UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Date: 9 November 2023
Commission File Number: 001-14958
NATIONAL GRID plc
(Translation
of registrant’s name into English)
England and Wales
(Jurisdiction
of Incorporation)
1-3 Strand, London, WC2N 5EH, United Kingdom
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
☒ Form 20-F ☐ Form 40-F
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(1): ☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(7): ☐
Indicate
by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3- 2(b) under the Securities
Exchange Act of 1934. ☐ Yes ☒ No
If
“Yes” is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b):
n/a
EXHIBIT INDEX
Exhibit No.
|
Description
|
99.1
|
Exhibit
99.1 Announcement sent to the London Stock Exchange on 9 November
2023 —
National Grid PLC Half-Year Results 2023/24
|
Exhibit
99.1
London | 9 November 2023:
National
Grid, a leading energy
transmission
and distribution company,
today
announces its Half-Year results for the period
ended 30 September
2023.
|
|
Record network investment: a new phase of capital
delivery
John Pettigrew, Chief Executive, said:
"Today we've announced solid results, and reconfirmed our full-year
guidance, as we continue to enhance critical energy infrastructure
across the communities we serve.
This financial performance reflects our role at the heart of the
energy transition and a new phase of capital delivery that is
firmly underway. Capital investment in our regulated networks
reached a record £3.5 billion in this half year, as we step up
our investment in 17 major onshore and offshore transmission
projects in the UK. In the US, we're now progressing a number of
major transmission projects to unlock renewable generation and
upgrade infrastructure across our jurisdictions. And we're
delivering this critical investment at the same time as ensuring
affordability for our customers, having now exceeded our £400
million efficiency savings target earlier
than planned.
In recognition of this strong progress, we are today updating our
2020/21 to 2025/26 five-year financial framework, which will
modestly enhance our asset and EPS growth within our existing
ranges. And whilst we're pleased to see momentum around policy
reform on both sides of the Atlantic, we now look forward to seeing
announcements and consultations translated into decisions and
action in order to deliver the energy transition. We're ready to
meet the opportunities, and are set up to tackle the challenges
ahead, to deliver a clean, fair and affordable energy future for
all."
Financial Summary
Six months ended 30 September: continuing
operations1
|
|
|
Statutory results2
|
|
Underlying3
|
Unaudited
|
|
2023
|
2022
|
% change
|
|
2023
|
|
2022
|
% change
|
Operating profit (£m)
|
|
1,985
|
2,239
|
(11%)
|
|
1,796
|
|
2,117
|
(15%)
|
Profit before tax (£m)
|
|
1,371
|
1,666
|
(18%)
|
|
1,144
|
|
1,455
|
(21%)
|
Earnings per share (p)
|
|
28.8
|
33.4
|
(14%)
|
|
23.8
|
|
32.4
|
(27%)
|
Dividend per share (p)
|
|
19.40
|
17.84
|
9%
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
2023
|
|
2022
|
% change
|
Capital investment4 (£m)
|
|
|
|
|
|
3,868
|
|
3,883
|
0%
|
1.
Excluding UK Gas Transmission which is held as a discontinued
operation. Amounts above are presented at actual
currency.
2.
For statutory EPS and profit before tax in 2022, comparative
amounts have been re-presented to reflect the classification of the
Further Acquisition Agreement (the FAA option) as held for sale and
within discontinued operations.
3.
'Underlying' represents statutory results from continuing
operations, but excluding exceptional items, remeasurements and
timing. Further detail and definitions for all alternative
performance measures (including constant currency) are
provided on page 63.
4.
Capital investment, an Alternative Performance Measure (APM),
represents statutory capital expenditure of £3,706 million
(2022: £3,717 million) plus contributions to joint ventures
and associates and NG Partners additions. Further detail and
reconciliations are provided on page 63.
Highlights
Solid financial delivery across the half year
■ Solid underlying operating profit
on a continuing basis of £1.8 billion. Whilst this
performance is in line with expectations, non-recurring items
reported in 2022/23 explain why underlying operating profit is
down 15% at actual exchange rates (14% at constant
currency) versus the prior period. These items in the prior half
year included: St William property land sales (£201 million);
a two month contribution from the Narragansett Electric Company
(NECO) (£53 million); and insurance proceeds received at our
IFA1 interconnector following a fire in September 2021
(£70 million). Underlying EPS for continuing operations
of 23.8p, down from 32.4p in the prior period, in line
with our expectation of underlying EPS to have a greater weighting
to the second half.
■ Statutory operating profit
down 11% to £2.0 billion, driven
principally by gains on NECO and St William land sales in the
prior period, partly offset by favourable timing. Statutory EPS
of 28.8p, down from 33.4p in the prior
period.
■ Interim
dividend of 19.40p/ordinary share* in line with policy
(17.84p/ordinary share in the prior period).
* This represents 35% of the total dividend per share
of 55.44p in respect of the last financial year
to 31 March 2023, in line with the Group's dividend
policy.
Highlights continued
Record regulatory capital investment driving the energy
transition
■ Capital investment
of £3.9 billion for continuing operations,
£70 million higher than the prior period at
constant currency (£15 million lower at actual exchange
rates). Of this total, capital investment in our regulated
networks[1] reached
a record £3.5 billion, up 10% on the prior period at
constant currency (7% at actual exchange
rates).
■ Group capital investment was principally driven by
higher connections spend and early investment relating to
Accelerated Strategic Transmission Investment (ASTI) in our UK
Electricity Transmission business; increased spend on our new
transmission projects in New York, such as our Smart Path Connect
project; higher asset condition and Grid Modernization spend in New
England; partially offset by lower investment in National Grid
Ventures (NGV) compared to the prior period due to lower spend on
the IFA1 Sellindge converter station rebuild, Isle of Grain
expansion and Viking interconnector as these projects near
completion.
Good, early progress on ASTI projects
■ Welcomed
Ofgem's decision to place 17 ASTI projects into our UK Electricity
Transmission operating licence.
■ Signed JVs with SP Transmission plc
(ScottishPower) for Eastern Green Link 1 in August, and with
Scottish Hydro Electric Transmission plc (SSE) for Eastern Green
Link 2 in June; selected suppliers for converter stations and
cables at the Eastern Green Links 1 and 2 offshore projects,
received planning consents on the English side of
the links.
■ Launched
the procurement process for the enterprise model to deliver the
majority of our onshore projects.
Continued capital re-allocation from National Gas
Transmission
■ Agreed to sell a further 20% equity interest in
National Gas Transmission to the consortium led by Macquarie
Asset Management and British Columbia Investment Management
Corporation, on equivalent financial terms to the 60% stake
sold to the consortium in January 2023.
