REG - National Grid PLC - Results for the year ended 31 MARCH 2017 <Origin Href="QuoteRef">NG.L</Origin> - Part 4
18/05/2017 07:07
- Part 4: For the preceding part double click ID:nRSR4855Fc
Further information is provided in notes 2 and 8.
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 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 payments - - 22 - 22 - 22
Tax on share-based payments - - 2 - 2 - 2
At 31 March 2016 447 1,326 16,305 (4,523) 13,555 10 13,565
Profit for the year - - 7,795 - 7,795 (1) 7,794
Total other comprehensive income for the year - - 84 536 620 - 620
Total comprehensive income for the year - - 7,879 536 8,415 (1) 8,414
Equity dividends 7 - - (1,463) - (1,463) - (1,463)
Scrip dividend related share issue1 2 (2) - - - - -
Purchase of treasury shares - - (189) - (189) - (189)
Issue of treasury shares - - 18 - 18 - 18
Purchase of own shares - - (6) - (6) - (6)
Other movements in non-controlling interests - - - - - 7 7
Share-based payments - - 35 - 35 - 35
Tax on share-based payments - - 3 - 3 - 3
At 31 March 2017 449 1,324 22,582 (3,987) 20,368 16 20,384
1. Included within share premium account are costs associated with scrip dividends.
Consolidated statement of financial positionas at 31 March
2017 2016
Notes £m £m
Non-current assets
Goodwill 6,096 5,315
Other intangible assets 923 887
Property, plant and equipment 39,825 43,364
Other non-current assets 121 82
Pension assets 603 410
Financial and other investments 1,100 482
Investments in joint ventures and associates 2,083 397
Derivative financial assets 10 1,515 1,685
Total non-current assets 52,266 52,622
Current assets
Inventories and current intangible assets 403 437
Trade and other receivables 2,782 2,395
Current tax assets 317 77
Financial and other investments 10 8,741 2,998
Derivative financial assets 10 192 278
Cash and cash equivalents 10 1,139 127
Total current assets 13,574 6,312
Total assets 65,840 58,934
Current liabilities
Borrowings 10 (5,496) (3,611)
Derivative financial liabilities 10 (1,054) (337)
Trade and other payables (3,438) (3,285)
Current tax liabilities (107) (252)
Provisions (416) (236)
Total current liabilities (10,511) (7,721)
Non-current liabilities
Borrowings 10 (23,142) (24,733)
Derivative financial liabilities 10 (1,169) (1,732)
Other non-current liabilities (1,447) (2,071)
Deferred tax liabilities (4,479) (4,634)
Pensions and other post-retirement benefit obligations (2,536) (2,995)
Provisions (2,172) (1,483)
Total non-current liabilities (34,945) (37,648)
Total liabilities (45,456) (45,369)
Net assets 20,384 13,565
Equity
Share capital 449 447
Share premium account 1,324 1,326
Retained earnings 22,582 16,305
Other equity reserves (3,987) (4,523)
Total shareholders' equity 20,368 13,555
Non-controlling interests 16 10
Total equity 20,384 13,565
Consolidated cash flow statementfor the years ended 31 March
2016
2017 Re-presented1
Notes £m £m
Cash flows from operating activities
Total operating profit from continuing operations 2(b) 3,208 3,225
Adjustments for:
Exceptional items and remeasurements 3 565 (11)
Depreciation, amortisation and impairment 1,481 1,311
Share-based payments charge 32 21
Gain on exchange of associate for available-for-sale investment - (49)
Changes in working capital 151 416
Changes in provisions (181) (58)
Changes in pensions and other post-retirement benefit obligations (768) (293)
Cash flows relating to exceptional items (36) (40)
Cash generated from operations 4,452 4,522
Tax paid (132) (230)
Net cash inflow from operating activities - continuing operations 4,320 4,292
Net cash inflow from operating activities - discontinued operations 909 1,076
Cash flows from investing activities
Acquisition of investments (137) (116)
Proceeds from sale of investments in subsidiaries 5,454 -
Purchases of intangible assets (223) (196)
Purchases of property, plant and equipment (3,296) (2,855)
Disposals of property, plant and equipment 18 4
Dividends received from joint ventures and associates 99 72
Interest received 51 23
Net movements in short-term financial investments2 (5,600) (391)
Net cash flow used in investing activities - continuing operations (3,634) (3,459)
Net cash flow used in investing activities - discontinued operations (680) (577)
Cash flows from financing activities
Purchase of treasury shares (189) (267)
Proceeds from issue of treasury shares 18 16
Purchase of own shares (6) (6)
Proceeds received from loans 2,463 2,726
Repayments of loans (1,616) (896)
Net movements in short-term borrowings and derivatives 90 (730)
Interest paid (839) (711)
Dividends paid to shareholders (1,463) (1,337)
Net cash flow used in financing activities - continuing operations (1,542) (1,205)
Net cash flow from/(used in) financing activities - discontinued operations3 1,611 (123)
Net increase in cash and cash equivalents 9 984 4
Disposal of bank overdraft in UK Gas Distribution 15 -
Exchange movements 16 4
Net cash and cash equivalents at start of year 124 116
Net cash and cash equivalents at end of year4 1,139 124
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. Includes the impact of proceeds from the sale of UK Gas Distribution being transferred to short term
financial investments on 31 March.
