Good morning, ladies and gentlemen, and welcome to the London Stock Exchange and to those of you joining online. My name is John Dawson, Head of Investor Relations for National Grid, and it is my pleasure to welcome you here for National Grid's full year results for 2013-2014. Before I start, can we just ask everybody to make sure they've turned off their mobile phones. During today's presentation, we will refer to profit and other measures, which will be on a constant currency basis, unless indicated and will be before timing, storms and other adjustments. Our presentation may include forward-looking statements. Please refer to our cautionary statements in our materials today. Just a reminder, you can find all our materials for today's presentation on our website and also on our Investor Relations app. The order of play today will be as follows: Steve will give an opening talk about the highlights of the year; Andrew Bonfield will then cover our financials in a little more detail; and then Steve will return to talk about our priorities for 2013-2014 and the outlook. So without further ado, I'll hand it over to Steve Holliday, our Chief Executive.

Thank you, John, and good morning, everybody. I think you meant 2014-2015 there, John, actually. This time last year, when we were together, I talked about the fact that we are entering a new period of clarity, real clarity for our businesses. And you will remember that followed the resetting of a lot of our regulatory arrangements, almost 80% in fact; and of course, a period of significant organizational change. Those two things together laid strong foundations for the future. And this year, this was a year of execution and we have delivered that execution. We've seen the benefits in network resilience from our investments. We've seen the benefits in our safety performance from our relentless focus. And the benefits here in the U.K. from our significant preparation for the RIIO price controls. I just want to share with you few of the highlights. Overall, we've delivered a solid financial performance. We got off to a good start to new eight-year price controls in the U.K., plus we've maintained our underlying improvements in the U.S. Operationally, it's been one of our best years ever, in terms of network reliability, resilience and customer service. Our investment program continues over GBP3.4 billion, contributing to overall growth in regulated asset base of 5%. Importantly, under the new RIIO incentives, around GBP70 million of savings will benefit consumers in the forms of reduced charges starting in 2015. Returns are fundamental to this business. They're calculated, of course on a different basis in the U.K. and the U.S., but they are the best measure of our performance, how we deliver at an operational level. They reflect how we live within our allowances, our incentive performance, and additionally at the group level how we efficiently finance the business to balance growth opportunities against the sustainability of…

Thank you, Steve, and good morning, everybody. First, let me begin by saying that this has been a solid year financially and we've shown good progress against all of our key metrics. You will have noticed in the statement that we are discussing our business in a different way. And we've introduced some new metrics, whilst continuing to promote the importance of others. As spoken before about how we can add additional information to standard IFRS measures to demonstrate the underlying strength of our businesses. These metrics reflect how we as National Grid management team will steward them in the future. Therefore, today and in the future, I will be discussing our performance based on regulatory financial performance and position, our return on equity or ROE and our new value-added metric. We spoke many times in the past about return on equity and its use as a measure of performance against our regulatory contracts. The new Value Added metric is newer and I'll take you through its calculation in a little while. I will refer to regulatory financial performance and regulatory financial position a number of times. These metrics adjust for timing incentives to reflect the real value created in the year. To do this, regulated financial performance takes operating profit and aligns with the regulatory treatment of expenditure and the way we are rewarded. Regulatory financial position is an Ofgem-defined metric and includes other regulatory assets and liabilities held outside RAV. In the U.S. this is nothing new and for some time we have been disclosing assets held by rate base such as deferrals. In the U.K., this principally comprises amounts owing to the group relating to pensions and logged-up up spend. In the U.K., electricity transmission return on equity was 12.4% compared to the base allowance of 10.2%.…