■ Agreed
a new option with the same consortium, exercisable between 1 May
2024 and 31 July 2024, allowing it to acquire the remaining
interest.
Strong regulatory progress underpinning future growth
■ Welcomed
the Energy Act 2023 receiving Royal Assent and passing into UK
legislation.
■ Published our 'Delivering for 2035' policy paper,
outlining five priority areas where action is required by the
UK government and Ofgem to ensure networks can play their part
in decarbonising the power sector by 2035.
■ Welcomed the Electricity Networks Commissioner's
(ENC) report and its recommendations for a strategic spatial energy
plan reducing timelines on transmission infrastructure
delivery.
■ Began
the first year of new price controls under RIIO-ED2, running for
five years until 31 March 2028.
■ Planning to move forward in settlement
negotiations with the New York Public Service Commission (PSC) for
new rates at KEDNY-KEDLI, hoping to reach a Joint Proposal in the
first quarter of calendar year 2024.
■ Filed
our Electric Sector Modernization Plan (ESMP) in Massachusetts,
proposing $2 billion of investment over the next five years in our
electric distribution network to help meet state clean energy goals
(not part of any rate order we currently have in
Massachusetts).
■ Community Offshore Wind JV successful in New
York's offshore wind solicitation with a provisional offtake award
of 1.3 GW.
■ Received approval for our Propel NY Energy
transmission project on Long Island, a partnership between New York
Transco and the New York Power Authority, which will bring offshore
wind into the state.
■ Our Twin States Clean Energy Link, a 1.2 GW
transmission project, selected by US Department of Energy (DOE) to
move to the next stage of negotiation under the DOE's Transmission
Facilitation Program.
Support for our communities and customers
■ Working to return £200 million of
interconnector revenues to UK consumers that we announced in May
2022, and the further £100 million that we announced in May
2023.
■ As part of our two-year winter support fund we
announced last year, £19 million will be available to support
our most vulnerable customers this coming
winter.
■ Received two Edison Electric Institute Awards in
June for outstanding storm response for the two most severe winter
storms in New England last year (on 23 December 2022, and 13 March
2023).
Highlights continued
Further progress on our Group efficiency programme and
synergies
■ Achieved
a further £53 million of Group efficiency savings during the
half year
[2].
This is in addition to the £373 million reported at the
end of 2022/23 and takes cumulative efficiency savings under the
programme to £426 million, exceeding our £400
million target that we committed to deliver by the end of
2023/24.
■ Delivered
£18 million to date of our £100 million UK Electricity
Distribution synergy target.
Updating our responsible business commitments
■ Published our third Responsible Business Report,
setting out the progress we have made against our commitments over
the last year, including a 70% reduction in Scope 1 and 2 emissions
versus a 1990/91 baseline, representing a 7.5% reduction versus the
prior year.
■ Updated our Responsible Business Charter to
reflect our new portfolio, focused on three key pillars:
environment; customers & communities; and our
people.
■ Published new Science Based Targets initiative
(SBTi) aligned near-term targets, including a new aim to
reduce Scope 1 and 2 emissions by 60% by 2030 from a 2018/19
baseline, whilst remaining committed to reducing Scope 3
emissions by 37.5% by 2034 (achieving these targets is subject to a
number of external dependencies, including policies in our
jurisdictions which deliver the energy
transition).
Financial Outlook and Guidance
■ Guidance
is based on our continuing businesses as defined by IFRS. It
excludes the minority stake in National Gas Transmission which is
classified as held for sale within discontinued operations, but
includes the ESO which is held for sale within continuing
operations.
■ We
have today updated our Five-Year Financial Framework for the period
2020/21 to 2025/26:
■ total
cumulative capital investment of around £42 billion, modestly
enhancing our asset and EPS growth;
■ asset
growth CAGR* of 8-10% backed by our strong balance
sheet;
■ driving
underlying EPS CAGR of 6-8% from the 2020/21 EPS baseline of 54.2
pence per share†;
■ credit
metrics consistent with current Group rating;
and
■ regulatory
gearing to remain in the low 70% range.
■ Accelerated Strategic Transmission Investment
(ASTI): as part of the total cumulative capital investment of
around £42 billion over the 2020/21 to 2025/26 period, we
expect to deliver around £3 billion of capital investment
across our 17 ASTI projects. As we progress work on these projects,
our current best estimate for total outturn investment (in
£bn) is in the mid-to-high teens range.
■ Excluding the ESO accounting benefit as
highlighted in our Forward Guidance on page 15, for 2023/24 we
continue to expect underlying EPS to be modestly below 2022/23
levels following the UK government change to the capital
allowances legislation from 1 April 2023. We expect this
change to have a 6-7p per share impact on EPS, albeit no economic
impact over the long term. Without this change, underlying EPS was
forecast to grow within our 6-8% CAGR range between 2022/23 and
2023/24, assuming an exchange rate of
£1:$1.20.
*
Compound Annual Growth Rate
†
Full-year underlying EPS (2020/21) as reported on 20 May
2021.
Financial Key Performance Indicators
As at and for the six months ended 30 September
(£
million)
|
2023
|
2022
|
change %
|
Statutory operating profit (continuing) at actual
currency:
|
|
|
|
UK Electricity Transmission
|
838
|
493
|
70%
|
UK Electricity Distribution
|
472
|
522
|
(10%)
|
UK Electricity System Operator
|
443
|
146
|
203%
|
New England (including NECO)
|
(47)
|
720
|
(107%)
|
New York
|
8
|
(26)
|
(131%)
|
National Grid Ventures
|
310
|
308
|
1%
|
Other
|
(39)
|
76
|
(151%)
|
Total statutory operating profit (continuing)
|
1,985
|
2,239
|
(11%)
|
|
|
|
|
Underlying operating profit
(continuing) at constant currency1:
|
|
|
|
UK Electricity Transmission
|
656
|
564
|
16%
|
UK Electricity Distribution
|
563
|
579
|
(3%)
|
UK Electricity System Operator
|
34
|
52
|
(35%)
|
New England (including NECO)
|
218
|
304
|
(28%)
|
New York
|
119
|
195
|
(39%)
|
National Grid Ventures
|
219
|
258
|
(15%)
|
Other
|
(13)
|
145
|
(109%)
|
Total underlying operating profit (continuing)
|
1,796
|
2,097
|
(14%)
|
|
|
|
|
Capital investment (continuing) at
constant currency:2,3
|
|
|
|
UK Electricity Transmission
|
800
|
629
|
27%
|
UK Electricity Distribution
|
608
|
584
|
4%
|
UK Electricity System Operator
|
75
|
42
|
79%
|
New England (including NECO)
|
789
|
771
|
2%
|
New York
|
1,257
|
1,195
|
5%
|
National Grid Ventures
|
326
|
531
|
(39%)
|
Other
|
13
|
46
|
(72%)
|
Total capital investment (continuing)
|
3,868
|
3,798
|
2%
|
1. 'Underlying'
represents statutory results from continuing operations, but
excluding exceptional items, remeasurements and timing. Further
detail and definitions for all alternative performance measures are
provided on page 63.