3. Included within net cash flows used in financing activities - discontinued operations are cash flows
relating to the liability management programme, comprising £4.8bn of debt issued and term debt raised, offset by £3.2bn in
respect of bond buybacks.
4. Net of bank overdrafts of £nil (2016: £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 2017,
which will be filed with the Registrar of Companies in due course. Statutory accounts for the year ended 31 March 2016 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 2017 which are consistent with those applied in the preparation of our accounts for the year ended 31 March
2016.
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 2017. None of the pronouncements had a material impact on the Company's
consolidated results or assets and liabilities for the year ended 31 March 2017.
· Annual improvements to IFRSs 2012-2014 Cycle;
· Amendments to IFRS 11 'Joint Arrangements';
· Amendments to IAS 1 'Presentation of Financial Statements';
· Amendments to IAS 16 'Property, Plant and Equipment' and
· Amendments to IAS 38 'Intangible Assets'.
Date of approval
This announcement was approved by the Board of Directors on 17 May 2017.
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 of Directors is National Grid's chief operating decision-making body (as
defined by IFRS 8 'Operating segments') and assesses the earnings performance of operations on the basis of operating
profit before exceptional items and remeasurements (see note 3).
There has been no change to the way in which our businesses have reported internally during the year. However, for the
purposes of this note, the reporting structure for the year ended 31 March 2017 has been updated to show the previously
reported UK Gas Distribution segment within discontinued operations together with the results of our interest in Xoserve
Limited, which was previously included within Other activities. Discontinued operations are solely within the UK
geographical area. National Grid Ventures formed on 1 April 2017 and the impact of this change will be reflected in
2017/18. Note 8 includes further information in respect of discontinued operations.
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.
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; 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
2017£m 20161£m
Operating segments:
UK Electricity Transmission 4,439 3,977
UK Gas Transmission 1,080 1,047
US Regulated 8,931 7,493
Other activities 713 824
Sales between segments (128) (129)
Total from continuing operations 15,035 13,212
Discontinued operations - UK geographical area (note 8) 1,887 1,903
16,922 15,115
Split by geographical areas - continuing operations
UK 6,064 5,619
US 8,971 7,593
15,035 13,212
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business
as a discontinued operation.
2. Segmental analysis continued
(b) Operating profit
Before exceptional items and remeasurements After exceptional items and remeasurements
2017 20161 2017 20161
£m £m £m £m
Operating segments - continuing operations:
UK Electricity Transmission 1,372 1,173 1,361 1,173
UK Gas Transmission 511 486 507 486
US Regulated 1,713 1,185 1,278 1,196
Other activities 177 370 62 370
Total from continuing operations 3,773 3,214 3,208 3,225
Discontinued operations - UK geographical area (note 8) 894 882 894 860
Xx
4,667 4,096 4,102 4,085
Split by geographical areas - continuing operations
UK 2,118 2,007 1,988 2,007
US 1,655 1,207 1,220 1,218
3,773 3,214 3,208 3,225
Reconciliation to profit before tax:
Operating profit from continuing operations 3,773 3,214 3,208 3,225
Finance income 53 22 53 22
Finance costs (1,082) (878) (1,140) (977)
Share of post-tax results of joint ventures and associates 63 59 63 59
Profit before tax from continuing operations 2,807 2,417 2,184 2,329
Profit before tax from discontinued operations (note 8) 748 725 742 703
3,555 3,142 2,926 3,032
1. Comparative amounts have been re-presented to reflect the classification of UK Gas Distribution business as a
discontinued operation.
(c) Capital expenditure
Net book value Capital expenditure Depreciation and amortisation
2017 20161 2017 20161 2017 20161
£m £m £m £m £m £m
Operating segments
UK Electricity Transmission 12,515 11,907 1,027 1,084 (421) (390)
UK Gas Transmission 4,165 4,140 214 186 (186) (178)
US Regulated 21,638 17,490 2,247 1,856 (642) (535)
Other activities 2,430 2,291 247 201 (232) (208)
Total from continuing operations 40,748 35,828 3,735 3,327 (1,481) (1,311)
Discontinued operations - UK geographical area - 8,423 588 566 (217) (303)
40,738 44,251 4,323 3,893 (1,698) (1,614)
Split by geographical areas - continuing operations:
UK 18,102 17,491 1,357 1,386 (753) (715)
US 22,646 18,337 2,378 1,941 (728) (596)
40,748 35,828 3,735 3,327 (1,481) (1,311)
By asset type
Property, plant and equipment 39,825 35,074 3,507 3,130 (1,348) (1,207)
Non-current intangible assets 923 754 228 197 (133) (104)
Total from continuing operations 40,748 35,828 3,735 3,327 (1,481) (1,311)
Discontinued operations - UK geographical area - 8,423 588 566 (217) (303)
40,748 44,251 4,323 3,893 (1,698) (1,614)
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business
as a discontinued operation.
