REG - National Grid PLC - Results for the year ended 31 MARCH 2017 <Origin Href="QuoteRef">NG.L</Origin> - Part 3
18/05/2017 07:07
- Part 3: For the preceding part double click ID:nRSR4855Fb
run from Quebec, through Vermont and New Hampshire. The project is expected to bid into the Massachusetts RFP for
renewables and if successful, would be completed in the early 2020s.
As technology evolves there is increasing demand to integrate large-scale battery solutions into the network. In addition
to National Grid's projects within its regulated distribution utilities, the Company is pursuing merchant storage projects.
On Long Island, National Grid and NextEra have partnered to develop two battery storage projects. This solution was
selected by the Long Island Power Authority and pending permitting approval, would be operational around 2018.
Capital investment - continuing(£m) - actual currency Year ended 31 March
2017 2016 % change
Metering 35 39 (10)
Grain LNG 6 25 (76)
French interconnector 15 5 200
North Sea Link 40 24 67
Property 15 15 -
Other UK 5 8 (38)
Other US 131 85 54
Capital expenditure excluding joint ventures 247 201 23
Investment in joint ventures (JVs)* 127 53 140
Capital investment including investment in JVs 374 254 47
*excludes £10m (2015/16: £63m) equity contribution to St William property joint venture
Other selected financial information - continuing Year ended 31 March
(£m) - constant currency 2017 2016 % change
Operating profit 177 373 (53)
Depreciation (232) (217) (7)
Depreciation (actual exchange rates) (232) (208) (12)
JOINT VENTURES AND ASSOCIATES
Share of post-tax results by principal activities (£m) 2017 2016 % change
BritNed 53 50 6
Millennium 15 11 36
Iroquois - 3
Other (5) (5) -
Share of post-tax results of joint ventures and associates 63 59 7
At the start of the year, joint ventures and associates in the Group consist principally of interests in electricity
transmission interconnectors and gas pipelines, which included a 50% interest in the 1GW BritNed electricity interconnector
between the Netherlands and England and a 26% interest in the Millennium natural gas pipeline in New York.
National Grid's share of post-tax results of joint ventures for the year was £63m, an increase of £4m compared with
2015/16. This reflected an increase in the contribution from the BritNed interconnector.
REVIEW OF DISCONTINUED OPERATIONS
2016/17 Overview
Discontinued operations principally comprise NGGD (61% of which was sold on 31 March 2017), as well as certain other assets
(principally property assets and an interest in Xoserve Limited) that were also disposed of at that date.
The review below has excluded the activity of the property assets and Xoserve Limited as these are not considered a
material part of the overall performance of discontinued operations.
Performance reflects continued good efficiency and incentive performance
Return on Equity 410bps above base levels
Return on Equity for the year, using a long-run inflation rate of 3%, was 14.0% compared with a regulatory assumption, used
in calculating the original revenue allowance, of 9.9%. The principal components of the difference are shown in the table
below.
Year ended 31 March 2017 2016
Base return (including avg. 3% long-run inflation) 9.9% 9.9%
Totex incentive mechanism 2.8% 2.0%
Other revenue incentives 1.2% 1.0%
Return including in year incentive performance 13.9% 12.9%
Pre-determined additional allowances 0.1% 0.1%
Return on Equity 14.0% 13.0%
The business performed strongly against the targets set by the totex incentive mechanism in the fourth year of RIIO. The
Gas Distribution Strategic Partnerships (GDSP) continued to drive this outperformance through their use of innovative and
efficient delivery of the mains replacement programme. Totex was £945m compared with an estimated allowance, adjusted for
outputs and phasing of spend, of £1,076m. Our share of this efficiency saving is expected to be £82m.
The business had another strong year of incentive performance, driven by the true up of outperformance over the RIIO period
to date as well as improved customer satisfaction incentive scores. Overall, the UK Gas Distribution business delivered 120
bps of additional returns through other revenue incentives. On a pre-tax basis, this equates to an estimated £43m of
additional revenue allowance, most of which is due to be recovered in future years under the RIIO funding mechanisms.
Regulated Financial Position broadly unchanged with RPI below long-run expectations
RAV increased 3.5% in the year reflecting the impact of inflation, continued investment and performance RAV, partially
offset by depreciation. Net other regulatory liabilities decreased by £16m, mainly reflecting current year revenue over
recoveries associated with lower than expected inflation.