2.
Comparative amounts have been re-presented to reflect NGV as a
separate operating segment and the reclassification of our US LNG
operations from New England to NGV following an internal
reorganisation in the period.
3.
Capital investment, an Alternative Performance Measure (APM),
represents statutory capital expenditure of £3,706 million
(2022: £3,717 million) plus contributions to joint ventures
and associates and NG Partners additions. Further detail and
reconciliations are provided on page 63.
Contacts
|
|
Investor Relations
|
Nick Ashworth
|
+44 (0) 7814 355 590
|
Angela Broad
|
+44 (0) 7825 351 918
|
James Flanagan
|
+44 (0) 7970 778 952
|
Alexandra Bateman
|
+44 (0) 7970 479 571
|
Media
|
Molly Neal
|
+44 (0) 7583 102 727
|
Lyndsey Evans
|
+44 (0) 7714 672 052
|
Brunswick
|
Dan Roberts
|
+44 (0) 7980 959 590
|
Results presentation webcast
|
An
audio webcast and live Q&A with management will be held at
09:15 (BST) today. Please use this link to join via a laptop,
smartphone or tablet:
https://www.nationalgrid.com/investors/events/results-centre
A replay
of the webcast will be available soon after the event at the same
link.
|
UK (and International)
|
+44 (0) 330 551 0200
|
UK (Toll Free)
|
0808 109 0700
|
US (Local)
|
+1 786 697 3501
|
Password
|
Quote "National Grid Half Year" when prompted by the
operator
|
|
|
|
|
Use of Alternative Performance Measures (APMs)
Throughout
this release we use a number of alternative (or non-IFRS) and
regulatory performance measures to provide users with a clearer
picture of the regulated performance of the business. This is in
line with how management monitor and manage the business
day-to-day. Further detail and definitions for all alternative
performance measures are provided on pages 63 to 67.
|
|
|
|
|
Inside information
This announcement contains inside information for the purposes of
Article 7 of the UK Market Abuse Regulation. The person responsible
for arranging the release of this announcement on behalf of
National Grid is Justine Campbell, Group General Counsel &
Company Secretary.
STRATEGIC OVERVIEW
A period of good regulatory progress and continued
growth
National Grid has reported a solid financial performance for the
first six months of the year, underpinned by continued
operational progress across the Group and record half-year
investment in our regulated network businesses.
Safety performance
In August 2023, one of our UK Electricity Distribution employees
tragically lost his life at a site in Ludlow, Shropshire, after
falling from height whilst performing overhead line work. This
tragic loss of life was felt acutely across the Group, and we have
worked closely with the individual's family, friends and colleagues
to support them. As a Group, we are firmly committed to our staff
and contractors returning home safely at the end of each day. With
the incident investigation in progress, we are taking actions in
Electricity Distribution and across the Group to prevent
reoccurrence, enhance safety leadership engagement, and proactively
learn from both actual and potentially severe
incidents.
During the half year, we recorded a Group Lost Time Injury
Frequency Rate (LTIFR) of 0.09, compared to 0.11 at year end and
against our Group target of 0.1.
Half-year operating financial performance
Our statutory operating profit is presented on page 4 which
includes the impact of exceptional items, remeasurements and
timing, and a reconciliation to our APMs is presented on page
65.
We achieved solid underlying operating profit on a continuing basis
of £1.8 billion. Whilst this performance is in line
with expectations, non-recurring items reported in 2022/23 explain
why underlying operating profit is down 15% at actual
exchange rates (14% at constant currency) versus the prior
period. These items in the prior half year included: St William
property land sales (£201 million); a two month contribution
from the Narragansett Electric Company (NECO) (£53 million);
and insurance proceeds received at our IFA1 interconnector
following a fire in September 2021 (£70 million).
Underlying operating profit - continuing operations1
Six
months ended 30 September
|
|
At actual
exchange rates
|
|
At constant currency
|
(£ million)
|
|
2023
|
2022
|
% change
|
|
2022
|
% change
|
UK Electricity Transmission
|
|
656
|
564
|
16%
|
|
564
|
16%
|
UK Electricity Distribution
|
|
563
|
579
|
(3%)
|
|
579
|
(3%)
|
UK Electricity System Operator
|
|
34
|
52
|
(35%)
|
|
52
|
(35%)
|
New England
|
|
218
|
316
|
(31%)
|
|
304
|
(28%)
|
New York
|
|
119
|
202
|
(41%)
|
|
195
|
(39%)
|
National Grid Ventures
|
|
219
|
259
|
(15%)
|
|
258
|
(15%)
|
Other
|
|
(13)
|
145
|
(109%)
|
|
145
|
(109%)
|
Total underlying operating profit
|
|
1,796
|
2,117
|
(15%)
|
|
2,097
|
(14%)
|
1.
Excluding UK Gas Transmission which is held as a discontinued
operation. 'Underlying results' and a number of other terms and
performance measures are not defined within accounting standards
and may be applied differently by other organisations. For clarity,
we have provided definitions of these terms and, where relevant,
reconciliations on pages 63 to 67.
For the half year, Group capital investment for continuing
operations reached £3,868 million, £70 million
higher than the prior period at constant currency (£15 million
lower at actual exchange rates). Of this total, capital investment
in our regulated networks reached a record
£3,529 million, up 10% on the prior period at
constant currency (7% at actual exchange rates).
Group capital
investment was principally driven by higher connections spend and
early investment relating to ASTI in our UK Electricity
Transmission business; increased spend on our new transmission
projects in New York, such as our Smart Path Connect project;
higher asset condition and Grid Modernization spend in New England;
partially offset by lower investment in NGV compared to the prior
period due to lower spend on the IFA1 Sellindge converter station
rebuild, Isle of Grain expansion and Viking interconnector as these
projects near completion.