Thanks, Andrew. I hope you can clearly see there how performance drives returns, and of course, how those returns then underpinned our dividend, and finance our growth. The focus is very clear, returns on asset growth. And that, not surprisingly therefore, sets our priorities for next year and beyond. Of course, the external environment in which we operate also has an influence, both here and in the United States. And the particular influence that has is on our investment program. Andrew has already indicated, we expect investment program for this new financial year to be very much in line with the last year, around GBP3.4 billion with some additional investments in the U.S. and a small reduction in the U.K. The linkage between our capital investment plans and growth remains, but it's not as straightforward as it once was, with asset lives in the U.K. tapering, transitioning of RepEx over the eight-year period, and of course, in the U.K. this new performance RAV. Let me take you back to the comments, if I can, that I was making in November. At that time based on the latest forecasts, for generation construction in the U.K., and therefore our connection activities, our planned activities for non-load related work for our regulatory businesses remain the same. We could see a sustainable baseline growth rate at a group level at around 5% per year in asset values for the foreseeable future. At this time next year, we should have a lot more clarity about new generation projects, as the EMR mechanism comes into effect this autumn. I would expect, and we certainly hope to see an increase in load-related CapEx for our electricity transmission business, and hence this rate of growth during the course of the first period of RIIO should increase, perhaps even…

And, Martin, your hand went up very quickly.

Thanks. Martin Brough from Deutsche. You're getting really good returns on your regulated assets, both in the U.K. and the U.S., but given where the share price is, I think the 57p of total return that you've given is less than a 4% real return on your current share price. So obviously, that's great in terms of the confidence that that shows from investors in maintaining this, but does that put pressure on you in terms of maintaining these very good returns over the long term, to justify where the share price is trading? And then the second question I had was, Alstom obviously, is up for discussion in terms of its future, and I think the Grid has an ongoing damages case against some of the electrical equipment manufacturers due to a previous cartel. Do you have any concerns about upstream consolidation in the equipment-making market?

So two very good questions. I mean I think, we've made very clear in our remarks about what our job is in terms of these returns and the growth, yes, and it's showing through. I hope you're getting a sense of confidence as well about we believe we can continue to sustain these returns. We have a baseline of growth in the business and our job is to work on the upside on there as well, and while that continues, make sure that we deliver the same sort of returns on all the new assets as well. The case that you identified, there's actually some costs in these results actually associated with the pursuance of a claim for the cartel that existed in gas insulated switch gear. There should be decision, reasonably soon actually on that. And we've reached an agreement with Ofgem as well, that if we get those damages back, then they'll be shared with consumers in the U.K. as well, another example of sensible regulation, sharing those benefits between investors and customers. But we've been pursuing ever since the case was proven that there was a cartel. I don't see any impact on the consolidation on that claim whatsoever.

But you don't have more general concerns about consolidation upstream?

Well, not. I don't really think so. I think, are there enough competitors in this marketplace, but it would be our concern, and there still are. I mean a lot of the things that we've been doing in procurement over recent years has been making sure we're not overly focused on Europe, frankly, as well. There is lot of equipment that comes into our businesses in both the U.K. and the U.S., now from the Far East. If you go back five, six years ago, the answer of that question was zero. So we've responded already to the fact there was less competition in Europe by broadening our reach to the global procurer. You want to pass forward to Bobby.

Thanks. It's Bobby Chada from Morgan Stanley. So two questions, the first is on this concept of managing the scrip more proactively. I think that RCF-to-debt is 10.5% for the year, you just reported. So there's clearly a fair bit of headroom there. How will you communicate, how you're going to manage the scrip. Is there a point in time twice a year, where you will say, we're going to buyback this much stock or is it just going to be a slightly less clear-cut process and we will see it after the fact? And then the second question is obviously, as Martin said great returns in those three U.K. businesses. In each of those, there are three very different buckets of outperformance and there are big differences between, which business is doing well, where. Can you give a broad feel for where you expect things to move between those three buckets or where the biggest moves may be?

