REG - National Grid PLC - Results for the year ended 31 MARCH 2016 <Origin Href="QuoteRef">NG.L</Origin> - Part 3
19/05/2016 07:10
- Part 3: For the preceding part double click ID:nRSS6702Yb
currency denominated activity, have been translated using the average US$ exchange rate for
the year ended 31 March 2016, which was $1.47 to £1.00. The average rate for the year ended 31 March 2015, was $1.58 to
£1.00. Assets and liabilities as at 31 March 2015 have been retranslated at the closing rate at 31 March 2016 of $1.44 to
£1.00. The closing rate for the balance sheet date 31 March 2015 was $1.49 to £1.00.
Earnings per share
Prior year earnings per share figures are restated to reflect the impact of additional shares issued as scrip dividends.
Other regulatory assets and liabilities
The revenues that National Grid's UK regulated businesses targets to collect in any year are based on the regulator's
forecasts for that year. Under the new UK price control arrangements, revenues will be adjusted in future years to take
account of actual levels of collected revenue, costs and outputs delivered when they differ from those regulatory
forecasts. This includes adjustments designed to share performance efficiencies with customers. National Grid's estimate of
these future revenue adjustments are represented in the calculation of regulated financial performance and regulated
financial position as "other regulatory assets and liabilities". These include:
· Revenues associated with sharing under the totex incentive mechanism
· Adjustments for changes to customer output requirements on totex allowances
· True ups for pass through costs, actual RPI and pensions deficit repair costs
· Differences between allowed/targeted and recovered revenues
· Differences between revenues collected and earned under other incentive mechanisms
In addition, other regulatory assets and liabilities include balances relating to "phasing adjustments". Where expenditure
allowances have been awarded in one year but are associated with expenditure that is now expected to be incurred in a
different year National Grid applies "phasing adjustments" to better match the allowances to the year of expenditure. In
such cases, the revenues associated with these re-phased allowances are included in other regulated assets and liabilities
and reversed when the associated expenditure is incurred.
In the US, other regulatory assets and liabilities include regulatory assets and liabilities which are not included in the
definition of rate base within that jurisdiction, including working capital where appropriate.
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. This is an addition to RAV above and beyond that associated with the remuneration
of actual expenditure and is termed "performance RAV".
Regulated asset base
'Regulated asset base' refers to assets included in regulated asset value and rate base within our UK and US regulated
businesses, respectively.
Timing
Under the Group's regulatory frameworks, the majority of the revenues that National Grid is allowed to collect each year
are governed by a regulatory price control or rate plan. If a company collects more than this allowed level of revenue, the
balance must be returned to customers in subsequent years, and if it collects less than this level of revenue it may
recover the balance from customers in subsequent years. These variances between allowed and collected revenues give rise to
"over and under recoveries". In addition, a number of costs in both the UK and the US are pass-through costs (including
substantial commodity and energy efficiency costs in the US), and are fully recoverable from customers. Any timing
differences between costs of this type being incurred and their recovery through revenues are also included in over and
under-recoveries. In the UK, timing differences also include an estimation of the difference between revenues earned under
revenue incentive mechanisms and any associated revenues collected. UK timing balances and movements exclude any
adjustments associated with changes to controllable cost (totex) allowances or adjustments under the totex incentive
mechanism.
Identification of these timing differences enables a better comparison of performance from one period to another. Opening
balances of under and over-recoveries have been restated where appropriate to correspond with regulatory filings and
calculations.
Totex
Under the UK RIIO regulatory arrangements the Company is incentivised to deliver efficiencies against cost targets set by
the regulator. In total, these targets are set in terms of a regulatory definition of combined total operating and capital
expenditure, also termed "totex". The definition of totex differs from the total combined regulated controllable operating
costs and regulated capital expenditure as reported in this statement according to IFRS accounting principles. Key
differences are capitalised interest, capital contributions, exceptional costs, costs covered by other regulatory
arrangements and unregulated costs.