Positioning National Grid for the future - our strategic
pivot
The strategic pivot that we announced in 2021 will enable the Group
to play a key role at the heart of the energy transition,
drive long-term shareholder value and deliver affordability for our
customers. It included the acquisition of UK Electricity
Distribution (June 2021), the sale of NECO (May 2022), and the sale
of a majority stake in UK Gas Transmission (January 2023, when the
company began to operate under a new name, National Gas
Transmission).
On 19 July, we announced the sale of a further 20% in National Gas
Transmission to a consortium led by Macquarie Asset Management. The
equity sale is on equivalent financial terms to the original 60%
transaction (acquired by the same consortium) that was completed in
January 2023. Completion of the sale of this further 20% is subject
to the same National Security and Investment (NSI) clearance
process as the initial 60% tranche and, subject to such clearance,
will complete in the same way. This will take the consortium's
equity stake in National Gas Transmission to 80%.
As part of the same announcement, National Grid confirmed that it
had entered into a new option agreement with the Consortium for the
potential sale of the final 20% shareholding in National Gas
Transmission. The Consortium has the option, exercisable between 1
May 2024 and 31 July 2024, to acquire the remaining interest. If
the option is partially exercised by the Consortium, National Grid
will have the right to put the remainder of its equity interest in
National Gas Transmission to the Consortium, which can be exercised
by National Grid between 1 December 2024 and 31 December 2024. If
one or both of these options are exercised, the consideration for
the remaining interest is expected to be paid in cash to National
Grid on equivalent financial terms to the original 60% transaction,
subject to certain adjustments.
National Grid's asset base will move to around 75% electricity (up
from 60% in 2021) once the 20% equity sale in National Gas
Transmission (that we announced in July) completes.
Supporting our customers and communities
Over the half year, we have made good progress on making sure our
economic and social role has the greatest impact on the communities
we serve. We have continued to see a tough economic backdrop for
our customers and communities as inflation, and rising energy
prices, have contributed to the cost-of-living crisis. As a
responsible business, our focus remains on delivering the energy
transition in the UK and the US to help move towards a clean energy
future that is affordable for customers.
As part of this, we announced last year our winter funding packages
to help our most vulnerable customers and communities in the UK and
US. Of the $17 million we committed to help customers in New York
and Massachusetts, around $9 million has already been distributed
in the past year through our network partners to assist over 35,000
households with high energy costs. The remaining funds will be
distributed across the forthcoming winter months in
2023/24.
In the UK, we have £11 million remaining of the original
£50 million support fund that we established last year, and we
plan to distribute it this coming winter across a number of areas.
This will include expanding our UK Electricity Distribution
Community Matters Fund that offers grants to customers
struggling with fuel poverty; continuing our support for home
visit, customer advice and fuel vouchers through the National
Energy Foundation and Fuel Bank Foundation; and supporting Citizens
Advice by funding an additional 15 full-time caseworkers,
delivering support to an additional 2,400 people with specialist
advice.
We also continue to work with Ofgem on the early return of
£200 million of interconnector revenues to UK consumers that
we announced in May 2022. We also plan to return a further
£100 million of revenues to customers, as we announced in
May 2023, subject to Ofgem's consent.
UK regulatory progress and Winter Outlook
We have seen good regulatory progress in the UK across a number of
policy and regulatory areas. From recommendations made to
accelerate transmission investment, through to the Energy Act 2023
receiving Royal Assent, the progress we have seen this year
will support the UK's drive for decarbonisation, greater
energy affordability and increased energy security, goals for
which National Grid is wholly aligned and supportive in
delivering.
Energy Act 2023 and Future Systems and Network Regulation
(FSNR)
At the end of October, we welcomed the Energy Act receiving Royal
Assent and passing into legislation. The Act is a crucial next step
in delivering a secure and affordable clean energy network and
establishes important policy and governance foundations to deliver
on the UK's net zero ambitions. The Act enables the separation of
the Electricity System Operator (ESO) from National Grid and the
formation of an Independent System Operator and Planner (ISOP). The
ISOP, formerly referred to as the Future System Operator, will have
a critical role in delivering strategic, whole system energy
planning and oversight as we continue to invest in and transform
the UK's energy infrastructure. We expect the ISOP to be
established as a public entity in 2024 with responsibilities across
both the electricity and gas systems.
We also welcomed the introduction of a net zero duty for Ofgem
within the Act, which widens the regulator's remit to consider
net zero targets as part of its decision making. The inclusion of
marine grids in the legislation's definition of offshore wind
associated infrastructure is also welcome and will assist in
simplifying the consenting process.
Also in October, we welcomed Ofgem's publication of the FSNR
Framework Decision. This sets out the overarching framework for the
network price controls for electricity and gas transmission, and
gas distribution, which will run from April 2026, known as
'RIIO-3'. For electricity transmission, the main points from the
FSNR Decision included:
■ the continuation of five-year price controls,
including the setting of returns and assessment of financeability
(to ensure that necessary capital is attracted to support
expansion needed in the grid);
■ evolution of a RIIO-style framework, with the
introduction of a major projects regime for significant network
investments identified in the Centralised Strategic Network Plan
(see below);
■ the need for streamlining of the regulatory
framework, recognising the requirement for companies to propose
investments that are anticipatory; and
■ a
focus on the need to accelerate digitalisation.
The detail of the frameworks will now be developed through the
sector specific methodology phase which will be managed through a
combination of working groups and a consultation to be published in
December 2023. The final methodology decision will be made in
Spring 2024. The Decision also confirmed that the overarching
RIIO-3 framework will provide a foundation for the Electricity
Distribution price control which will start in April 2028. The
precise framework and process for Electricity Distribution will be
consulted on separately in late 2024.
Further progress on ASTI
On 25 August, Ofgem published transmission licence modifications
which formally place the ASTI projects into Transmission Operators'
licences. This includes the 17 ASTI projects that Ofgem awarded to
National Grid in December 2022 to upgrade the East coast
transmission network in support of the UK government's 50 GW 2030
offshore wind target. We are pleased with progress, and we have
continued to engage with Ofgem on the profile and timing of
the required ASTI investment. We expect the majority of this
investment to be deployed towards the end of this
decade.
The 17 ASTI projects will be delivered by our Strategic
Infrastructure (SI) business unit which ensures efficient and
effective delivery. As each project completes, it will be
transferred to UK Electricity Transmission which will then be
responsible for the ongoing operation and maintenance of the
infrastructure when in service[3].
We have made good progress on our ASTI projects over the half year,
including: signing JVs with ScottishPower for Eastern Green Link 1
in August, and with SSE for Eastern Green Link 2 in June; selecting
the preferred suppliers for converter stations and cables at
Eastern Green Links 1 and 2; completing the 'examination' stage of
our Development Consent Order (DCO) application for the Yorkshire
Green project; and launching the procurement process for the 'Great
Grid Upgrade Partnership', the contractual model that will be used
to deliver the majority of our onshore projects. The model has been
designed on industry best practice with contracts expected to be
awarded early in the new year.
