Washington D.C. 20549

Commission file number: 001-14958

1-3 Strand
London
WC2N 5EH

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ                     Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3- 2(b) under the Securities Exchange Act of 1934. Yes  o                No  þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

 

 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

Date: 19 November 2009

ANNEX 1 SUMMARY

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a - 16 or 15d - 16 of
The Securities Exchange Act of 1934

Announcement sent to the London Stock Exchange on 19 November 2009

National Grid plc
1-3 Strand, London, WC2N 5EH,
United Kingdom

 

Announcement:

‘National Grid plc —
Half year report for the six months ended 30 September 2009 (unaudited)’

19 November 2009

National Grid plc
Half year report for the six months ended 30 September 2009 (unaudited)

HIGHLIGHTS

•

Very strong first half performance

	•		Pre-tax profit1 up 16%, earnings per share1 up 31%
	•		Higher operating cash flow2 of £1,607m

•		8% increase in the interim dividend
•		Delivering on our priorities

	•		Regulatory progress in the US, filings on track
	•		Capital investment of £1.5bn, in line with plans for full year

•		Funding for the year complete, stable credit ratings, net debt down £693m
•		Outlook for 2009/10 strong, in line with our expectations

FINANCIAL RESULTS FOR CONTINUING OPERATIONS

		Six months ended 30 September
(£m, at actual exchange rate)		2009				2008				% change
Business performance1
Operating profit			1,149				1,079				6
Pre-tax profit			649				558				16
Earnings			554				431				29
Earnings per share			22.5p				17.2p3				31
Statutory results
Operating profit			1,404				943				49
Pre-tax profit			944				564				67
Earnings			696				406				71
Earnings per share			28.3p				16.2p3				75
Dividend per share			13.65p				12.64p				8

Steve Holliday, Chief Executive, said:

“We have made good operational and financial progress against our priorities for this year and have delivered a very strong financial performance in the first half. Our pre-tax profits were up 16%, supported by lower financing costs, delivering higher operating cash flows. We have now filed or implemented new rate plans for over 60% of our US rate base and are on track to deliver this year’s investment programme of £3.4bn, financed through internal cash flows and borrowings.

As we look to the future our focused strategy is being confirmed by the changing energy landscape, which creates a number of organic growth opportunities for National Grid. With the right regulatory frameworks this will create significant value for our shareholders.”

National Grid
2009/10 Half Year Report

CHIEF EXECUTIVE’S REVIEW

National Grid has made a very good start to what is expected to be a strong financial year. This is despite the prevailing economic conditions, which have marginally affected our distribution businesses particularly in the US. We have made good progress on our stated priorities for 2009/10:- delivering our disciplined investment programme, progressing with our US regulatory filings and driving efficiency through the phased introduction of our operating model. Looking forward, the energy landscape is changing, creating a number of organic growth opportunities for National Grid.

Priorities for 2009/10

Our investment pipeline remains strong. In the UK electricity and gas markets, investment is being driven by changes in sources of gas supply and electricity generation (c.40%), and the need for asset replacement (c.60%). In the US electricity and gas markets, investment is being driven by customer additions (c.20%), the need for asset replacement (c.50%), system reinforcement (c.20%) and the emerging need for renewable generation (c.10%).

To date this year we have invested £1.5bn and are on target to invest around £3.4bn for the full year, growing our asset base. This is supported by current rate plans and long term contracts and is being financed from internal cash flow and borrowings.

Our financial position remains robust. Net operating cash flows are £747m higher than the previous period reflecting a favourable working capital movement. We have completed our funding requirement of £2.5bn for 2009/10 and have already pre-funded £1.3bn of our funding requirement for 2010/11. This year National Grid has issued long term bonds totalling over $2bn, from its Upstate New York regulated entity, Niagara Mohawk, and Massachusetts Electric at competitive rates. This is part of our programme to reallocate debt to our US operating companies.

Our net finance costs for this period have decreased by £20m to £504m. This reflects our variable rate debt benefiting from lower interest rates, along with UK deflation positively affecting our index linked debt. We have taken full advantage of these lower rates, fixing the majority of our variable rate debt portfolio for both the current year and 2010/11.

We are committed to financing our business in a manner consistent with maintaining an efficient balance sheet and optimising our cost of capital. We expect all credit metrics to improve this year, primarily due to the reduction in our interest charge. Moody’s Investor Services, Fitch Ratings and Standard & Poor’s have all reaffirmed our credit ratings with stable outlook.

We continue to make progress on our rate case filings in the US. This financial year we have made filings in Massachusetts Electric Company and Narragansett Electric. In addition we plan to file the Niagara Mohawk electric rate case in early 2010 and intend to file a rate case for our Colonial Gas business in the first quarter of 2010/11. At the same time we plan to make a consolidated filing, combining our Boston and Essex gas businesses into a single rate plan, greatly simplifying and improving the transparency of our Massachusetts gas regulatory arrangements.