METRIC CALCULATIONS
Regulated financial performance (£m) 2015/16 2014/15
UKET UKGT UKGD US REG UKET UKGT UKGD US REG
Statutory operating profit 1,173 486 878 1,196 1,237 437 826 1,081
Exceptional items/remeasurements - - - (11) - - - 83
Adjusted operating profit 1,173 486 878 1,185 1,237 437 826 1,164
Depreciation and amortisation 390 178 298 535 376 172 286 452
EBITDA 1,563 664 1,176 1,720 1,613 609 1,112 1,616
Regulatory treatment adjustments
Movement in UK regulatory "IOUs" (147) (80) (35) - (130) (16) (28) -
US timing - - - 73 - - - (30)
Performance RAV created 80 (5) 40 - 77 (7) 41 -
Pensions deficit contributions (54) (77) (13) (144) (48) (49) (5) (92)
3% RAV Indexation 339 166 255 - 326 166 255 -
UK deferred taxation adjustment 80 45 (34) - 88 85 60 -
Regulatory depreciation (758) (196) (402) (535) (728) (194) (434) (452)
Fast/slow money adjustment 92 18 (168) - 34 54 (182) -
Regulated financial performance 1,195 535 819 1,114 1,232 648 819 1042
Group RoE calculation(year ended 31 March)
2016 2015 2014
Regulated financial performance 3,663 3,741 3,468
Operating profit of other activities 374 199 131
Group financial performance 4,037 3,940 3,599
Share of post-tax results of joint ventures 59 46 28
Non-controlling interests (3) 8 12
Adjusted group interest charge (922) (945) (1,055)
Group tax charge (753) (695) (581)
Tax on adjustments 4 (14) 73
Group financial performance after interest and tax 2,422 2,340 2,076
Opening rate base/RAV 36,998 35,237 33,128
Opening NBV of non-regulated businesses 1,213 1,341 1,185
Joint Ventures 319 358 371
Opening Goodwill 5,182 4,856 5,028
Opening capital employed 43,712 41,792 39,712
Opening Net Debt (24,024) (21,974) (21,429)
Opening Equity 19,688 19,818 18,283
Return on Equity 12.3% 11.8% 11.4%
Regulated financial position (£m - constant currency) 2015/16
UKET UKGT UKGD US REG
Opening RAV/rate base* 11,285 5,525 8,513 11,974
In year movement 545 69 163 729
Closing RAV/rate base 11,830 5,594 8,676 12,703
Opening other regulatory assets and liabilities* 49 157 (89) 1,951
In year movement (147) (80) (35) (515)
Closing other regulatory assets and liabilities (98) 77 (124) 1,436
Closing regulated financial position 11,732 5,671 8,552 14,139
Total 2015/16 40,094
*Adjusted to correspond with 2014/15 regulatory filings and calculations
DESCRIPTION OF METRIC CALCULATIONS
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 makes adjustments to reported operating profit to reflect the impact of the
businesses' regulatory arrangements when presenting financial performance. It reflects both the value realised on behalf of
providers of capital in the year and also an estimation of net value created, but not yet realised, that is reasonably
expected to be realised or returned to customers in future periods under the Group's regulatory arrangements.
The principal adjustments from reported operating profit to regulated financial performance are:
Adjustment Calculation
US timing & 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. US: As per US Timing.UK: Movement in other regulated assets and liabilities.
Performance RAVUK performance efficiencies are in part remunerated by the creation of additional RAV which is expected to result in future earnings under regulatory arrangements. In year totex outperformance multiplied by the appropriate regulatory capitalisation ratio and multiplied by the retained company incentive sharing ratio.
Pension adjustment Cash payments against pension deficits in the UK are recoverable under regulatory contracts. In US Regulated operations, US GAAP pension charges are generally recoverable through rates. Revenue recoveries are recognised under IFRS but payments are not UK: cash payments against the regulatory proportion of pension deficits in the UK regulated business.US: the difference between IFRS and US GAAP pension charges.
charged against IFRS operating profits in the year.
3% RAV IndexationFuture UK revenues expected to be set using an asset base adjusted for inflation. UK RAV multiplied by 3% (long-run RPI inflation assumption).