3. Exceptional items and remeasurements
Exceptional items and remeasurements are items of income and expenditure that, in the judgment of management, should be
disclosed separately on the basis that they are important to an understanding of our financial performance and
significantly distort the comparability of financial performance between periods. 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 effective.
2017 20161
Continuing operations £m £m
Included within operating profit:
Exceptional items:
Environmental charges (526) -
Gas holder demolition costs (107) -
(633) -
Remeasurements:
Commodity contracts 68 11
(565) 11
Included within finance costs:
Remeasurements:
Net losses on derivative financial instruments (58) (99)
(58) (99)
Total included within profit before tax (623) (88)
Included within tax:
Exceptional credits arising on items not included in profit before tax:
Deferred tax credit arising on the reduction in the UK corporation tax rate 94 162
Tax on exceptional items 227 -
Tax on remeasurements (29) 15
292 177
Total exceptional items and remeasurements after tax (331) 89
Analysis of total exceptional items and remeasurements after tax:
Exceptional items after tax (312) 162
Remeasurements after tax (19) (73)
Total exceptional items and remeasurements after tax (331) 89
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business as a
discontinued operation.
Further detail of operating exceptional items specific to 2016/17
In the US, the Group's most significant environmental liabilities relate to former manufacturing gas plant (MGP) facilities
formerly owned or operated by the Company. The sites are subject to both state and federal law in the US. Environmental
reserves are re-evaluated at each reporting period. The expenditure is expected to be largely recoverable from rate payers
but under IFRS, no asset can be recorded for this. During the second half of 2016/17, the Group updated its assessment of
the gross remediation costs at three key sites in New York, resulting in an increase of £481m on an undiscounted basis.
The charge booked reflects the Group's best estimate of future cash outflow, based on notices received from state and
federal authorities, and plans developed in response, supported by external consultants where appropriate. In some cases,
judgement is also required regarding the Group's share of the estimated cost, principally at sites where other parties are
also potentially liable but where no cost sharing agreement exists.
A provision of £107m has been made for the demolition of certain non-operational gas holders in the UK. Following the
disposal of UK Gas Distribution, the land on which the gas holders are sited was transferred to the Group's UK property
division. The Group's property division maximises our return from our land portfolio and therefore a constructive
obligation exists to demolish the gas holders.
Also included within the above are charges relating to the impact of a change in the real discount rate from 2% to 1% on
our provisions.
3. Exceptional items and remeasurements continued
Remeasurements
Commodity contracts represent mark-to-market movements on certain physical and financial commodity contract obligations in
the US. These contracts primarily relate to the forward purchase of energy for supply to customers, or to the economic
hedging thereof, that are required to be measured at fair value and that do not qualify for hedge accounting. Under the
existing rate plans in the US, commodity costs are recoverable from customers although the timing of recovery may differ
from the pattern of costs incurred.
Net (losses)/gains on derivative financial instruments comprise (losses)/gains arising on derivative financial instruments
reported in the income statement. These exclude gains and losses for which hedge accounting has been effective, which have
been recognised directly in other comprehensive income or which are offset by adjustments to the carrying value of debt.
The tax charge in the year includes £nil (2016: £1m credit) in respect of prior years.
Items included within tax
The Finance Act 2016 which was enacted on 15 September 2016 reduced the main rate of UK corporation tax to 17% with effect
from 1 April 2020. Deferred tax balances have been calculated at this rate.
Deferred taxes at the reporting date have been measured using these enacted tax rates and reflected in these financial
statements, resulting in a deferred tax credit. This credit is presented as exceptional, reflecting its nature.
4. Finance income and costs
2017 20161
£m £m
Finance income 53 22
Finance costs
Net interest on pension and other post-retirement benefit obligations (107) (111)
Interest expense on financial instruments (994) (783)
Unwinding of discount on provisions (73) (69)
Other interest (17) (27)
Less: interest capitalised2 109 112
Finance costs before exceptional items and remeasurements (1,082) (878)
Remeasurements:
Net losses on derivative financial instruments3,4 (58) (99)
Exceptional items and remeasurements included within finance costs (58) (99)
Finance costs (1,140) (977)
Net finance costs from continuing operations (1,087) (955)
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business as a
discontinued operation.
