld key provisions of Order 1000 against legal challenges in an August 2014 decision. Policies to comply with Order 1000 have been in effect in New York since January 2014 and became effective in New England in May 2015. The competitive transmission planning processes instituted under Order 1000 have opened National Grids service territory to competition from non-incumbent transmission developers and also created opportunities for National Grid to compete for transmission projects outside of the Companys current geographic footprint. |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 171 |
Additional Information
|
||
The business in detail continued
|
||
172 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 173 |
Additional Information
|
||
Internal control and risk factors continued
|
||
174 |
Risk factors
|
||||
Growth and business development activity |
||||
Failure to respond to external market developments and execute our growth strategy may negatively affect our performance. Conversely, new businesses or activities that we undertake alone or with partners may not deliver target outcomes and may expose us to additional operational and financial risk. Failure to grow our core business sufficiently and have viable options for new future business over the longer term could negatively affect the Groups credibility and reputation and jeopardise the achievement of intended financial returns.
Business development activities and the delivery of our growth ambition, including acquisitions, disposals, joint ventures, partnering and organic investment opportunities (including organic investments made as a result of changes to the energy mix), are subject to a wide range of both external uncertainties (including the availability of potential investment targets and |
attractive financing and the impact of competition for onshore transmission in both the UK and US), and internal uncertainties (including actual performance of our various existing operating companies and our business planning model assumptions and ability to integrate acquired businesses effectively). As a result, we may suffer unanticipated costs and liabilities and other unanticipated effects.
We may also be liable for the past acts, omissions or liabilities of companies or businesses we have acquired, which may be unforeseen or greater than anticipated. In the case of joint ventures, we may have limited control over operations and our joint venture partners may have interests that diverge from our own.
The occurrence of any of these events could have a material adverse impact on our results of operations or financial condition, and could also impact our ability to enter into other transactions. |
|||
Cost escalation |
||||
Changes in foreign currency rates, interest rates or commodity prices could materially impact earnings or our financial condition. We have significant operations in the US and so are subject to the exchange rate risks normally associated with non UK operations, including the need to translate US assets and liabilities, and income and expenses, into sterling, our primary reporting currency.
In addition, our results of operations and net debt position may be affected because a significant proportion of our borrowings, derivative financial instruments and commodity contracts are |
affected by changes in interest rates, commodity price indices and exchange rates, in particular the dollar to sterling exchange rate.
Furthermore, our cash flow may be materially affected as a result of settling hedging arrangements entered into to manage our exchange rate, interest rate and commodity price exposure, or by cash collateral movements relating to derivative market values, which also depend on the sterling exchange rate into euro and other currencies. |
|||
Our results of operations could be affected by inflation or deflation. In our regulated UK networks, our allowed revenues are set in real terms and then adjusted for actual RPI inflation. There is a risk that inflationary impacts on our costs are higher than RPI inflation and are not fully compensated by this inflation adjustment to revenues. There is also a risk that year-on-year RPI inflation is negative with no corresponding decrease in costs or insufficient decrease to offset the impact on revenues. |
Our income under our rate plans in the US is not typically linked to inflation. In periods of inflation in the US, our operating costs may increase by more than our revenues. In both the UK and US such increased costs may materially adversely affect the results of our operations. |
|||
We may be required to make significant contributions to fund pension and other post-retirement benefits. We participate in a number of pension schemes that together cover substantially all our employees. In both the UK and US, the principal schemes are DB schemes where the scheme assets are held independently of our own financial resources.
In the US, we also have other post-retirement benefit schemes. Estimates of the amount and timing of future funding for the UK and US schemes are based on actuarial assumptions and other factors including: the actual and projected market performance of the scheme assets; future long-term bond yields; average life expectancies; and relevant legal requirements. |
Actual performance of scheme assets may be affected by volatility in debt and equity markets.
Changes in these assumptions or other factors may require us to make additional contributions to these pension schemes which, to the extent they are not recoverable under our price controls or state rate plans, could materially adversely affect the results of our operations and financial condition. |
|||
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 175 |
Additional Information
Internal control and risk factors continued
Risk factors
|
||||
Financing and liquidity |
||||
An inability to access capital markets at commercially acceptable interest rates could affect how we maintain and grow our businesses. Our businesses are financed through cash generated from our ongoing operations, bank lending facilities and the capital markets, particularly the long-term debt capital markets.
Some of the debt we issue is rated by credit rating agencies and changes to these ratings may affect both our borrowing capacity and borrowing costs. In addition, restrictions imposed by regulators may also limit how we service the financial requirements of our current businesses or the financing of newly acquired or developing businesses.
Financial markets can be subject to periods of volatility and shortages of liquidity. If we were unable to access the capital markets or other sources of finance at competitive rates for a prolonged period, our cost of financing may increase, the discretionary and uncommitted elements of our proposed capital investment programme may need to be reconsidered and the manner in which we implement our strategy may need to be reassessed.
Such events could have a material adverse impact on our business, results of operations and prospects.
Some of our regulatory agreements impose lower limits for the long-term senior unsecured debt credit ratings that certain companies within the Group must hold or the amount of equity within their capital structures. |
One of the principal limits requires National Grid plc to hold an investment grade long-term senior unsecured debt credit rating. In addition, some of our regulatory arrangements impose restrictions on the way we can operate.
These include regulatory requirements for us to maintain adequate financial resources within certain parts of our operating businesses and may restrict the ability of National Grid plc and some of our subsidiaries to engage in certain transactions, including paying dividends, lending cash and levying charges.
The inability to meet such requirements or the occurrence of any such restrictions may have a material adverse impact on our business and financial condition.
The remediation plans in place or being implemented to address control weaknesses in our US business may not operate as expected, as a result of which we may be unable to provide accurate financial information to our debt investors in a timely manner.
Our debt agreements and banking facilities contain covenants, including those relating to the periodic and timely provision of financial information by the issuing entity and financial covenants, such as restrictions on the level of subsidiary indebtedness.
Failure to comply with these covenants, or to obtain waivers of those requirements, could in some cases trigger a right, at the lenders discretion, to require repayment of some of our debt and may restrict our ability to draw upon our facilities or access the capital markets.
|
|||
Customers and counterparties |
||||
Customers and counterparties may not perform their obligations. Our operations are exposed to the risk that customers, suppliers, banks and other financial institutions and others with whom we do business will not satisfy their obligations, which could materially adversely affect our financial position.
This risk is significant where our subsidiaries have concentrations of receivables from gas and electricity utilities and their affiliates, such as from our previous LIPA managed services agreement (MSA) and current PSEG-LI transition services agreement (TSA), as well as industrial customers and other purchasers, and may also arise where customers are unable to pay us as a result of increasing commodity prices or adverse economic conditions.
|
To the extent that counterparties are contracted with for physical commodities (gas and electricity) and they experience events that impact their own ability to deliver, we may suffer supply interruption as described in Infrastructure and IT systems on page 174.
There is also a risk to us where we invest excess cash or enter into derivatives and other financial contracts with banks or other financial institutions. Banks who provide us with credit facilities may also fail to perform under those contracts. |
|||
Employees and others |
||||
We may fail to attract, develop and retain employees with the competencies, including leadership and business capabilities, values and behaviours required to deliver our strategy and vision and ensure they are engaged to act in our best interests. Our ability to implement our strategy depends on the capabilities and performance of our employees and leadership at all levels of the business. Our ability to implement our strategy and vision may be negatively affected by the loss of key personnel or an inability to attract, integrate, engage and retain appropriately qualified |
personnel, or if significant disputes arise with our employees. As a result, there may be a material adverse effect on our business, financial condition, results of operations and prospects.
There is a risk that an employee or someone acting on our behalf may breach our internal controls or internal governance framework or may contravene applicable laws and regulations. This could have an impact on the results of our operations, our reputation and our relationship with our regulators and other stakeholders.
|
|||
|
176 |
The following description is a summary of the material terms of our Articles and applicable English law. It is a summary only and is qualified in its entirety by reference to the Articles.
Summary The Articles set out the Companys internal regulations. Copies are available on our website and upon request. Amendments to the Articles have to be approved by at least 75% of those voting at a general meeting of the Company. Subject to company law and the Articles, the Directors may exercise all the powers of the Company. They may delegate authorities to committees and day-to-day management and decision-making to individual Executive Directors. The committee structure is set out on page 49.
General The Company is incorporated under the name National Grid plc and is registered in England and Wales with registered number 04031152. 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 allow non conflicted Directors of the Company to 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. In total, these fees must not exceed £2,000,000 a year or any higher sum 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. Further details of Directors remuneration are set out in the Directors Remuneration Report (see pages 60 to 75).
The Directors may exercise all the powers of National Grid to borrow money. However, the aggregate principal amount of all the Groups borrowings 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, although they 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. Ordinary shareholders and ADS holders receive dividends.
Subject to these points, 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 they hold. On a show of hands or poll, shareholders may cast votes either personally or by proxy. A proxy need not be a shareholder. Under the Articles, all substantive resolutions at a general meeting must be decided on a poll. Ordinary shareholders and ADS holders can vote at general meetings.
(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); the liquidator 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. In neither case will a shareholder be compelled to accept assets upon which there is a liability.
(iv) Restrictions 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 Directors 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. Treasury shares do not attract a vote or dividends.
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. This must be 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. |
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 177 |
Additional Information
|
||
Shareholder information continued
|
||
178 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 179 |
Additional Information
|
||
Shareholder information continued
|
||
180 |
On 20 April 2015, The Capital Group of Companies, Inc. notified us of a holding in voting rights of 3.881%, 145,094,617 ordinary shares, as at 16 April 2015.
As at 20 May 2015, no further notifications have been received.
The rights attached to ordinary shares are detailed on page 177. All ordinary shares carry the same voting rights.
The share capital of the Company consists of ordinary shares of 11 17 ⁄ 43 pence nominal value each and ADSs, which represent five ordinary shares each.
Authority to purchase shares Shareholder approval was given at the 2014 AGM to purchase up to 10% of the Companys share capital (being 373,477,508 ordinary shares). The Directors intend to seek shareholder approval to renew this authority at this years AGM.
In some circumstances, the Company may find it advantageous to have the authority to purchase its own shares in the market, where the Directors believe this would be in the interests of shareholders generally. The Directors believe that it is an important part of the financial management of the Company to have the flexibility to repurchase issued shares in order to manage its capital base, including actively managing share issuances from the operation of the scrip dividend scheme. It is expected that such repurchases will not exceed 2.5% of the issued share capital (excluding treasury shares) per annum.
When purchasing shares, the Company have and will, take into account market conditions prevailing at the time, other investment and financing opportunities and the overall financial position of the Company.
During the year the Company purchased ordinary shares in the capital of the Company as part of the management of the dilutive effect of share issuances under the scrip dividend scheme. |
Authority to allot shares Shareholder approval was given at the 2014 AGM to allot shares of up to one third of the Companys share capital. The Directors are seeking this same lower level of authority this year. 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 expects to actively manage the dilutive effect of share issuance arising from the operation of the scrip dividend scheme. In some circumstances, additional shares may be allotted to the market for this purpose under the authority provided by this resolution. Under these unlikely circumstances, it is expected that the associated 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 year.
Dividend waivers The trustees of the National Grid Employees Share Trust, which are independent of the Company, waived the right to dividends paid during the year, and have agreed to waive the right to future dividends, in relation to the ordinary shares and American Depositary Receipts (ADR) held by the trust.
Under the Companys ADR programme, the right to dividends in relation to the ordinary shares underlying the ADRs was waived during the year by the ADR Depositary, under an arrangement whereby the Company pays the monies to satisfy any dividends separately to the Depositary for distribution to ADR holders entitled to the dividend. This arrangement is expected to continue for future dividends.
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. |
|||||||||||||||
Number of shares |
Total nominal value |
Percentage of called up share capital 1 |
||||||||||||||
|
||||||||||||||||
Shares held in Treasury purchased in prior years |
123,948,354 | £14,124,347.32 | 3.18% | |||||||||||||
Shares purchased and held in Treasury during the year 2,3 |
37,350,216 | £4,256,187.40 | 0.96% | |||||||||||||
Shares transferred from Treasury during the year (to employees under employee share plans) 2 |
8,353,093 | £951,864.09 | 0.21% | |||||||||||||
Maximum number of shares held in Treasury during the year 2 |
152,970,767 | £17,431,552.52 | 3.93% | |||||||||||||
|
||||||||||||||||
1. Called up share capital of 3,891,691,900 ordinary shares as at the date of this Report. 2. From 7 August 2014 to 31 March 2015. 3. Shares purchased for a total cost of £338,170,931.
As at the date of this Report, the Company held 150,305,846 ordinary shares as treasury shares, representing 3.86% of the Companys called up share capital.
|
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 181 |
Additional Information
|
||
Shareholder information continued
|
||
182 |
Dividends received by non-corporate US Holders with respect to ADSs or ordinary shares will generally be taxable at the reduced rate applicable to long-term capital gains provided (i) either (a) we are eligible for the benefits of the Tax Convention or (b) ADSs or ordinary shares are treated as readily tradable on an established securities market in the United States and (ii) we are not, for our taxable year during which the dividend is paid or the prior year, a passive foreign investment company for US federal income tax purposes (a PFIC), and certain other requirements are met. We (1) expect that our shares will be treated as readily tradable on an established securities market in the United States as a result of the trading of ADSs on the New York Stock Exchange and (2) believe we are eligible for the benefits of the Tax Convention. Based on our audited financial statements and the nature of our business activities, we believe that we were not treated as a PFIC for US federal income tax purposes with respect to our taxable year ending 31 March 2015. In addition, based on our current expectations regarding the value and nature of our assets, the sources and nature of our income, and the nature of our business activities, we do not anticipate becoming a PFIC in the foreseeable future.
Dividends received by corporate US Holders with respect to ADSs or ordinary shares will not be eligible for the dividends received deduction generally allowed to corporations.
Taxation of capital gains US Holders will not be subject to UK taxation on any capital gain realised on the sale or other disposition of ADSs or ordinary shares.