UK deferred taxation adjustmentFuture UK revenues are expected to recover cash taxation cost including the unwinding of deferred taxation balances created in the current year. The difference between 1. IFRS EBITDA less other regulatory adjustments and 2. IFRS EBITDA less other regulatory adjustments less current taxation (adjusted for interest tax shield) then grossed up at full UK statutory tax rate.
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. Regulatory depreciation.
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 Difference between IFRS classification of costs as operating costs or fixed asset additions and the regulatory classification.
principles.
Group RoE Calculation
The Group Return on Equity (RoE) 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.
Calculation: Regulatory financial performance, including a long-run assumption of 3.0% RPI inflation, less adjusted
interest and adjusted taxation divided by equity investment in assets
· Adjusted interest removes interest on pensions, capitalised interest and release of provisions Adjusted taxation
adjusts the Group taxation charge for differences between IFRS profit before tax and regulated financial performance less
adjusted interest
· Equity investment in assets is calculated as the total opening UK regulatory asset value, the total opening US rate
base plus goodwill plus opening net book value of joint ventures and other activities; minus opening net debt as reported
under IFRS
US Regulated Return on Equity (nominal)
US Regulated Return on Equity is a measure of how a business is performing operationally against the assumptions used by
the 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 (calendar year to 31 December).
Calculation: Regulated net income divided by equity rate base:
· Regulated net income calculated as US GAAP operating profit less interest on the adjudicated debt portion of the rate
base (calculated at the actual rate on long term debt, adjusted where the proportion of long term debt in the capital
structure is materially different from the assumed regulatory proportion) less tax at the adjudicated rate
· Regulated net income is adjusted for earned savings in New York and Narragansett Electric and for certain material
specified items
· Equity rate base is the average rate base for the calendar year as reported to the Group's regulators or, where a
reported rate base is not available, an estimate based on rate base calculations used in previous rate filings multiplied
by the adjudicated equity portion in the regulatory capital structure
UK Regulated Return on Equity (nominal)
UK operational return is a measure of how a business is performing operationally against the assumptions used by the
regulator.
These returns are calculated using the assumption that the businesses are financed in line with the regulatory adjudicated
capital structure, at the cost of debt assumed by the regulator and that RPI is equal to a long-run assumption of 3.0%.
Calculation: Base allowed Return on Equity plus or minus the following items
· Additional allowed revenues/profits earned in the year from incentive schemes, less associated corporation tax
charge;
· Totex outperformance multiplied by the company sharing factor set by the regulator; and
· Revenues (net of associated depreciation and base allowed asset return) allowed in the year associated with incentive
performance earned under previous price controls but not yet fully recovered, less associated corporation tax charge
(excluding logging up or pensions recovery)
Divided by average equity RAV in line with regulatory assumed capital structure.
PROVISIONAL FINANCIAL TIMETABLE
19 May 2016 2015/16 preliminary results
2 June 2016 Ordinary shares go ex-dividend
3 June 2016 Record date for 2015/16 final dividend
9 June 2016 Scrip reference price announced
20 June 2016 Preliminary Scrip election date for 2015/16 final dividend
25 July 2016 Annual General Meeting, ICC, Birmingham
10 August 2016 2015/16 final dividend paid to qualifying shareholders
10 November 2016 2016/17 half year results
24 November 2016 Ordinary shares go ex-dividend
25 November 2016 Record date for 2016/17 interim dividend
1 December 2016 Scrip reference price announced
9 December 2016 Scrip election date for 2016/17 interim dividend
11 January 2017 2016/17 interim dividend paid to qualifying shareholders
May 2017 2016/17 preliminary results
American Depositary Receipt (ADR) Deposit Agreement
The Company amended the deposit agreement under which the ADRs representing its ordinary shares are issued to allow a fee
of up to $0.05 per ADR to be charged for any cash distribution made to ADR holders, including cash dividends. ADR holders
who receive cash in relation to the 2015/16 final dividend will be charged a fee of $0.02 per ADR by the Depositary prior
to distribution of the cash dividend.