We continue to drive efficiency through the phased introduction of our operating model. We expect that our 2009/10 regulated controllable costs (excluding bad debts) as a proportion of our asset base will reduce significantly from the 8.1% reported for 2008/09. We continue to drive procurement costs down through a combination of leveraging National Grid’s scale, unit price reductions and a decrease in the number of suppliers. We remain on track with delivery of our KeySpan synergy savings, at 30 September 2009 we had achieved a run rate of $140m.

National Grid
2009/10 Half Year Report

Potential growth opportunities

When we set out our strategy in November 2006, we noted the significant requirement for investment in our chosen markets, the UK and US, driven largely by the need for asset replacement, renewable energy policy and customer connections. Since that time, there have been clear developments in both UK and US energy policy and the regulatory and commercial regimes are now beginning to take shape. In the main they are being driven by specific national and state targets for renewable energy supply and reductions in carbon emissions.

This changing energy landscape will create a number of opportunities for National Grid and other energy companies. These will include the need for investment in renewable generation, new transmission systems to connect new nuclear stations and onshore and offshore wind generation, smart grids, carbon capture and storage projects, interconnectors and strategic gas storage. Whilst it is unclear today which of these projects will be appropriate for National Grid or their precise timing, we expect that greater clarity will emerge as UK and US energy policies continue to crystallise and appropriate regulatory frameworks are put in place. We are clear that we will adopt a rigorous approach to the assessment of these opportunities as they emerge and will be selective about which we pursue. We will only undertake investments that produce an attractive and predictable return for shareholders.

DIVIDEND

Reflecting the positive outlook for the year, the Board has approved an 8% increase in the interim dividend to 13.65p per ordinary share ($1.1480 per American Depositary Share) in line with its long term policy. The interim dividend is to be paid on 20 January 2010 to shareholders on the register as at 4 December 2009. A scrip dividend alternative will be offered.

OUTLOOK

Current performance remains in line with our expectations.

We continue to expect a strong performance from our Transmission and Electricity Distribution and Generation businesses. Our Gas Distribution business will benefit from increases in net revenues under our UK and US rate plans, but will be impacted by negative timing differences, resulting in lower operating profit in this business.

Net interest charges will benefit from low inflation and the majority of our variable rate debt having been fixed at low interest rates. Our full year effective tax rate is expected to be in line with last year.

Overall we are well positioned to deliver another year of strong performance.

National Grid
2009/10 Half Year Report

BASIS OF PRESENTATION

Unless otherwise stated, all financial commentaries are given on a business performance basis at actual exchange rates. Business performance represents the results for continuing operations before exceptional items, mark-to-market remeasurements of commodity contracts and financial instruments that are held for economic hedging purposes but did not achieve hedge accounting, and US stranded cost recoveries. Commentary provided in respect of results after exceptional items, mark-to-market remeasurements and US stranded cost recoveries is described as ‘statutory’.

REVIEW OF RESULTS AND FINANCIAL POSITION

Operating profit was £1,149m, up 6% on the prior period (up 2% on a constant currency basis⁴). This was primarily driven by good results in our Transmission and Electricity Distribution and Generation businesses partially offset by timing related items in our US Gas Distribution business. Operating profit performance in the first half of the year reflected the expected seasonality in our US businesses.

Net finance costs were £504m, 4% lower than the prior period, reflecting lower interest rates and RPI deflation benefiting the accretion on index linked bonds. We expect this trend to continue through to the full year but lessen as RPI inflation returns. Profit before tax was up 16% to £649m. The tax charge on profit was £93m, £32m lower than the prior period, with the first half tax charge under IAS34 reflecting discrete items of £67m and the geographical and seasonal split of our earnings. For the full year we expect our effective tax rate to be in line with last year. Earnings were up £123m on the prior period at £554m. Earnings per share increased 31% from 17.2p in the first half last year to 22.5p.

Exceptional items and remeasurements for continuing operations increased statutory earnings by £142m after tax. After these items and minority interests, statutory earnings for continuing operations attributable to shareholders were £696m – statutory basic earnings per share from continuing operations were 28.3p compared with 16.2p for the prior period.

Operating cash flows from continuing operations, before exceptional items, remeasurements, stranded cost recoveries and taxation, were £1,607m, £747m higher than the prior period.

Organic investment in our continuing businesses was £1.5bn, in line with our plans for the year.

Our net debt fell to £21.98bn at 30 September 2009 compared with £22.67bn at 31 March 2009, reflecting the impact of the weakening of the US dollar - pound exchange rate on our dollar denominated debt.

Further information about our principal risks and uncertainties for the next six months of the financial year is provided in Note 13 on page 25.

