Notes to the consolidated financial statements – supplementary information
38. National Grid Gas plc and Niagara Mohawk Power Corporation additional disclosures
The following condensed consolidating financial information, comprising income statements, balance sheets and cash flow statements, is given in respect of National Grid Gas plc (Subsidiary guarantor), which became joint full and unconditional guarantor on 11 May 2004 with National Grid plc (Parent guarantor) of the 6.625% Guaranteed Notes due 2018 issued in June 1998 by British Transco Finance Inc. (then known as British Gas Finance Inc.) (issuer of notes). Condensed consolidating financial information is also provided in respect of Niagara Mohawk Power Corporation as a result of National Grid plc’s guarantee (dated 29 October 2007) of Niagara Mohawk’s 3.6% and 3.9% issued preferred shares. National Grid Gas plc, British Transco Finance Inc., and Niagara Mohawk Power Corporation are wholly-owned subsidiaries of National Grid plc.
The following financial information for National Grid plc, National Grid Gas plc, British Transco Finance Inc., and Niagara Mohawk Power Corporation on a condensed consolidating basis is intended to provide investors with meaningful and comparable financial information and is provided pursuant to Rule 3-10 of Regulation S-X in lieu of the separate financial statements of each subsidiary issuer of public debt securities.
This parent company-only financial information should be read in conjunction with the Company’s financial statements and footnotes presented in our 2007/08 Annual Report and Accounts.
Summary income statements are presented, on a consolidating basis, for the three years ended 31 March 2008. Summary income statements of National Grid plc and National Grid Gas plc are presented under IFRS measurement principles, as modified by the inclusion of the results of subsidiary undertakings on the basis of equity accounting principles.
The summary balance sheets of National Grid plc and National Grid Gas plc include the investments in subsidiaries recorded under the equity method for the purposes of presenting condensed consolidating financial information under IFRS. The IFRS summary balance sheets present these investments within ‘Investments’.
The consolidation adjustments column includes the necessary amounts to eliminate the inter-company balances and transactions between National Grid plc, National Grid Gas plc, British Transco Finance Inc., Niagara Mohawk Power Corporation, and other subsidiaries.
Summary income statement for the year ended 31 March 2008 – IFRS
| Parent guarantor | Issuer of notes | Subsidiary guarantor | |||||
|---|---|---|---|---|---|---|---|
| National Grid plc £m |
Niagara Mohawk Power Corporation £m |
British Transco Finance Inc. £m |
National Grid Gas plc £m |
Other subsidiaries £m |
Consolidation adjustments £m |
National Grid consolidated £m |
|
| Revenue | – | 2,108 | – | 2,459 | 7,104 | (248) | 11,423 |
| Other operating income | – | – | – | 8 | 67 | – | 75 |
| Operating costs | |||||||
| Depreciation and amortisation | – | (101) | – | (432) | (461) | – | (994) |
| Payroll costs | – | (201) | – | (226) | (752) | – | (1,179) |
| Purchases of electricity | – | (609) | – | – | (744) | – | (1,353) |
| Purchases of gas | – | (297) | – | (110) | (1,604) | – | (2,011) |
| Rates and property taxes | – | (93) | – | (227) | (288) | – | (608) |
| Electricity transmission services scheme direct costs | – | – | – | – | (574) | – | (574) |
| Payments to Scottish electricity transmission network owners | – | – | – | – | (226) | – | (226) |
| Other operating charges | – | (248) | – | (514) | (1,075) | 248 | (1,589) |
| – | (1,549) | – | (1,509) | (5,724) | 248 | (8,534) | |
| Operating profit | – | 559 | – | 958 | 1,447 | – | 2,964 |
| Net finance costs | (116) | (116) | – | (298) | (246) | – | (776) |
| Dividends receivable | – | – | – | – | 500 | (500) | – |
| Interest in equity accounted affiliates | 1,711 | – | – | (27) | (7) | (1,673) | 4 |
| Profit before taxation | 1,595 | 443 | – | 633 | 1,694 | (2,173) | 2,192 |
| Taxation | (14) | (194) | – | (141) | (262) | – | (611) |
| Profit for the year from continuing operations | 1,581 | 249 | – | 492 | 1,432 | (2,173) | 1,581 |
| Profit for the year from discontinued operations | 1,618 | – | – | 3 | 1,615 | (1,618) | 1,618 |
| Profit for the year | 3,199 | 249 | – (i) | 495 | 3,047 | (3,791) | 3,199 |
| Attributable to: | |||||||
| Equity shareholders | 3,196 | 249 | – | 495 | 3,044 | (3,788) | 3,196 |
| Minority interests | 3 | – | – | – | 3 | (3) | 3 |
| 3,199 | 249 | – (i) | 495 | 3,047 | (3,791) | 3,199 | |
(i) Profit for the year for British Transco Finance Inc. is £nil as interest payable to external bond holders is offset by interest receivable on loans to National Grid Gas plc.