Transforming the network - reforming the pace of the energy
transition
In May, National Grid published 'Delivering for 2035: Upgrading the
grid for a secure, clean and affordable energy future'. The paper
outlines five priority areas where action is required by the UK
government and Ofgem to ensure electricity networks can fully play
their part in decarbonising the power sector by 2035. These
priority areas are:
■ reforming
the planning system, centred around a strategic spatial energy
plan;
■ ensuring
the regulatory and governance framework is set up for
delivery;
■ transforming
how clean energy connects to the grid and accelerating net zero
projects;
■ putting
communities and consumers at the forefront of the transition;
and
■ developing
supply chain capacity and a skills pipeline across the
country.
The recommendations we made in the publication are critical to
reforming the scale and pace of the energy transition needed over
the next decade, particularly in transmission, to enable the
decarbonisation of the UK power sector by 2035. Whilst significant
progress has been made towards transforming the UK's power system
in recent years, full decarbonisation will require more urgent
action from industry, the UK government and Ofgem. We are pleased
to see a number of positive developments in this half year that
support our call for urgent reform.
In August, we welcomed the publication of the Electricity Networks
Commissioner's (ENC's) report and its recommendations aimed at
significantly reducing timelines for delivering onshore and
offshore transmission network infrastructure. Many of the
recommendations align with our priority areas. In particular, we
support the ENC's recommendation for a strategic spatial approach
to planning energy infrastructure and the robust need case this
would provide. The UK government has committed to publishing an
Action Plan in response to the ENC report by the end of 2023,
setting out future actions for government, Ofgem and
industry.
Key proposals by the ENC also link with Ofgem's consultation
published in June on proposed arrangements for the Centralised
Strategic Network Plan (CSNP). The CSNP will be a new transmission
network planning approach that will be delivered by the ISOP. The
Ofgem consultation covers the first stage of the CSNP regulatory
framework setting out how it expects the ISOP to model future
supply and demand (currently the Future Energy Scenarios, or FES)
that will inform future network investment need. National Grid
fully supports the creation of a CSNP and agrees with the
direction of the proposals in the Ofgem consultation. As with
the ENC recommendations, the aims of the CSNP align with our five
priority areas in our 'Delivering for 2035' paper.
Connections reform across our transmission and distribution
networks
National Grid has launched a new reform initiative to accelerate
grid connections across our transmission and distribution
networks.
During the half year, the ESO has continued to work with
stakeholders, including UK Electricity Transmission, to improve and
reform the connections process to the transmission network. We have
been working on two major aspects, the shorter term Five Point
Plan, and a longer full connection reform process. The transmission
connection queue now stands at over 400 GW for Great Britain which
represents a significant oversubscription of what is
required to meet the scenarios in the ESO Future Energy Scenario
publication.
The Five Point Plan has been worked through with all transmission
owners and customers. Progress is being made with around 5 GW of
connection contracts being rescinded through the Transmission Entry
Capacity (TEC) Amnesty, and our change of the treatment of
batteries has accelerated over 10 GW of connections by at least
four years. Work is being undertaken by the transmission owners to
assess the full impact of the implementation of the Five Point
Plan. One of the key changes will be the introduction of Queue
Management clauses into connection agreements so that if connecting
customers miss key milestones in their development then the ESO
will have the right to terminate the connection. It is expected
that Ofgem will decide on the code modification required to enable
this in November this year.
For longer-term reform, the ESO published a consultation in the
summer, and we are responding with a recommended solution at the
end of November. We are working with Ofgem to understand a way
forward that can expedite the implementation and delivery of the
benefits of the proposed connection reform.
We have also taken further action on connections reform across our
UK Electricity Distribution network. In September, we announced
plans to release 10 GW of grid capacity for the connection of
renewable generation assets to our network. This follows engagement
since the beginning of the year with the ESO, Ofgem and the UK
government to find solutions to speed up the connection of low
carbon technologies. Through a new agreement with the ESO, projects
that require additional transmission network reinforcement will be
offered the chance to connect under an interim, non-firm connection
arrangement. In return for an earlier connection, the interim
arrangements would mean some projects could be curtailed when there
is too much generation on the system, such as on some of the
windiest and sunniest summer days.
In the long term, these interim arrangements will be replaced with
firm connections as network capacity increases. In addition,
from September we have started to replace the current 'first come,
first served' connection model with a 'first ready, first
connected' approach on our UK Electricity Distribution network.
This updated approach, which will apply on a non-firm basis to a
subset of supply points, will accelerate the connection
of 'shovel ready' projects to allow more low carbon projects
to connect faster. As a result, these changes will
allow customers to accelerate their connection dates and
provide a more agile approach to managing
connection requests.
We also continue to work with members of the Energy Networks
Association (ENA) on reforming the connection process to
distribution networks. This includes promoting mature projects that
are closer to delivery above those that may be 'blocking' the
queue; and changing how transmission and distribution networks
coordinate connections, improving their interactivity.
Ofgem inflation consultation
On 1 August, Ofgem published a 'call for input' on the impact of
high inflation on network price controls. This was expected as it
was raised by Ofgem as part of the Electricity Distribution Draft
Determinations in summer 2022. There are five policy considerations
that Ofgem have asked stakeholders to comment on, namely: no
action; reporting and transparency; future price control design;
true up; and voluntary submissions. The document recognises the
importance of stable regulation and the risk of changing how
regulation works.
We have worked with the ENA to put forward our views and,
given the timeline, we believe this is best discussed as part of
the RIIO-3 price controls. Ofgem is expected to publish an informal
consultation in late 2023 which will provide more detail around
whether it intends to launch a standalone consultation or whether
it will wait for the next price control period.
UK Winter Outlook
In September, the ESO published the electricity Winter Outlook for
the upcoming winter in Great Britain.
Despite the ongoing conflicts in Ukraine and the Middle East, the
broad European energy market has improved since last year. The
market has bolstered European gas storage and supplies, and the
French nuclear fleet capacity is back to pre-pandemic levels. The
ESO has built on the experience of the 2022/23 winter and continued
to build resilience and minimise the potential impact of risks and
uncertainties in the energy markets. As such, the System Operator's
Base Case scenario is that there will be adequate margins (4.4
GW/7.4%) through the forthcoming winter to ensure Great Britain
remains within the reliability standard[4].