£m 2017 2016
Opening Regulated Asset Value (RAV)* 8,664 8,513
Asset additions (aka slow money) (actual) 408 392
Performance RAV or assets created 47 40
Inflation adjustment (actual RPI) 273 133
Depreciation and amortisation (413) (402)
Closing RAV 8,979 8,676
Opening balance of other regulated assets and (liabilities)* (132) (89)
Movement 16 (35)
Closing balance (116) (124)
Closing Regulated Financial Position 8,863 8,552
*March 2016 opening balances adjusted to correspond with 2015/16 regulatory filings and calculations
Investment activities in 2016/17 focussed on asset health
UK Gas Distribution invested £558m during the year, a £9m increase on the prior year. This included £389m of replacement
expenditure (£28m lower than the prior year), as the catch up of work in 2015/16 was not repeated. Other capex was £169m,
£37m higher than the prior year due to an increase in reinforcement workload and kit relocations.
APPENDIX to DISCONTINUED OPERATIONS
Revenue and Costs in 2016/17 on an IFRS basis
On an IFRS basis UK Gas Distribution operating profit was £898m, up £20m or 2%. Excluding the impact of timing, operating
profit was £68m higher reflecting a decreased depreciation charge.
The principal components of the movement in operating profit are shown below.
Year ended 31 March Revenue and Costs
(£m) 2017 2016 % change
Net revenue 1,532 1,566 (2)
Regulated controllable operating costs (387) (374) (3)
Post-retirement costs (42) (39) (8)
Other operating costs and provisions/contribution release 9 23 (61)
Depreciation and amortisation (214) (298) 28
Operating profit 898 878 2
Less: Timing impact (22) 26 n/a
Operating profit excluding timing 920 852 8
Net revenue (net of pass through costs) decreased by £34m. Excluding timing impacts of £48m, net revenue increased by £14m.
This primarily relates to inflationary increases, partly offset by a reduction in base revenues.
Regulated controllable costs increased by £13m. This was primarily driven by workload related headcount increases and
inflation.
Depreciation and amortisation decreased by £84m reflecting the cessation of depreciation for the period 8 December 2016 to
31 March 2017, following the announcement of the sale of the business. This was partly offset by higher depreciation in the
first eight months of the year due to increased asset commissioning activity. Other operating credits were £14m lower
driven by the non-recurrence of gas holder provision releases in the prior year.
APPENDIX: BASIS OF PRESENTATION, DEFINITIONS AND METRIC CALCULATIONS
BASIS OF PRESENTATION
Adjusted and Statutory Results
Unless otherwise stated, all financial commentaries in this release are given on an adjusted basis at actual exchange
rates. Prior year earnings per share figures are restated to reflect the impact of additional shares issued as scrip
dividends (refer to note 6 on page 59).
'Adjusted' results are a key financial performance measure used by National Grid, being the results for continuing
operations before exceptional items and remeasurements. Remeasurements comprise gains or losses recorded in the income
statement arising from changes in the fair value of commodity contracts and of derivative financial instruments to the
extent that hedge accounting is not achieved or is not fully effective. Commentary provided in respect of results after
exceptional items and remeasurements is described as 'statutory'. Further details are provided in note 3 on page 56. A
reconciliation of business performance to statutory results is provided in the consolidated income statement on page 47.
DEFINITIONS
Annual asset growth
'Annual asset growth' measures the increase in 'total regulatory value and other investments', defined below.
Capital investment
'Capital investment' or 'investment' refer to additions to plant, property and equipment and intangible assets, and
contributions to joint ventures, other than the St William joint venture during the period. St William is excluded based on
the nature of this joint venture arrangement.
Constant currency
'Constant currency basis' refers to the reporting of the actual results against the results for the same period last year
which, in respect of any US$ currency denominated activity, have been translated using the weighted average US$ exchange
rate for the year ended 31 March 2017, which was $1.28 to £1.00. The weighted average rate for the year ended 31 March
2016, was $1.47 to £1.00. Assets and liabilities as at 31 March 2016 have been retranslated at the closing rate at 31 March
2017 of $1.25 to £1.00. The closing rate for the balance sheet date 31 March 2016 was $1.44 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.
Net revenue
'Net revenue' is revenue less pass-through costs, such as payments to other UK network owners, system balancing costs, and
gas and electricity commodity costs in the US. Pass-through costs are fully recoverable from our customers and are
recovered through separate charges that are designed to recover those costs with no profit. Any over- or under-recovery of
these costs is returned to, or recovered from, our customers.
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 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.
Total regulatory value and other investments
The sum of: the regulatory asset value of the UK regulated businesses determined under the methodology set out in Ofgem's
Price Control Financial Model; the rate bases applicable to each US regulated entity calculated according to the
methodology used by each respective utility regulator; the value of assets held by the Group's other activities; together
with investments in joint ventures and associates. Other activities primarily relate to non-network businesses and other
commercial operations including: UK gas metering activities; the Great Britain-France Interconnector; UK property
management; and a UK LNG import terminal.