I mean obviously, the issue here is, as we look through over the future period of time, we still do require some scrip out throughout the real process. Ultimately, at the end of the day, we do have a large investment program. And we're going to need to be a little bit more flexible about how we do it. I don't think probably we would want to sit upfront today and, say, tomorrow we're going to buyback 10 million shares, because that's how many are coming through the scrip program, because ultimately, again, there are people who will trade against you doing that. But I think you will get a very clear indication based on cash flows and cash flow performance and what we will be doing. So we all are going to have to be slightly obscure about it from year-to-year, because we don't want to end up in a situation where we are creating value for other people rather than for our shareholders. Ultimately, at the end of the day, we will sort of manage the scrip period. So for example, at this time, we've actually reduced the period of time we're going to be offering the scrip. Ultimately, again that then reduces the arbitrage opportunity, which means take-up will probably be lower. So that's one other thing we can do as well. So it's just going to be lots of little things like that to sort of manage. And then label those people who have the ongoing scrip elections to enable them to do it. The problem with stopping and starting the program is there are people who have evergreen elections, because they prefer to take scrip.

We'll certainly be clear on an annual basis about what the plan is though for the forward year clearly.

Isn't it fair to say that if you had a typical scrip take-up of sort of 20%-odd with CapEx flat this year, starting off with 10.5% debt toward CF. You'd have to do something to try and cancel that?

If you would look at the share, and say, if we were doing the program, as we would have done this year, if you remember, we cancelled the scrip on the interim dividend. We probably would have shortened the scrip election periods as the first option. And then also bought back the share as well if we deals already in place.

Yes is the answer to that question. I mean the balance sheet is strong as we've already said, but we did a big investment program. On your second part, John, I'd like to comment, I mean you're absolutely right. I'm pleased in some ways that those charts do demonstrate, there are different things going on here. We're certainly expecting gas distribution, the totex outperformance, to be the key driver performance in that business and given the contracts we expect that to continue year-on-year. As Andrew said, on gas transmission, it was slightly lower on incentives this year on gas transmission. We expect that to increase. The carrier from the old price control last a couple of years actually, and then disappears. I think it's two or three, John, in transmission. Do you want to pick up, what you expect on transmission?

So in terms of the traditional incentives, we got some overhang from the legacy from, TPCR4, so some of that then will diminish over the RIIO period, so gas transmission, I think, that comes to end in 2017-2018. In electricity transmission, actually they go right through the RIIO period. For the totex incentives, as Andrew said, in gas transmission we had some overhang projects that were funded under RIIO, they will be completed this year and therefore the opportunity to outperform on totex is there for gas transmission. And also in gas transmission, we've got the opportunity to go back to Ofgem to get funding for our compressors to deal with the emission challenges that we have. So we've got an opportunity to go back to Ofgem in 2015, which again will create the opportunities for outperformance. Then on electricity transmission, first year of RIIO, so of course a lot of the projects are still continuing from previous periods, because they are longer duration projects, so as we move into RIIO, we would expect to bring a principal as we've put in place for RIIO to benefit those projects as well.

Thanks, John. John, next.

This is John Musk, RBC. Two questions, again. First one, we talked briefly before coming in on CapEx and just how confident are you that what we've been seeing over the last couple of years, which seems to be more and more deferrals of CapEx will actually come through and confidence in the structures being put in place by the government and DECC to ensure that we do get enough new build in the U.K. And then secondly, on the interconnectors, how should we think about the potential returns that might be on offer to you from building those interconnectors? Obviously, regulated returns in the U.K. are good, would be only doing these interconnectors, if you expect and the returns to be better than those you're getting in the regulated assets?

