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Performance during the year
Performance
Safety
Our safety performance deteriorated in 2006/07 compared with 2005/06, which is disappointing after the significant improvement we recorded last year. Our aim in 2007/08 is to improve our safety performance in line with our goal of zero work-related injuries.
In September 2006, we held our first combined UK and US safety, health and environment conference involving 60 participants from across National Grid and KeySpan. The conference provided the opportunity to review our safety and occupational health policy and our Vision for Safety and develop strategies to meet the challenges facing the business over the next few years. Last year we reported the UK gas and electricity businesses had introduced Golden Rules, setting standards for good safety behaviours and reinforcing a culture whereby safety becomes second nature. This approach is to be extended throughout all our operations during 2007/08.
Public safety
28 members of the public were injured as a result of our operations compared with 20 during 2005/06 and 52 in 2004/05. This includes a member of the public who died after illegally climbing and subsequently falling from an electricity tower in the UK.
Employee safety
During 2006/07, 142 of our employees received injuries that resulted in them taking time off work, compared with 117 in 2005/06 and 201 in 2004/05 (160 when the sold networks are excluded). As a consequence, employee lost time injuries per 100,000 hours worked rose to 0.34 in 2006/07 compared with 0.28 and 0.37 in the two previous years.
In our 2006 employee opinion survey, 89% of respondents considered that National Grid has a clear commitment to operating safely and 89% considered that employees take safety seriously and do their best to prevent injuries and accidents compared with 86% on both these questions in the 2004 survey. 79% of respondents in 2006 felt confident safety concerns or issues raised would be addressed, up from 75% in the 2004 survey.
Contractor safety
It is with sadness we record the death of a contractor while working for our UK electricity transmission business during 2006/07. This was a tragic event and our thoughts and deepest sympathies are with all those affected.
There was an increase in the number of contractor lost time injuries, rising from 119 in 2005/06 to 131 in 2006/07.
Employee health
We continue to focus on our employees' health and wellbeing. Resulting from an action coming out of the September 2006 safety, health and environment conference, later in 2007/08 we will launch a new ‘Vision for Health and Wellbeing’ setting out how we aim to help and support our employees in the maintenance of good physical and mental health through proper diet, exercise and habits. We also participate in the UK's Business in the Community Business Action on Health programme at both a leadership team and practitioner level. The objectives of this programme are to raise the profile of health issues in companies and to quantify and track best practice workplace health activities.
Around 2.48% of available work days were lost due to sickness absence in 2006/07 compared with 2.38% in 2005/06 and 2.69% in 2004/05. This equates to 6.3 days of sickness per employee per year. The UK Confederation of British Industry's 2007 sickness absence survey reported that average annual sickness for UK company employees was 7.0 days.
Reliability
Overall, our reliability performance in Transmission in the UK was the best in recent years. In particular, the amount of electricity demanded but not delivered over our UK transmission network this year was the second lowest in the past 5 years, and there were only 5 loss of supply incidents compared to an average of 11 over the preceding 4 years. As we enter a large programme of investment in our UK transmission networks, there is an increased risk of loss of supply incidents and so we are increasing our focus on maintaining reliability over the next few years by assessing the condition of circuits that remain in service during the periods that we replace or overhaul parts of the transmission network.
Our Gas Distribution operations also continued to perform reliably during the year.
In our Electricity Distribution business in the US, we did not meet all of our reliability targets in 2006 and incurred penalties in Massachusetts and New York as a consequence. We achieved all of our targets in Rhode Island. We are seeing improved performance as a result of our comprehensive reliability enhancement programme, as described in Reliability enhancement programme.
Further detail on the reliability of our operations is discussed under Performance during the year in the business sections.
Efficiency
We continued to institute measures during the year to improve efficiency, with the implementation of a shared services function in the UK to support our principal UK businesses, our business process reviews in Transmission, Electricity Distribution and other business process projects, together with the integration of the acquired Rhode Island gas distribution operations and the work we are carrying out in the US in advance of the planned acquisition of KeySpan to identify efficiencies we can achieve as a combined organisation.
Financial performance
Operating profit from continuing operations excluding US stranded cost recoveries, exceptional items and remeasurements increased from £1,936 million in 2004/05 to £1,968 million in 2005/06 to £2,031 million in 2006/07, while including US stranded cost recoveries operating profit from continuing operations before exceptional items and remeasurements increased from £2,401 million in 2004/05 to £2,457 million in 2005/06 and fell to £2,454 million in 2006/07. Operating profit from continuing operations increased from £2,113 million in 2004/05 to £2,374 million in 2005/06 to £2,513 million in 2006/07.
Earnings per share from continuing operations before exceptional items and remeasurements increased from 41.4p in 2004/05 to 45.5p in 2005/06 to 47.7p in 2006/07. Earnings per share from continuing operations increased from 35.9p in 2004/05 to 41.6p in 2005/06 to 48.1p in 2006/07.
Cash flows generated by continuing operations increased from £2,820 million in 2004/05 to £2,973 million in 2005/06 to £3,090 million in 2006/07.
More information on our financial performance is contained under Financial results and in the business sections.