We have stepped up our participation in the debate on shaping the energy future – ensuring that, while we continue to deliver strongly today, we are also planning for tomorrow.
I am pleased to report another strong set of results for 2009/10. Our priorities arising from the Board’s strategy are now well embedded and driving performance across the Company. The line of sight concept seeks to link each employee with our corporate vision, which is set out in the Operating and Financial Review.
This year, we experienced difficult weather conditions in both the UK and the US, resulting in high levels of gas demand. Significant reengineering and investment in our UK gas national transmission system has been undertaken over recent years to construct and facilitate additional sources of supply connection as North Sea gas outputs have reduced. However, vital as having made the right hardware and system investment decisions was, it was the skill, dedication and professionalism of our people that allowed us successfully to meet these severe, weather-driven challenges.
Over the last year, we have stepped up our participation in the debate on shaping the energy future – ensuring that, while we continue to deliver strongly today, we are also planning for tomorrow. I am confident National Grid can adapt and deliver the significant changes that the future energy environment will require, while delivering value to our shareholders.
Investment and balance sheet
We maintain a disciplined approach to our capital investment and efficient management of our balance sheet. Since the merger of National Grid and Lattice in 2002, this has enabled us to return almost £10 billion of capital to shareholders, which includes more than doubling our dividend in the process. National Grid plays a vital role in delivering essential UK energy infrastructure and we are entering an era of significantly higher capital investment. We are, therefore, announcing a £3.2 billion rights issue, which we believe will enable us to continue to deliver our growth strategy in the UK and maintain our single A credit ratings in our UK operating companies.
I believe the commitment of our employees makes possible the delivery of our promises, obligations and ambitions. We seek to develop their talent, through new and innovative ways of enhancing their capabilities and leadership skills. We also strive to ensure National Grid will continue to attract new talent and be seen as an employer of choice.
We encourage the excellence of our employees through the Chairman’s awards, in the areas of inclusion and diversity, safety, health, environment, community, and customer delivery. This year, more than 240 nominations were submitted, which allowed us to recognise the outstanding achievements of those employees who go well above and beyond their work requirements.
We recognise that having an appropriately skilled workforce is fundamental both now and into the future and we also acknowledge the challenge achieving this entails. We are taking firm action to ensure we have a robust pool of employees with the right skills and capabilities and in the right roles to achieve our mutual ambitions. We have created a number of targeted solutions to assist our employees in maximising their performance.
Safety and wellbeing
Safety is paramount in all our undertakings and we believe that everyone in National Grid, collectively and individually, has a part to play to achieve it. I am glad to report a further improvement in our safety performance across the Company.
The wellbeing of our employees has been an important consideration for us throughout 2009/10. This is not only important for the health and happiness of our employees but also plays a vital role in our success. We have been encouraging our employees to make a positive impact on their wellbeing and the wellbeing of those around them and have seen good use of health kiosks and cardiovascular screening.
I am encouraged by the career progression of the young people who have completed the Young Offender Programme, which provides skills training and employment for offenders nearing the end of their sentence. Not only is it reducing reoffending from 70% to less than 7% for those completing the programme in our industry, but it also provides talented employees for more than 80 other companies who have been engaged with us on the programme.
I am also proud of the leading role we are taking to aid and educate the communities in which we operate with regards to energy efficiency. Our 3% Less challenge in the US asks all our customers to work with us in reducing their energy consumption by 3% a year for the next 10 years. In the UK, we continue our involvement with the affordable warmth programme, which to date has seen more than 647,000 households benefit from energy efficiency measures. Such programmes see us leading by example. We appreciate the importance of being a positive partner in the communities in which we operate and remain committed to safeguarding our global environment for future generations.
We have consistently demonstrated a commitment to leading governance at Board level and hence throughout the Company. We welcome recent reviews by the Financial Reporting Council and, based on the December 2009 proposals for the revised UK Corporate Governance Code, we do not anticipate any major changes to our already robust approach to corporate governance matters. However, from the 2010 Annual General Meeting onwards, we intend to introduce an annual re-election for the Chairman and all Directors to enhance further our governance processes.
We also believe that good governance emanates from a quality Board. Critical to this are the breadth of our Non-executive skill set along with specialised knowledge, both of which provide the potential for a healthy and necessary level of challenge in the boardroom. Following our annual appraisal of Board effectiveness, we have again assessed the fitness of our Board to participate meaningfully in the debate and make the objective judgements inevitably required. I am satisfied that the composition of our Board enables it to fulfil its role in an effective way.
We are again recommending a dividend increase of 8% for 2009/10, giving a final dividend of 24.84 pence per share, with a total for the year of 38.49 pence per share. This brings a 62% increase in our dividend over the last 5 years.
The Board continues to have confidence that the strategy and objectives we are pursuing will allow National Grid to grow and deliver our commitment of value creation to our shareholders. In parallel, we remain focused on identifying further improvements in safety, reliability and efficiency, while being a valued partner to our customers and the communities in which we operate. We will also maintain our endeavours to be at the centre of a low carbon economy.
Sir John Parker
The Board is proposing a
recommended final dividend of
We are also targeting
an increase of
per annum until 2011/12