Summary income statement for the year ended 31 March 2007 – IFRS
| Parent guarantor | Issuer of notes | Subsidiary guarantor | |||||
|---|---|---|---|---|---|---|---|
| National Grid plc £m |
Niagara Mohawk Power Corporation £m |
British Transco Finance Inc. £m |
National Grid Gas plc £m |
Other subsidiaries £m |
Consolidation adjustments £m |
National Grid consolidated £m |
|
| Revenue | – | 2,189 | – | 2,231 | 4,593 | (318) | 8,695 |
| Other operating income | – | – | – | 6 | 77 | – | 83 |
| Operating costs | |||||||
| Depreciation and amortisation | – | (102) | – | (389) | (380) | – | (871) |
| Payroll costs | – | (209) | – | (228) | (383) | – | (820) |
| Purchases of electricity | – | (633) | – | – | (960) | – | (1,593) |
| Purchases of gas | – | (309) | – | (113) | (122) | – | (544) |
| Rates and property taxes | – | (104) | – | (211) | (157) | – | (472) |
| Electricity transmission services scheme direct costs | – | – | – | – | (558) | – | (558) |
| Payments to Scottish electricity transmission network owners | – | – | – | – | (237) | – | (237) |
| Other operating charges | (2) | (154) | – | (531) | (801) | 318 | (1,170) |
| (2) | (1,511) | – | (1,472) | (3,598) | 318 | (6,265) | |
| Operating profit | (2) | 678 | – | 765 | 1,072 | – | 2,513 |
| Net finance costs | 18 | (131) | – | (280) | (371) | – | (764) |
| Dividends receivable | – | – | – | – | 1,850 | (1,850) | – |
| Interest in equity accounted affiliates | 1,286 | – | – | 15 | (1) | (1,298) | 2 |
| Profit before taxation | 1,302 | 547 | – | 500 | 2,550 | (3,148) | 1,751 |
| Taxation | 8 | (238) | – | (239) | 28 | – | (441) |
| Profit for the year from continuing operations | 1,310 | 309 | – | 261 | 2,578 | (3,148) | 1,310 |
| Profit for the year from discontinued operations | 86 | – | – | 13 | 73 | (86) | 86 |
| Profit for the year | 1,396 | 309 | –(i) | 274 | 2,651 | (3,234) | 1,396 |
| Attributable to: | |||||||
| Equity shareholders | 1,394 | 309 | – | 274 | 2,649 | (3,232) | 1,394 |
| Minority interests | 2 | – | – | – | 2 | (2) | 2 |
| 1,396 | 309 | –(i) | 274 | 2,651 | (3,234) | 1,396 | |
(i) Profit for the year for British Transco Finance Inc. is £nil as interest payable to external bond holders is offset by interest receivable on loans to National Grid Gas plc.