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.
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 plus share repurchase costs less the growth in net debt (at constant currency). This is then presented on an
absolute and a per share basis.
METRIC CALCULATIONS
Regulated financial performance (£m) 2016/17 2015/16
UKET UKGT UKGD US REG UKET UKGT UKGD US REG
Statutory operating profit 1,361 507 898 1,278 1,173 486 878 1,196
Exceptional items/remeasurements 11 4 - 435 - - - (11)
Adjusted operating profit 1,372 511 898 1,713 1,173 486 878 1,185
Depreciation and amortisation 421 186 214 642 390 178 298 535
EBITDA 1,793 697 1,112 2,355 1,563 664 1,176 1,720
Regulatory treatment adjustments
Movement in UK regulatory "IOUs" (288) (120) 16 - (147) (80) (35) -
US timing - - - (199) - - - 73
Performance RAV created 74 (11) 47 - 80 (5) 40 -
Pensions deficit contributions (47) (53) (13) (155) (54) (77) (13) (144)
3% RAV Indexation 356 168 260 - 339 166 255 -
UK deferred taxation adjustment 62 39 (24) - 80 45 (34) -
Regulatory depreciation (800) (207) (413) (642) (758) (196) (402) (535)
Fast/slow money adjustment 34 (14) (121) - 92 18 (168) -
Regulated financial performance 1,184 499 864 1,359 1,195 535 819 1,114
Group RoE calculation(year ended 31 March)
2017 2016 2015
Regulated financial performance 3,906 3,663 3,741
Operating profit of other activities 204 374 199
Group financial performance 4,110 4,037 3,940
Share of post-tax results of joint ventures 63 59 46
Non-controlling interests 1 (3) 8
Adjusted group interest charge (1,075) (922) (945)
Group tax charge (808) (753) (695)
Tax on adjustments 166 4 (14)
Group financial performance after interest and tax 2,457 2,422 2,340
Opening rate base/RAV 40,435 36,998 35,237
Opening NBV of non-regulated businesses 1,579 1,213 1,341
Joint Ventures 408 319 358
Opening Goodwill 5,984 5,182 4,856
Opening capital employed 48,406 43,712 41,792
Opening Net Debt (27,346) (24,024) (21,974)
Opening Equity 21,060 19,688 19,818
Return on Equity 11.7% 12.3% 11.8%
Regulated financial position (£m - constant currency) 2016/17
UKET UKGT UKGD US REG
Opening RAV/rate base* 11,871 5,597 8,664 14,571
In year movement 593 158 315 827
Closing RAV/rate base 12,464 5,755 8,979 15,398
Opening other regulatory assets and liabilities* (129) 56 (132) 1,647
In year movement (288) (120) (16) 18
Closing other regulatory assets and liabilities (417) (64) (116) 1,665
Closing regulated financial position 12,047 5,691 8,863 17,063
Total 2016/17 43,664
*Adjusted to correspond with 2015/16 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. For the current (and future) year results, this has been
calculated on a fiscal basis (i.e. year ended 31 March 2017). For the prior year, this was calculated on a calendar year to
31 December 2015.
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 for the current year is an estimate based on rate base calculations used in previous rate filings
multiplied by the adjudicated equity portion in the regulatory capital structure. For the prior year, equity rate base was
an 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 Regulated Return on Equity 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
18 May 2017 2016/17 full year results
19 May 2017 General meeting
19 May 2017 Record date for 2016/17 special dividend
22 May 2017 Ex-dividend date for 2016/17 for special dividend
31 May 2017 ADRs go ex-dividend for 2016/17 final dividend
1 June 2017 Ordinary shares go ex-dividend for 2016/17 final dividend
2 June 2017 Record date for 2016/17 final dividend
2 June 2017 2016/17 special dividend paid to qualifying shareholders
8 June 2017 Scrip reference price announced
19 June 2017 Scrip election date for 2016/17 final dividend
7 July 2017 Investor stewardship meeting
31 July 2017 Annual General Meeting, ICC, Birmingham
16 August 2017 2016/17 final dividend paid to qualifying shareholders
9 November 2017 2017/18 half year results
22 November 2017 ADRs go ex-dividend for 2017/18 interim dividend
23 November 2017 Ordinary shares go ex-dividend for 2017/18 interim dividend
24 November 2017 Record date for 2017/18 interim dividend
30 November 2017 Scrip reference price announced
8 December 2017 Scrip election date for 2017/18 interim dividend
10 January 2018 2017/18 interim dividend paid to qualifying shareholders
American Depositary Receipt (ADR) Deposit Agreement
National Grid 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 2016/17 final dividend and 2016/17 special dividend will be charged a fee of $0.02 and
$0.015 per ADR, respectively, 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, including any arising as a result of the United Kingdom's exit from the European Union;