Hopefully, I'll try to answer your question in terms of base lining our CapEx and growth. This is quite hard to downside from where we are today, given how little generation is being connected. So the question I think, John, is more about how much confidence do we have in the Energy Act and the EMR working in terms of incentivizing generation, all the way through this. And Nick, of course, is closely working with the government on putting in place the processes that we need to fulfill our administrative roles under EMR. We're only going to know the answers to that when we've run the auctions this autumn, the capacity auctions and the CFDs. So as I was saying, this time next year when we stand up, we would hope, the government would hope, and I suspect everyone in this room would hope as well that generators are going to want to invest in the U.K. And that's going to come forward, but that's 2018 onwards, of course. If you will actually look at the connection lists we got today, which we often talked about, how many people have contracted with National Grid for a connection agreement between today and 2025, in November that number was 101,000 megawatts, staggering number, given only 85,000 megawatts were connected today with the transmission system. Since November, that's gone down to 98,000 megawatts. Quite a lot of the big offshore wind farms in around, three were cancelled, but a whole bunch of other projects have come on, so biomass, in particular. So we've had still got a big order book, if you will, of people that want to connect. Of that 98,000 megawatts, only one power station is being built right now. So only 1.5 gigawatts are actually under construction, another 17 has actually got consent, but is not yet being built. So this is a key year for the U.K. without any question to see how round one of the market reform really turns out, and whether we have people who want to stick with those connection dates. But they're 2018 onwards and we'll reflect that when we talk about, so therefore, what's that done to our CapEx plan this time next year. I've completely forgot your second question, I'm sorry.

Interconnector returns.

Interconnectors. They are unregulated, but the regime that is underdevelopment at the moment, which is out for consultation for the build of an interconnector, there is a cap and collar regime, actually -- a cap and floor. So there's a minimum return that we would get, and if we were, through the auctioning of capacity, earning excessive returns, then that would be return to shareholders. So it's almost a quasi-competitive and regulated entity. If the economics work for that, the return is commensurate with the risk there, which is clearly higher than a purely regulated business, then we'd be very happy to invest, but the financial terms of that yet are not decided.

This is Ashley Thomas from Societe Generale. Two questions on incentives, but one is a follow-up. Just on U.K. gas transmission incentives on the D2 demand, are you expecting any changes there? And then more broadly, in terms of U.S. incentives, o you get a sense that sort of U.S. regulators are potentially more open towards moving towards a U.K. style, sort of output-related incentives? I'm thinking particularly in New York State, and if so would you welcome that?

I'm glad you picked up on New York, because you might have seen that the Governor actually issued a paper and he did refer to incentive-based regulation. Tom, well, I'd like to come on that in a minute. Your first point on D2 has completely foxed me, actually.

I think it's only about 10 million, but I think, Ofgem are consulting on whether to change the D2 to D5 incentive?

Anything, John?

Demand forecasting?

Demand forecasting, all right -- sorry, accuracy incentive, right.

So last year, Ofgem introduced some new incentives for actually hitting maintenance against planned and actually then demand forecasting a D plus two days and D plus five days, I think. So we've performed very well against them in the first year. So we will look at the consultation that they're doing and we'll comment on it appropriately.

Thanks John. Tom?

So the bottomline on the discussions with New York on incentives is they are interested, number one. We are supporting that discussion and have done at least two deep dives on RIIO with New York, also similar discussions in Massachusetts. And let met just give you three key points that New York is trying to accelerate on. One is they want to advance technology on the networks. That's a key objective of theirs. Second is they wanted to accelerate clean resources of generation, DG and other resources on the network. And the third is they are looking for economic development and job growth. So it's a broad, state objective to use the energy networks as accelerating economic development jobs and advancing clean technology and resources. So really the first step they're going to take is an open proceeding on just about how do we go about doing that? What are forecast and cost? How long does it take, et cetera, and then coupled with that will be the returns and the incentives as part of the discussion. And we're in early days, but I'm very encouraged. We are trying to have the same discussions with Massachusetts, which ties to Steve's issue. We really would like to see those discussions accelerate also in advance, and couple that with the next round of rate cases. So that's we're on that. And hopefully that was responsive to that.

I mean, they're asking -- we should pass over to Dominic. They're asking the right questions about it. Can you get these incentives lined up with what customers place a value on. Dominic?