Alongside the Base Case, the ESO has stress tested the impact of
credible Great Britain and EU energy market events on the system
against available operational tools. As a result, it plans to
reintroduce the Demand Flexibility Service for this winter to
incentivise customers to reduce consumption during periods when
margins are tightest. This measure, alongside the robust set of
tools already deployed by the ESO, will contribute to maintaining
adequate margins and mitigate impacts to customers.
US regulatory progress
We have seen good momentum on regulatory progress across our US
jurisdictions during the half year.
New York rate filings
On 1 September, New York Public Service Commission (PSC) Staff
responded to our rate filing that we made for our downstate
gas business, KEDNY-KEDLI, in April. The response proposed a Return
on Equity (ROE) of 9.1% (compared to our request for 9.8%), revenue
increases of $389 million for KEDNY and $220 million for KEDLI
(compared to our request of $466 million and $277 million
respectively) and a 7.5% reduction on our request for capital
expenditure in 2024/25. In addition, PSC Staff also recommended
increasing Leak Prone Pipe (LPP) replacement targets for both
KEDNY and KEDLI (for example, 55 miles of pipe replacement at KEDNY
in calendar year 2024 against our request for around 40 miles; and
125 miles of pipe replacement at KEDLI in calendar year 2024
against our request for around 110 miles). PSC Staff supported
future Renewable Natural Gas (RNG) connections to the gas
network, recognising that projects are at an early stage; the
regulator also expressed support for advancing and funding an
opportunity to use an existing green hydrogen facility for blending
in a closed system on Long Island. National Grid responded to the
PSC Staff position on 22 September, and we plan to move
forward in settlement negotiations, hoping to reach a Joint
Proposal with stakeholders in the first quarter of calendar year
2024.
We also remain on track to file for new rates at our Niagara Mohawk
(NIMO) electric and gas business (upstate New York) in summer
2024.
New York transmission investment
In July, we received Federal Energy Regulatory Commission (FERC)
approval for cost recovery on our Smart Path Connect transmission
rebuild and refurbishment project in upstate New York. The order
included a 10.3% ROE with a 50:50 debt:equity ratio, with cost
recovery effective from 1 April 2023. The project, to develop 110
miles of transmission lines in partnership with the New York Power
Authority (NYPA), will unlock more than 1,000 MW of existing
renewable resources, deliver significant production cost savings
and emissions reductions, and will decrease transmission
congestion. The project is on track to be completed by
2025.
Massachusetts - Electric Sector Modernization Plan
submitted
On 1 September, we filed our Electric Sector Modernization Plan
(ESMP) in Massachusetts. The plan outlines the investment required
in our electric distribution network over the next five years and
beyond to help the State meet its clean energy goals under the 2050
Clean Energy and Climate Plan (CECP). Under the plan, we have
proposed to invest up to $2 billion over the next five years across
the following areas:
■ Network
infrastructure: upgraded
power lines, transformers, substations, to make the network more
resilient, connect clean energy and plan in advance for growth in
electric demand;
■ Technology
and platforms: new
planning tools for smarter decision making, including new data and
monitoring systems to ensure system stability, and new IT
infrastructure; and
■ Customer
programmes: help
customers reduce carbon footprint, drive smart energy
use.
Customers and all other interested parties will be able to provide
their feedback through public and technical workshops that National
Grid will conduct jointly with other electric distribution
companies. We will use feedback to inform the formal filing of a
Future Grid Plan to the Department for Public Utilities (DPU) in
January 2024, after which the DPU will consider the Plan and direct
the company on how to proceed. The proposed investment under the
ESMP is not currently part of any rate order for our service
territory.
We remain on track to file for new rates for our Massachusetts
Electric business in mid-November 2023, and we will propose a
mechanism for recovery of the ESMP investment as part of that
filing.
Twin States Clean Energy Link
In October, the Twin States Clean Energy Link was selected by the
US Department of Energy (DOE) as one of three projects in the US to
enter capacity contract negotiations through the DOE's Transmission
Facilitation Program. Twin States is a bidirectional transmission
project being proposed by National Grid and Citizens Energy
Corporation. If built, the line will deliver 1,200 MW of
hydro-sourced generation from Canada to New England when it is
needed and will allow for excess power from offshore wind in New
England to be delivered to Canada. Moving forward, we will continue
working with local, state and federal stakeholders to progress the
project which has the potential to create significant savings for
customers in New England.
Community Offshore Wind (COSW)
On 24 October, the New York State Energy Research and Development
Authority (NYSERDA) announced three successful projects that will
receive Offshore Renewable Energy Certificates (ORECs) as part of
New York's third large-scale offshore wind solicitation. COSW, our
JV with RWE, was selected as one of the successful projects with a
provisional offtake award of 1.3 GW. The project would be located
within COSW's 3.2 GW seabed lease in the New York
Bight.
In August 2023, COSW also submitted an offtake bid for up to 1.3 GW
in response to the New Jersey Board of Public Utilities (BPU)
solicitation. We await selection decisions in the first or second
quarter of calendar year 2024.
Further progress on Group efficiency savings
As part of our Group efficiency savings programme, we achieved a
further £53 million of savings in the first half of the
year[5].
This is in addition to the £373 million reported at the end of
2022/23 and takes our cumulative efficiency savings under the
programme to £426 million. This exceeds our £400 million
savings target that we announced in November 2021 and that we
committed to deliver by the end of 2023/24.
Of the £53 million savings achieved this financial year,
almost £40 million has been in New York and New England. This
has principally been through property rationalisation and
implementing a more strategic approach to National Grid's sourcing
and contract management strategies, enabling the business to reduce
its external spend. It has also been driven by the use of digital
solutions such as OnMyWay (which digitises National Grid's
paper-based work for electric line crews, enabling more efficient
job coordination), FutureNow (which digitises our electric network
investment planning), and Vegetation Management Optimization (which
optimises our vegetation management strategy and execution for
value, cost and reliability). The continued roll out of new
customer initiatives, including the use of lower cost service
providers supporting our front office teams, and increased use
of e-billing and self-service options for customers has enabled
further cost reduction.
In our field operations, we have identified ways to reduce the
workloads of our maintenance teams whilst maintaining the safe and
reliable operation of the network. For example, we have maximised
resource capacity through combined training for teams, more
efficient coordination with external partners to reduce completion
time, and optimising crew sizes where it is safe to do so. In
addition, we have improved productivity through combining projects
where appropriate and making them more efficient to
deliver.
Throughout the rest of our business, we have driven efficiencies
following the 2020/21 Business Unit reorganisation, enabled by new
digital capabilities, contract renegotiations and procurement
strategies. We will continue to drive further efficiencies, and we
would expect a similar level of savings in the second half of this
year compared to the first half.
