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Discontinued operations

About discontinued operations

Principal operations

Our discontinued operations at 31 March 2008 comprise the Ravenswood generation station, KeySpan Communications and KeySpan Engineering Associates, all of which were acquired as part of the acquisition of KeySpan. During the year, they also included our UK and US wireless infrastructure operations, and our Basslink electricity interconnector in Australia that we sold on 3 April, 15 August and 31 August 2007 respectively.

Our UK wireless infrastructure operations were sold to Macquarie UK Broadcast Ventures Limited on 3 April 2007 for £2.5 billion and our US wireless infrastructure operations were sold in August 2007 for proceeds of £147 million. We sold Basslink for £485 million on 31 August 2007.

Ravenswood

The Ravenswood generation station, a 2,480 MW facility in Queens in New York City is primarily fuelled by natural gas, and provides over 20% of New York City’s electricity supply. Divestiture of Ravenswood is a condition of the New York Public Service Commission order approving the acquisition of KeySpan by National Grid.

On 31 March 2008, we announced that we had entered into an agreement to sell the Ravenswood generation station for $2.9 billion (£1.4 billion) to TransCanada Corporation, subject to regulatory approvals. The proceeds are subject to customary closing adjustments. Completion is expected during the summer of 2008.

KeySpan Communications and KeySpan Engineering Associates

KeySpan Communications operates a fibre optic telecommunications network that extends through parts of New York City, Long Island and New Jersey with over 1,600 route kilometres of network and over 120,000 kilometres of fibre. It also has access to transatlantic cable systems linking Long Island with Paris and London.

KeySpan Engineering Associates provides engineering, design and consulting services for commercial, institutional and industrial customers and operates within the northeastern US.

We have entered into an agreement to sell KeySpan Communications to Lightower Fiber LLC, subject to regulatory approval.

Performance against our objectives

Delivering our strategy

The disposal of these operations will complete our programme of disposals of non-core businesses, enabling us to achieve our objective of focusing our operations on electricity and gas infrastructure and related businesses in the UK and the US.

Operating performance

The financial performance of these operations is described below, excluding operations discontinued in prior years.

Capital investment in operations discontinued in the year was considerably lower than in 2006/07 and 2005/06 at £1 million reflecting the disposal of our UK wireless infrastructure operations in April 2007 and only five months’ activity for both our US wireless operations and Basslink which were disposed of in August 2007.

Financial performance

The operating results for discontinued operations for the years ended 31 March 2008, 2007 and 2006 relating to operations sold or discontinued during the year were as follows:

	Years ended 31 March
	2008 £m	2007 £m	2006 £m
Revenue	201	383	325
Operating costs excluding exceptional items and remeasurements	(166)	(266)	(255)
Adjusted operating profit	35	117	70
Exceptional items	–	(55)	(5)
Operating profit	35	62	65

In 2007/08, revenue, operating costs and operating profit decreased primarily as a consequence of the sales of the UK wireless operations on 3 April 2007 and the US wireless operations and Basslink in August 2007, partially offset by contributions from the Ravenswood generation station, KeySpan Communications and KeySpan Engineering Associates from 24 August 2007 onwards.

In 2006/07, revenue, operating costs and adjusted operating profit increased compared with 2005/06 as a consequence of the first year of operation of Basslink and growth in our UK wireless infrastructure operations. Exceptional charges of £55 million in 2006/07 arose from impairment to goodwill recorded in our US wireless operations compared with £5 million of restructuring costs in 2005/06.