Hi. Dominic Nash, Macquarie. Two questions, please, as well. Firstly, in the U.S., the ROEs this year coming at 9%, is that driven by a combination both a lower numerator and a higher denominator in your investment case? And including with your increased growth and investment in this U.S., would we expect to see the ROE broadly flat going out this year or do you think that's going to, is there a leg up or leg down there? And the second question was, I think in 2008 or so, last time that we had quite a buoyant property market, you were going to try and sell quite a slug of property. Now things are turning around, is this something that you could revisit? And could you just remind me again some brief on the size of it, I do remember it was quite large?

It was indeed. It's always well-kept, embarrassing secret, the size of land owner that National Grid is in the U.K., actually, behind the Church of England and Network Rail. And there are some property profits actually coming through here. So just to answer that one, that is something that we're interested in. It has now changed. It is an opportunity again to advance some of those proceeds. But there isn't anything to talk about today. In terms of the States, and Tom might like to comment as well, we've tried to cover this off. Our hope is we're essentially flat year-on-year. If you take out the reductions in the ROEs on the two businesses that I talked about, we've essentially stabilized and held flat. Now, that's not what we want to do, frankly, that we are still not where we need to be in terms of meeting our allowed returns. So I see this is a little bit of a pause, and because we do have to go back into Massachusetts and refile, our target this year is to work very hard to make sure we hold our cost flat in nominal terms. And the rate base growth will not erode the returns, those profits, because of the way the mechanisms are working, despite the small lag that should not impact returns. Our challenge is to hold our cost flat, if we do that then we will hold and sustain those returns for another year. The next step up that is the following year, which is associated both with the rate cases, but moreover the benefits that we will exploit once the SAP system is up and running. Want to add anything to that Tom?

Just a quick breakdown on the jurisdictions. You should expect the same turnout in Rhode Island and FERC, as we're reporting. That would be certainly our expectations, because we have the right mechanisms in place to true up the cost and the cash recovery within the financial year. On New York, we'll have full benefit of 12 months versus the nine months that we have in this reporting year. Massachusetts is where the issues are and where the problem is. And as discussed before, looking at the combination of those grid modernizations and sustaining the U.S. financial systems give us the ability to go in 2015 with real solid numbers and a clear view of where Massachusetts is going on grid modernization and true up that cost. So the real pressure on us will be in Massachusetts. I expect the other jurisdictions to perform. And therefore the objective will be to ensure that we're managing our cost and sustaining and maintaining those returns.

Thanks, Tom. Peter?

Hi, it's Peter Atherton from Liberum. Two questions for Nick, as he's living us, and then one for Andrew. Nick, I wonder if you can give us an update on SBR. We heard from SSE at March that they had withdrawn Keadby. So how is the general process going? And then secondly, how did the transmission system cope this year will all the wind, the first real windy winter we've had, with lots of wind on the system? And then for Andrew, thanks for the new Value Added metric. That's really good. Can you strip out inflation for us and tell us what was that number would have been with zero inflation?

You've got a couple of seconds to work that out, while Nick answers the first one.

Well, thank you, Peter. So on SBR, two things to report. We're currently seeing the progress of license changes going through the Ofgem consultation process. That's well-advanced, so we're expecting license changes for SBR and DSBR to be finalized in June. In parallel with that, as you can imagine, there is plenty of analysis going on to look at margins right out through the next four years. Those piece of work come together in the next couple months and we should then see announcements from essentially, the three of us, DECC, Ofgem and ourselves, as to whether we need to use DSBR and SBR in any of those years and what that will mean then about when the auctions go ahead. So personally, I think it's a great work being done there. The new tools are exactly the right thing. And they're on time, and we are comfortable that they give us the right capability to manage the situation we had.

So when would an auction take place? I know you're suggesting, actually, you may not requite SBR, you may just say, we don't actually need it.

