Notes to the consolidated financial statements – analysis of items in the primary statements

1. Segmental analysis	10. Earnings per share	19. Trade and other receivables
2. Other operating income	11. Goodwill	20. Cash and cash equivalents
3. Operating costs	12. Other intangible assets	21. Borrowings
4. Exceptional items, remeasurements and stranded cost recoveries	13. Property, plant and equipment	22. Trade and other payables
5. Pensions and other post-retirement benefits	14. Other non-current assets	23. Other non-current liabilities
6. Finance income and costs	15. Financial and other investments	24. Provisions
7. Taxation	16. Deferred tax assets and liabilities	25. Share capital
8. Discontinued operations	17. Derivative financial instruments	26. Reconciliation of movements in total equity
9. Dividends	18. Inventories and current intangible assets	27. Consolidated cash flow statement

27. Consolidated cash flow statement

(a) Cash flow from operating activities – discontinued operations

	2008 £m	2007 £m	2006 £m
Operating profit	35	62	111
Adjustments for:
Exceptional items	–	55	20
Depreciation and amortisation	–	72	77
Share-based payment charge	–	–	3
Changes in working capital, provisions and pensions	(25)	(8)	(47)
Cash flow relating to exceptional items	–	–	(26)
Cash flow relating to discontinued operations	10	181	138

(b) Cash flow from investing activities – discontinued operations

	2008 £m	2007 £m	2006 £m
Disposal proceeds	3,064	27	5,750
Acquisition of subsidiaries, net of cash acquired	–	(85)	–
Other investing activities	(14)	(47)	(209)
Cash flow relating to discontinued operations	3,050	(105)	5,541

(c) Reconciliation of net cash flow to movement in net debt

	2008 £m	2007 £m	2006 £m
Movement in cash and cash equivalents	(1,450)	175	1,181
(Decrease)/increase in financial investments	(45)	1,725	(25)
(Increase)/decrease in borrowings and derivatives	(1,589)	(3,045)	2,304
Cash paid to shareholders under B share scheme	26	26	1,957
Net interest paid	694	597	704
Change in net debt resulting from cash flows	(2,364)	(522)	6,121
Changes in fair value of financial assets and liabilities and exchange movements	(133)	331	(299)
Issue of B shares	–	–	(2,009)
Net interest charge on the components of net debt	(901)	(655)	(660)
Borrowings of subsidiary undertaking acquired	(2,446)	(48)	–
Amounts reclassified to businesses held for sale	17	(42)	–
Other non-cash movements	(26)	(2)	(17)
Movement in net debt (net of related derivative financial instruments) in the year	(5,853)	(938)	3,136
Net debt at start of year	(11,788)	(10,850)	(13,638)
Impact of adoption of IAS 32 and IAS 39 (i)	–	–	(348)
Net debt (net of related derivative financial instruments) at end of year	(17,641)	(11,788)	(10,850)

(i) The adoption of IAS 39 resulted in changes to the carrying value of borrowings and financial investments as at 1 April 2005.

(d) Analysis of changes in net debt

	Cash and cash equivalents £m	Bank overdrafts £m	Net cash and cash equivalents £m	Financial investments(ii) £m	Borrowings(ii) £m	Derivatives(ii) £m	Total £m
At 31 March 2005	272	(18)	254	398	(14,290)	–	(13,638)
Impact of adoption of IAS 32 and IAS 39 (i)	–	–	–	3	(894)	543	(348)
Cash flow	1,166	15	1,181	(155)	5,037	58	6,121
Fair value gains and losses	14	–	14	3	(207)	(109)	(299)
Issue of B shares	–	–	–	–	(2,009)	–	(2,009)
Interest charges	–	–	–	135	(746)	(49)	(660)
Other non-cash movements	–	–	–	–	(17)	–	(17)
At 31 March 2006	1,452	(3)	1,449	384	(13,126)	443	(10,850)
Cash flow	178	(3)	175	1,509	(2,233)	27	(522)
Fair value gains and losses	(14)	–	(14)	(9)	511	(157)	331
Interest charges	–	–	–	215	(833)	(37)	(655)
Other non-cash movements	(23)	–	(23)	(1)	(30)	(38)	(92)
At 31 March 2007	1,593	(6)	1,587	2,098	(15,711)	238	(11,788)
Cash flow	(1,446)	(4)	(1,450)	(251)	(729)	66	(2,364)
Fair value gains and losses	4	–	4	4	(990)	849	(133)
Interest charges	–	–	–	211	(1,066)	(46)	(901)
Acquisition of subsidiary undertaking	–	–	–	33	(2,479)	–	(2,446)
Other non-cash movements	23	–	23	–	(18)	(14)	(9)
At 31 March 2008	174	(10)	164	2,095	(20,993)	1,093	(17,641)

(i) National Grid adopted IAS 39 with effect from 1 April 2005 consistent with the requirements of IFRS 1. The adoption of IAS 39 also resulted in changes to the carrying value of borrowings and financial investments as at 1 April 2005.

(ii) Includes interest. Accrued interest at 31 March 2008 was £(225)m.

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