National Grid
2009/10 Half Year Report

REVIEW OF TRANSMISSION OPERATIONS

Summary results		Six months ended 30 September
(£m)		2009				2008				% change
Revenue and other operating income			1,826				1,975				(8)
Operating costs			(978)				(1,188)				(18)
Depreciation and amortisation			(211)				(196)				8
Operating profit – actual exchange rate			637				591				8
Operating profit – constant currency			637				611				4
Operating profit by geographical segment		Six months ended 30 September
(£m, at constant currency)		2009				2008				% change
UK			549				508				8
US			88				103				(15)
Operating profit			637				611				4
Capital investment		Six months ended 30 September
(£m, at actual exchange rate)		2009				2008				% change
UK			561				684				(18)
US			99				72				38
Capital investment			660				756				(13)

Transmission operating profit was up 8% at £637m. Our allowed UK transmission regulated revenue increased by 6.7% for electricity and 3.8% for gas at 1 April 2009 in line with our RPI + X price control allowances. This resulted in operating profit from our UK regulated revenue being £60m higher than the prior period. This was partially offset by operating profit lower in the US by £15m largely due to timing differences. Operating profit from our French Interconnector, which had a particularly strong performance last year, was lower by £22m. Other items increased operating profit by £3m. The period on period movement in exchange rates had a £20m positive benefit on Transmission operating profit.

Capital investment in Transmission was £660m. Large schemes in the UK include load related investment in the Thames estuary and transmission investment in renewable generation (which earns an enhanced return). Investment in our US transmission networks includes reliability spend in New York and investment on the New England East-West Solution (NEEWS) project, where we earn an enhanced Federal Energy Regulatory Commission (FERC) return on equity of 12.89%.

National Grid
2009/10 Half Year Report

REVIEW OF GAS DISTRIBUTION OPERATIONS

Summary results		Six months ended 30 September
(£m)		2009				2008				% change
Revenue and other operating income			1,767				1,863				(5)
Operating costs			(1,331)				(1,432)				(7)
Depreciation and amortisation			(183)				(157)				17
Operating profit – actual exchange rate			253				274				(8)
Operating profit – constant currency			253				276				(8)
Operating profit by geographical segment		Six months ended 30 September
(£m, at constant currency)		2009				2008				% change
UK			385				264				46
US			(132)				12				-
Operating profit			253				276				(8)
Capital investment		Six months ended 30 September
(£m, at actual exchange rate)		2009				2008				% change
UK capex			104				72				44
UK repex			233				207				13
US			204				170				20
Capital investment			541				449				20

Gas Distribution operating profit decreased by £21m during the period to £253m. In the UK, net regulated revenues were up £23m, reflecting increases under the price control allowance. In addition the re-phasing of UK billing between the first and second half of the year increased operating profit by £104m. In the US, where the vast majority of annual revenue is collected in the second half of the year, net revenues were up £16m on the prior period. This good performance comes on the back of last year’s significant over recovery, which together with negative timing impacts in this half year, has led to a £142m period on period decrease in operating profit. Most of this year’s under recovery is expected to reverse in the second half. In addition, as anticipated, the US recession is reducing our customers’ ability to pay their bills with operating profit down by £16m as a result of an increase in bad debts. Other items reduced UK and US net operating profit by £8m. The period on period movement in exchange rates had a £2m positive benefit on operating profit.

During the period, together with our Gas Distribution alliance partnerships in the UK, we have replaced around 1,026km of gas mains, resulting in total replacement expenditure (repex) of £233m. In our US operations customer connections have slowed as a result of the US recession. This period we have added around 19,000 new customers. Overall, our investment in network infrastructure projects in the UK and US resulted in total capital expenditure (including repex) of £541m this period, 20% up on the prior period.

We continue to make good regulatory progress in the US. On 14 May 2009 our Niagara Mohawk gas rate case, recommended by the New York Public Service Commission (NYPSC) staff, was approved in full with a base allowed return of 10.2% and provided for a $39m increase in revenues. The revenue increase came into effect on 20 May. On 29 May 2009 the New Hampshire gas rate case (covering around 1% of our US rate base) was approved. We were disappointed with the allowed return on equity of 9.54%, which is out of line with other regulatory decisions and we subsequently asked the New Hampshire Public Utilities Commission to reconsider the decision. Last week, the Commission denied our motion for reconsideration and we are now considering our next steps.

Next year we plan to make a rate case filing for Colonial Gas and a consolidated filing, combining our Boston and Essex businesses into a single rate plan. Our continued programme of refiling rate cases will benefit both customers and shareholders by supporting much needed investment and recovery of costs.