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; and 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 the Company's sale of a majority interest in its UK Gas Distribution business and
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 183 to 186 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 2016 published on 10 November 2016. 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
2017 2016Re-presented1
Notes £m £m
Continuing operationsRevenue 2(a) 15,035 13,212
Operating costs (11,827) (9,987)
Operating profit
Before exceptional items and remeasurements 2(b) 3,773 3,214
Exceptional items and remeasurements 3 (565) 11
Total operating profit 2(b) 3,208 3,225
Finance income 4 53 22
Finance costs
Before exceptional items and remeasurements 4 (1,082) (878)
Exceptional items and remeasurements 3,4 (58) (99)
Total finance costs 4 (1,140) (977)
Share of post-tax results of joint ventures and associates 63 59
Profit before tax
Before exceptional items and remeasurements 2(b) 2,807 2,417
Exceptional items and remeasurements 3 (623) (88)
Total profit before tax 2(b) 2,184 2,329
Tax
Before exceptional items and remeasurements 5 (666) (604)
Exceptional items and remeasurements 3 292 177
Total tax 5 (374) (427)
Profit after tax from continuing operations
Before exceptional items and remeasurements 2,141 1,813
Exceptional items and remeasurements 3 (331) 89
Profit after tax from continuing operations 1,810 1,902
Profit after tax from discontinued operations
Before exceptional items and remeasurements 8 606 576
Exceptional items and remeasurements 8 57 116
Gain on disposal of UK Gas Distribution 8 5,321 -
Profit after tax from discontinued operations 8 5,984 692
Total profit for the year (continuing and discontinued)
Before exceptional items and remeasurements 2,747 2,389
Exceptional items and remeasurements (274) 205
Gain on disposal of UK Gas Distribution 5,321 -
Total profit for the year 7,794 2,594
Attributable to:Equity shareholders of the parent
From continuing operations 1,810 1,901
From discontinued operations 5,985 690
7,795 2,591
Non-controlling interests
From continuing operations - 1
From discontinued operations (1) 2
(1) 3
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business as a
discontinued operation. Further information is provided in notes 2 and 8.
Consolidated income statement continued
for the years ended 31 March
2017 2016Re-presented1
Notes £m £m
Earnings per share2
Basic
From continuing operations 6(a) 48.1p 50.4p
From discontinued operations 6(a) 17.6p 18.3p
Gain on disposal of UK Gas Distribution 6(a) 141.4p -
6(a) 207.1p 68.7p
Diluted
From continuing operations 6(b) 47.9p 50.2p
From discontinued operations 6(b) 17.5p 18.2p
Gain on disposal of UK Gas Distribution 6(b) 140.8p -
6(b) 206.2p 68.4p
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business
as a discontinued operation. Further information is provided in notes 2 and 8.
2. 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
2017 2016Re-presented1
£m £m
Profit after tax from continuing operations 1,810 1,902
Other comprehensive income/(loss) from continuing operations
Items from continuing operations that will never be reclassified to profit or loss:
Remeasurement gains of pension assets and post-retirement benefit obligations 423 410
Tax on items that will never be reclassified to profit or loss (277) (95)
Total items from continuing operations that will never be reclassified to profit or loss 146 315
Items from continuing operations that may be reclassified subsequently to profit or loss:
Exchange adjustments 346 69
Net gains in respect of cash flow hedges 70 88
Transferred to profit or loss in respect of cash flow hedges (6) 26
Net gains on available-for-sale investments 81 43
Transferred to profit or loss on sale of available-for-sale investments (25) -
Tax on items that may be reclassified subsequently to profit or loss (34) (39)
Total items from continuing operations that may be reclassified subsequently to profit or loss 432 187
Other comprehensive income for the year, net of tax from continuing operations 578 502
Other comprehensive income for the year, net of tax from discontinued operations 8 42 71
Other comprehensive income for the year, net of tax 620 573
Total comprehensive income for the year from continuing operations 2,388 2,404
Total comprehensive income for the year from discontinued operations 8 6,026 763
Total comprehensive income for the year 8,414 3,167
Attributable to:
Equity shareholders of the parent
From continuing operations 2,389 2,403
From discontinued operations 6,026 761
8,415 3,164
Non-controlling interests
From continuing operations (1) 1
From discontinued operations - 2
(1) 3
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business as a discontinued operation.
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