Updating our responsible business commitments to reflect our
repositioned portfolio
National Grid believes that all businesses need to stand for more
than just profits. We have a critical role in enabling net zero and
ensuring that the benefits of the energy transition are shared with
everyone, with nobody left behind. This responsibility is integral
to our core strategy and underpins our Responsible Business
Fundamentals - ensuring safe and reliable operations, living our
values, whilst influencing, and expecting the same of our partners
and supply chain.
Progress against our Responsible Business commitments
Our 2022/23 Responsible Business Report, released in June, sets out
the progress we have made against our commitments in 2022/23. These
included:
■ a
70% reduction in Scope 1 and 2 emissions versus a 1990/91 baseline,
representing a 7.5% reduction versus the prior
year;
■ maintaining
our CDP Climate Change 'A list rating' for the seventh consecutive
year;
■ achieving
60,096 employee volunteering hours. This means that, since 2020, we
have achieved a cumulative 100,000 employee volunteering hours
versus our target of 500,000 to be reached by 2030;
and
■ integrating
our responsible business commitments within our performance
management frameworks.
Underpinning this progress against our commitments is the record
level of investment we have made across our networks in the past
year, making us one of the FTSE's biggest investors in the delivery
of net zero.
Updating our Responsible Business Charter
Since we launched our first Responsible Business Charter three
years ago the external environment has continued to change, and our
business has evolved significantly with the repositioning of our
portfolio. To reflect these changes, we updated the Charter in
September following engagement with stakeholders and with a focus
on three core pillars: our environment; our customers and
community; and our people. Each of these pillars is underpinned by
our Responsible Business Fundamentals, with the previous pillars of
economy and governance now embedded within these new focus
areas.
New SBTi aligned targets
On environment, our new aim is to reduce scope 1 and 2 emissions by
60% by 2030, from a 2018/19 baseline[6],
whilst remaining committed to reducing scope 3 emissions by 37.5%
by 2034. These near-term emission targets across the Group align
National Grid to a 1.5 degrees pathway and have been verified by
the SBTi. We have also updated our emission reduction ambitions for
our supply chain, adding clarity on how we will target our
suppliers to reduce Scope 3 emissions across the company. Achieving
these targets is subject to a number of external dependencies,
including policies in our jurisdictions which deliver the energy
transition. We are engaging actively with policy makers to enable
these.
On our customers and communities, we aim to support an affordable,
and fair, energy transition, where nobody is left behind. We will
continue to mobilise hardship funds and energy efficiency measures,
and improve our reporting, on the benefits that these initiatives
provide. We will also continue to provide meaningful skills
development for 45,000 people by 2030 with a focus on communities
facing socio-economic disadvantage, and report on the progress of
our Grid for Good employability programmes. We will deliver 500,000
hours of volunteering by the same date.
On our third pillar, people, we are investing to build the skills
needed to deliver the clean energy future. Building a diverse,
equitable and inclusive organisation that reflects the communities
we serve, is key to our success. Whilst we have made good progress
here, we will move forward with goals that include: achieving 35%
gender diversity and 20% ethnic diversity in our management
population by 2025, representing a 1.5% and 3% increase,
respectively, compared to today; aiming for 50% female
representation and 40% ethnic diversity in our new talent
population by 2025; aiming to lead the industry on wellbeing, with
metrics above the prior year level; and we remain committed to
making sure pay is equitable for all our colleagues.
Board changes
On 17 May, we announced that Thérèse Esperdy will step
down from the Board as a Non-Executive Director on 31 December 2023
after serving more than nine years.
On 21 September, we announced that Ian Livingston will succeed
Thérèse Esperdy as the Senior Independent Director on 31
December 2023.
FIVE-YEAR FINANCIAL FRAMEWORK
Our five-year
financial framework (1 April 2021 to 31 March 2026) includes UK
Electricity Distribution from acquisition, the sale of NECO in May
2022, and the sale of a 60% stake in our UK Gas Transmission
business in January 2023.
Capital investment and Group asset growth
Following our update, we now expect to invest around £42
billion across our energy networks and adjacent businesses, in the
UK and US, over the five-year period to 2025/26. Of this, around
£32 billion is considered to be aligned with the principles of
the EU Taxonomy legislation as at the date of reporting. We expect
this increased investment to be modestly enhancing to asset and EPS
growth.
In the UK, we expect around £11 billion of investment in
Electricity Transmission, of which around £3 billion is driven
by ASTI projects (which forms part of our best current view on
total outturn investment for all 17 ASTI projects of mid-to-high
teens (in £bn)). We expect our Electricity Distribution
network to invest around £6 billion over the five years to
2025/26 in asset replacement, reinforcement and new connections,
facilitating the infrastructure for electric vehicles, heat pumps
and directly connected generation.
In our US regulated businesses, we expect to invest around £12
billion in New York and £9 billion in New England, over the
five years to 2025/26. Over half of this will be safety related
projects in our gas networks with the remainder in our electric
networks such as for storm hardening, other net zero investments,
and further electric transmission investment.
We expect NGV to invest £3-4 billion over the five years to
2025/26 in completing the interconnector programme, the Isle of
Grain Liquefied Natural Gas (LNG) capacity expansion project, and
US renewable generation.
As we have worked through the transactions, coupled with the sum of
these investments, and the broad economic protection our businesses
have against rising macroeconomic variables such as inflation,
Group asset growth is expected to be 8-10% CAGR through to
2025/26.
Group gearing
We expect regulatory gearing to remain in the low 70% range for the
remainder of the five-year framework. We remain committed to a
strong, overall investment grade credit rating. Combined with the
benefit of our hybrid debt, we expect gearing levels, and the other
standard metrics we monitor, to sit within our current BBB+/Baa1
corporate rating band.
Group underlying earnings growth and dividend growth
From 2020/21 through to 2025/26, we expect our CAGR in underlying
earnings per share to be in our 6-8% range from the baseline 54.2
pence per share[7] (this
includes our long run average scrip uptake assumption of
25% per annum). This will underpin our sustainable, progressive
dividend policy into the future.
Excluding the ESO accounting benefit as highlighted in our Forward
Guidance on page 15, for 2023/24 we continue to expect
underlying EPS to be modestly below 2022/23[8] levels
following the UK government change to the capital allowances
legislation from 1 April 2023. We expect this change to have a 6-7p
per share impact on EPS, albeit no economic impact over the long
term. Without this change, underlying EPS was forecast to grow
within our 6-8% CAGR range between 2022/23 and 2023/24, assuming an
exchange rate of £1:$1.20.