National Grid
2009/10 Half Year Report

REVIEW OF ELECTRICITY DISTRIBUTION AND GENERATION OPERATIONS

Summary results		Six months ended 30 September
(£m)		2009				2008				% change
Revenue and other operating income*			1,947				1,854				5
Operating costs			(1,673)				(1,639)				2
Depreciation and amortisation			(105)				(86)				22
Operating profit – actual exchange rate			169				129				31
Operating profit – constant currency			169				160				6
Operating profit by principal activities		Six months ended 30 September
(£m, at constant currency)		2009				2008				% change
Electricity distribution			109				135				(19)
Long Island transmission and distribution services			25				9				178
Long Island generation			35				16				119
Operating profit			169				160				6
Capital investment		Six months ended 30 September
(£m, at actual exchange rate)		2009				2008				% change
Electricity distribution			148				130				14
Long Island generation			18				13				38
Capital investment			166				143				16

During the period, operating profit from Electricity Distribution and Generation increased by 31% to £169m. This period saw an increase in our net revenues of £29m, primarily reflecting the increase in generation contract revenues. Timing related items, mainly relating to an under recovery of income, temporarily reduced operating profit by £64m. Other items, including a reduction in service penalty costs and the absence of non-cash one off items incurred last year, increased operating profit by £44m. 2008 saw us delivering a significant improvement in our upstate New York system reliability performance, consistently beating our historic average and avoiding service penalties. The period on period movement in exchange rates benefited operating profit by £31m.

We have made solid regulatory progress during the period. As planned in Massachusetts and Rhode Island we filed electric rate cases on 15 May 2009 and 1 June 2009 respectively. These filings will benefit both customers and shareholders by supporting much needed investment and recovery of costs. We expect a conclusion to be reached around the end of the year in Massachusetts and early next year in Rhode Island.

National Grid
2009/10 Half Year Report

REVIEW OF NON-REGULATED AND OTHER ACTIVITIES

Summary results		Six months ended 30 September
(£m)		2009				2008				% change
Revenue and other operating income			382				356				7
Operating costs			(206)				(194)				6
Depreciation and amortisation			(86)				(77)				12
Operating profit			90				85				6
Operating profit by principal activities		Six months ended 30 September
(£m, at actual exchange rate)		2009				2008				% change
Metering			86				76				13
Grain LNG			20				4				400
Property			10				24				(58)
Sub-total operating profit			116				104				12
Corporate and other activities			(26)				(19)				37
Operating profit			90				85				6
Capital investment*		Six months ended 30 September
(£m, at actual exchange rate)		2009				2008				% change
Metering			64				76				(16)
Grain LNG			60				122				(51)
Property			2				3				(33)
Other			13				43				(70)
Capital investment			139				244				(43)

Operating profit from our non-regulated and other activities increased by 6% to £90m. This was primarily driven by an increase in profit in our Metering and Grain LNG businesses, partially offset by a reduction in operating profit in our Property business. As reported in February, given current market conditions we have taken action to defer property sales in order to preserve value. This has reduced operating profit by £14m compared to the previous period.

Metering operating profit was up £10m at £86m, mainly driven by increased revenue, and lower costs and depreciation charges. During the period, capital investment in this business was £64m, with around 360,000 new meters installed. On 29 April 2009 the Competition Appeal Tribunal in part overturned Ofgem’s decision to fine us for a breach of the UK Competition Act 1998 and reduced the fine to £30m but also upheld the original decision in part. The Court of Appeal has granted us leave to appeal the Tribunal’s decision both on points of law and as to the amount of the penalty.

Our Grain LNG business delivered an operating profit of £20m, five times that of the previous period, as a result of Phase II becoming operational in December 2008. During the period capital investment in this business decreased by 51% to £60m, mainly reflecting the completion of the Phase II capacity extension in October 2008. Phase III is currently under construction and is planned to complete in late 2010. This will add a further LNG tank and a second unloading jetty, increasing the total annual capacity of the terminal to around 15 million tonnes, representing around 20% of total UK gas demand. These investments are underpinned by long-term, take-or-pay contracts, which deliver an index-linked revenue stream for 20 years.

National Grid
2009/10 Half Year Report

PROVISIONAL FINANCIAL TIMETABLE

2 December 2009		Ordinary shares go ex-dividend
4 December 2009		Record date for 2009/10 interim dividend
9 December 2009		Scrip reference price announced
18 December 2009		Scrip election date for 2009/10 interim dividend
20 January 2010		2009/10 interim dividend paid to qualifying ordinary shareholders
February 2010		Interim Management Statement
20 May 2010		2009/10 preliminary results
2 June 2010		Ordinary shares go ex-dividend
4 June 2010		Record date for 2009/10 final dividend
9 June 2010		Scrip reference price announced
Mid-June 2010		Annual Report published
21 July 2010		Scrip election date for 2009/10 final dividend
26 July 2010		Interim Management Statement and Annual General Meeting, ICC, Birmingham
18 August 2010		2009/10 final dividend paid to qualifying ordinary shareholders

National Grid
2009/10 Half Year Report

CONTACTS

National Grid:

Investors

David Rees		+44 (0)20 7004 3170		+44 (0)7901 511322(m)
George Laskaris		+1 718 403 2526		+1 917 375 0989(m)
Richard Smith		+44 (0)20 7004 3172		+44 (0)7747 006321(m)
Victoria Davies		+44 (0)20 7004 3171		+44 (0)7771 973447(m)

Media

Clive Hawkins		+44 (0)20 7004 3147		+44 (0)7836 357173(m)
Chris Mostyn		+1 781 907 1726		+1 347 702 3740(m)
Gemma Stokes		+44 (0)1926 65 3555		+44 (0)7974 198333(m)
Brunswick: Tom Burns		+44 (0)20 7404 5959		+44 (0)7974 982308(m)

An analyst presentation will be held at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS at 9:15am (UK time) today.