Provided that we are not a PFIC for any taxable year during which a US Holder holds their ADSs or ordinary shares, upon a sale or other disposition of ADSs or ordinary shares, a US Holder generally will recognise capital gain or loss equal to the difference between the US dollar value of the amount realised on the sale or other disposition and the US Holders adjusted tax basis in the ADSs or ordinary shares. Such capital gain or loss generally will be long-term capital gain or loss if the ADSs or ordinary shares were held for more than one year. For non-corporate US Holders, long-term capital gain is generally taxed at a lower rate than ordinary income. A US Holders ability to deduct capital losses is subject to significant limitations.
UK stamp duty and stamp duty reserve tax (SDRT) Transfers of ordinary shares SDRT at the rate of 0.5% of the amount or value of the consideration will generally be payable on any agreement to transfer ordinary shares that is not completed using a duly stamped instrument of transfer (such as a stock transfer form).
Where an instrument of transfer is executed and duly stamped before the expiry of the six year period beginning with the date on which the agreement is made, the SDRT liability will be cancelled. 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 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 using a stock transfer form will generally result in a UK stamp duty liability 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 result in a SDRT liability. 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, 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. Under the terms of the Deposit 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.
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 complies with applicable certification requirements.
US Holders should consult their tax advisors about 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 UK national for the purposes of the Estate Tax Convention will generally not be subject to UK inheritance tax in respect of (i) the ADSs or ordinary shares on the individuals death or (ii) a gift of the ADSs or ordinary shares during the individuals lifetime. This is not the case where the ADSs or ordinary shares are part of the business property of the individuals permanent establishment in the UK or relate 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.
Capital gains tax (CGT) for UK resident shareholders You can find CGT information relating to National Grid shares for UK resident shareholders on our website under: Investors, Shareholder centre, More information and help. Share prices on specific dates are also available on our website. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 183 |
184 |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 185 |
|
||
Other unaudited financial information
|
||
Reconciliations of adjusted profit measures |
186 |
Commentary on consolidated financial statements
for the year ended 31 March 2014
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 187 |
Additional Information
Other unaudited financial information continued
Analysis of the adjusted operating profit by segment for the year ended 31 March 2014
UK Electricity Transmission For the year ended 31 March 2014, revenue in the UK Electricity Transmission segment increased by £277 million, and adjusted operating profit increased by £38 million.
Net regulated income after pass-through costs was £170 million higher, reflecting increases in allowed revenues under the new RIIO regulatory framework. This was partially offset by under-recoveries of revenue in the year of £60 million compared with over-recoveries of £29 million in the prior year. Regulated controllable costs were £27 million higher due to inflation, legal fees and one-off credits in the prior year. Depreciation and amortisation was £20 million higher reflecting the continued capital investment programme (investment in the year was £1,381 million). Other costs were £4 million lower than prior year.
UK Gas Transmission Revenue in the UK Gas Transmission segment decreased by £177 million in 2013/14 to £941 million and adjusted operating profit fell by £114 million to £417 million.
Net regulated income after pass-through costs was £80 million lower, with lower permit income than prior year under the new RIIO arrangements. In addition, under-recoveries in the year of £21 million compared with over-recoveries last year of £17 million, gave rise to an adverse timing movement of £38 million. Depreciation and amortisation was £10 million higher due to investment, with £181 million invested in the year. Partially offsetting these, other operating costs were £14 million lower.
UK Gas Distribution UK Gas Distribution revenue increased by £184 million in the year to £1,898 million, and adjusted operating profit increased by £110 million to £904 million.
Net regulated income after pass-through costs was £96 million higher, reflecting increases in allowed revenues under the new RIIO regulatory framework. Timing differences added another £39 million, with £29 million over-recoveries in 2013/14, compared with a £10 million under-recovery in the prior year. Partially offsetting these, regulated controllable costs were £14 million higher primarily due to inflation. Depreciation and amortisation was £10 million higher reflecting the continued capital investment programme (investment in the year was £480 million). Other costs were £1 million higher than prior year.
|
US Regulated Revenue in our US Regulated businesses was £122 million higher at £8,040 million, and adjusted operating profit fell by £129 million to £1,125 million.
The weaker dollar reduced operating profit in the year by £38 million. Excluding the impact of foreign exchange, net regulated income fell by £52 million, principally due to the end of deferral income recoveries at Niagara Mohawk in March 2013. Timing differences added another £29 million profit compared with prior year. Regulated controllable costs increased by £89 million at constant currency as a result of inflation and wage increases, higher insurance costs post Superstorm Sandy, and cost true-ups identified during the implementation of the new enterprise resource planning system. Other operating costs (excluding major storms) increased by £61 million at constant currency due to the higher cost of non-major storm remediation, higher property taxes and depreciation of the new US enterprise resource planning system.
There were no major storms affecting our operations in the year ended 31 March 2014. In 2012/13, two major storms in the US, Superstorm Sandy and Storm Nemo, reduced operating profit within US Regulated by £82 million at constant currency.
Our capital investment programme continued in the US, with a further £1,219 million invested in 2013/14.
Other activities Revenue in Other activities increased by £58 million to £736 million in the year ended 31 March 2014. Adjusted operating profit was £120 million higher at £131 million.
There was no repeat of the major storm cost of £51 million incurred in our insurance captive in the prior year due to Superstorm Sandy. Operating profit in the French interconnector was £62 million higher as a result of strong auction revenues this year. In our other non-regulated businesses, adjusted operating profit was £7 million higher due to improved results in our UK metering business and insurance captive, partially offset by higher costs associated with the stabilisation of the new US enterprise resource planning system.
Capital expenditure in our Other activities was £37 million lower at £180 million, principally reflecting reduced capital spend on the new US enterprise resource planning system. |
188 |
Analysis of the statement of financial position for the year ended 31 March 2014 Goodwill and other intangible assets Goodwill and intangibles decreased by £354 million to £5,263 million as at 31 March 2014. This decrease was due to foreign exchange movements of £472 million and software amortisation of £127 million, partially offset by software additions of £179 million.
Property, plant and equipment Property, plant and equipment increased by £587 million to £37,179 million as at 31 March 2014. This was due to capital expenditure of £3,262 million on the renewal and extension of our regulated networks, offset by foreign exchange movements of £1,244 million, and £1,299 million of depreciation in the year.
Investments and other non-current assets Investments in joint ventures and associates; financial and other investments and other non-current assets decreased by £31 million to £722 million as at 31 March 2014. This was principally due to changes in the fair value of our US commodity contract assets and available-for-sale investments.
Inventories and current intangible assets, and trade and other receivables Inventories and current intangible assets, and trade and other receivables decreased by £78 million to £3,123 million as at 31 March 2014. This decrease was principally due to foreign exchange movements of £195 million, partially offset by an increase in trade and other receivables of £120 million mostly due to colder weather in the US in February and March 2014 compared with 2013 resulting in increased billings for commodity costs and customer usage.
Trade and other payables Trade and other payables decreased by £20 million to £3,031 million as at 31 March 2014 due to favourable foreign exchange movements of £150 million, partially offset by higher payables in the UK due in part to changes in payment terms with new Gas Distribution strategic partners and increased activity on the Western Link project.
Current tax liabilities Current tax liabilities decreased by £63 million to £168 million at 31 March 2014. This was primarily due to higher tax payments made in 2013/14 although these were partially offset by a larger current tax charge.
Deferred tax liabilities Deferred tax liabilities increased by £5 million to £4,082 million as at 31 March 2014. This was primarily due to the impact of the £172 million deferred tax charge on actuarial gains (a £179 million tax credit in 2012/13) being offset by the impact of the reduction in the UK statutory tax rate for future periods, foreign exchange movements and the reduction in prior year charges.
Provisions and other non-current liabilities Provisions (both current and non-current) and other non-current liabilities decreased by £158 million to £3,486 million as at 31 March 2014.
Total provisions decreased by £115 million to £1,645 million as at 31 March 2014. The underlying movements included additions of £230 million primarily relating to a provision for the demolition of certain gas holders in the UK of £79 million, restructuring provisions of £86 million and other provisions of £42 million, more than offset by foreign exchange movements of £112 million and utilisation of £288 million in relation to all classes of provisions.
|
Other non-current liabilities decreased by £43 million principally due to foreign exchange movements of £47 million.
Net debt
Net debt is the aggregate of cash and cash equivalents, current financial and other investments, borrowings, and derivative financial assets and liabilities.
Net pension and other post-retirement obligations
A summary of the total UK and US assets and liabilities and the overall net IAS 19 (revised) accounting deficit is shown below:
Net plan liability |
|
UK
£m |
|
|
US
£m |
|
Total £m |
|||
As at 1 April 2013
|
|
(1,169
|
)
|
|
(2,328
|
)
|
(3,497)
|
|||
Exchange movements
|
|
|
|
|
186
|
|
186
|
|||
Current service cost
|
|
(96
|
)
|
|
(129
|
)
|
(225)
|
|||
Net interest cost
|
|
(47
|
)
|
|
(81
|
)
|
(128)
|
|||
Curtailments and settlements LIPA
|
|
|
|
|
214
|
|
214
|
|||
Curtailments and settlements other
|
|
(30
|
)
|
|
(12
|
)
|
(42)
|
|||
Actuarial (losses)/gains
|
||||||||||
on plan assets
|
|
(98
|
)
|
|
283
|
|
185
|
|||
on plan liabilities
|
|
452
|
|
|
(152
|
)
|
300
|
|||
Employer contributions
|
|
235
|
|
|
361
|
|
596
|
|||
As at 31 March 2014
|
|
(753
|
)
|
|
(1,658
|
)
|
(2,411)
|
|||
Represented by:
|
||||||||||
Plan assets
|
|
17,409
|
|
|
5,849
|
|
23,258
|
|||
Plan liabilities
|
|
(18,162
|
)
|
|
(7,507
|
)
|
(25,669)
|
|||
|
(753
|
)
|
|
(1,658
|
)
|
(2,411)
|
The principal movements in net obligations during the year included a curtailment gain of £214 million following the LIPA MSA transition, net actuarial gains of £485 million and employer contributions of £596 million. Net actuarial gains included actuarial gains on plan liabilities of £542 million arising as a consequence of an increase in the UK real discount rate and the nominal discount rate in the US. This was partially offset by actuarial losses of £283 million arising from increases in life expectancy in the US. Actuarial losses/gains on plan assets reflects the asset allocations in the different plans. In both the UK and US, returns on equities were above the assumed rate; however, UK Government securities had negative returns and corporate bonds were close to nil.
Off balance sheet items
There were no significant off balance sheet items other than the contractual obligations shown in note 30(b) to the consolidated financial statements, and the commitments and contingencies discussed in note 27.
Through the ordinary course of our operations, we are party to various litigation, claims and investigations. We do not expect the ultimate resolution of any of these proceedings to have a material adverse effect on our results of operations, cash flows or financial position.