Summary income statement for the year ended 31 March 2006 – IFRS
| Parent guarantor | Issuer of notes | Subsidiary guarantor | |||||
|---|---|---|---|---|---|---|---|
| National Grid plc £m* |
Niagara Mohawk Power Corporation £m* |
British Transco Finance Inc. £m* |
National Grid Gas plc £m* |
Other subsidiaries £m* |
Consolidation adjustments £m* |
National Grid consolidated £m* |
|
| Revenue | 1 | 2,360 | – | 2,281 | 4,589 | (363) | 8,868 |
| Other operating income | – | – | – | 4 | 76 | – | 80 |
| Operating costs | |||||||
| Depreciation and amortisation | – | (105) | – | (396) | (387) | – | (888) |
| Payroll costs | – | (221) | – | (213) | (420) | – | (854) |
| Purchases of electricity | – | (694) | – | – | (1,283) | – | (1,977) |
| Purchases of gas | – | (418) | – | (148) | – | – | (566) |
| Rates and property taxes | – | (104) | – | (180) | (153) | – | (437) |
| Electricity transmission services scheme direct costs | – | – | – | – | (536) | – | (536) |
| Payments to Scottish electricity transmission network owners | – | – | – | – | (259) | – | (259) |
| Other operating charges | – | (281) | – | (983) | (588) | 795 | (1,057) |
| – | (1,823) | – | (1,920) | (3,626) | 795 | (6,574) | |
| Operating profit | 1 | 537 | – | 365 | 1,039 | 432 | 2,374 |
| Net finance costs | (1) | (130) | – | (193) | (335) | – | (659) |
| Dividends receivable | – | – | – | – | 310 | (310) | – |
| Interest in equity accounted affiliates | 1,149 | – | – | 441 | 3 | (1,590) | 3 |
| Profit before taxation | 1,149 | 407 | – | 613 | 1,017 | (1,468) | 1,718 |
| Taxation | 34 | (148) | – | (123) | (298) | – | (535) |
| Profit for the year from continuing operations | 1,183 | 259 | – | 490 | 719 | (1,468) | 1,183 |
| Profit for the year from discontinued operations | 2,667 | – | – | 2,494 | 185 | (2,679) | 2,667 |
| Profit for the year | 3,850 | 259 | –(i) | 2,984 | 904 | (4,147) | 3,850 |
| Attributable to: | |||||||
| Equity shareholders | 3,848 | 259 | – | 2,984 | 902 | (4,145) | 3,848 |
| Minority interests | 2 | – | – | – | 2 | (2) | 2 |
| 3,850 | 259 | –(i) | 2,984 | 904 | (4,147) | 3,850 | |
*Comparatives have been adjusted to reclassify amounts relating to discontinued operations
(i) Profit for the year for British Transco Finance Inc. is £nil as interest payable to external bond holders is offset by interest receivable on loans to National Grid Gas plc.
Balance sheet as at 31 March 2008 – IFRS
| Parent guarantor | Issuer of notes | Subsidiary guarantor | |||||
|---|---|---|---|---|---|---|---|
| National Grid plc £m |
Niagara Mohawk Power Corporation £m |
British Transco Finance Inc. £m |
National Grid Gas plc £m |
Other subsidiaries £m |
Consolidation adjustments £m |
National Grid consolidated £m |
|
| Non-current assets | |||||||
| Goodwill | – | 564 | – | – | 3,274 | – | 3,838 |
| Other intangible assets | – | 12 | – | 56 | 204 | – | 272 |
| Property, plant and equipment | – | 2,756 | – | 9,761 | 11,816 | – | 24,333 |
| Deferred tax assets | 3 | 67 | – | – | – | (70) | – |
| Other non-current assets | – | – | – | – | 1,101 | – | 1,101 |
| Amounts owed by subsidiary undertakings | – | – | – | 5,630 | 1,067 | (6,697) | – |
