Business Context and Reporting Period
Company: National Grid plc
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended March 31, 2011
Accounting Basis: International Financial Reporting Standards (IFRS)
Operations: National Grid operates regulated electricity and gas transmission and distribution networks in the United Kingdom and the United States (New York and New England). The company is incorporated in England and Wales.
Key Financial Metrics
| Metric | 2011 (£m) | 2010 (£m) |
|---|---|---|
| Revenue | 14,343 | 14,007 |
| Total Operating Profit | 3,745 | 3,293 |
| Profit for the Year | 2,163 | 1,389 |
| Basic EPS (Continuing Ops) | 63.9 pence | 48.4 pence |
| Total Assets | 46,375 | 43,553 |
| Net Assets | 9,069 | 4,211 |
| Dividends Paid (per share) | 37.74 pence | 36.65 pence |
Note: The filing text does not provide specific values for cash flow from operations, total debt, or liquidity ratios in the summary sections. These details are incorporated by reference from the Annual Report and Accounts.
Material Changes vs. Prior Period
- Profitability Surge: Profit for the year increased significantly by 56% (from £1,389m to £2,163m), driven by a 14% increase in operating profit.
- Revenue Growth: Revenue rose 2.4% to £14,343m. The filing notes that items previously reported as "other operating income" were reclassified into revenue for comparative periods.
- Balance Sheet Strength: Net assets more than doubled from £4,211m in 2010 to £9,069m in 2011, reflecting retained earnings and equity movements.
- Share Count: The number of basic shares outstanding increased from 2,864 million to 3,378 million, largely due to a rights issue and scrip dividends.
Guidance, Outlook, and Risks
Management Commentary & Outlook: The filing incorporates the "Operating and Financial Review" by reference. Management highlights a strategy focused on regulated returns and infrastructure investment. The company suspended its share buy-back program in 2009 and is not currently returning stranded asset cash flows via repurchases.
Risk Factors: Key risks identified include regulatory changes, environmental and climate change laws, network failures, credit market volatility, and exchange rate fluctuations. The company notes that forward-looking statements are subject to uncertainties regarding government decisions and weather patterns affecting energy demand.
Unusual Items: The 2008 comparatives were restated for the finalization of the fair value exercise on the acquisition of KeySpan Corporation. EPS data has been restated to reflect the impact of a rights issue bonus element and scrip dividends.
Investor Verification Checklist
- Debt and Liquidity: Verify total debt levels and interest coverage ratios in the full Annual Report (Exhibit 15.1), as specific debt figures are not listed in this summary text.
- Cash Flow: Review the Consolidated Cash Flow Statement to confirm operating cash flow generation against capital expenditure requirements.
- Regulatory Environment: Assess the impact of upcoming regulatory determinations in both the UK and US on future revenue caps and allowed returns.
- Dividend Sustainability: Confirm the payout ratio given the significant increase in net assets and profit, noting the dividend per share increased to 37.74 pence.
- Share Capital Structure: Verify the impact of the increased share count (3.378 billion) on future earnings per share growth targets.