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 189 |
Summary consolidated financial information
|
|
|||||||||||||||||||||
Financial summary (unaudited) The financial summary set out below has been derived from the audited consolidated financial statements of National Grid for the five financial years ended 31 March 2015. It should be read in conjunction with the consolidated financial statements and related notes, together with the Strategic Report. The information presented below for the years ended 31 March 2011, 2012, 2013, 2014 and 2015 has been prepared under IFRS issued by the IASB and as adopted by the EU 1 . |
|
|||||||||||||||||||||
2015 | 2014 | 2013 1 | 2012 1 | 2011 1 | ||||||||||||||||||
|
||||||||||||||||||||||
Summary income statement |
||||||||||||||||||||||
Revenue |
15,201 | 14,809 | 14,359 | 13,832 | 14,343 | |||||||||||||||||
Operating profit |
||||||||||||||||||||||
Before exceptional items, remeasurements and stranded cost recoveries |
3,863 | 3,664 | 3,639 | 3,491 | 3,619 | |||||||||||||||||
Exceptional items, remeasurements and stranded cost recoveries |
(83 | ) | 71 | 110 | 44 | 145 | ||||||||||||||||
3,780 | 3,735 | 3,749 | 3,535 | 3,764 | ||||||||||||||||||
Profit before tax |
||||||||||||||||||||||
Before exceptional items, remeasurements and stranded cost recoveries |
2,876 | 2,584 | 2,533 | 2,408 | 2,283 | |||||||||||||||||
Exceptional items, remeasurements and stranded cost recoveries |
(248 | ) | 164 | 178 | (26 | ) | 151 | |||||||||||||||
2,628 | 2,748 | 2,711 | 2,382 | 2,434 | ||||||||||||||||||
Profit for the year |
2,011 | 2,464 | 2,154 | 1,919 | 2,043 | |||||||||||||||||
Profit for the year attributable to equity shareholders |
||||||||||||||||||||||
Before exceptional items, remeasurements and stranded cost recoveries |
2,189 | 2,015 | 1,913 | 1,709 | 1,627 | |||||||||||||||||
Exceptional items, remeasurements and stranded cost recoveries |
(170 | ) | 461 | 240 | 208 | 412 | ||||||||||||||||
2,019 | 2,476 | 2,153 | 1,917 | 2,039 | ||||||||||||||||||
|
||||||||||||||||||||||
Earnings per share |
||||||||||||||||||||||
Basic continuing operations (pence) 2 |
53.6 | 65.7 | 57.2 | 51.1 | 56.3 | |||||||||||||||||
Diluted continuing operations (pence) 2 |
53.4 | 65.4 | 57.0 | 50.8 | 56.0 | |||||||||||||||||
Basic (pence) 2 |
53.6 | 65.7 | 57.2 | 51.1 | 56.3 | |||||||||||||||||
Diluted (pence) 2 |
53.4 | 65.4 | 57.0 | 50.8 | 56.0 | |||||||||||||||||
|
||||||||||||||||||||||
Number of shares basic (millions) 3 |
3,766 | 3,766 | 3,761 | 3,755 | 3,622 | |||||||||||||||||
Number of shares diluted (millions) 3 |
3,783 | 3,785 | 3,779 | 3,774 | 3,641 | |||||||||||||||||
|
||||||||||||||||||||||
Dividends per ordinary share |
||||||||||||||||||||||
Paid during the year (pence) |
42.25 | 40.85 | 39.84 | 37.40 | 37.74 | |||||||||||||||||
Approved or proposed during the year (pence) |
42.87 | 42.03 | 40.85 | 39.28 | 36.37 | |||||||||||||||||
Paid during the year ($) |
0.697 | 0.636 | 0.633 | 0.599 | 0.592 | |||||||||||||||||
Approved or proposed during the year ($) |
0.672 | 0.696 | 0.632 | 0.623 | 0.571 | |||||||||||||||||
|
||||||||||||||||||||||
190 |
2015 | 2014 | 2013 1 | 2012 1 | 2011 1 | ||||||||||||||||||
|
||||||||||||||||||||||
Summary statement of net assets
|
||||||||||||||||||||||
Non-current assets
|
49,058 | 44,895 | 45,129 | 41,684 | 39,787 | |||||||||||||||||
Current assets
|
6,031 | 7,489 | 9,576 | 5,387 | 6,323 | |||||||||||||||||
Assets of businesses held for sale
|
| | | 264 | 290 | |||||||||||||||||
Total assets
|
55,089 | 52,384 | 54,705 | 47,335 | 46,400 | |||||||||||||||||
Current liabilities
|
(7,374 | ) | (7,331 | ) | (7,445) | (6,004) | (6,826) | |||||||||||||||
Non-current liabilities
|
(35,741 | ) | (33,134 | ) | (37,026) | (32,001) | (30,403) | |||||||||||||||
Liabilities of businesses held for sale
|
| | | (87) | (110) | |||||||||||||||||
Total liabilities
|
(43,115 | ) | (40,465 | ) | (44,471) | (38,092) | (37,339) | |||||||||||||||
Net assets |
11,974 | 11,919 | 10,234 | 9,243 | 9,061 | |||||||||||||||||
|
||||||||||||||||||||||
Shareholders equity |
11,962 | 11,911 | 10,229 | 9,236 | 9,052 | |||||||||||||||||
|
||||||||||||||||||||||
Summary cash flow statement
|
||||||||||||||||||||||
Cash generated from continuing operations |
5,350 | 4,419 | 4,037 | 4,487 | 4,854 | |||||||||||||||||
|
||||||||||||||||||||||
Tax (paid)/received |
(343 | ) | (400 | ) | (287) | (259) | 4 | |||||||||||||||
|
||||||||||||||||||||||
Net cash inflow from operating activities
|
5,007 | 4,019 | 3,750 | 4,228 | 4,858 | |||||||||||||||||
Net cash flows used in investing activities
|
(2,001 | ) | (1,330 | ) | (6,130) | (2,371) | (4,774) | |||||||||||||||
Net cash flows (used in)/from financing activities
|
(3,253 | ) | (2,972 | ) | 2,715 | (1,900) | (430) | |||||||||||||||
Net (decrease)/increase in cash and cash equivalents |
(247 | ) | (283 | ) | 335 | (43) | (346) | |||||||||||||||
|
1. For the year ended 31 March 2015, there have been no significant changes in accounting standards, interpretations or policies that have a material financial impact on the selected financial data. For the year ended 31 March 2014, the adoption of IAS 19 (revised) Employee benefits resulted in a significant change in pensions and employee benefits accounting. The numbers included in the selected financial data above for the years 31 March 2011, 2012 and 2013 were restated to show the impact of IAS 19 (revised) had it been adopted since 2010.
2. Items previously reported for 2011 to 2014 have been restated to reflect the additional shares issued as scrip dividends.
3. Number of shares previously reported for 2011 to 2014 have been restated to reflect the impact of the additional shares issued as scrip dividends. |
||||||||||||
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 191 |
Definitions and glossary of terms
192 |
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.
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 28 member states located in Europe.
Exchange Act The US 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 159 to 163, which are prepared in accordance with UK GAAP.
G Grain LNG National Grid Grain LNG Limited.
Great Britain England, Wales and Scotland.
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.
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 (LTI) 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. |
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 193 |
Additional Information
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.
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.
|
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.
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.
RPI The UK retail price index as published by the Office for National Statistics.
S Scope 1 greenhouse gas 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 greenhouse gas 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. |
194 |
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.
SEH Committee The Safety, Environment and Health Committee of the Board whose role is explained on page 56.
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.
Tax Convention Tax Convention means the income tax convention between the US and the UK.
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 in September 2012, on how companies should be governed, applicable to UK listed companies, including National Grid, in respect of reporting periods beginning before 1 October 2014.
UK Corporate Governance Code 2014 (the New Code) Updated guidance, issued by the Financial Reporting Council in September 2014, on how companies should be governed, applicable to UK listed companies, including National Grid, in respect of reporting periods beginning on or after 1 October 2014.
UK GAAP Generally accepted accounting principles in the UK. These differ from IFRS and from US GAAP.
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.
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 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).
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).
V 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.
|
NATIONAL GRID ANNUAL REPORT AND ACCOUNTS 2014/15 | 195 |
|
Want more information or help?
Capita Asset Services For queries about ordinary shares : |
The Bank of New York Mellon For queries about American Depositary Shares : |
Further information about National Grid including share price and interactive tools can be found on our website: www.nationalgrid.com | ||||||||
|
0371 402 3344 Calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable international rate. Lines are open 8.30am to 5.30pm, Monday to Friday, excluding public holidays. If calling from outside the UK: +44 (0)371 402 3344
Visit the National Grid share portal www.nationalgridshareholders.com Email: nationalgrid@capita.co.uk
National Grid Share Register Capita Asset Services The Registry 34 Beckenham Road Beckenham, Kent BR3 4TU |
|
1-800-466-7215 If calling from outside the US: +1-201-680-6825
www.mybnymdr.com Email: shrrelations@ cpushareownerservices.com
The Bank of New York Mellon Depositary Receipts PO Box 30170 College Station, Texas 77842-3170 |
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. |
Dividends
The Directors are recommending a final dividend of 28.16 pence per ordinary share ($2.1866 per ADS) to be paid on 5 August 2015 to shareholders on the register as at 5 June 2015. Further details in respect of dividend payments can be found on page 23. If you live outside the UK, you may be able to request that your dividend payments be converted into your local currency.
Under the Deposit Agreement, a fee of up to $0.05 per ADS can be charged for any cash distribution made to ADS holders, including cash dividends. ADS holders who receive cash in relation to the 2014/15 final dividend will be charged a fee of $0.02 per ADS by the Depositary prior to the distribution of the cash dividend.
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
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 vote ● Get copies of your dividend tax vouchers and view your dividend payment history ● Update your address details
Registered office 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.
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.
|
196 |
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.
Cautionary statement This document comprises the Annual Report and Accounts for the year ending 31 March 2015 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 75 and 164 to 191, 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, due to counterparties being unable to deliver physical commodities, 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 and remediation plans; 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 or deflation; 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, including competition for onshore transmission, 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 173 and 176 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.
Designed and produced by CONRAN DESIGN GROUP
Printed on Amadeus 100% Recycled Offset paper. The paper is independently certified according to the rules of the Forest Stewardship Council ® (FSC). The manufacturing mill holds the ISO 14001 environmental certification and the EU Eco-label (EMAS). Printed by Pureprint Group, ISO 14001, FSC ® certified and CarbonNeutral ® . |
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 2015.
High | Low | |||
June 2015* |
1.5331 | 1.5207 | ||
May 2014 |
1.5789 | 1.5177 |
* | For the period to 3 June 2015. |
Share ownership
At 3 June 2015, 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 10.02% of our outstanding share capital as at 12 June 2012 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 % and then as at 31 March 2014 to 11.103%. As noted on page 180 of the 2014/2015 Annual Report and Accounts, we have been notified that Capital Group Companies, Inc. held 4.981% of our outstanding share capital as at 31 March 2015 and such holdings decreased as at 20 April 2015 to 3.881% which percentage remains unchanged as at 3 June 2015.
Since 31 March 2015, we have not been notified of any other subsequent significant change in the percentage of shares held by the shareholders, listed on page 180 of the 2014/2015 Annual Report and Accounts
Material interest in American Depositary Shares
As at 3 June 2015, we had 15,499 registered holders of our American Depositary Shares (ADSs) representing ownership of 9.7% of our issued and outstanding share capital, excluding ordinary shares held in treasury. As at 3 June 2015, based on information available to us, we believe that approximately 9.7% of our issued and outstanding share capital (whether in the form of shares or ADSs), excluding shares held in treasury, was held beneficially in the United States.
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 2015* |
937.90 | 905.20 | 71.54 | 67.81 | ||||
May 2015 |
940.90 | 851.50 | 72.14 | 65.74 |
* | For the period to 3 June 2015, 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 |
||||||||
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. |
Incorporated by Reference | ||||||
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. |
Incorporated by Reference | ||||||
2(b).9 |
Amended and Restated Trust Deed dated 12 September 2014 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).10 |
Amended and Restated Trust Deed dated 18 December 2014 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 | ||||||
2(b).11 |
Amended and Restated Trust Deed dated 18 July 2014 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. |
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 |
Incorporated by reference |
No. 1-14958) |
||||||||
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. (Exhibit 4(c).5 to National Grid plc Form 20-F dated 5 June 2014 File No. 1-14958) |
Incorporated by reference | ||||||
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. (Exhibit 4(c).14 to National Grid plc Form 20-F dated 5 June 2014 File No. 1-14958) |
Incorporated by reference | ||||||
4(c).15 |
Employment Agreement among National Grid plc, National Grid USA and Dean Seavers dated 22 October 2014. |
Filed herewith | ||||||
4(c).16 |
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).17 |
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).18 |
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).19 |
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).20 |
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).21 |
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).22 |
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 subsidiariesThe list of the Companys significant subsidiaries as of 31 March 2015 is incorporated by reference to Financial StatementsNotes to the consolidated financial statements32. Subsidiary undertakings, joint venture and associates Principal subsidiary undertakings on page 150 included in the Annual Report on Form 20-F for the financial year ended 31 March 2015. This list excludes subsidiaries that do not, in aggregate, constitute a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X as at 31 March 2015. |
Incorporated by reference | ||||||
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 2015
EXHIBIT 2(b).9
Dated 12 September 2014
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 |
11 | |||
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 |
20 | |||
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 |
A18528409
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 |
A18528409
ii
This Amended and Restated Trust Deed is made on 12 September 2014 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 12 September 2013 (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 2014, 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
A18528409
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 2014 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.;
A18528409
2
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
A18528409
3
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;
A18528409
4
Prospectus Directive means Directive 2003/71/EC of the European Parliament and of the Council, as amended, to the extent that such amendments have been implemented in the relevant Member State of the European Economic Area;
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:
A18528409
5
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 |
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
A18528409
6
authorised to hold Instruments as eligible collateral for Eurosystem monetary policy and intra-day credit operations.
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
A18528409
7
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 or Canadian Paying Agent, as applicable, 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 Canadian Paying Agent, as applicable, 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: |
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
A18528409
8
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
(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 |
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 or Canadian Paying Agent, as applicable, 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
A18528409
9
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 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.
A18528409
10
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 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
A18528409
11
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. |
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 |
A18528409
12
becomes a Principal Subsidiary, a certificate by the auditors of National Grid 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 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 Allen & Overy 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; |
A18528409
13
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; |
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.
A18528409
14
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 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.
A18528409
15
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 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.
A18528409
16
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.
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.
A18528409
17
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.
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.
A18528409
18
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 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. |
8.21 |
Illegality |
No provision of the 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.
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.
A18528409
19
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 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 |
A18528409
20
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: |
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;
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;
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;
such Issuer and the Substituted Obligor comply with such other requirements as the Trustee may direct in the interests of the relevant Instrumentholders; and
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
A18528409
21
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.
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
A18528409
22
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.
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
A18528409
23
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.
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.
A18528409
24
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
A18528409
25
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).
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
A18528409
26
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.
A18528409
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. |
A18528409
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
A18528409
29
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.
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.
A18528409
30
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.
A18528409
31
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. |
A18528409
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 |
A18528409
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]
A18528409
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. |
A18528409
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
* |
Delete as applicable. |
A18528409
36
system satisfactory to the Trustee is available within 90 working days after the Issuer becoming aware that CDS is no longer so recognised.] *
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. |
A18528409
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 |
A18528409
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. |
A18528409
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. |
A18528409
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. |
A18528409
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
|
A18528409
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.]
A18528409
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. |
A18528409
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. |
A18528409
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
A18528409
46
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.
A18528409
47
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.
A18528409
48
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. |
A18528409
49
The Schedule
[Insert the provisions of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Schedule]
A18528409
50
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. |
A18528409
51
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
A18528409
52
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.
A18528409
53
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. |
A18528409
54
(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.
A18528409
55
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. |
A18528409
56
The Schedule
[Insert the provisions of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Schedule.]
A18528409
57
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. |
A18528409
58
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.
A18528409
59
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
A18528409
60
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 of 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 2014 between 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 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 2014 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. The 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
A18528409
61
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 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 2014 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.
A18528409
62
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
A18528409
63
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.
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 lodgement 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:
(d) |
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 ); |
(e) |
the transferee is not a retail client as defined in section 761G of the Australian Corporations Act; |
(f) |
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 |
(g) |
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 all 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
A18528409
64
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 ( 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, 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.
A18528409
65
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 3.6,
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 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 3.6. 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
A18528409
66
Rate Determination shall apply, depending upon which is specified in the relevant Final Terms.
(a) |
ISDA Determination: 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: |
(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.
A18528409
67
(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 |
A18528409
68
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 |
A18528409
69
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 |
(c) |
Linear Interpolation: Where Linear Interpolation is specified in the relevant Final Terms 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 in the relevant Final Terms as applicable) or the relevant Floating Rate Option (where ISDA Determination is specified in the relevant Final Terms 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: (a) in relation to Screen Rate Determination, the period of time designated in the Reference Rate, and (b) in relation to ISDA Determination, the Designated Maturity.
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.
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 5.4.1(ii)).
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 7).
A18528409
70
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 (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 Optional
A18528409
71
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 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.