Live telephone coverage of the analyst presentation - password ‘National Grid’

UK dial in number		+44 (0) 203 023 4488		US dial in number		+1 866 966 5335

Telephone replay of the analyst presentation (available until 19 December 2009)

Dial in number		+44 (0) 208 196 1998		Account number		5254788#

A live web cast of the presentation will also be available at www.nationalgrid.com.

A short video of Steve Holliday talking about these results is available on www.cantos.com.

You can view or download copies of our latest Annual Report or the Annual Review from our website at www.nationalgrid.com/corporate/Investor+Relations/ or request a free printed copy by contacting investor.relations@ngrid.com.

CAUTIONARY STATEMENT

This announcement contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to National Grid’s financial condition, results of operations and businesses, strategy, plans and objectives. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “will”, “continue”, “project” and similar expressions, as well as statements in the future tense, identify forward-looking statements. These forward-looking statements are not guarantees of National Grid’s future performance and are subject to assumptions, risks and uncertainties that could cause actual future results to differ materially from those expressed in or implied by such forward-looking statements. Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid’s ability to control or estimate precisely, such as delays in obtaining, or adverse conditions contained in, regulatory approvals and contractual consents, unseasonable weather affecting the demand for electricity and gas, competition and industry restructuring, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in energy market prices, changes in historical weather patterns, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, the impact of changes to accounting standards, technological developments and the ability to access capital markets and other sources of credit in a timely manner on acceptable terms, especially considering the recent deterioration of market conditions in the global economy and financial markets. Other factors that could cause actual results to differ materially from those described in this announcement include the ability to integrate the businesses relating to announced or recently completed acquisitions with National Grid’s existing business to realise the expected synergies from such integration, the availability of new acquisition opportunities and the timing and success of future acquisition opportunities, the timing and success or other impact of the sales of National Grid’s non-core businesses, the failure for any reason to achieve reductions in costs or to achieve operational efficiencies, the failure to retain key management, the behaviour of UK electricity market participants on system balancing, the timing of amendments in prices to shippers in the UK gas market, the performance of National Grid’s pension schemes and the regulatory treatment of pension costs, and any adverse consequences arising from outages on or otherwise affecting energy networks, including gas pipelines owned or operated by National Grid. For a more detailed description of some of these assumptions, risks and uncertainties, together with any other risk factors, please see National Grid’s filings with and submissions to the US Securities and Exchange Commission (the “SEC”) (and in particular the “Risk Factors” and “Operating and Financial Review” sections in its most recent Annual Report on Form 20-F). Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements. The effects of these factors are difficult to predict. New factors emerge from time to time and National Grid cannot assess the potential impact of any such factor on its activities or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The contents of any website referenced herein do not form part of this document.

National Grid
2009/10 Half Year Financial Information

CONSOLIDATED INCOME STATEMENT for the six months ended 30 September				2009			2008			Year ended  31 March  2009
		Notes		£m			£m			£m
Revenue		2a			6,044			6,072			15,624
Other operating income					13			29			63
Operating costs					(4,653)			(5,158)			(13,064)
Operating profit
- Before exceptional items, remeasurements and stranded cost recoveries		2b			1,149			1,079			2,915
- Exceptional items, remeasurements and stranded cost recoveries		3			255			(136)			(292)
Total operating profit		2c			1,404			943			2,623
Interest income and similar income		4			509			640			1,315
Interest expense and other finance costs
- Before exceptional items and remeasurements					(1,013)			(1,164)			(2,465)
- Exceptional items and remeasurements		3			40			142			(84)
		4			(973)			(1,022)			(2,549)
Share of post-tax results of joint ventures and associates					4			3			5
Profit before taxation
- Before exceptional items, remeasurements and stranded cost recoveries					649			558			1,770
- Exceptional items, remeasurements and stranded cost recoveries		3			295			6			(376)
Total profit before taxation					944			564			1,394
Taxation
- Before exceptional items, remeasurements and stranded cost recoveries		5			(93)			(125)			(517)
- Exceptional items, remeasurements and stranded cost recoveries		3			(153)			(31)			45
Total taxation					(246)			(156)			(472)
Profit from continuing operations after taxation
- Before exceptional items, remeasurements and stranded cost recoveries					556			433			1,253
- Exceptional items, remeasurements and stranded cost recoveries		3			142			(25)			(331)
Profit for the period from continuing operations					698			408			922
Profit for the period from discontinued operations
- Before exceptional items and remeasurements					-			6			9
- Exceptional items and remeasurements					-			11			16
					-			17			25
Profit for the period					698			425			947
Attributable to:
- Equity shareholders of the parent					696			423			944
- Minority interests					2			2			3
					698			425			947
Earnings per share from continuing operations*
- Basic		6a			28.3p			16.2p			37.1p
- Diluted		6b			28.1p			16.1p			36.8p
Earnings per share*
- Basic		6a			28.3p			16.8p			38.1p
- Diluted		6b			28.1p			16.7p			37.8p
Dividends per ordinary share: paid during the period		7			23.00p			21.30p			33.94p
Dividends per ordinary share: for the period					13.65p			12.64p			35.64p