CAUTIONARY STATEMENT
This announcement 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 National Grid's financial condition, its 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 National Grid's 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 National Grid's 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 its 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
National Grid's IT systems and supporting technology; performance against regulatory targets and standards and against
National Grid's 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 announcement include fluctuations in exchange rates,
interest rates and commodity price indices; restrictions and conditions (including filing requirements) in National Grid's
borrowing and debt arrangements, funding costs and access to financing; regulatory requirements for the Company to maintain
financial resources in certain parts of its 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 National
Grid's regulated businesses and whether aspects of its activities are contestable; the funding requirements and performance
of National Grid's 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 the
National Grid's employees or the breach of laws or regulations by its employees; the failure to respond to market
developments, including competition for onshore transmission, the threats and opportunities presented by emerging
technology, development activities relating to changes in the energy mix and the integration of distributed energy
resources, and the need to grow the Company's business to deliver its 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 impact National Grid, please read the Strategic Report section and the 'Risk factors' on pages
173 to 176 of National Grid's most recent Annual Report and Accounts, as updated by National Grid's unaudited half-year
financial information for the six months ended 30 September 2015 published on 10 November 2015. In addition, new factors
emerge from time to time and National Grid cannot assess the potential impact of any such factor on its 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 announcement.
Consolidated income statement
for the years ended 31 March
2016 2015
Notes £m £m
Revenue 2(a) 15,115 15,201
Operating costs (11,030) (11,421)
Operating profit
Before exceptional items and remeasurements 2(b) 4,096 3,863
Exceptional items and remeasurements 3 (11) (83)
Total operating profit 2(b) 4,085 3,780
Finance income 4 22 36
Finance costs
Before exceptional items and remeasurements 4 (1,035) (1,069)
Exceptional items and remeasurements 3 (99) (165)
Total finance costs 4 (1,134) (1,234)
Share of post-tax results of joint ventures and associates 59 46
Profit before tax
Before exceptional items and remeasurements 2(b) 3,142 2,876
Exceptional items and remeasurements 3 (110) (248)
Total profit before tax 2(b) 3,032 2,628
Tax
Before exceptional items and remeasurements 5 (753) (695)
Exceptional items and remeasurements 3 315 78
Total tax 5 (438) (617)
Profit after tax
Before exceptional items and remeasurements 2,389 2,181
Exceptional items and remeasurements 3 205 (170)
Profit for the year 2,594 2,011
Attributable to:
Equity shareholders of the parent 2,591 2,019
Non-controlling interests 3 (8)
2,594 2,011
Earnings per share1
Basic 6(a) 69.0p 53.2p
Diluted 6(b) 68.7p 52.9p
1. Comparative amounts have been restated to reflect the impact of additional shares issued as scrip dividends.
Consolidated statement of comprehensive incomefor the years ended 31 March
2016 2015
£m £m
Profit for the year 2,594 2,011
Other comprehensive income/(loss)
Items that will never be reclassified to profit or loss:
Remeasurements of net retirement benefit obligations 539 (771)
Tax on items that will never be reclassified to profit or loss (125) 299
Total items that will never be reclassified to profit or loss 414 (472)
Items that may be reclassified subsequently to profit or loss:
Exchange adjustments 69 175
Net gains/(losses) in respect of cash flow hedges 50 (154)
Transferred to profit or loss in respect of cash flow hedges 29 13
Net gains on available-for-sale investments 43 41
Transferred to profit or loss on sale of available-for-sale investments - (8)
Tax on items that may be reclassified subsequently to profit or loss (32) 11
Total items that may be reclassified subsequently to profit or loss 159 78
Other comprehensive income/(loss) for the year, net of tax 573 (394)
Total comprehensive income for the year 3,167 1,617
Attributable to:
Equity shareholders of the parent 3,164 1,624
Non-controlling interests 3 (7)
3,167 1,617
Consolidated statement of changes in equityfor the years ended 31 March Share capital Share premium account Retained earnings Other equity reserves Total share-holders' equity Non-controlling interests Total equity