3.8 |
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. |
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); |
A18528409
72
(d) |
if Actual/365 (Fixed) is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 365; |
(e) |
if Actual/360 is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 360; |
(f) |
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:
Y 1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y 2 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;
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;
(g) |
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:
Y 1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y 2 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;
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
A18528409
73
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, in which case D 2 will be 30;
(h) |
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:
Y 1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y 2 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;
D 1 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 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 (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D 2 will be 30;
(i) |
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 |
(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
A18528409
74
Determination Date means the date specified as such in the relevant Final Terms or, if none is so specified, the Interest Payment Date;
(j) |
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: |
(iii) |
one divided by the number of Interest Payment Dates in each 12 month period; and |
(iv) |
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; and |
(k) |
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 specified Interest Amount, 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:
(iv) |
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 |
(v) |
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
A18528409
75
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 unless otherwise specified in the applicable Final Terms .
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.
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.
3.9 |
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
A18528409
76
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 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 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:
(vi) |
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 |
(vii) |
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 |
(viii) |
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. |
A18528409
77
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 ).
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 3.5.
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 |
A18528409
78
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, 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. |
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 |
A18528409
79
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 paragraph (b) or (c) below; |
(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) 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 |
A18528409
80
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).
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
A18528409
81
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).
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 3.5.
4.9 |
Changes 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: |
A18528409
82
(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.
(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 paragraph (b), (c) or (d) below; or |
A18528409
83
(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 paragraph (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 paragraph (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; |
(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 |
A18528409
84
such adjustments to the Index consistent with adjustments made to the Related Instrument. |
(v) |
Manifest Error in Publication: If, within 30 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 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 4.8).
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.
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
A18528409
85
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 |
(i) |
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. |
(ii) |
Subject to the provisions of sub-paragraph (iii) 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. |
(iii) |
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 (ii) 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 |
A18528409
86
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. |
5.5.2 |
If Call Option is specified in the relevant Final Terms, the Issuer may, unless an Exercise Notice has been given pursuant to Condition 5.6 or 5.7, 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(s) 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 but excluding 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.
A18528409
87
5.5.3 |
If Make-whole Redemption Option is specified in the relevant Final Terms as applicable, the Issuer may, unless an Exercise Notice has been given pursuant to Condition 5.6 or 5.7, 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 Make-whole Redemption Date(s). Any such redemption of Instruments shall be at an amount equal to the higher of the following, in each case together with interest accrued to but excluding the date fixed for redemption: |
(i) |
the nominal amount of the Instrument; and |
(ii) |
the nominal amount of the Instrument multiplied by the price (as reported in writing to the Issuer and the Trustee by a financial adviser (the Financial Adviser ) appointed by the Issuer and approved by the Trustee) expressed as a percentage (rounded to the nearest fifth decimal places, 0.000005 being rounded upwards) at which the Gross Redemption Yield on the Instruments on the Determination Date specified in the Final Terms is equal to the Gross Redemption Yield at the Quotation Time specified in the relevant Final Terms on the Determination Date of the Reference Bond specified in the relevant Final Terms (or, where the Financial Adviser advises the Trustee that, for reasons of illiquidity or otherwise, such Reference Bond is not appropriate for such purpose, such other government stock as such Financial Adviser may recommend) plus any applicable Redemption Margin specified in the Final Terms. |
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.
In this Condition:
Gross Redemption Yield means a yield calculated in accordance with generally accepted market practice at such time, as advised to the Trustee by the Financial Adviser.
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 |
* |
Only applicable where National Grid is the Issuer. |
A18528409
88
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:
(i) |
(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 - |
(ii) |
(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-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.
A18528409
89
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;
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
A18528409
90
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.;
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
A18528409
91
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 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 |
A18528409
92
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.] |
5.6.1 |
* [ 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:
(i) |
(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 |
(ii) |
(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
* |
Only applicable where NGET is the Issuer. |
A18528409
93
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.
5.6.2 |
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 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 |
A18528409
94
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 |
(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
A18528409
95
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.
5.6.3 |
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. |
5.6.4 |
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. NGET shall redeem the relevant Instruments on the Put Date unless previously redeemed or purchased.]
A18528409
96
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 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 |
A18528409
97
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.
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 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.
A18528409
98
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 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 (as amended from time to time) 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 Agent , 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. |
A18528409
99
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. |
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 |
A18528409
100
(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 (as amended from time to time) 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 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 (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 |
A18528409
101
(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
(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.
* |
Only applicable where National Grid is the Issuer. |
A18528409
102
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 |
(h) |
it has been indemnified and/or secured and/or prefunded 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 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).
A18528409
103
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.
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.
A18528409
104
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.
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.
A18528409
105
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, |
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. |
A18528409
106
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.] |
A18528409
107
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
A18528409
108
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.] |
A18528409
109
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
A18528409
110
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; |
A18528409
111
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 |
A18528409
112
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. |
A18528409
113
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 |
A18528409
114
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 |
A18528409
115
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. |
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. |
A18528409
116
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. |
A18528409
117
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/ Malcolm Cooper, Director |
|||
EXECUTED AS A DEED BY AFFIXING THE COMMON SEAL of THE LAW DEBENTURE TRUST CORPORATION p.l.c. |
} |
|||
in the presence of |
||||
Director |
/s/ Richard Rance |
|||
Authorised Signatory |
/s/ Clive Rakestrow |
A18528409
118
EXHIBIT 2(b).10
Dated 18 December 2014
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/EE
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 |
10 | ||||
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 |
i
This Trust Deed is made on 18 December 2014 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 2013 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, London Branch 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 ;
A18975460
1
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 18 December 2014 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;
A18975460
2
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
A18975460
3
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;
A18975460
4
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
A18975460
5
clearing system must also be authorised to hold Instruments as eligible collateral for Eurosystem monetary policy and intra-day credit operations.
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
A18975460
6
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 |
A18975460
7
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.
A18975460
8
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
A18975460
9
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.
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.
6 |
Covenants |
So long as any Instrument issued by it is outstanding, each Issuer shall:
A18975460
10
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
A18975460
11
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; |
A18975460
12
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
A18975460
13
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.
A18975460
14
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.
A18975460
15
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.
A18975460
16
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. |
A18975460
17
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.
A18975460
18
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.
A18975460
19
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 |
A18975460
20
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 |
A18975460
21
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
A18975460
22
effect purporting to be issued by Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic.
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.
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
A18975460
23
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
A18975460
24
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.
A18975460
25
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. |
A18975460
26
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.
A18975460
27
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.
A18975460
28
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
A18975460
29
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. |
A18975460
30
Schedule
[Insert the provisions of the relevant Final Terms that relate to the Conditions or the Global Certificate as the Schedule.]
A18975460
31
Schedule 1
Part B
Form of Certificate
[NATIONAL GRID US A
(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.
A18975460
32
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.
A18975460
33
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.]
A18975460
34
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, London Branch
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
A18975460
35
KBL European Private Bankers S.A.
43 Boulevard Royal
L-2955 Luxembourg
A18975460
36
Schedule 2
Terms and Conditions of the Instruments
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 18 December 2014 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, London Branch 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 18 December 2014 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.
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.
A18975460
37
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 3.6.
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
A18975460
38
each Interest Payment Date. The amount of Interest payable shall be determined in accordance with Condition 3.6. 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 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.
A18975460
39
(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 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 |
A18975460
40
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). |
(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: (a) in relation to Screen Rate Determination, the period of time designated in the Reference Rate and (b) in relation to ISDA Determination, the Designated Maturity.
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
A18975460
41
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 (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.
A18975460
42
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 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 |
A18975460
43
(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 |
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 D1 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 D1 is greater than 29, in which case D2 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: |
A18975460
44
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;
(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: |
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 (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
(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 |
A18975460
45
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.
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.
A18975460
46
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 unless otherwise specified in the applicable Final Terms.
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.
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
A18975460
47
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 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.
A18975460
48
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. |
|
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 |
A18975460
49
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, unless an Exercise Notice has been given pursuant to Condition 4.6, 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(s) 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 but excluding 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 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.
4.5.3 |
If Make-whole Redemption Option is specified in the relevant Final Terms as applicable, the Issuer may, unless an Exercise Notice has been given pursuant to Condition 4.6, 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 Make-whole Redemption Date(s). Any such redemption of Instruments shall be at an amount equal to the higher of the following, in each case together with interest accrued to but excluding the date fixed for redemption: |
(i) |
the nominal amount of the Instrument; and |
(ii) |
the nominal amount of the Instrument multiplied by the price (as reported in writing to the Issuer and the Trustee by a financial adviser (the Financial Adviser) appointed by the Issuer and approved by the Trustee) and confirmed in writing by the Issuer to the Trustee expressed as a percentage (rounded to the nearest five decimal places, 0.000005 being rounded upwards) at which the Gross Redemption Yield (as defined below) on the Instruments on the Determination Date specified in the Final Terms is equal |
A18975460
50
to the Gross Redemption Yield at the Quotation Time specified in the relevant Final Terms on the Determination Date of the Reference Bond specified in the relevant Final Terms (or, where the Financial Adviser advises the Trustee that, for reasons of illiquidity or otherwise, such Reference Bond is not appropriate for such purpose, such other government stock as such Financial Adviser may recommend) plus any applicable Redemption Margin specified in the Final Terms. |
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.
In this Condition:
Gross Redemption Yield means a yield calculated in accordance with generally accepted market practice at such time, as advised to the Trustee by the Financial Adviser.
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
A18975460
51
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.
5.2 |
Payments subject to Fiscal Laws etc. |
All payments are subject in all cases to (i) any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 6 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471 (b) of the U.S. Internal Revenue Code 1986 (the Code) or otherwise imposed pursuant to Sections 1471 to 1474 (inclusive) of the Code, any United States Treasury Regulations or agreements thereunder, any official interpretations thereof, any successor, substitute or similar legislation or law or any law implementing an intergovernmental approach thereto. 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 is not obliged to
A18975460
52
withhold or deduct tax pursuant to European Council Directive 2003/48/EC (as amended from time to time) 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. |
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 |
A18975460
53
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 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 agreements thereunder, any official interpretations thereof, 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 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
A18975460
54
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
(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,
A18975460
55
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.
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
A18975460
56
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 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
A18975460
57
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.
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
A18975460
58
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 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
A18975460
59
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).
(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.
A18975460
60
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 |
A18975460
61
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 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: |
A18975460
62
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: |
A18975460
63
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. |
A18975460
64
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. |
A18975460
65
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. |
A18975460
66
In witness of which this Trust Deed is delivered on the date stated at the beginning.
NATIONAL GRID USA |
||
By: |
/s/ Malcom 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/ Richard Rance and |
Authorised Signatory: |
/s/ Sonal Ambasna |
A18975460
67
EXHIBIT 2(b).11
Dated 18 July 2014
NATIONAL GRID GAS plc
as Issuer
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
as Trustee
arranged by
HSBC BANK plc
AMENDED AND RESTATED TRUST DEED
relating to a
Euro 10,000,000,000
Euro Medium Term Note Programme
Ref: EXM/RR/VGS
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 |
9 | ||||
6 |
Covenants |
10 | ||||
7 |
Remuneration and Indemnification of the Trustee |
12 | ||||
8 |
Provisions Supplemental to the Trustee Acts |
14 | ||||
9 |
Trustee Liable for Negligence |
17 | ||||
10 |
Waiver and Proof of Default |
18 | ||||
11 |
Trustee not Precluded from Entering into Contracts |
18 | ||||
12 |
Modification and Substitution |
18 | ||||
13 |
Appointment, Retirement and Removal of The Trustee |
20 | ||||
14 |
Instruments Held in Clearing Systems and Couponholders |
21 | ||||
15 |
Currency Indemnity |
22 | ||||
16 |
Enforcement |
22 | ||||
17 |
Communications |
23 | ||||
18 |
Governing Law and Jurisdiction |
24 | ||||
Schedule 1 Part A Form of CGN Temporary Global Instrument |
25 | |||||
Schedule 1 Part B Form of CGN Permanent Global Instrument |
32 | |||||
Schedule 1 Part C Form of NGN Temporary Global Instrument |
41 | |||||
Schedule 1 Part D Form of NGN Permanent Global Instrument |
47 | |||||
Schedule 2 Part A Form of Definitive Instrument |
54 |
A18243981
i
Schedule 2 Part B Terms and Conditions of the Instruments |
58 | |||||
Schedule 2 Part C Form of Coupon |
90 | |||||
Schedule 2 Part D Form of Talon |
92 | |||||
Schedule 3 Provisions for Meetings of Instrumentholders |
94 |
A18243981
ii
This Trust Deed is made on 18 July 2014 between :
(1) |
NATIONAL GRID GAS plc ( National Grid Gas or the Issuer ); 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 Issuer proposes to issue from time to time bearer debt instruments (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 under this Trust Deed. |
(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 National Grid Gas and the Trustee entered into an amended and restated trust deed dated 27 March 2013 (the Prior Trust Deed ). |
(D) |
With effect from the date hereof, National Grid Gas Finance (No 1) plc will cease to be an Issuer and shall no longer be entitled to issue Instruments under the Programme. |
This Trust 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 18 July 2014 between the Issuer, the Trustee, The Bank of New York Mellon as Issuing and Paying Agent and the other agents 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.
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.
Clearstream, Luxembourg means Clearstream Banking, société anonyme .
Common Safekeeper means, in relation to a Series, the common safekeeper for Euroclear and Clearstream, Luxembourg appointed in respect of such Instruments.
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
A18243981
1
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 7 ( Remuneration and Indemnification of the Trustee ), pounds sterling or such other currency as may be agreed between the 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 18 July 2014 between the Issuer, the Arranger, and the dealers named in it.
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.
Euroclear means Euroclear Bank S.A./N.V.
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 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 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 to be issued by the 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.
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.
A18243981
2
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 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 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.
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 from time to time by the Issuer, the
A18243981
3
Trustee, the Dealers (as defined in the Dealer Agreement) and the Issuing and Paying Agent and which are set out in Schedule 4 (Procedures Memorandum) of the Agency Agreement.