| Financial and other investments (i) | 3,189 | 20 | – | 19 | 11,082 | (14,059) | 251 |
| Derivative financial assets | 751 | – | – | 101 | 211 | – | 1,063 |
| Total non-current assets | 3,943 | 3,419 | – | 15,567 | 28,755 | (20,826) | 30,858 |
| Current assets | |||||||
| Inventories and current intangible assets | – | 18 | – | 31 | 406 | – | 455 |
| Trade and other receivables | 3 | 401 | – | 254 | 1,611 | – | 2,269 |
| Amounts owed by subsidiary undertakings | 11,350 | – | 154 | 125 | 6,465 | (18,094) | – |
| Financial and other investments | 787 | 2 | – | 499 | 807 | – | 2,095 |
| Derivative financial assets | 341 | – | – | 81 | 41 | – | 463 |
| Cash and cash equivalents | – | 5 | – | 3 | 166 | – | 174 |
| Total current assets | 12,481 | 426 | 154 | 993 | 9,496 | (18,094) | 5,456 |
| Assets of businesses held for sale | – | – | – | – | 1,508 | – | 1,508 |
| Total assets | 16,424 | 3,845 | 154 | 16,560 | 39,759 | (38,920) | 37,822 |
| Current liabilities | |||||||
| Borrowings | (1,019) | (351) | (3) | (680) | (1,829) | – | (3,882) |
| Derivative financial liabilities | (79) | – | – | (27) | (8) | – | (114) |
| Trade and other payables | (51) | (231) | – | (580) | (1,577) | – | (2,439) |
| Amounts owed to subsidiary undertakings | (4,804) | (170) | – | (1,490) | (11,630) | 18,094 | – |
| Current tax liabilities | – | (41) | – | (27) | (230) | – | (298) |
| Provisions | – | (16) | – | (50) | (323) | – | (389) |
| Total current liabilities | (5,953) | (809) | (3) | (2,854) | (15,597) | 18,094 | (7,122) |
| Non-current liabilities | |||||||
| Borrowings | (4,460) | (417) | (151) | (4,906) | (7,187) | – | (17,121) |
| Derivative financial liabilities | (179) | – | – | (83) | (57) | – | (319) |
| Other non-current liabilities | – | (188) | – | (1,043) | (490) | – | (1,721) |
| Amounts owed to subsidiary undertakings | (452) | (615) | – | – | (5,630) | 6,697 | – |
| Deferred tax liabilities | – | – | – | (1,630) | (1,847) | 70 | (3,407) |
| Pensions and other post-retirement benefits | – | (784) | – | – | (962) | – | (1,746) |
| Provisions | – | (166) | – | (64) | (713) | – | (943) |
| Total non-current liabilities | (5,091) | (2,170) | (151) | (7,726) | (16,886) | 6,767 | (25,257) |
| Liabilities of businesses held for sale | – | – | – | – | (63) | – | (63) |
| Total liabilities | (11,044) | (2,979) | (154) | (10,580) | (32,546) | 24,861 | (32,442) |
| Net assets (i) | 5,380 | 866 | – | 5,980 | 7,213 | (14,059) | 5,380 |
| Equity | |||||||
| Called up share capital | 294 | 94 | – | 45 | 182 | (321) | 294 |
| Share premium account | 1,371 | 1,486 | – | 204 | 3,642 | (5,332) | 1,371 |
| Retained earnings | 8,949 | (723) | – | 4,433 | 10,055 | (13,765) | 8,949 |
| Other equity reserves | (5,252) | 9 | – | 1,298 | (6,666) | 5,359 | (5,252) |
| Total shareholders’ equity (i) | 5,362 | 866 | – | 5,980 | 7,213 | (14,059) | 5,362 |
| Minority interests | 18 | – | – | – | – | – | 18 |
| Total equity (i) | 5,380 | 866 | – | 5,980 | 7,213 | (14,059) | 5,380 |
i) Includes parent Company’s subsidiaries, associates and joint ventures presented on an equity accounted basis.