* In accordance with IAS 33, comparative period amounts have been restated as a result of the shares issued via the scrip dividend

National Grid
2009/10 Half Year Financial Information

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30 September		2009				2008				Year ended 31 March 2009
		£m				£m				£m
Profit for the period			698				425				947
Other comprehensive income:
Exchange adjustments			(79)				141				464
Actuarial net loss			(1,424)				(113)				(2,018)
Deferred tax on actuarial net losses			455				29				678
Net losses taken to equity in respect of cash flow hedges			(3)				(12)				(1)
Transferred to profit or loss on cash flow hedges			(5)				3				(53)
Deferred tax on cash flow hedges			1				3				19
Net gains/(losses) taken to equity on available-for-sale investments			33				(7)				9
Transferred to profit or loss on sale of available-for-sale investments			-				(2)				(18)
Deferred tax on available-for-sale investments			(5)				1				7
Other comprehensive (loss)/income for the period			(1,027)				43				(913)
Total comprehensive (loss)/income for the period			(329)				468				34
Total comprehensive (loss)/income attributable to:
- Equity shareholders of the parent			(330)				466				26
- Minority interests			1				2				8
			(329)				468				34

National Grid
2009/10 Half Year Financial Information

CONSOLIDATED BALANCE SHEET at 30 September				2009				2008				At 31 March 2009
		Notes		£m				£m				£m
Non-current assets
Goodwill					4,843				4,357				5,391
Other intangible assets					355				314				370
Property, plant and equipment					29,197				26,321				29,545
Deferred tax assets					219				-				137
Pension asset					-				1,055				269
Other non-current assets					139				128				106
Financial and other investments					425				304				361
Derivative financial assets		9			1,867				633				1,533
Total non-current assets					37,045				33,112				37,712
Current assets
Inventories and current intangible assets					647				860				556
Trade and other receivables					1,702				2,085				2,672
Financial and other investments		9			1,669				1,265				2,197
Derivative financial assets		9			432				291				593
Cash and cash equivalents		9			359				148				737
Total current assets					4,809				4,649				6,755
Total assets		2d			41,854				37,761				44,467
Current liabilities
Borrowings		9			(2,626)				(2,412)				(3,253)
Derivative financial liabilities		9			(183)				(317)				(307)
Trade and other payables					(2,302)				(2,391)				(2,835)
Current tax liabilities					(274)				(642)				(383)
Provisions					(263)				(291)				(248)
Total current liabilities					(5,648)				(6,053)				(7,026)
Non-current liabilities
Borrowings		9			(22,883)				(19,092)				(23,540)
Derivative financial liabilities		9			(615)				(272)				(633)
Other non-current liabilities					(1,936)				(1,948)				(2,092)
Deferred tax liabilities					(2,514)				(2,883)				(2,661)
Pensions and other post-retirement benefit obligations					(3,652)				(1,664)				(3,080)
Provisions					(1,349)				(1,124)				(1,451)
Total non-current liabilities					(32,949)				(26,983)				(33,457)
Total liabilities					(38,597)				(33,036)				(40,483)
Net assets					3,257				4,725				3,984
Equity
Called up share capital					297				294				294
Share premium account					1,368				1,371				1,371
Retained earnings					6,467				8,171				7,135
Other equity reserves					(4,887)				(5,124)				(4,830)
Shareholders’ equity					3,245				4,712				3,970
Minority interests					12				13				14
Total equity					3,257				4,725				3,984