Prospectus means the prospectus prepared in connection with the Programme and constituting a base prospectus in respect of the Issuer for the purposes of Article 5.4 of the Prospectus Directive, as revised, supplemented or amended from time to time by the Issuer 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, as amended, to the extent that such amendments have been implemented in the relevant Member State of the European Economic Area.
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 such other or further person as may from time to time be appointed by the 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 the Issuer or of a Successor in Business of 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.
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.
A18243981
4
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.
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 Issuer 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 Issuer, the Trustee and the Issuing and Paying Agent. In the case of NGNs, such alternative clearing system must also be authorised to
A18243981
5
hold Instruments as eligible collateral for Eurosystem monetary policy and intra-day credit operations.
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 |
Amendment and Restatement |
The Prior Trust Deed shall be amended and restated on the terms of this Trust Deed, such amendment and restatement to take effect from the date of this Trust Deed. Any Instruments issued on or after the date of this Trust Deed shall be constituted by, and issued pursuant to, this Trust Deed. This does not affect any Instruments issued prior to the date of this Trust Deed or any other Instrument issued on or after the date of this Trust Deed to be consolidated and form a single series with the Instruments of any series issued prior to the date of this Trust Deed. Subject to such amendment and restatement, the Prior Trust Deed shall continue in full force and effect.
2 |
Issue of Instruments and Covenant to Pay |
2.1 |
Issue of Instruments |
The 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 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 the 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 , 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.
A18243981
6
2.3 |
Covenant to Pay |
The 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 premium and shall (subject to the Conditions and other than in respect of the 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 after a Default ), 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.
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 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 the 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 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 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, Coupons and Talons and all moneys, documents and records |
A18243981
7
held by them in respect of Instruments, Coupons and Talons to the order of the Trustee; or |
(ii) |
to deliver all Instruments, Coupons and Talons and all moneys, documents and records held by them in respect of the 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 Issuer, require the Issuer to make all subsequent payments in respect of the 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 the 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 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 temporary Global Instruments shall be exchangeable for Definitive Instruments or interests in permanent Global Instruments as set out in each temporary Global Instrument. Interests in permanent Global Instruments shall be exchangeable for Definitive Instruments as set out in each 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, Coupons and Talons shall be signed manually or in facsimile by an authorised signatory of the Issuer and the Instruments shall be authenticated by or on behalf of the Issuing and Paying Agent. The 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, Coupons and Talons so executed and authenticated (and effectuated, if applicable) shall be binding and valid obligations of the 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 Issuer as stated above) shall be binding upon the
A18243981
8
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 |
The Issuer shall pay any stamp, issue, documentary or other taxes and duties payable in the United Kingdom in respect of the creation, issue and offering of the Instruments, Coupons and Talons by it and the execution or delivery by it of this Trust Deed. The Issuer shall also indemnify the Trustee, the 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 Instrumentholders or the Couponholders to enforce the Issuers obligations under this Trust Deed or the Instruments, Coupons or Talons.
4.2 |
Change of Taxing Jurisdiction |
If the 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 the 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 the Issuer has become so subject. In such event this Trust Deed and the 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 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 Instruments or Coupons pari passu and rateably; and |
5.1.3 |
thirdly, in payment of any balance to the Issuer for itself. |
A18243981
9
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 largest 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 is outstanding, the 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 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.
A18243981
10
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 Issuer or any parent undertaking of it generally in their capacity as such.
6.5 |
Certificate of Directors |
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 Issuer signed by a Director or the Company Secretary that, having made all reasonable enquiries, to the best of the knowledge, information and belief of the 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.
6.6 |
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 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 and subject to the requirements of the Dealer Agreement.
A18243981
11
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 (or such other firm of legal advisers as may be agreed between the 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 |
unless the 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 Issuer, the Trustee, the Instruments, the Certificates, the Coupons, the Talons, 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. |
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 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 the 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 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
A18243981
12
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 |
In the event of the occurrence of an Event of Default or Potential Event of Default the Issuer hereby agrees that the Trustee shall be entitled to be paid additional remuneration, 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 the Issuer 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 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 an investment bank (acting as an expert) selected by the Trustee and approved by the 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 investment banks fee shall be shared equally between the Trustee and the Issuer. The determination of such investment bank shall be conclusive and binding on the Issuer, the Trustee, the Instrumentholders and the Couponholders.
7.3 |
Expenses |
The Issuer, in respect of 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 duties paid by the Trustee in connection with any legal proceedings reasonably brought or contemplated by the Trustee against the Issuer to enforce any provision of this Trust Deed, the 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 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 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 the Issuer a reasonable opportunity to meet such costs, charges and expenses itself or to put the Trustee in funds
A18243981
13
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 |
The 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 reasonable costs, charges and expenses paid or incurred in disputing or defending any of the foregoing) which any of them may incur 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.
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 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 the Issuer is performing all of its obligations under this Trust Deed, the Instruments, the Coupons and the 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
A18243981
14
constitution of the meeting or the passing of the resolution or that the resolution was not valid or binding on the Instrumentholders or Couponholders.
8.4 |
Certificate Signed by a Director, 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 Director or the Company Secretary of the 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 Issuer or any Instrumentholder or Couponholder by reason of having accepted as valid or not having rejected any Instrument, Certificate, Coupon or Talon purporting to be such and later found to be forged or not authentic.
A18243981
15
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 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 Issuer, the Instrumentholders and the Couponholders.
8.14 |
Payment for and Delivery of Instruments |
The Trustee shall not be responsible for the receipt or application by the Issuer of the proceeds of the issue of the Instruments, any exchange of Instruments or the delivery of 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 Issuer 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 |
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 the 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.
A18243981
16
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) materially prejudicial to the interests of Instrumentholders. Any such determination shall be conclusive and binding on the Issuer, the Instrumentholders and the Couponholders.
8.20 |
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.
8.21 |
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.
8.22 |
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.
8.23 |
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.
8.24 |
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.
9 |
Trustee Liable for Negligence |
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,
A18243981
17
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 or proposed breach by the 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 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 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 the Issuer 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 modification to this Trust Deed which is in its opinion not materially prejudicial to the interests of the Instrumentholders, but such power does not extend to any such modification as is mentioned in the proviso to
A18243981
18
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 National Grid Gass Successor in Business or any subsidiary of National Grid Gas (the Substituted Obligor ) in place of National Grid Gas, as the case may be (or of any previous substitute under this Clause 12) as the principal debtor under this Trust Deed, the Instruments, the Coupons and the Talons, 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, the Instruments, the Coupons and the Talons (with consequential amendments as the Trustee may deem appropriate) as if the Substituted Obligor had been named in this Trust Deed, the Instruments, the Coupons and the Talons as the principal debtor in place of the 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 7 with the substitution for the references in that Condition to the Issuers Territory of references to the Substituted Territory whereupon the Trust Deed, the Instruments, the Coupons and the 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 the Issuer; |
(iv) |
the Issuer and the Substituted Obligor comply with such other requirements as the Trustee may direct in the interests of the Instrumentholders; |
(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 Instruments in place of the 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 Instruments and the Coupons and (iii) such approvals and consents are at the time of substitution in full force and effect; and |
(vi) |
a guarantee is provided in respect of the Instruments, the Coupons and the Talons by the Issuer (or the Successor in Business) unless the Substituted Obligor is the Successor in Business. |
A18243981
19
12.2.2 |
Release of Substituted Issuer : An agreement by the Trustee pursuant to this Clause 12.2 ( Substitution ) shall, if so expressed, release the Issuer (or a previous substitute) from any or all of its obligations under this Trust Deed, the Instruments, the Coupons and the 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. |
12.2.3 |
Completion of Substitution : On completion of the formalities set out in this Clause 12.2 ( Substitution ), the Substituted Obligor shall be deemed to be named in this Trust Deed, the Instruments, the Coupons and the Talons as the principal debtor in place of the Issuer (or of any previous substitute) and this Trust Deed, the Instruments, the Coupons and the 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 |
The Issuer has the power of appointing new trustees but no one may be so appointed unless previously approved by an Extraordinary Resolution. A trust corporation shall at all times be a Trustee and may be the sole Trustee. Any appointment of a new Trustee shall be notified by the Issuer to the 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 the 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 the Issuer 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 the Issuer and that person remove that person. At the Trustees request, the Issuer shall forthwith do all things as may be required to perfect such
A18243981
20
appointment or removal and it irrevocably appoints the Trustee as its attorney in its name and on its 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 Issuer of its intention to make such appointment (and the reason for that) and shall give due consideration to representations made by the Issuer 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 |
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 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 Global Instrument and may consider such interests on the basis that such accountholders or participants were the holder(s) of such Global Instrument.
14.2 |
Reliance on Instruments Held in Clearing Systems |
The Trustee and the 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 Instrument and if the Trustee or the 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 the 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.
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
A18243981
21
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 the Issuer 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 the Issuer or otherwise), by the Trustee or any Instrumentholder or Couponholder in respect of any sum expressed to be due to it from the Issuer, shall only discharge the 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 Issuer shall indemnify it against any loss sustained by it as a result. In any event, the 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.
16 |
Enforcement |
16.1 |
Trustee to enforce |
Only the Trustee may enforce the rights of the Instrumentholders and Couponholders against the 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 Issuer unless the Trustee, having become bound to proceed, fails to do so within a reasonable time and such failure is continuing.
A18243981
22
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 unless it shall be indemnified and/or secured and/or prefunded by the 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, 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 or Couponholder where entitled in accordance with this Trust Deed so to do) institutes legal proceedings against the Issuer to enforce any obligations under this Trust Deed:
16.3.1 |
proof in such proceedings that as regards any specified Instrument the 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 the 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 the Issuer has made default in paying any sum due to the relevant Couponholder shall (unless the contrary be proved) be sufficient evidence that the 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 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 delivered, 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.
A18243981
23
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, the 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, the Coupons or the Talons ( Proceedings ) may be brought in such courts. The Issuer irrevocably submits to the jurisdiction of such courts and waives any objections to Proceedings in such courts on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. The submission is for the benefit of each of the Trustee, the Instrumentholders and the 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).
A18243981
24
Schedule 1
Part A
Form of CGN Temporary Global Instrument
NATIONAL GRID GAS plc
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number 2006000)
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 Gas plc (the Issuer ).
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 18 July 2014 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 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.
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.
Promise to Pay
Subject as provided in this temporary Global Instrument, the Issuer, for value received, 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
A18243981
25
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.
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 Agency Agreement to the effect that it has received a certificate or certificates substantially to the effect set out in Schedule 2 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.
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.
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
A18243981
26
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.
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 6.4(v) and Condition 7(e)(i) will apply to the Definitive Instruments only.
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 6.6 (Non-business days).
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.
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
A18243981
27
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 any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
A18243981
28
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 GAS 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
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.
A18243981
29
The First Schedule
Nominal amount of Instruments represented by thistemporary 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 |
A18243981
30
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]
A18243981
31
Schedule 1
Part B
Form of CGN Permanent Global Instrument
NATIONAL GRID GAS plc
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number 2006000)
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 Gas plc (the Issuer ).
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 18 July 2014 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 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.
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.
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
A18243981
32
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.
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 the Third Schedule to this permanent Global Instrument.
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.
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.
A18243981
33
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 6.4(v) 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 6.6 (Non-business days).
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.
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.
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 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.
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.
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.
Instrumentholders Options
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
A18243981
34
not be required to contain the certificate numbers of the Instruments in respect of which the option has been exercised, 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, or to a Paying Agent acting on behalf of the Issuing and Paying Agent, for notation accordingly in the Fourth Schedule to this permanent Global Instrument.
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.
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.
This permanent Global Instrument and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
A18243981
35
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 GAS 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
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.
A18243981
36
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 the whole or a part of 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/ decrease in nominal amount of this permanent Global Instrument |
Reason for increase/
decrease in nominal
payment made) |
Nominal amount of this permanent Global Instrument on issue or following such increase/ decrease |
Notation made by or on behalf of the Issuing and Paying Agent |
A18243981
37
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
|
A18243981
38
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.]
A18243981
39
The Fourth Schedule
Exercise of Instrumentholders 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
|
A18243981
40
Schedule 1
Part C
Form of NGN Temporary Global Instrument
NATIONAL GRID GAS plc
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number 2006000)
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 Gas plc (the Issuer ).
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 18 July 2014 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 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.
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 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
A18243981
41
by the temporary Global Instrument at any time shall be conclusive evidence of the records of the relevant Clearing Systems at that time.
Promise to Pay
Subject as provided in this temporary Global Instrument, the Issuer, for value received, 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.
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 Agency Agreement to the effect that it has received a certificate or certificates substantially to the effect set out in Schedule 2 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 Part A of the Schedule to this temporary Global Instrument.
A18243981
42
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.
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.
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 6.4(v) and Condition 7(e)(i) will apply to the Definitive Instruments only.
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 6.6 (Non-business days).
A18243981
43
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.
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 any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
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 GAS 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
A18243981
44
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.
A18243981
45
The Schedule
[Insert the provisions of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Schedule]
A18243981
46
Schedule 1
Part D
Form of NGN Permanent Global Instrument
NATIONAL GRID GAS plc
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number 2006000)
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 Gas plc (the Issuer ).
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 18 July 2014 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 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.
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 these purposes, a statement issued by a relevant Clearing System (which statement shall be
A18243981
47
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.
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.
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 the Schedule to this permanent Global Instrument.
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 this permanent Global Instrument shall in all respects be entitled to the same benefits as if it were
A18243981
48
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.
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 6.4(v) 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 6.6 (Non-business days).
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.
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.
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.
A18243981
49
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.
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 Notes 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 Notes recorded in the records of the relevant Clearing Systems and represented by this permanent Global Instrument shall be reduced accordingly.
Instrumentholders Options
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.
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.
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 |
A18243981
50
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 any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
A18243981
51
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 GAS 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.
A18243981
52
The Schedule
[Insert the provisions Part A of the relevant Final Terms that relate to the Conditions or the Global Instruments as the Third Schedule.]