Note £m £m £m £m £m £m £m
At 1 April 2014 439 1,336 14,895 (4,759) 11,911 8 11,919
Profit for the year - - 2,019 - 2,019 (8) 2,011
Total other comprehensive (loss)/income for the year - - (472) 77 (395) 1 (394)
Total comprehensive income/(loss) for the year - - 1,547 77 1,624 (7) 1,617
Equity dividends 7 - - (1,271) - (1,271) - (1,271)
Scrip dividend related share issue1 4 (5) - - (1) - (1)
Purchase of treasury shares - - (338) - (338) - (338)
Issue of treasury shares - - 23 - 23 - 23
Purchase of own shares - - (7) - (7) - (7)
Other movements in non-controlling interests - - (3) - (3) 11 8
Share-based payment - - 20 - 20 - 20
Tax on share-based payment - - 4 - 4 - 4
At 31 March 2015 443 1,331 14,870 (4,682) 11,962 12 11,974
Profit for the year - - 2,591 - 2,591 3 2,594
Total other comprehensive income for the year - - 414 159 573 - 573
Total comprehensive income for the year - - 3,005 159 3,164 3 3,167
Equity dividends 7 - - (1,337) - (1,337) - (1,337)
Scrip dividend related share issue1 4 (5) - - (1) - (1)
Purchase of treasury shares - - (267) - (267) - (267)
Issue of treasury shares - - 16 - 16 - 16
Purchase of own shares - - (6) - (6) - (6)
Other movements in non-controlling interests - - - - - (5) (5)
Share-based payment - - 22 - 22 - 22
Tax on share-based payment - - 2 - 2 - 2
At 31 March 2016 447 1,326 16,305 (4,523) 13,555 10 13,565
1. Included within share premium account are costs associated with scrip dividends.
Consolidated statement of financial positionas at 31 March
2016 2015
Notes £m £m
Non-current assets
Goodwill 5,315 5,145
Other intangible assets 887 802
Property, plant and equipment 43,364 40,723
Other non-current assets 82 80
Pension assets 410 121
Financial and other investments 482 330
Investments in joint ventures and associates 397 318
Derivative financial assets 9 1,685 1,539
Total non-current assets 52,622 49,058
Current assets
Inventories and current intangible assets 437 340
Trade and other receivables 2,472 2,836
Financial and other investments 9 2,998 2,559
Derivative financial assets 9 278 177
Cash and cash equivalents 9 127 119
Total current assets 6,312 6,031
Total assets 58,934 55,089
Current liabilities
Borrowings 9 (3,611) (3,028)
Derivative financial liabilities 9 (337) (635)
Trade and other payables (3,285) (3,292)
Current tax liabilities (252) (184)
Provisions (236) (235)
Total current liabilities (7,721) (7,374)
Non-current liabilities
Borrowings 9 (24,733) (22,882)
Derivative financial liabilities 9 (1,732) (1,764)
Other non-current liabilities (2,071) (1,919)
Deferred tax liabilities (4,634) (4,297)
Pensions and other post-retirement benefit obligations (2,995) (3,379)
Provisions (1,483) (1,500)
Total non-current liabilities (37,648) (35,741)
Total liabilities (45,369) (43,115)
Net assets 13,565 11,974
Equity
Share capital 447 443
Share premium account 1,326 1,331
Retained earnings 16,305 14,870
Other equity reserves (4,523) (4,682)
Shareholders' equity 13,555 11,962
Non-controlling interests 10 12
Total equity 13,565 11,974
Consolidated cash flow statementfor the years ended 31 March
2016 2015
Notes £m £m
Cash flows from operating activities
Total operating profit 2(b) 4,085 3,780
Adjustments for:
Exceptional items and remeasurements 3 11 83
Depreciation, amortisation and impairment 1,614 1,494
Share-based payment charge 22 20
Gain on exchange of associate for available-for-sale investment (49) -
Changes in working capital 456 301
Changes in provisions (90) (41)
Changes in pensions and other post-retirement benefit obligations (327) (270)
Cash flows relating to exceptional items (62) (17)
Cash generated from operations 5,660 5,350
Tax paid (292) (343)
Net cash inflow from operating activities 5,368 5,007
Cash flows from investing activities
Acquisition of investments (116) -
Purchases of intangible assets (220) (207)
Purchases of property, plant and equipment (3,408) (3,076)
Disposals of property, plant and equipment 4 9
Dividends received from joint ventures 72 79
Interest received 23 37
Net movements in short-term financial investments (391) 1,157
Net cash flow used in investing activities (4,036) (2,001)
Cash flows from financing activities
Purchase of treasury shares (267) (338)
Proceeds from issue of treasury shares 16 23
Purchase of own shares (6) (7)
Proceeds received from loans 2,726 1,534
Repayments of loans (896) (2,839)
Net movements in short-term borrowings and derivatives (730) 623
Interest paid (834) (826)
Exceptional finance costs on the redemption of debt - (152)
Dividends paid to shareholders (1,337) (1,271)
Net cash flow used in financing activities (1,328) (3,253)
Net increase/(decrease) in cash and cash equivalents 8 4 (247)