National Grid
2009/10 Half Year Financial Information

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY		Called-up share capital				Share premium account				Retained earnings				Other equity reserves				Total share- holders’ equity				Minority interests				Total equity
		£m				£m				£m				£m				£m				£m				£m
Changes in equity for the period:
At 1 April 2009			294				1,371				7,135				(4,830)				3,970				14				3,984
Total comprehensive (loss)/income for the period			-				-				(273)				(57)				(330)				1				(329)
Equity dividends			-				-				(557)				-				(557)				-				(557)
Scrip dividend related share issue			3				(3)				137				-				137				-				137
Other movements in minority interests			-				-				-				-				-				(3)				(3)
Share-based payment			-				-				10				-				10				-				10
Issue of treasury shares			-				-				13				-				13				-				13
Tax on share-based payment			-				-				2				-				2				-				2
At 30 September 2009			297				1,368				6,467				(4,887)				3,245				12				3,257
																		Total
		Called-up				Share								Other				share-
		share				premium				Retained				equity				holders’				Minority				Total
		capital				account				earnings				reserves				equity				interests				equity
		£m				£m				£m				£m				£m				£m				£m
Changes in equity for the period:
At 1 April 2008			294				1,371				8,943				(5,252)				5,356				18				5,374
Total comprehensive income for the period			-				-				338				128				466				2				468
Equity dividends			-				-				(531)				-				(531)				-				(531)
Repurchase of share capital and purchase of treasury shares			-				-				(599)				-				(599)				-				(599)
Other movements in minority interests			-				-				-				-				-				(7)				(7)
Share-based payment			-				-				10				-				10				-				10
Issue of treasury shares			-				-				8				-				8				-				8
Tax on share-based payment			-				-				2				-				2				-				2
At 30 September 2008			294				1,371				8,171				(5,124)				4,712				13				4,725
																		Total
		Called-up				Share								Other				share-
		share				premium				Retained				equity				holders’				Minority				Total
		capital				account				earnings				reserves				equity				interests				equity
		£m				£m				£m				£m				£m				£m				£m
Changes in equity for the year:
At 1 April 2008			294				1,371				8,943				(5,252)				5,356				18				5,374
Total comprehensive (loss)/income for the year			-				-				(396)				422				26				8				34
Equity dividends			-				-				(838)				-				(838)				-				(838)
Repurchase of share capital and purchase of treasury shares			-				-				(603)				-				(603)				-				(603)
Other movements in minority interests			-				-				-				-				-				(12)				(12)
Share-based payment			-				-				22				-				22				-				22
Issue of treasury shares			-				-				8				-				8				-				8
Tax on share-based payment			-				-				(1)				-				(1)				-				(1)
At 31 March 2009			294				1,371				7,135				(4,830)				3,970				14				3,984

National Grid
2009/10 Half Year Financial Information

CONSOLIDATED CASH FLOW STATEMENT for the six months ended 30 September		2009				2008				Year ended 31 March 2009
		£m				£m				£m
Cash flows from operating activities
Total operating profit			1,404				943				2,623
Adjustments for:
Exceptional items, remeasurements and stranded cost recoveries			(255)				136				292
Depreciation and amortisation			585				511				1,122
Share-based payment charge			10				10				22
Changes in working capital			329				(161)				54
Changes in provisions			(57)				(32)				(99)
Changes in pensions and other post-retirement benefit obligations			(409)				(547)				(678)
Cash flows relating to exceptional items			(72)				(39)				(131)
Cash flows relating to stranded cost recoveries			194				113				359
Cash flows generated from continuing operations			1,729				934				3,564
Cash flows relating to discontinued operations (excluding tax)			-				1				(8)
Cash generated from operations			1,729				935				3,556
Tax paid			(131)				(229)				(143)
Net cash inflow from operating activities			1,598				706				3,413
Cash flows from investing activities
Acquisition of investments			(53)				(29)				(73)
Purchases of intangible assets			(35)				(56)				(78)
Purchases of property, plant and equipment			(1,426)				(1,535)				(3,107)
Disposals of property, plant and equipment			9				18				27
Interest received			12				61				85
Dividends received from joint ventures			17				-				-
Net movements in financial investments			507				814				99
Cash flows used in continuing operations - investing activities			(969)				(727)				(3,047)
Cash flows relating to discontinued operations
- disposal proceeds (net of tax) (i)			-				1,600				1,053
- other investing activities			-				(3)				(4)
Net cash flow (used in)/from investing activities			(969)				870				(1,998)
Cash flows from financing activities
Proceeds from issue of share capital and sale of treasury shares			13				8				8
(Decrease)/increase in borrowings and related derivatives			(112)				17				1,641
Interest paid			(480)				(468)				(1,061)
Dividends paid to shareholders			(420)				(531)				(838)
Repurchase of share capital and purchase of treasury shares			-				(623)				(627)
Net cash flow used in financing activities			(999)				(1,597)				(877)
Net (decrease)/increase in cash and cash equivalents			(370)				(21)				538
Exchange movements			(7)				5				18
Net cash and cash equivalents at start of period			720				164				164
Net cash and cash equivalents at end of period (ii)			343				148				720

i)	31 March 2009 includes payment of tax arising on disposal of the Ravenswood generation station and other businesses of £564m.
ii)	Net of bank overdrafts of £16m (30 September 2008: £nil; 31 March 2009: £17m).