A18243981
53
Schedule 2
Part A
Form of Definitive Instrument
On the front:
[Denomination] |
[ISIN | ] | [Series | ] | [Certif. No. | ] |
[Currency and denomination]
NATIONAL GRID GAS plc
(Incorporated with limited liability in England and Wales
under the Companies Act 1985 with registered number 2006000)
EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
This Instrument forms one of the Series of Instruments referred to above (the Instruments ) of National Grid Gas 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.
A18243981
54
In witness of which the Issuer has caused this Instrument to be signed on its behalf.
Dated as of the Issue Date.
NATIONAL GRID GAS plc
By: |
||
Authorised Signatory
CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
This Definitive 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.
A18243981
55
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.]
A18243981
56
ISSUING AND PAYING AGENT
THE BANK OF NEW YORK MELLON
One Canada Square
London E14 5AL
PAYING AGENT
KBL EUROPEAN PRIVATE BANKERS S.A.
43 Boulevard Royal
L-2955 Luxembourg
A18243981
57
Schedule 2
Part B
Terms and Conditions of the Instruments
National Grid Gas plc ( National Grid Gas or the Issuer ) has established a Euro Medium Term Note Programme (the Programme ) for the issuance of up to 10,000,000,000 in aggregate principal amount of debt instruments (the Instruments ).
The Instruments are constituted by an Amended and Restated Trust Deed (as amended or supplemented from time to time, the Trust Deed ) dated 18 July 2014 between the Issuer 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 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 Amended and Restated Agency Agreement (as amended or supplemented from time to time, the Agency Agreement ) dated 18 July 2014 has been entered into in relation to the Instruments between the Issuer, 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) . Copies of the Trust Deed and the Agency Agreement are available for inspection during usual business hours at the registered office of the Trustee (as at 18 July 2014 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 bearer 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, 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 the 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
A18243981
58
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 this Instrument.
2 |
Status |
The Instruments and 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, rank equally with all other present and future unsecured obligations (other than subordinated obligations, if any) of the Issuer.
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).
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
A18243981
59
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.
(A) |
ISDA Determination: 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: |
(x) |
the Floating Rate Option is as specified in the relevant Final Terms; |
(y) |
the Designated Maturity is a period specified in the relevant Final Terms; and |
(z) |
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: 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 shall be determined by the Calculation Agent at or about the Relevant Time on the Interest Determination Date in respect of such Interest Accrual Period in accordance with the following: |
(x) |
if the Primary Source for Floating Rate is a Page, subject as provided below, the Rate of Interest shall be: |
(a) |
the Relevant Rate (where such Relevant Rate on such Page is a composite quotation or is customarily supplied by one entity); or |
(b) |
the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on that Page, |
|
in each case appearing on such Page at the Relevant Time on the Interest Determination Date; |
A18243981
60
(y) |
if the Primary Source for the Floating Rate is Reference Banks or if sub-paragraph (x) (a) applies and no Relevant Rate appears on the Page at the Relevant Time on the Interest Determination Date or if sub-paragraph (x) (b) above applies and fewer than two Relevant Rates appear on the Page at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of Interest shall (i) for Reference Rates other than CAD-BA-CDOR, be the arithmetic mean of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre at the Relevant Time on the Interest Determination Date, or (ii) where the Reference Rate is CAD-BA-CDOR, on the basis of the bid rates of the Reference Banks for Canadian dollar bankers acceptances for the Specified Duration for settlement on the relevant Interest Determination Date in a Representative Amount accepted by the Reference Banks at the Relevant Time on the Interest Determination Date, as determined by the Calculation Agent; and |
(z) |
if paragraph (y) above applies and the Calculation Agent determines that fewer than two Reference Banks are so quoting Relevant Rates, subject as provided below, the Rate of Interest shall be the arithmetic mean of the rates per annum (expressed as a percentage) that the Calculation Agent determines to be the rates (being the nearest equivalent to the Benchmark) in respect of a Representative Amount of the Specified Currency that at least two out of five leading banks selected by the Calculation Agent in the principal financial centre of the country of the Specified Currency or, if the Specified Currency is euro in those Member States of the European Union which are participating in European economic and monetary union as selected by the Calculation Agent (the Principal Financial Centre) are quoting at or about the Relevant Time on the date on which such banks would customarily quote such rates for a period commencing on the Effective Date for a period equivalent to the Specified Duration (I) to leading banks carrying on business in Europe, or (if the Calculation Agent determines that fewer than two of such banks are so quoting to leading banks in Europe) (II) to leading banks carrying on business in the Principal Financial Centre or (III) where the Reference Rate is CAD-BA-CDOR, for Canadian dollar bankers acceptances for settlement on the Effective Date; except that, if fewer than two of such banks are so quoting to leading banks in the Principal Financial Centre, the Rate of Interest shall be the Rate of Interest determined on the previous Interest Determination Date (after readjustment for any difference between any Margin, Rate Multiplier or Maximum or Minimum Rate of Interest applicable to the preceding Interest Accrual Period and to the relevant Interest Accrual Period). |
(C) |
Linear Interpolation: Where Linear Interpolation is specified in the relevant Final Terms as applicable in respect of an Interest Accrual Period, the Rate of Interest for such Interest Accrual Period shall be calculated by the Calculation |
A18243981
61
|
Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified in the relevant Final Terms as applicable) or the relevant Floating Rate Option (where ISDA Determination is specified in the relevant Final Terms 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: (a) in relation to Screen Rate Determination, the period of time designated in the Reference Rate, and (b) in relation to ISDA Determination, the Designated Maturity.
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 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 Maximum or Minimum Redemption Amount is specified in the relevant Final Terms, then any |
A18243981
62
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 (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 after the Relevant Time 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 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 |
A18243981
63
|
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 3.2.2, 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) |
Definitions |
In these Conditions, unless the context otherwise requires, the following defined terms shall have the meanings set out below:
Benchmark means LIBOR, EURIBOR, AUD-BBR-BBSW or CAD-BA-CDOR, as may be specified in the relevant Final Terms.
Business Day means:
(i) |
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: (x) Canadian dollars is Toronto except when the Reference Rate is LIBOR, then the financial centres are London and Toronto; and (y) Australian dollars is Sydney); and/or |
(ii) |
in the case of euro, a day on which the TARGET System is operating (a TARGET Business Day ); and/or |
(iii) |
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. |
Calculation Amount means the amount specified as such in the relevant Final Terms.
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, the Calculation Period ):
A18243981
64
(i) |
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); |
(ii) |
if Actual/365 (Fixed) is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 365; |
(iii) |
if Actual/360 is specified in the relevant Final Terms, the actual number of days in the Calculation Period divided by 360; |
(iv) |
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 |
where:
Y 1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y 2 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;
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;
(v) |
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:
Y 1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
A18243981
65
Y 2 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;
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, in which case D 2 will be 30;
(vi) |
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 |
where:
Y 1 is the year, expressed as a number, in which the first day of the Calculation Period falls;
Y 2 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;
D 1 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 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 (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D 2 will be 30;
(vii) |
if Actual/Actual-ICMA is specified in the relevant Final Terms, |
(c) |
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 |
A18243981
66
|
actual number of days in such Determination Period and (y) the number of Determination Periods in any year; and |
(d) |
if the Calculation Period is longer than one Determination Period, the sum of: |
(x) |
the actual number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (1) the actual number of days in such Determination Period and (2) the number of Determination Periods in any year; and |
(y) |
the actual number of days in such Calculation Period falling in the next Determination Period divided by the product of (1) the actual number of days in such Determination Period and (2) 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;
(viii) |
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: |
(a) |
one divided by the number of Interest Payment Dates in each 12 month period; and |
(b) |
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; and |
(ix) |
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 specified Interest Amount, such interest will be calculated on the basis of the actual number of days in the Calculation Period and a year of 365 days. |
Effective Date means, with respect to any Floating Rate to be determined on an Interest Determination Date, the date specified as such in the relevant Final Terms or, if none is so specified, the first day of the Interest Accrual Period to which such Interest Determination Date relates.
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.
A18243981
67
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 |
(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, (i) the first day of such Interest Accrual Period if the Specified Currency is Sterling or (ii) 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 (iii) 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 unless otherwise specified in the applicable Final Terms.
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 amended or supplemented from time to time.
Page means such page, section, caption, column or other part of a particular information service (including, but not limited to, the Reuters Market 3000 ( Reuters )) as may be specified for the purpose of providing a Relevant Rate, or such other page, section, caption, column or other part
A18243981
68
as may succeed or replace it on that information service or on such other information service, in each case as may be nominated by the person or organisation providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to that Relevant Rate.
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 the institutions specified as such in the relevant Final Terms or, if none, five leading banks selected by the Calculation Agent in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that is most closely connected with the Benchmark (which, if EURIBOR is the relevant Benchmark, shall be Europe, 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).
Relevant Financial Centre means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the financial centre as may be specified as such in the relevant Final Terms or, if none is so specified, the financial centre with which the relevant Benchmark is most closely connected (which, in the case of EURIBOR, shall be Europe) or, if none is so connected, London.
Relevant Rate means the Benchmark for a Representative Amount of the Specified Currency for a period (if applicable or appropriate to the Benchmark) equal to the Specified Duration commencing on the Effective Date.
Relevant Time means, with respect to any Interest Determination Date, the local time in the Relevant Financial Centre specified in the relevant Final Terms or, if no time is specified, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Specified Currency in the interbank market in the Relevant Financial Centre or, if no such customary local time exists, 11.00 hours in the Relevant Financial Centre and, for the purpose of this definition local time means, with respect to Europe as a Relevant Financial Centre, Brussels time.
Representative Amount means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the amount specified as such in the relevant Final Terms or, if none is specified, an amount that is representative for a single transaction in the relevant market at the time.
A18243981
69
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.
Specified Duration means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on an Interest Determination Date, the duration specified in the relevant Final Terms or, if none is specified, a period of time equal to the relevant Interest Accrual Period, ignoring any adjustment pursuant to Condition 3.2.2.
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.
(g) |
Calculation Agent and Reference Banks |
The Issuer shall procure that there shall at all times be four Reference Banks (or such other number as may be required) with offices in the Relevant Financial Centre and 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. If any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a Reference Bank, then the Issuer shall (with the prior approval of the Trustee) appoint another Reference Bank with an office in the Relevant Financial Centre to act as such in its place. 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 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 |
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 the purposes of Conditions 4.1 to 4.6, unless the context otherwise requires, the following defined terms shall have the following meanings:
A18243981
70
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 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;
A18243981
71
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 ).
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 |
A18243981
72
|
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, 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. |
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 the Trustee and the Issuer have been notified by the Calculation Agent that the Index has ceased to be published, or 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) |
A18243981
73
|
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 (ii), 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).
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, Conditions 4.7 to 4.10 will apply. For the purposes of
A18243981
74
Conditions 4.7 to 4.10, unless the context otherwise requires, the following defined terms shall have the following meanings:
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; and
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
A18243981
75
time the originally selected Related Instrument is redeemed (including any bond for which the redeemed originally selected Related Instrument is exchanged).
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 |
Changes 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.
(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 |
A18243981
76
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 ; |
(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 |
A18243981
77
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 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 4.8).
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.
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
A18243981
78
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, on any Interest Payment Date or, if so specified in the relevant Final Terms 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. |
(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 |
A18243981
79
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 above), 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 |
Residual Holding Call Option |
If (i) Residual Holding Call Option is specified in the relevant Final Terms as applicable, 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.
5.5.2 |
Call Option |
If Call Option is specified in the relevant Final Terms as applicable, the Issuer may, unless an Exercise Notice has been given pursuant to Condition 5.6, 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(s) 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 but excluding the date fixed for redemption.
A18243981
80
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.
5.5.3 |
Make-whole Redemption Option |
If Make-whole Redemption Option is specified in the relevant Final Terms as applicable, the Issuer may, unless an Exercise Notice has been given pursuant to Condition 5.6, 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 Make-whole Redemption Date(s). Any such redemption of Instruments shall be at an amount equal to the higher of the following, in each case together with interest accrued to but excluding the date fixed for redemption:
(i) |
the nominal amount of the Instrument; and |
(ii) |
the nominal amount of the Instrument multiplied by the price (as reported in writing to the Issuer and the Trustee by a financial adviser (the Financial Adviser ) appointed by the Issuer and approved by the Trustee) expressed as a percentage (rounded to the nearest fifth decimal places, 0.000005 being rounded upwards) at which the Gross Redemption Yield on the Instruments on the Determination Date specified in the Final Terms is equal to the Gross Redemption Yield at the Quotation Time specified in the relevant Final Terms on the Determination Date of the Reference Bond specified in the relevant Final Terms (or, where the Financial Adviser advises the Trustee that, for reasons of illiquidity or otherwise, such Reference Bond is not appropriate for such purpose, such other government stock as such Financial Adviser may recommend) plus any applicable Redemption Margin specified in the Final Terms. |
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
A18243981
81
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.
In this Condition:
Gross Redemption Yield means a yield calculated in accordance with generally accepted market practice at such time, as advised to the Trustee by the Financial Adviser.
5.6 |
Redemption at the Option of Instrumentholders and Exercise of Instrumentholders Options |
If Put Option is specified in the relevant Final Terms as applicable, the Issuer shall, at the option of the holder of any such Instrument, upon the holder of such Instrument 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 relevant 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.
5.7 |
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 subsidiary undertakings may, at the option of the Issuer, be held, resold or surrendered together with all unmatured Coupons and all unexchanged Talons attached to them to a Paying Agent for cancellation. Any Instruments so purchased or otherwise acquired, for so long as they are held by the Issuer or any of its subsidiary undertakings, 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 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 6.5.6) or Coupons (in the case of interest, save as specified in Condition 6.5.6), 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
A18243981
82
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 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.
6.3 |
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 Issuer or its agents agree to be subject and the Issuer 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.
6.4 |
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 (i) an Issuing and Paying Agent, (ii) a Paying Agent having a specified office in a continental European city, (iii) a Calculation Agent where the Conditions so require one, (iv) 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 the relevant stock exchange or other relevant authority and (v) to the extent that the Issuer is able to do so and not provided for by the foregoing provisions of this Condition 6.4, a Paying Agent with a specified office in a European Union Member State that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC (as amended from time to time) or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any law implementing or complying with, or introduced in order to conform to, such Directive. As used in these Conditions, the terms Issuing and Paying Agent , Calculation Agent , 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 6.2.