Exchange movements 4 24
Net cash and cash equivalents at start of year 116 339
Net cash and cash equivalents at end of year1 124 116
1. Net of bank overdrafts of £3m (2015: £3m).
Notes
1. Basis of preparation and new accounting standards, interpretations and amendments
The full year financial information contained in this announcement, which does not constitute statutory accounts as defined
in Section 434 of the Companies Act 2006, has been derived from the statutory accounts for the year ended 31 March 2016,
which will be filed with the Registrar of Companies in due course. Statutory accounts for the year ended 31 March 2015 have
been filed with the Registrar of Companies. The auditors' report on each of these statutory accounts was unqualified and
did not contain a statement under Section 498 of the Companies Act 2006.
The full year financial information has been prepared in accordance with the accounting policies applicable for the year
ended 31 March 2016 which are consistent with those applied in the preparation of our accounts for the year ended 31 March
2015.
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 2016. None of the pronouncements had a material impact on the Company's
consolidated results or assets and liabilities for the year ended 31 March 2016.
· Amendment to IAS 19 'Defined Benefit Plans: Employee Contributions';
· Annual Improvements to IFRSs 2010-2012 Cycle;
· Annual Improvements to IFRSs 2011-2013 Cycle.
Date of approval
This announcement was approved by the Board of Directors on 18 May 2016.
2. Segmental analysis
We present revenue and the results of the business analysed by operating segment, based on the information the Board of
Directors uses internally for the purposes of evaluating the performance of operating segments and determining resource
allocation between operating segments. The Board is National Grid's 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 and remeasurements (see note 3).
There have been no changes to our reporting structure during the year ended 31 March 2016.
The following table describes the main activities for each operating segment:
UK Electricity Transmission High voltage electricity transmission networks in Great Britain.
UK Gas Transmission The gas transmission network in Great Britain and UK liquefied natural gas (LNG) storage activities.
UK Gas Distribution Four of the eight regional networks of Great Britain's gas distribution system.
US Regulated Gas distribution networks, electricity distribution networks and high voltage electricity transmission networks in New York and New England and electricity generation facilities in New York.
Other activities primarily relate to non-regulated businesses and other commercial operations not included within the above
segments, including: UK gas metering activities; the Great Britain-France Interconnector; UK property management; a UK LNG
import terminal (National Grid Grain LNG Limited); US LNG operations; US unregulated transmission pipelines; together with
corporate activities.
Sales between operating segments are priced considering the regulatory and legal requirements to which the businesses are
subject. The analysis of revenue by geographical area is on the basis of destination. There are no material sales between
the UK and US geographical areas.
(a) Revenue
2016£m 2015£m
Operating segments:
UK Electricity Transmission 3,977 3,754
UK Gas Transmission 1,047 1,022
UK Gas Distribution 1,918 1,867
US Regulated 7,493 7,986
Other activities 876 762
Sales between segments (196) (190)
15,115 15,201
Geographical areas:
UK 7,522 7,191
US 7,593 8,010
15,115 15,201
2. Segmental analysis continued
(b) Operating profit
Before exceptional items and remeasurements After exceptional items and remeasurements
2016 2015 2016 2015
£m £m £m £m
Operating segments:
UK Electricity Transmission 1,173 1,237 1,173 1,237
UK Gas Transmission
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