Balance sheet as at 31 March 2007 – IFRS
| Parent guarantor | Issuer of notes | Subsidiary guarantor | |||||
|---|---|---|---|---|---|---|---|
| National Grid plc £m |
Niagara Mohawk Power Corporation £m |
British Transco Finance Inc. £m |
National Grid Gas plc £m |
Other subsidiaries £m |
Consolidation adjustments £m |
National Grid consolidated £m |
|
| Non-current assets | |||||||
| Goodwill | – | 569 | – | – | 911 | – | 1,480 |
| Other intangible assets | – | 12 | – | 41 | 91 | – | 144 |
| Property, plant and equipment | – | 2,624 | – | 8,829 | 7,442 | – | 18,895 |
| Deferred tax assets | 3 | 143 | – | – | – | (146) | – |
| Other non-current assets | – | – | – | 2 | 71 | – | 73 |
| Amounts owed by subsidiary undertakings | – | – | – | 5,611 | 620 | (6,231) | – |
| Financial and other investments (i) | 1,508 | 20 | – | 47 | 11,385 | (12,823) | 137 |
| Derivative financial assets | 192 | – | – | 65 | 123 | – | 380 |
| Total non-current assets | 1,703 | 3,368 | – | 14,595 | 20,643 | (19,200) | 21,109 |
| Current assets | |||||||
| Inventories and current intangible assets | – | 16 | – | 28 | 64 | – | 108 |
| Trade and other receivables | 3 | 377 | – | 238 | 618 | – | 1,236 |
| Amounts owed by subsidiary undertakings | 9,047 | – | 156 | 92 | 5,432 | (14,727) | – |
| Financial and other investments | 279 | 19 | – | 305 | 1,495 | – | 2,098 |
| Derivative financial assets | 119 | – | – | 9 | 149 | – | 277 |
| Cash and cash equivalents | 751 | 4 | – | 172 | 666 | – | 1,593 |
| Total current assets | 10,199 | 416 | 156 | 844 | 8,424 | (14,727) | 5,312 |
| Assets of businesses held for sale | – | – | – | – | 1,968 | – | 1,968 |
| Total assets | 11,902 | 3,784 | 156 | 15,439 | 31,035 | (33,927) | 28,389 |
| Current liabilities | |||||||
| Borrowings | (360) | (120) | (3) | (353) | (195) | – | (1,031) |
| Derivative financial liabilities | (29) | – | – | (12) | (194) | – | (235) |
| Trade and other payables | (23) | (306) | – | (587) | (936) | – | (1,852) |
| Amounts owed to subsidiary undertakings | (2,776) | (216) | – | (2,440) | (9,295) | 14,727 | – |
| Current tax liabilities | – | – | – | (34) | (41) | – | (75) |
| Provisions | – | (13) | – | (31) | (123) | – | (167) |
| Total current liabilities | (3,188) | (655) | (3) | (3,457) | (10,784) | 14,727 | (3,360) |
| Non-current liabilities | |||||||
| Borrowings | (4,524) | (710) | (153) | (3,219) | (6,080) | – | (14,686) |
| Derivative financial liabilities | (54) | – | – | (83) | (47) | – | (184) |
| Other non-current liabilities | – | (148) | – | (1,012) | (315) | – | (1,475) |
| Amounts owed to subsidiary undertakings | – | (620) | – | – | (5,611) | 6,231 | – |
| Deferred tax liabilities | – | – | – | (1,627) | (908) | 146 | (2,389) |
| Pensions and other post-retirement benefits | – | (876) | – | – | (406) | – | (1,282) |
| Provisions | – | (130) | – | (74) | (223) | – | (427) |
| Total non-current liabilities | (4,578) | (2,484) | (153) | (6,015) | (13,590) | 6,377 | (20,443) |
| Liabilities of businesses held for sale | – | – | – | – | (450) | – | (450) |
| Total liabilities | (7,766) | (3,139) | (156) | (9,472) | (24,824) | 21,104 | (24,253) |
| Net assets (i) | 4,136 | 645 | – | 5,967 | 6,211 | (12,823) | 4,136 |
| Equity | |||||||
| Called up share capital | 308 | 95 | – | 45 | 181 | (321) | 308 |
| Share premium account | 1,332 | 1,499 | – | 204 | 3,091 | (4,794) | 1,332 |
| Retained earnings | 7,635 | (951) | – | 4,467 | 9,454 | (12,970) | 7,635 |
| Other equity reserves | (5,150) | 2 | – | 1,251 | (6,515) | 5,262 | (5,150) |
| Total shareholders’ equity (i) | 4,125 | 645 | – | 5,967 | 6,211 | (12,823) | 4,125 |
| Minority interests | 11 | – | – | – | – | – | 11 |
| Total equity (i) | 4,136 | 645 | – | 5,967 | 6,211 | (12,823) | 4,136 |
(i) Includes parent Company’s subsidiaries, associates and joint ventures presented on an equity accounted basis.