A18243981
83
Notice of any such change or any change of any specified office shall promptly be given to the Instrumentholders in accordance with Condition 14.
6.5 |
Unmatured Coupons and unexchanged Talons: |
6.5.1 |
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. |
6.5.2 |
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. |
6.5.3 |
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. |
6.5.4 |
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. |
6.6 |
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:
(i) |
(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 |
(ii) |
(in the case of a payment in euro), which is a TARGET Business Day. |
6.7 |
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
A18243981
84
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 thirtieth day; or |
(d) |
where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC (as amended from time to time) or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any law implementing or complying with, or introduced in order to conform to, such Directive; 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 (i) principal shall be deemed to include any premium payable in respect of the Instruments, 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 5 or any amendment or supplement to it, (ii) 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 or pursuant to Condition 6 or any amendment or supplement to it and (iii) 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
A18243981
85
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 (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) |
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 |
(d) |
Enforcement Proceedings : attachment is made of the whole or substantially the whole of the assets or undertaking 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 |
(e) |
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 |
(f) |
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.
Any such notice by the Trustee to the Issuer shall specify the serial number(s) of the Instrument(s) concerned.
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:
A18243981
86
(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 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) and on all Couponholders, except that any Extraordinary Resolution proposed, inter alia , (i) to amend the dates of maturity or redemption of the Instruments or any date for payment of interest on the Instruments, (ii) to reduce or cancel the nominal amount of, or any premium payable on redemption of, the Instruments, (iii) 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, (iv) 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, (v) to vary any method of calculating the Final Redemption Amount, the Early Redemption Amount or the Optional Redemption Amount, (vi) 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 or (vii) 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 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 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 |
The Trustee may agree, without the consent of the Instrumentholders or Couponholders, to (i) 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 (ii) 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
A18243981
87
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 such other conditions as the Trustee may require, but without the consent of the Instrumentholders or the Couponholders, to the substitution of a Successor in Business (as defined in the Trust Deed) or any subsidiary in place of the Issuer or of any previous substituted company, as principal debtor under the Trust Deed 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 provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Instrumentholders.
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
A18243981
88
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.
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.
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 provisions relieving it from any obligation to 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 |
(a) |
The Instruments and any non-contractual obligations arising out of or in connection with them shall be governed by, and construed in accordance with, English law. |
(b) |
The courts of England have exclusive jurisdiction to settle any dispute (a Dispute ), arising from or connected with the Instruments. |
(c) |
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. |
(d) |
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. |
A18243981
89
Schedule 2
Part C
Form of Coupon
On the front:
NATIONAL GRID GAS plc
Euro Medium Term Note Programme
Series 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 GAS plc
By:
Authorised Signatory
[Cp. No.] | [Denomination] | [ISIN] | [Series] | [Certif. No.] |
* |
[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.] |
A18243981
90
On the back:
ISSUING AND PAYING AGENT
The Bank of New York Mellon
One Canada Square
London E14 5AL
PAYING AGENT
KBL European Private Bankers S.A.
43 Boulevard Royal
L-2955 Luxembourg
A18243981
91
Schedule 2
Part D
Form of Talon
On the front:
NATIONAL GRID GAS plc
Euro Medium Term Note Programme
Series 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 GAS plc
By:
Authorised Signatory
[Talon No.] | [ISIN] | [Series] | [Certif. No.] |
* |
[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 due.] |
** |
[Only required where the Series comprises Instruments of more than one denomination.] |
A18243981
92
On the back:
ISSUING AND PAYING AGENT
The Bank of New York Mellon
One Canada Square
London E14 5AL
PAYING AGENT
KBL European Private Bankers S.A.
43 Boulevard Royal
L-2955 Luxembourg
A18243981
93
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 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 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 the 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 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 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 |
A18243981
94
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 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 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: |
7.1 |
the meeting has been concluded; or |
A18243981
95
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. |
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 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. |
A18243981
96
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 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 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 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; |
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 |
A18243981
97
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 Issuer, the Trustee or one or more persons holding one or more Instruments or voting certificates, in each case, representing two 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 nominal amount 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. |
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 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 |
A18243981
98
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. |
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 25, each Instrumentholder shall have one vote in respect of each 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 |
A18243981
99
Instrumentholders were references to the Instruments and Instrumentholders of the Series concerned. |
A18243981
100
This Trust Deed is delivered on the date stated at the beginning.
EXECUTED AS A DEED BY AFFIXING THE COMMON SEAL of NATIONAL GRID GAS plc AS ISSUER |
} |
|||
in the presence of:/s/ Heather Rayner, Secretary |
||||
EXECUTED AS A DEED BY AFFIXING THE COMMON SEAL of THE LAW DEBENTURE TRUST CORPORATION p.l.c. AS TRUSTEE |
} |
|||
in the presence of: |
||||
Director /s/ Julian Mason-Jebb |
||||
Authorised /s/ Sonal Ambasna |
A18243981
101
EXHIBIT 4(c).15
Dated 22 October 2014
NATIONAL GRID
and
NATIONAL GRID USA
and
DEAN SEAVERS
EMPLOYMENT AGREEMENT
Linklaters LLP
One Silk Street
London EC2Y 8HQ
Telephone (+44) 20 7456 2000
Facsimile (+44) 20 7456 2222
Ref SKD/JH
Table of Contents
Contents |
Page | |||
1 Interpretation |
1 | |||
2 Commencement of Employment |
1 | |||
3 Appointment and Duties of the Executive |
1 | |||
4 Hours |
2 | |||
5 Interests of the Executive |
3 | |||
6 Location |
3 | |||
7 Base Salary and Benefits |
3 | |||
8 Expenses |
4 | |||
9 Confidentiality |
5 | |||
10 Intellectual Property |
5 | |||
11 Termination and Suspension |
6 | |||
12 Garden Leave |
8 | |||
13 Restrictions after Termination of Employment |
10 | |||
14 Offers on Liquidation |
11 | |||
15 Return of Company Property |
11 | |||
16 Directorships |
12 | |||
17 Notices |
12 | |||
18 Data Protection Act 1998 |
13 | |||
19 Disputes |
13 | |||
20 Miscellaneous |
14 |
A18771805/1.0/12 May 2015
i
This Employment Agreement (this Agreement ) is made 2014 among:
(1) |
NATIONAL GRID PLC incorporated in the UK with registered number 04031152 whose registered office is at 1-3 The Strand, London WC2N 5EH (the Parent ); |
(2) |
NATIONAL GRID USA , a wholly-owned subsidiary of the Parent (the Company ), and |
(3) |
DEAN SEAVERS (the Executive ). |
This Agreement records the terms on which the Executive will serve the Parent and the Company.
1 |
Interpretation |
In this Agreement (and any schedules to it):
1.1 |
Definitions |
Board means the board of directors of the Parent from time to 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 the Parent, its ultimate holding company from time to time and the Parents associates (as defined in section 435 of the Insolvency Act 1986) from time to time;
Group Company means a member of the Group and Group Companies will be interpreted accordingly;
Listing Rules means the listing rules made by the Financial Services Authority in exercise of its functions as competent authority pursuant to Part VI of the Financial Services and Markets Act 2000;
Role Appointment Date means 1 April 2015; and
Subsidiary and Holding Company mean subsidiary and holding company as defined in Section 1159 of the Companies Act 2006, provided that where a holding company creates security over the shares of a subsidiary that subsidiary shall be deemed not to cease being a subsidiary of the holding company solely as a result of that security.
2 |
Commencement of Employment |
2.1 |
The Employment will start on 1 December 2014 (the Commencement Date ). The Employment will continue until termination in accordance with the provisions of this Agreement. |
2.2 |
The Executive represents and warrants to the Company 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. |
3 |
Appointment and Duties of the Executive |
3.1 |
The Executive will serve the Company from the Commencement Date and shall work in preparation for taking up his role as Executive Director and President of National Grid |
A18771805/1.0/12 May 2015
1
USA, and shall take up and serve in the role of Executive Director and President of National Grid USA with effect from the Role Appointment Date or in any other executive capacity as the Executive and the Company may agree from time to time in writing.
3.2 |
With effect from the Role Appointment Date the Parent shall appoint the Executive as, and the Executive agrees to serve as, an Executive Director of the Parent (it being understood that the Executives continuing service as an Executive Director is subject to the vote of the Parents shareholders at the applicable annual general meeting). |
3.3 |
The Executive will: |
3.3.1 |
devote the whole of his business time, attention and skill to the Employment; |
3.3.2 |
properly perform his duties and exercise his powers; |
3.3.3 |
accept any offices or directorships in Group Companies as reasonably required by the Company; |
3.3.4 |
comply with all reasonable policies, rules and regulations issued by the Company or the Parent which are applicable to him; |
3.3.5 |
obey the reasonable and lawful directions of the Board; and |
3.3.6 |
use his best endeavours to promote the interests and reputation of every Group Company. |
3.4 |
The Executive accepts that with his consent (which he will not unreasonably withhold or delay): |
3.4.1 |
the Company or the Parent 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 3.3.4 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 (however, the actual payments and benefits may be delivered by any Group Company) and; |
3.4.2 |
the Company may transfer the Employment to any other Group Company. |
3.5 |
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, as requested by the Board from time to time. He will provide information to the Board in writing if requested. |
3.6 |
The Executive will promptly, where legally permissible, 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 Group Company or to the interests or reputation of any Group Company. |
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. |
A18771805/1.0/12 May 2015
2
4.2 |
The Executive and the Company agree that the Executive is a managing executive 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. |
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) in any businesses whether or not of a commercial or business nature except his interests in any Group Company. |
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 recognized Stock Exchange or dealt in on the Alternative Investments Market. |
5.4 |
The Executive will comply (and will advise that his spouse and dependent children) comply with all rules of law pertaining to insider trading, 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 Group from time to time in relation to the holding or trading of securities. |
6 |
Location |
The Executive will work at the Boston area office of the Company provided he shall travel from time to time as required by the Board. He will be required to travel and work outside the United States from time to time but unless otherwise agreed with the Board will not be required to live nor maintain his primary working office location outside the United States.
7 |
Base Salary and Benefits |
7.1 |
The Company will pay the Executive an annual base salary of USD 1,000,000. Base salary will accrue from day to day and will be paid in accordance with the Companys payroll practices as they exist from time to time. Salary will be reviewed annually, normally commencing in June of each year. The first review will take place in June 2015. |
7.2 |
Subject to the Executives appropriate confirmation of lost compensation from his previous employer (to be determined by the Company), the Company will pay the Executive USD500,000 in cash, payable in two instalments: |
7.2.1 |
The first instalment of USD 250,000 will be paid within one month of the Commencement Date; and |
7.2.2 |
The second and final instalment of USD 250,000 will be paid one year following the Commencement. |
Both instalments are conditional upon the Executive being employed by the Company at the time of payment and should the Executive resign within 12 months of either payment being made, the Executive will be required to pay the relevant amount.
A18771805/1.0/12 May 2015
3
Both instalments are non-pensionable, but are subject to applicable tax withholdings.