2. Interest on funding attributable to assets in the course of construction in the current year was capitalised at a
rate of 3.4% (2016: 3.3%). In the UK, capitalised interest qualifies for a current year tax deduction with tax relief
claimed of £18m (2016: £19m). In the US, capitalised interest is added to the cost of plant and qualifies for tax
depreciation allowances.
3. Includes a net foreign exchange loss on financing activities of £264m (2016: £407m) offset by foreign exchange gains
and losses on derivative financial instruments measured at fair value.
4. Includes a net loss on instruments designated as fair value hedges of £27m (2016: £34m gain) and a net gain of £60m
(2016: £5m) arising from fair value adjustments to the carrying value of debt.
5. Tax
Tax charged/(credited) to the income statement - continuing operations
2017 20161
£m £m
Tax before exceptional items and remeasurements 666 604
Exceptional tax on items not included in profit before tax (note 3) (94) (162)
Tax on other exceptional items and remeasurements (198) (15)
Tax on total exceptional items and remeasurements (note 3) (292) (177)
Total tax charge from continuing operations 374 427
Tax as a percentage of profit before tax % %
Before exceptional items and remeasurements - continuing operations 23.7 25.0
After exceptional items and remeasurements - continuing operations 17.1 18.3
The tax charge for the year can be analysed as follows:
£m £m
Current tax
UK corporation tax at 20% (2016: 20%) 225 239
UK corporation tax adjustment in respect of prior years (47) (5)
Overseas corporation tax - 38
Overseas corporation tax adjustment in respect of prior years 1 (19)
Total current tax from continuing operations 179 253
Deferred tax
UK deferred tax (9) (80)
UK deferred tax adjustment in respect of prior years (18) 24
Overseas deferred tax 224 229
Overseas deferred tax adjustment in respect of prior years (2) 1
Total deferred tax from continuing operations 195 174
Total tax charge from continuing operations 374 427
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business
as a discontinued operation.
6. Earnings per share
Adjusted earnings and earnings per share, excluding exceptional items and remeasurements, are provided to reflect the
business performance subtotals used by the Company. We have included reconciliations from this additional EPS measure to
earnings for both basic and diluted EPS to provide additional detail for these items. For further details of exceptional
items and remeasurements, see note 3.
(a) Basic earnings per share
Earnings2017 Earnings Earnings20161 Earnings
per share2017 per share20161,2
£m pence £m pence
Adjusted earnings from continuing operations 2,141 56.9 1,812 48.0
Exceptional items after tax from continuing operations (312) (8.3) 162 4.3
Remeasurements after tax from continuing operations (19) (0.5) (73) (1.9)
Earnings from continuing operations 1,810 48.1 1,901 50.4
Adjusted earnings from discontinued operations 607 16.1 574 15.2
Exceptional items after tax from discontinued operations 62 1.6 116 3.1
Remeasurements after tax from discontinued operations (5) (0.1) - -
Gain on disposal of UK Gas Distribution 5,321 141.4 - -
Earnings from discontinued operations 5,985 159.0 690 18.3
Total adjusted earnings 2,748 73.0 2,386 63.2
Total exceptional items after tax (250) (6.7) 278 7.4
Total remeasurements after tax (24) (0.6) (73) (1.9)
Gain on disposal of UK Gas Distribution 5,321 141.4 - -
Total earnings 7,795 207.1 2,591 68.7
2017millions 2016millions
Weighted average number of shares - basic1 3,763 3,774
1. Comparative amounts have been re-presented to reflect the classification of the UK Gas Distribution business as a
discontinued operation.
2. Comparative amounts have been restated to reflect the impact of additional shares issued as scrip dividends.
(b) Diluted earnings per share
Earnings2017 Earnings Earnings20161 Earnings
per share2017 per share20161,2
£m pence £m pence
Adjusted earnings from continuing operations 2,141 56.7 1,812 47.8
Exceptional items after tax from continuing operations (312) (8.3) 162 4.3
Remeasurements after tax from continuing operations (19) (0.5) (73) (1.9)
Earnings from continuing operations 1,810 47.9 1,901 50.2
Adjusted earnings from discontinued operations 607 16.0 574 15.1
Exceptional items after tax from discontinued operations 62 1.6 116 3.1
Remeasurements after tax from discontinued operations (5) (0.1) - -
Gain on disposal of UK Gas Distribution 5,321 140.8 - -
Earnings from discontinued operations 5,985 158.3 690 18.2
Total adjusted earnings 2,748 72.7 2,386 63.0
Total exceptional items after tax (250) (6.7) 278 7.3
Total remeasurements after tax (24) (0.6) (73) (1.9)
Gain on disposal of UK Gas Distribution 5,321 140.8 - -
Total earnings 7,795 206.2 2,591 68.4
2017millions 2016Millions
Weighted average number of shares - basic1
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