Independent review of US cost allocation concluded

RNS Number : 5056E

National Grid PLC

07 April 2011

 



7 April 2011

National Grid plc

Conclusion of independent review of US cost allocation

National Grid plc has received the conclusions of a comprehensive and independent five-month review of its accounting systems and practices across its US operations.

The review has concluded that deliberate misallocation of expenses had not occurred. However, it did identify that the continued use of multiple systems inherited from past acquisitions by National Grid's US business had resulted in significant complexity in both systems and processes. The report acknowledges that National Grid is already taking a number of actions to address these issues

This independent review was commissioned by National Grid following the identification in September 2010 of the misallocation of company expenses in its US businesses and was conducted by Liberty Consulting Group ("Liberty").

National Grid has reviewed Liberty's full report in detail. Key initiatives and actions are already underway to address the majority of the specific issues raised. The recently announced re-organisation of the US business will address key issues around its processes and accountability. In addition, the business is investing in a major systems transformation across its US operations to address the issues of multiple ageing legacy infrastructure dating back before the acquisition of KeySpan in 2007. Key controls around the allocation process are also being reviewed to increase consistency and effectiveness.

National Grid will be sharing the conclusions of Liberty's audit with a number of its jurisdictional regulators over the coming days. Following engagement and consultation with the regulators, further work will ensure all appropriate actions are being undertaken to ensure these regrettable issues do not recur.

CONTACTS

National Grid:

Investors                                                                                                                                                                    

John Dawson	[phone]	[phone] (m)
George Laskaris	[phone]	[phone] (m)
Andy Mead	[phone]	[phone] (m)
Michael Smart	[phone]	[phone] (m)
Iwan Hughes	[phone]	[phone] (m)
Tom Hull	[phone]	[phone] (m)

Media                                                                                                                                                                          

Clive Hawkins	[phone]	[phone] (m)
Chris Mostyn	[phone]	[phone] (m)
Jackie Barry	[phone]
Stephen Brady	[phone]

Brunswick Tom Burns Tom Batchelar

[phone]

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, its results of operations and businesses, strategy, plans and objectives. Words such as 'anticipates', 'expects', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'targets', '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 such as changes in laws or regulations and decisions by governmental bodies or regulators; breaches of, or changes in, environmental, climate change and health and safety laws or regulations; network failure or interruption, the inability to carry out critical non-network operations and damage to infrastructure; performance against regulatory targets and standards, including delivery of costs and efficiency savings; customers and counterparties failing to perform their obligations to National Grid; and unseasonable weather affecting energy demands. Other factors that could cause actual results to differ materially from those described in this announcement include fluctuations in exchange rates, interest rates, commodity price indices and settlement of hedging arrangements; restrictions in National Grid's borrowing and debt arrangements; changes to credit ratings of National Grid and its subsidiaries; adverse changes and volatility in the global credit markets; National Grid's ability to access capital markets and other sources of credit in a timely manner and other sources of credit on acceptable terms; deflation or inflation; the seasonality of National Grid's businesses; the future funding requirements of National Grid's pension schemes and other post-retirement benefit schemes, and the regulatory treatment of pension costs; the loss of key personnel or the inability to attract, train or retain qualified personnel; new or revised accounting standards, rules and interpretations, including changes of law and accounting standards that may affect National Grid's effective rate of tax; incorrect assumptions or conclusions underpinning business development activity and any restructuring or reorganization of National Grid and its subsidiaries, and any unforeseen significant liabilities or other unanticipated or unintended effects of such activities, restructuring or reorganization and the performance of National Grid's subsidiaries. In addition National Grid's reputation may be harmed if consumers of energy suffer a disruption to their supply. 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). 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 its results to differ materially from those contained in any forward-looking statement. Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements, which speak only as of the date of this announcement. The contents of any website references herein do not form part of this announcement.

 

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