Cash flow statements
| Parent guarantor | Issuer of notes | Subsidiary guarantor | |||||
|---|---|---|---|---|---|---|---|
| National Grid plc £m |
Niagara Mohawk Power Corporation £m |
British Transco Finance Inc. £m |
National Grid Gas plc £m |
Other subsidiaries £m |
Consolidation adjustments £m |
National Grid consolidated £m |
|
| Year ended 31 March 2008 | |||||||
| Net cash provided by operating activities – continuing operations | 4 | 316 | – | 1,552 | 1,283 | – | 3,155 |
| Net cash provided by operating activities – discontinued operations | – | – | – | – | 10 | – | 10 |
| Net cash provided by operating activities | 4 | 316 | – | 1,552 | 1,293 | – | 3,165 |
| Net cash provided by/(used in) investing activities – continuing operations | 1,547 | (209) | – | (1,630) | (3,658) | (2,123) | (6,073) |
| Net cash (used in)/provided by investing activities – discontinued operations | – | – | – | (4) | 3,054 | – | 3,050 |
| Net cash used in investing activities | 1,547 | (209) | – | (1,634) | (604) | (2,123) | (3,023) |
| Net cash (used in)/provided by financing activities | (2,302) | (105) | – | (87) | (1,221) | 2,123 | (1,592) |
| (Decrease)/increase in cash and cash equivalents in the year | (751) | 2 | – | (169) | (532) | – | (1,450) |
| Year ended 31 March 2007 | |||||||
| Net cash provided by operating activities – continuing operations | 1 | 374 | – | 1,341 | 1,064 | – | 2,780 |
| Net cash provided by operating activities – discontinued operations | – | – | – | – | 178 | – | 178 |
| Net cash provided by operating activities | 1 | 374 | – | 1,341 | 1,242 | – | 2,958 |
| Net cash used in investing activities – continuing operations | (1,225) | (140) | – | (1,381) | (403) | (807) | (3,956) |
| Net cash provided by/(used in) investing activities – discontinued operations | – | – | – | 27 | (132) | – | (105) |
| Net cash used in investing activities | (1,225) | (140) | – | (1,354) | (535) | (807) | (4,061) |
| Net cash provided by/(used in) financing activities | 940 | (232) | – | (42) | (195) | 807 | 1,278 |
| (Decrease)/increase in cash and cash equivalents in the year | (284) | 2 | – | (55) | 512 | – | 175 |
| Year ended 31 March 2006 | |||||||
| Net cash provided by operating activities – continuing operations | – | 329 | – | 1,140 | 1,401 | – | 2,870 |
| Net cash (used in)/provided by operating activities – discontinued operations | – | – | – | (57) | 158 | – | 101 |
| Net cash provided by operating activities | – | 329 | – | 1,083 | 1,559 | – | 2,971 |
| Net cash used in investing activities – continuing operations | – | (192) | – | (146) | (659) | (492) | (1,489) |
| Net cash provided by/(used in) investing activities – discontinued operations | – | – | – | 5,635 | (94) | – | 5,541 |
| Net cash (used in)/provided by investing activities | – | (192) | – | 5,489 | (753) | (492) | 4,052 |
| Net cash provided by/(used in) financing activities | 914 | (141) | – | (6,355) | (752) | 492 | (5,842) |
| Increase/(decrease) in cash and cash equivalents in the year | 914 | (4) | – | 217 | 54 | – | 1,181 |
Cash dividends were received by National Grid plc from consolidated subsidiaries amounting to £2,500m during the year ended 31 March 2008 (2007: £220m; 2006: £nil).