We will look at all four years and decide whether to run an auction for either product, against any of those years. Yes, that degree of freedom is still open. And clearly, we're only going to go out if we believe that the margin figures require us to do so. In terms of how does the transmission system operates over the winter. I mean Steve touched on flooding, which was I suppose the headline stuff in the press, and we were really proud of some the key works that we had done, really significant key works, that paid back hugely for customers during the flood events. Wind, as you say, was also a very significant part of the winter and we were absolutely delighted by the performance of the transmission system. We had a few circuits trip on occasions of very strong wind, but no lost supply from that. And really strong performance shows the care we've taken in looking after those assets and the good shape they're in.

And managing the intermittency of wind, when it's sometimes providing 15% of the output was okay?

Yes. We've had a quite a few years to get used to that and to learn about it, as winters come on the system. The big issue there is, wind cut out at high levels and our forecasting is absolutely bang on these days. And so when you look at what we expect to happen as the wind rises from the output of wind generation, we're completely on top of that and can manage it very professionally and successfully. So it didn't cause us any problems.

Our seven-day outlook on wind, the accuracy of that forecast is just phenomenal today, it really is. Andrew, the inflation of that.

We have used in our regulatory financial performance measure, and that is set out in the release, and electricity transmission is about GBP300 million and gas transmission is about GBP160 million, and gas distribution is about GBP250 million, so in total about GBP700 million. We use 3% in our calculations for financial position, and then obviously that's slightly different from the Ofgem-defined RAV, which is based on the real actual underlying indexation in the year. And that will be slightly lower, because it's turn off percent rate.

Deepa Venkateswaran from Sanford Bernstein. So two questions, both on the totex. So firstly, you've incurred a few one-off restructuring costs this year. What magnitude do you expect to sort of reoccur or was it front-loaded? And secondly, on electricity transmission, you mentioned that a lot of the focus of the projects this year was still continuing from the previous regime. So by when do you sort of see some of the impacts trickled in and move to the gas distribution sort of performance on totex?

The restructuring costs that Andrew referred to I think are all this year and that is the end of them actually. They're just in the course of this year.

These items would normally have been classified as exceptional and some of those are put into the totex calculation. Reduced return is about 40 basis points this year and across all of the U.K. business.

But don't continue into next year. And the totex, as John was saying, I think I said in my speech as well. The start of flow through in the new year, I mean some of the projects I was referring to the small things, really start to flow into year or two. There's a little bit of a lag on the tunnels for example in under London. The GBP1 billion project that we are, but doesn't complete until 2016, that's continuing. But progressively, it will increase. We'll certainly see some of those benefits in fiscal year '14, '15.

Just on the restructuring, just because I think this is also a good thing to know is, there will be decisions we take now and this has always been the thing we've talked about on totex, about where you can make investments, which were OpEx related, such as restructuring, which actually we'll have a long-term benefits, which may not necessarily flow-through through OpEx, but ultimately will flow-through through maybe lower CapEx spending and so forth, which ultimately can benefit you. So again, this is part of that being able to actually holistically manage the business now, not just a focus on OpEx versus CapEx. It's managing as total of cash and that's one of the advantages.

It could be. But there are no plans in this year. Those are the major restructuring associated with the RIIO readiness.

This is Iain Turner from Exane. Can I ask you about Superstorm Sandy? It only seems 12 months ago that you were getting a lot of flak about that. Can you give us an update on where the flak process is and whether it will come down?

It does seem a long time ago now, doesn't it? If you tragically go and visit some of the south shore of Long Island, it's still there for you to see, it really is. I mean some of the damages, some of the houses are still there. They've not been knocked down yet. And lot of the businesses who we interact with actually and provided help to over the storm, Tom and I are often they are still struggling. The damage continues actually from the storm. The costs that we were actually collecting from Long Island, we've actually collected all of those, as Andrew said, that was in the cash adjustment here. The Governor started the Moreland Commission, which looked at all of the responses across Sandy, which looked not just at the utilities, but the emergency responses and everybody. There were some recommendations out of there. What's the next step, Tom, on the Moreland? There isn't really anything is that I think I'm aware of?