National Grid
2009/10 Half Year Financial Information

NOTES TO THE 2009/10 HALF YEAR FINANCIAL INFORMATION

1. Basis of preparation and new accounting standards, interpretations and amendments

The half year financial information covers the six month period ended 30 September 2009 and has been prepared under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and IFRS as adopted by the European Union, in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’ and the Disclosure and Transparency Rules of the Financial Services Authority. The half year financial information is unaudited but has been reviewed by the auditors and their report is attached to this document.

The following standards, interpretations and amendments, issued by the IASB and by the International Financial Reporting Interpretations Committee (IFRIC), are effective for the year ending 31 March 2010. None of these had a material impact on consolidated results or assets and liabilities.

	•		IFRS 8 on operating segments
	•		IAS 23 revised on borrowing costs
	•		IFRIC 13 on customer loyalty programmes
	•		IAS 1 revised on the presentation of financial statements
	•		Amendment to IFRS 2 on share-based payments
	•		Amendments to IAS 32 and IAS 1 on puttable financial instruments and obligations arising on liquidation
	•		Amendments to IFRS 1 and IAS 27 on recognition of investments on first-time adoption of IFRS and dividends out of pre-acquisition profits
	•		Improvements to IFRS 2008
	•		IFRIC 15 on agreements for the construction of real estate
	•		IFRIC 16 on hedges of a net investment in a foreign operation
	•		Amendment to IAS 39 on the effective date for reclassification of financial assets

The following interpretation and amendments, issued by the IFRIC and the IASB, are effective for the year ending 31 March 2010, but have not yet been endorsed by the European Union:

	•		IFRIC 18 on transfers of assets from customers
	•		Amendment to IFRS 7 on improving disclosures about financial instruments
	•		Amendments to IFRIC 9 and IAS 39 on embedded derivatives

The amendment to IFRS 7 and amendments to IFRIC 9 and IAS 39 have no impact on the consolidated results or assets and liabilities of the Company. The impact of IFRIC 18 is to increase profit for the six months ended 30 September 2009 and reduce liabilities as at 30 September 2009; however, the adoption of this interpretation did not have a material impact on our consolidated results or assets and liabilities and therefore the half year financial information complies with both IFRS as issued by the IASB and IFRS as adopted by the European Union.

The half year financial information does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. It should be read in conjunction with the statutory accounts for the year ended 31 March 2009, which were prepared in accordance with IFRS as adopted by the European Union and the IASB and have been filed with the Registrar of Companies. The auditors’ report on these statutory accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.

The half year financial information has been prepared in accordance with the accounting policies expected to be applicable for the year ending 31 March 2010 and consistent with those applied in the preparation of our accounts for the year ended 31 March 2009, except for the impact of new standards, interpretations and amendments noted above.

Date of approval
This announcement was approved by the Board of Directors on 18 November 2009.

National Grid
2009/10 Half Year Financial Information

2. Segmental analysis

The segmental analysis is 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 Company assesses the performance of its operations principally on the basis of operating profit before exceptional items, remeasurements and stranded cost recoveries. The following table describes the main activities for each operating segment:

Transmission UK		High-voltage electricity transmission networks, the gas transmission network in the UK, UK liquefied natural gas (LNG) storage activities and the French electricity interconnector.
Transmission US		High-voltage electricity transmission networks in New York and New England.
Gas Distribution UK		Four of the eight regional networks of Great Britain’s gas distribution system.
Gas Distribution US		Gas distribution in New York and New England.
Electricity Distribution and Generation US		Electricity distribution in New York and New England and electricity generation in New York.

Other activities primarily relate to non-regulated businesses and other commercial operations not included within the above segments, including: UK-based gas metering activities; UK property management; a UK LNG import terminal; other LNG operations; US unregulated transmission pipelines; US gas fields; and corporate activities, including business development.

Sales between operating segments are priced having regard to the regulatory and legal requirements to which the businesses are subject.

The Gas Distribution US segment experiences significant seasonal fluctuations owing to weather conditions and peak delivery volumes occurring in the second half of the fiscal year. In the UK the pricing methodology for gas distribution has a higher capacity delivery component and a lower volume component and so is not subject to such significant seasonal fluctuations.

A reconciliation of the operating segments’ measure of profit to total profit before taxation is provided on the face of the income statement. Further details of the reconciling items are provided in note 3.

a)    Revenue

										Year ended
										31 March
Six months ended 30 September		2009				2008				2009
		£m				£m				£m
Operating segments – continuing operations
Transmission UK			1,609				1,799				3,487
Transmission US			208				176				420
Gas Distribution UK			768				647				1,466
Gas Distribution US			999				1,216				4,786
Electricity Distribution and Generation US			2,175				2,011				4,972
Other activities			378				327				719
Sales between operating segments			(93)				(104)				(226)
Revenue			6,044				6,072				15,624
Total excluding stranded cost recoveries			5,816				5,915				15,189
Stranded cost recoveries			228				157				435
Revenue			6,044				6,072				15,624
Geographical area
UK			2,695				2,666				5,334
US			3,349				3,406				10,290
Revenue			6,044				6,072				15,624