7.3 |
The salary referred to in Clause 7.1 will be inclusive of any remuneration or fees which the Executive is or becomes entitled to as an office holder in the Company or any Group Company or any other company in which the Executive becomes an office holder as part of or in connection with his duties under this Agreement. To achieve this: |
7.3.1 |
the Executive will repay any fees he receives to the Company; or |
7.3.2 |
his base salary will be reduced by the amount of those fees; or |
7.3.3 |
a combination of the methods set out in Clauses 7.3.1 and 7.3.2 will be applied. |
7.4 |
The Executive may, at the discretion of the Remuneration Committee of the Board, be invited to participate in any bonus plan operated by the Company 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 that plan from time to time in force. Participation in a bonus plan for one year does not entitle the Executive to participation in any bonus plan for any other year. |
7.5 |
In order to comply with remuneration laws, rules, regulations or applicable regulatory requirements or guidance, any variable pay which the Executive is awarded may be subject to reduction (i.e. malus or performance adjustment) or recovery (i.e. clawback). The terms of such reduction or recovery will be communicated to the Executive at the time of award. By signing this Agreement the Executive agrees to such reduction or recovery in respect of any variable pay which the Executive is awarded. |
7.6 |
The Executive shall be eligible to participate in the Companys Defined Contribution Pension Plan and Defined Contribution Supplemental Retirement Plan in accordance with their respective terms and conditions. |
7.7 |
The Executive is entitled to 25 days paid vacation each year in accordance with the Companys vacation policy. |
7.8 |
The Executive shall be eligible to participate in employee benefit and welfare plans, including plans providing retirement benefits, medical, dental, hospitalization, life or disability insurance, on the same basis as provided to similarly situated senior executives of the Parent (except as determined by the Remuneration Committee of the Board). For purposes of this Agreement, employee benefit and welfare plans do not include any severance, termination or redundancy plan, program or arrangement operated by any member of the Group. |
7.9 |
The Executive will receive an annual allowance of USD 8,000 towards financial planning and/or tax preparation advice. This annual allowance will be paid to the Executive in January each year. |
7.10 |
The Executive will also be eligible for relocation benefits in accordance with the Companys Relocation Policy. For the avoidance of doubt, this includes a payment or payments to cover the cost of a rental property in Waltham area for a period up to six months. |
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 from time to time. The Company will require the |
A18771805/1.0/12 May 2015
4
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 only be used for expenses which he incurs in performing the duties of the Employment. |
9 |
Confidentiality |
9.1 |
Without prejudice to the common law duties which he owes to the Group 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 Groups 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 unauthorized disclosure by the Executive. The Executive will use his best endeavours to prevent the unauthorized copying, use or disclosure of such information. |
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 Group, customer lists, pricing information, information relating to the Groups marketing and financial strategies, marketing materials, financial information and any other information concerning the affairs of the Group or the personnel of the Group 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 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 should or will prevent the Executive from raising any concerns in accordance with the provisions of the National Grid Standards of Ethical Business Conduct and the Requirement for Written Codes of Ethics for Employees (incorporating Whistleblowing Protection), or from disclosing confidential information as required by applicable law. |
10 |
Intellectual Property |
10.1 |
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 organization as the Company may require. |
10.2 |
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 States, the United Kingdom or any other part of the world for all Inventions and will do everything necessary (including executing |
A18771805/1.0/12 May 2015
5
documents) for vesting letters patent or other similar protection when obtained and all right 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 organization as the Company may require. |
10.3 |
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. |
10.4 |
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. |
10.5 |
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, define or protect the rights of the Company in all Works. |
10.6 |
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. |
10.7 |
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 10.7, 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. |
11.3 |
Except as otherwise agreed by the Executive and the Company, notwithstanding the other provisions of this Agreement and in particular Clause 11.2, this Agreement will automatically terminate at the end of the Companys fiscal year in which the Executives 65th birthday occurs. |
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). Any payment by the Company in lieu of any unexpired period of notice will be made as soon as practicable and, in any event, completed no later than the 15th day of the third month following the later of the end of the calendar year or the Company fiscal |
A18771805/1.0/12 May 2015
6
year that occurs immediately following initial notice under Clause 11.2. The Executive is not entitled to participate in or benefit from any severance, termination or redundancy plan, program or arrangement maintained by any Group Company; for the avoidance of doubt, this is notwithstanding anything to the contrary that may be contained in such severance, termination or redundancy plan, program or arrangement. |
11.5 |
Notwithstanding the above, the Company reserves the right to apply a mitigation strategy in respect of any payment in lieu of notice in line with the Companys remuneration policy and applicable corporate governance requirements from time to time. |
11.6 |
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 two years. This notice can be given whilst the Executive continues not to perform his duties or on expiration of the 364 day period. In this clause, days includes Saturdays, Sundays and public holidays. |
11.7 |
The Company may terminate the Employment by giving written notice to take immediate effect if the Executive: |
11.7.1 |
has not performed his duties under this Agreement to the standard required by the Board; or |
11.7.2 |
commits any serious or persistent breach of his obligations under this Agreement; or |
11.7.3 |
does not comply with any material term of this Agreement; or |
11.7.4 |
does not comply with any lawful order or direction given to him by the Board; or |
11.7.5 |
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 |
11.7.6 |
is guilty of dishonesty or is convicted of an offense (other than a motoring offence which does not result in imprisonment) whether in connection with the Employment or not; or |
11.7.7 |
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 |
11.7.8 |
becomes of unsound mind, is bankrupted 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 |
11.7.9 |
becomes disqualified from being a director of a company or the Executives directorship of the Parent terminates without the consent or concurrence of the Parent; or |
11.7.10 |
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. |
11.8 |
Where the Company terminates the Employment by giving written notice to take immediate effect in accordance with either Clause 11.6 or 11.7 (or in the case of the |
A18771805/1.0/12 May 2015
7
Executives death), 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. |
11.9 |
The Executive will have no claim for damages or any other remedy against the Company if the Employment is terminated for any of the reasons set out in clause 11.6 or 11.7. |
11.10 |
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. |
11.11 |
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 and such suspension shall not entitle the Executive to claim that he has been constructively dismissed. |
11.12 |
As a condition to making the payments and providing the benefits stated in this clause 11, the Company may require the Executive to execute and deliver a general release in which he (i) releases all claims that he may have in respect of his employment against any Group Company and any of their respective past or present officers, directors or employees other than his rights under this Agreement or another agreement into which he and the Company subsequently enter and (ii) covenants that he has not filed and will not file any civil action, suit, arbitration, administrative charge, or legal proceeding against any of the released parties in respect of the released claims. |
11.13 |
Unless the Group waives this requirement, the termination of the Employment for any reason will constitute the Executives resignation from (1) any director, officer or employee position he then has with any Group Company and (2) all fiduciary positions (including as trustee) he holds with respect to any pension plans or trusts established by any Group Company. The Executive agrees that this Agreement will serve as his written notice of resignation in this circumstance. |
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 six 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 contract); or |
A18771805/1.0/12 May 2015
8
12.2.3 |
contact or have any communication with any employee, officer, director, agent or consultant of the Parent or any other Group Company in relation to the business of the Parent or any other Group Company; or |
12.2.4 |
remain or become involved in any aspect of the business of the Parent or any other Group Company except as required by such companies. |
12.3 |
The Company may require the Executive: |
12.3.1 |
to comply with the provisions of Clause 15; and |
12.3.2 |
to immediately resign from any directorship, trusteeships or other offices which he holds in the Parent, 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 (excluding bonuses) in accordance with the terms of this Agreement. Any unused vacation accrued at the commencement of the Garden Leave Period and any vacation 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, in its sole and absolute discretion, pay the Executive base salary alone (as defined in Clause7.1) 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). In any event, and in accordance with Clause 11.4, the Companys payment in lieu of the unexpired period of notice will be completed no later than the 15th day of the third month following the later of the end of the calendar year or the Company fiscal year that occurs immediately following initial notice under Clause 11.2. |
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 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 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. |
A18771805/1.0/12 May 2015
9
13 |
Restrictions after Termination of Employment |
13.1 |
In this Clause; |
Prohibited Area means the United States and any other country in the world in which the Company or any Group Company has material business interests in the period of 12 months ending on the Relevant Date;
Relevant Date means the Termination Date or, if earlier, the date on which the Executive commences any Garden Leave Period;
Restricted Period means the period of 12 months (less any Garden Leave Period) commencing on the Termination Date;
Significant Customer means any party with respect to whom the Company or any Group Company derives, or expects to derive, revenue which represents 1 per cent or more of the revenue of the Group for the applicable fiscal year; and
Termination Date means the Executives last date of employment with the Group.
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 employed in, 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; |
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) canvass or solicit in competition with the Company or any other Group Company or deal with or otherwise accept in competition with the Company or any Group Company the business of any customer which is or is about to become a Significant Customer at the Relevant Date; and |
13.2.3 |
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. |
A18771805/1.0/12 May 2015
10
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. |
13.6 |
Any termination of the Employment or of this Agreement (or breach of this Agreement by the Executive, the Company or the Parent) shall have no effect on the continuing operation of this Clause 13. |
13.7 |
The parties hereto acknowledge that the potential restrictions on the Executives future employment imposed by this Clause 13 are reasonable in both duration and geographic scope and in all other respects. If for any reason any court of competent jurisdiction shall find any provisions of this Clause 13 unreasonable in duration or geographic scope or otherwise, the Executive and the Company agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction. |
13.8 |
The parties acknowledge that this Agreement would not have been entered into and the benefits described in Clause 7 would not have been promised in the absence of the Executives promises under this clause 13. |
13.9 |
In the event that the Executive breaches Clause 13.2.1, 13.2.2, or 13.2.3, the Companys obligation to make or provide payments or benefits under Clause 7 and 12 shall cease. |
13.10 |
Before the Executive either applies for or accepts employment with any other person or entity while any of Clause 13.2.1, 13.2.2, or 13.2.3 is in effect, the Executive will provide the prospective employer with written notice of the provisions of this Clause 13 and will deliver a copy of the notice to the Company. |
13.11 |
The Executive agrees not to take any action that is intended to harm the Group or its reputation or which leads to unwanted or unfavourable publicity to the Group or make any public statement that disparages any member of the Group or any of their respective past or present executive officers or directors. |
14 |
Offers on Liquidation |
The Executive will have no claim against the Company if the Employment is terminated by reason of liquidation in order to reconstruct or amalgamate the Company or by reason of any reorganization of the Company and the Executive is offered employment with the company succeeding to the Company upon such liquidation or reorganization and the new terms of employment offered to the Executive are no less favourable to him than the terms of this Agreement.
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: |
A18771805/1.0/12 May 2015
11
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, other than his employment and deferred compensation documents; and |
15.1.2 |
all other property belonging or relating to any of the Group Companies. |
15.2 |
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 or any other Group Company is subject to the Articles of Association or Certificate of Incorporation 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 or Certificate of Incorporation, the Articles of Association or Certificate of Incorporation will prevail. |
16.2 |
The Executive must 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 Parent. |
17 |
Taxes, Withholding and Section 409A. |
The Executive and the Group will treat all payments to under this Agreement as compensation for services. Accordingly, the Group may withhold from any payment any taxes that are required to be withheld under any applicable law, rule or regulation. Each instalment payment under this Agreement payable on a payroll date shall constitute a separate payment for purposes of Section 409A of the Internal Revenue Code. Notwithstanding anything to the contrary in this Agreement, any payments that become payable under Section 12 of this Agreement on account of the Company placing the Executive on garden leave and any payments in lieu of any unexpired period of notice will be completed no later than the 15 th day of the third month following the later of the end of the calendar year or the Company fiscal year that occurs immediately following initial notice under Clause 11.2. Any amounts payable to the Executive in kind, or as
A18771805/1.0/12 May 2015
12
reimbursement of expenses, shall be paid not later than the last day of the year following the year in which the reimbursable expense is incurred, the amount payable in one year shall not be affected by the amount payable in another year, and no other amount shall be paid in substitution for such amounts.
18 |
Notices |
18.1 |
Any notices given under this Agreement must be given by letter or email. Notice to either the Parent or the Company must be addressed to its respective registered office at the time the notice is given, and may be emailed to a director of such company other than the Executive. Notice to the Executive must be given to him personally or sent to his last known address or emailed to his last known email address, with a copy to Evan Belosa, Esq., Cadwalader, Wickersham & Taft, PPL, 1 World Financial Center, New York, New York 10281 or by email to Evan.Belosa@cwt.com. |
18.2 |
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 sent by email shall be deemed to have been received only when a read receipt has been received by the sender confirming that the relevant email has been opened. |
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 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 European Economic Area. |
19.2 |
The Executive acknowledges that during his Employment he will have access to and process, or authorize the processing of, personal data and sensitive personal data relating to employees, customers and other individuals held and controlled by the Company. The Executive agrees to comply with the terms of the Act in relation to such data and to abide by the Companys data protection policy issued from time to time. |
A18771805/1.0/12 May 2015
13
20 |
Governing Law and Jurisdiction |
20.1 |
This Agreement and any documents to be entered into pursuant to it, save as expressly referred to therein, and any non-contractual obligations arising out of or in connection with it and any such documents shall be governed by the law of England and Wales. |
20.2 |
The parties irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and any documents to be entered into pursuant to it and that accordingly any proceedings arising out of or in connection with this Agreement and any documents to be entered into pursuant to it shall be brought in such courts. Each of the parties irrevocably submits to the jurisdiction of such courts and waives any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum. |
20.3 |
This Agreement will be binding on, inure to the benefit of and be enforceable by the parties and their respective heirs, personal representatives, successors and assigns. This Agreement does not confer any rights, remedies, obligations or liabilities to any entity or person other than the parties hereto and their permitted successors and assigns. |
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 |
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. |
21.6 |
The Company may withhold from any amounts payable under this Agreement any applicable withholding in respect of federal, state, local or foreign taxes. |
21.7 |
This Agreement supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in it. It 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). |
21.8 |
Neither partys rights or powers under this Agreement will be affected if: |
A18771805/1.0/12 May 2015
14
21.8.1 |
one party delays in enforcing any provision of this Agreement; or |
21.8.2 |
one party grants time to the other party. |
21.9 |
References to any statutory provisions include any modifications or re-enactments of those provisions. |
21.10 |
Headings will be ignored in construing this Agreement. |
21.11 |
If either party agrees to waive his or its rights under a provision of this Agreement, that waiver will only be effective if it is in writing and it is signed by him or it. 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. |
21.12 |
The Executive hereby confirms that the execution of this Agreement and performance of his obligations under this Agreement do not and will not conflict with, violate the terms of, or constitute a default under, and will be in compliance with any agreement or instrument to which he is a party or by which he is bound, or to which he is subject. The Executive further confirms that he is not party to any employment contract, confidentiality agreement or other agreement that contains any restriction that will affect the performance of his duties hereunder as of the Commencement Date. Executive represents that (A) his negotiations with the Group have not interfered with his duties as an employee, partner or member of another entity, (B) he has not and will not solicit or encourage any employee of another entity to leave such entitys employment in violation of any agreement between such entity and the Executive and (C) he has not, and will not, use, retain or disclose to the Group any confidential information of another entity. |
21.13 |
The Executive shall be covered by the indemnity policies, by-laws and procedures applicable to senior executives of the Company. |
21.14 |
This Agreement is in consideration of the mutual covenants contained in it. |
21.15 |
The parties hereto acknowledge the receipt and sufficiency of the consideration to this Agreement and intend this Agreement to be legally binding. |
A18771805/1.0/12 May 2015
15
Executed 2014 on behalf of
|
||||
NATIONAL GRID PLC
|
} |
/s/ Steve Holliday |
NATIONAL GRID USA
|
} |
/s/ Roger G. Young |
BY SIGNING This Agreement, I HEREBY CERTIFY THAT I (A) HAVE RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY BEFORE SIGNING IT, (B) HAVE READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT, (C) HAVE HAD SUFFICIENT OPPORTUNITY TO REVIEW THE AGREEMENT WITH ANY ADVISOR I DESIRED TO CONSULT, INCLUDING LEGAL COUNSEL, (D) HAVE HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING IT TO ASK ANY QUESTIONS ABOUT THIS AGREEMENT AND HAVE RECEIVED SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS, AND (E) UNDERSTAND MY RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT.
/s/ Dean Seavers |
||||
Executed 22/10/2014 by DEAN SEAVERS in the presence . |
} |
|||
Witnesss signature |
/s/ Mathew V. Moore |
|||
Name Mathew V Moore |
||||
Address of: 296 State Street , Boston MA |
||||
Occupation |
Hotel Mgr & Notary Public |
A18771805/1.0/12 May 2015
16
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 2015
/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 2015
/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 2015 (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 2015 |
/s/ Steve Holliday |
|||
Steve Holliday | ||||
Title: Chief Executive | ||||
National Grid plc | ||||
Date: 5 June 2015 |
/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 20, 2015 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, 2015 |