It's moved into just normal PSC oversight. So I don't expect anything new to come other than continued performance storm after storm.

When we go back to your earlier question and Tom's answer about what the Governor issued the other week about the energy future of New York, it's not just about the smarter systems and getting customers a different proposition. Infrastructure reinforcement post-storms and resiliency is a key part of that as well, actually. So that's one of outputs from the Moreland Commission.

And multiple storms throughout the year that we performed under. So it's good performance.

Lakis Athanasiou, Agency Partners. Two questions on the U.K. please. One on the CapEx spend. I mean very roughly actually, this morning just looking at the numbers, you seem to be really way below the baseline on CapEx in ET and gas distribution, the order of GBP600 million. Now obviously, there is a capitalization on the totex and I haven't really looked to the OpEx side of things. But two questions on that, one is, what is that, is that rephrasing? Is it efficiency? Will it be changing revenue drivers? And in your RAVs that you give, are you putting in that under spend on an efficient size basis or are you making judgments about what is re-phasing and what is efficiency? And what's the magnitude of that? And second different question on metering, a nice little cash cow, but it depends on how quickly smart metering comes through. We're already seeing the process of kicking that down the road starting. Has Ofgem started to signal yet, it will want to come back and review the pricing arrangements on that or do you expect that to be another couple of years down the road?

Andrew, can pick up the first one in terms of the complexity of accounting. We've just completed the price control on metering in this last year. So it's not there. It's just another one of those businesses, there's too much to talk about almost these days, isn't there? So they've literally just reviewed and reset the prices for measuring. So we don't expect to come back on that any time soon. But you are right, every time you look at that business, it does look as if that aspect is drifting back into the future, Lakis, you're right. On the accounting term, Andrew?

So the accounting side, you're correct, there is about a GBP600 million under spend against allowance, about GBP415 million of that is phasing. So we have not taken any of that into account in working out totex outperformance. There is about a GBP170 million, which is totex outperformance, of which GBP70 million goes back to customers and the GBP100 million comes through into our performance RAV. That's an average number.

Mark?

It's Mark Freshney from Credit Suisse. Two questions on issues with your contractors that have hit the media headlines over the past week. Firstly, on the big offshore cable that you're looking to put in, there's been a recall on that. Can you talk through the issues and if there is any potential risk to your totex outperformance from that? And just secondly, I think gas distribution has been where you've had some issues with Ofgem in the past, and I think there was some suspensions at one of your big contractors. Can you talk through that? And is that issue contained with your contractor or could it impact your relationship with Ofgem?

On the second one, Mark, the standards that we hold ourselves to, the ethical standards that we run our business to, is something we absolutely expect all of our suppliers to meet as well. And I'm very pleased actually that Balfour Beatty had an issue up in Wolverhampton and they acted totally in line with what we would absolutely demand from all of our contractors, is that they carry a full and extensive investigation. And as we understand it, it's their investigation not ours, while they're doing that, they've suspended a few employees while they're getting to the bottom of it. There's nothing in terms of the work they do for National Grid at all. This was associated with an accusation of fraud on some of their subcontracts. I have great confidence in them, actually. They've responded exactly as we would expect them to do. They're doing a very thorough investigation and suspended the key employees until they reach the decision, that's the consequence of that. And obviously that is an issue for Balfour Beatty. That is what we would expect them to do. In terms of the cable, John, you've got the latest on the Western Link.

This is the Western Link, so we're manufacturing a 420 kilometers subsea cable. Last week, Prysmian, who are doing the manufacturing, let us know that in the last batch that came out of the impregnation tank, which is about 25 kilometers, there was an anomaly on the cable that's concerning them. So at this stage we just know there is an anomaly on the cable. It's a 425 kilometers or the 420. So our engineers and their engineers are now looking at that to understand whether that's an issue and what we would need to do to that cable. So that's the latest and where we are with it.

