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Performance during the year

Returns to shareholders

Bar chart showing the total ordinary dividends per share in pence for 2002/03 through to 2006/07

Bar chart showing the total ordinary dividends per ADS in dollars for 2002/03 through to 2006/07

Our total shareholder return over the year ended 31 March 2007 was 44.9% (2005/06: 22.9%, 2004/05: 19.0%) representing the increase in our share price over the year, assuming reinvestment of dividends and taking account of returns of capital.

Dividends in respect of the financial year

Dividends	2007 pence	2006 pence	2005 pence	2004 pence	2003 pence
Interim	10.9	10.2	8.5	7.91	6.86
Final	17.8	15.9	15.2	11.87	10.34
Total	28.7	26.1	23.7	19.78	17.20

Dividends per ADS	$	$	$	$	$
Interim	1.03	0.88	0.79	0.67	0.54
Final	1.76	1.51	1.38	1.05	0.84
Total	2.79	2.39	2.17	1.72	1.38

The proposed total ordinary dividend for 2006/07 amounts to £778 million or 28.7 pence per ordinary share. This represents an increase of 10% over the previous year's ordinary dividend per share of 26.1 pence. The above amounts exclude the return of £169 million to shareholders in 2006/07 through a share buy-back programme and the return of £2 billion to shareholders in 2005/06 through the B share scheme.

The total ordinary dividend per share was covered 1.7 times by adjusted earnings from continuing operations per ordinary share (2005/06 covered 1.7 times, 2004/05 covered 1.7 times) and covered 1.7 times by earnings per ordinary share from continuing operations (2005/06 covered 1.6 times, 2004/05 covered 1.5 times).

The table above shows the ordinary dividends paid or payable by National Grid for the past five financial years. These dividends do not include any associated UK tax credit in respect of such dividends.

Dividends expressed in US dollars per ADS in the table above reflect the actual amount paid to ADS holders, expressed to two decimal places, with respect to all amounts with the exception of the final ordinary dividend for 2006/07, which reflects the declared US dollar amount expressed to two decimal places.

In accordance with IFRS, the final dividend proposed in respect of each financial year is reported in the financial statements for the subsequent year. As a consequence the final dividend proposed to shareholders for 2006/07 of 17.8 pence per share, amounting to £481 million, will be reported in the financial statements for the year ending 31 March 2008.

Dividend and share buy-back policies

We maintain our aim of increasing dividends per ordinary share expressed in sterling by 7% in each financial year through to 31 March 2008.

As part of our strategy announcement in November 2006 we are committed to return cash to shareholders through a share buyback programme based on the after-tax cash flows generated from the recovery of stranded costs in the US. This is expected to amount to approximately $1.9 billion (£1 billion) over the period from 2006 to 2012. We have commenced a share buyback programme to return this cash to shareholders, in 2006/07 this amounted to £169 million.

In addition, following the successful disposal of our UK wireless infrastructure operations for £2.5 billion on 3 April 2007, we have announced that we intend to return a further £1.8 billion to shareholders through expanding the share buy-back programme over the next two financial years.

This followed the return of £2 billion to shareholders in 2005/06 through a B share scheme, following the successful completions of the sales of four regional gas distribution networks for proceeds of £5.8 billion.