Environmental Pollution

We are committed to a year-by-year improvement in our environmental performance. Our environmental policy sets out the key areas we are addressing, and we continue to implement environmental management systems certified to the International Standard ISO 14001 to help us deliver improvements in these areas.

At 31 March 2008, approximately 66% of our employees worked to certified ISO 14001 environmental management systems compared to over 90% at the same time last year. The main reasons for this reduction were the acquisition of KeySpan operations that were not ISO 14001 certified and the disposal of our wireless infrastructure operations that were certified. During 2008/09, we will work to bring KeySpan operations in line with the rest of the Company.

The number of significant environmental incidents in 2007/08 arising directly from our operations was 34, which included 25 contractor-related incidents, compared with 40, including 20 contractor-related incidents in 2006/07 and 23, including 1 contractor-related incident in 2005/06. Incidents outside of our control resulting from third party or weather-related damage to our networks was1 compared with 13 in 2006/07 and 25 in 2005/06.

There were no prosecutions by enforcing bodies resulting from these incidents. In the US, we received 6 environmental citations in 2007/08 compared with 9 in 2006/07 and 10 in 2005/06. Of these, 1 attracted a fine of $6,000 (£3,000).

Prosecutions and citations for operations acquired with KeySpan will be reported from 2008/09.