Thanks, John. Bobby? And one more to Bobby.

Thanks. I wanted to just to go back to the U.S., if possible, and to some of the comments Tom made. If I understood the process correctly, you would expect the SAP system to be operational, basically at the end of this calendar year. And so filing rate cases sometime in the first half of calendar '15, take a 12-month run rate for a rate case, it looks like it could be two financial years before you have much benefit from new rate cases in Massachusetts or in KEDLI or KEDNY. So one of you talked about holding costs flat in nominal terms, is that really something you can manage for two financial years or should we expect to see some ROE degradation?

That's not our challenge, Bobby, at all. So just go back -- actually, we're in conversation on KEDLI at the moment, as I referred to. If we get the allowances that we need to expand that network that will defer the need for a full rate case. Actually, we've already deferred, because of the arrangements we've made on KEDNY, the need for it. Tom actually covered off upstate New York, which will go on for a few years yet. Rhode Island is working very, very well. And don't forget the annual correction mechanisms that I was referring to as well. The issue as Tom pointed out is Massachusetts totally. At this moment in time, I'd expect to be filing that probably towards the middle of 2015, it's not a year process in Massachusetts either, it's a much quicker process actually, so we'd be expecting those to go into rates in early 2016. Meanwhile, we have to do self-help that we're going to need to do during the course of 2014, '15. That's absolutely right. But there are some things that are going up. In the Niagara Mohawk rate case, for example, there were revenue increases in year two and year three embedded in that rate case. The assets that have got into rate base automatically drive up revenues in some of the other jurisdictions as well. The issue is very focused on Massachusetts at the moment. And that's if you look at the rate base of Mass Electric across the rate base overall, it's about 10% of our total rate base.

On the SAP implementation, what sort of level of confidence would you say you have now and at being done to new, well it's not changed today, but existing time and budget?

If I may, we could spend hours on SAP and we do spend hours on SAP, you should imagine. It's working today. It's not that the systems are waiting to be switched on, it is working today. But as Andrew said, the amount of money or workarounds to double check things are costing us money today. So it's removing the incremental costs that are important, and the third release that goes in the summaries is a big release. We put a release in over Christmas. We put a release in literally just before Christmas. Very, very smoothly that makes some differences. So we are on schedule for completing that during the course of 2014. And as Andrew said at the moment, the cost associate with that are slightly below our expectations. We are not there yet, so we are not taking in any way our finger off the pulse on that one. But we are on track, on schedule to get that done this year. Okay. One final question from anybody?

The business has sort of obviously recovered very well since the difficulties around 2010 and the rights issues now very stable footing. So paradoxically, it's actually a much better time to have a sort of deep strategic think about, where this business is going to be five and 10 years time? Are you giving a deep -- so as you think about what the business is going to be in five to 10 years times? And what are you thoughts about, where the business will be in five and 10 years time?

Great timeframe. Sitting back in an armchair, having a philosophical strategic conversation, I can categorically assure you that the Board of National Grid has conversations about the future of this business five years and 10 years out continuously. So you are absolutely right in some ways in terms of the work we've been doing in the last five years to get the business to the position it is today, operationally and financially. Throughout that period of time, that doesn't mean to say, we've not been always thinking about what's the long-term direction, what's the right business model for us in terms of maximizing value for shareholders, and what do customers actually need from us. Going back to Lakis' point, in some ways on the smarter systems and the work we're doing in New York. The shape of this business will change over the next 10 years for sure. We will absolutely know the agenda of our essential investment and infrastructure that we're making on both side of ponds for the next few years. But there is and there will continue to be a lot of thinking about, how does the business evolve post-2020 in particular, where we might be in a very different sort of energy system and on both sides of the Atlantic. Good place to finish. Thank you for your time this morning, appreciate it.