2023/24 FORWARD GUIDANCE
This forward guidance is based on our continuing businesses as
defined by IFRS. It excludes the minority stake in National Gas
Transmission which is classified as held for sale within
discontinued operations, but includes the ESO which is held for
sale within continuing operations.
The outlook and forward guidance contained in this statement should
be viewed, together with the forward-looking statements set out in
this release, in the context of the cautionary statement. The
forward guidance in this section is presented on an underlying
basis and excludes remeasurements and exceptional
items.
UK Electricity Transmission
Net revenue (excluding timing) is
expected to increase by around £260 million compared to
2022/23 primarily driven by the non-repeat of the prior year
Western Link settlement, and higher revenues driven by indexation.
This includes the impact on underlying revenues of the
new UK capital allowances legislation. Costs are expected to offset
around a third of the revenue increase, including higher
depreciation due to the increasing asset base.
We expect to deliver around 100 bps of outperformance in the third
year of RIIO-T2 in operational Return on
Equity. This is in line with
our target to deliver 100 basis points of operational
outperformance on average through the five-year period of the
RIIO-T2 price control.
UK Electricity Distribution
Net revenue (excluding timing) is
expected to be modestly lower compared to 2022/23, as we enter the
first year of the RIIO-ED2 price control. This includes the impact
on underlying revenues of the new UK capital allowances
legislation. Controllable costs are expected to be modestly higher
compared to the prior year due to increased workload associated
with the new price control, inflationary impacts, and the
non-repeat of some one-off items, whilst depreciation is expected
to be slightly higher, driven by increasing rate
base.
In line with our target, we expect to deliver around
100-125 basis points of outperformance in the first year
of RIIO-ED2 in operational Return on
Equity.
UK Electricity System Operator (ESO)
Underlying operating profit (excluding timing) is
expected to be around £30 million higher than 2022/23, driven
by around £50 million lower depreciation following being
classified as held for sale at the end of October
2023.
Under the RIIO-2 price control, totex in ESO is no longer subject
to the totex incentive mechanism and is instead regulated under a
pass-through mechanism, with cost increases or efficiencies
trued-up the following year.
New England
The completion
of the sale of NECO in May 2022 will reduce underlying operating
profit (excluding timing) in 2023/24 by around $65 million.
For the remaining business we expect net revenue
(excluding timing) to be around $160 million
higher from expected rate increases, with just over half of this
being offset by cost increases due to depreciation, rate funded
increases, and inflation.
Return on Equity for
New England is expected to slightly improve in respect of
underlying performance compared to 2022/23. Alongside this, there
is expected to be an additional one-off benefit of around 40 basis
points in 2023/24 partially relating to the regulatory recovery of
a historical property tax matter.
New York
Net Revenue (excluding timing) is
expected to be around $270 million higher, including increases from
proposed rate settlements. Just under one third of this increase
will be offset by depreciation as a result of higher investment.
Lower controllable costs, as a result of efficiencies and
non-recurrence of one-off items are broadly offset by higher rate
funded costs.
Return on Equity for
New York is expected to be broadly in line with
2022/23.
NGV and Other activities
In NGV, we expect operating
profit to be around 5%
lower than 2022/23 driven by the reduction in interconnector
auction revenues as energy markets return to more usual levels
following the high prices experienced last
year.
We also expect other activities' underlying operating profit to be
lower year-on-year by just over £100 million. This
is driven by reduced sales in our Commercial Property
business, partly offset by the impact of our significant community
spend in 2022/23.
Joint Ventures and Associates
Our share of the profit after
tax of joint ventures and
associates is expected to be just under £100 million lower
than 2022/23 as a result of lower auction revenues in our joint
venture interconnectors.
Interest and Tax
Net finance costs in
2023/24 are expected to be around £20 million lower than
2022/23. This follows the repayment of the acquisition bridge loan
and lower inflationary rate increases, partially offset by
increasing rates on new issuances. Other interest is expected
to remain broadly flat.
For the full year 2023/24, the underlying effective tax
rate, excluding the share of
post-tax profits from joint ventures and associates, is expected to
be around 26%.
Investment, Growth and Net Debt
Overall Group capital
investment for continuing
operations in 2023/24 is expected to be above £8
billion.
Asset Growth is
expected to be within the 8-10% CAGR range, reflecting an increase
in capex along with indexation impacting our UK regulated
businesses.
Depreciation is
expected to increase, reflecting the impact of continued high
levels of capital investment.
Operating cash flow generated
from continuing operations (excluding acquisitions, disposals and
transaction costs) is expected to increase by around 30% compared
to 2022/23 principally driven by ESO over-recoveries and
higher operating profits. This increase is expected to be mostly
offset by higher cash interest, higher cash capital investment and
higher cash dividends than 2022/23.
Net debt is
expected to increase by around £3.5 billion (from £41.0
billion as at 31 March 2023) at a GBP:USD rate of 1.20, driven by
our continued levels of significant investment in critical clean
energy infrastructure, with regulatory gearing broadly flat year
over year. This includes proceeds from the sale of a further 20%
stake in National Gas Transmission to the consortium led by
Macquarie Asset Management that we announced in
July.
Weighted average number of shares (WAV) is expected to be
approximately 3,690 million in 2023/24.
FINANCIAL REVIEW - HY 2023/24
In managing the business, we focus on various non-IFRS measures
which provide meaningful comparisons of performance between years,
monitor the strength of the Group's balance sheet as well as
profitability, and reflect the Group's regulatory economic
arrangements. Such alternative and regulatory performance measures
are supplementary to, and should not be regarded as a substitute
for, IFRS measures which we refer to as statutory results. We
explain the basis of these measures and reconcile these to
statutory results in 'Alternative performance measures/non-IFRS
reconciliations' on pages 63 to 67. Also, we distinguish between
adjusted results, which exclude exceptional items and
remeasurements, and underlying results, which further take account
of: (i) volumetric and other revenue timing differences arising
from our regulatory contracts, and (ii) major storm costs which are
recoverable in future periods, where these are in excess of $100
million in the year, neither of which give rise to economic gains
or losses.
Financial summary for continuing operations - performance for the
six months ended 30 September
(£ million)
|
2023
|
2022
|
change %
|
Accounting profit:
|
|
|
|
Gross revenue
|
8,489
|
9,444
|
(10%)
|
Other operating income
|
12
|
544
|
(98%)
|
Operating costs
|
(6,516)
|
(7,749)
|
(16%)
|
Statutory operating profit
|
1,985
|
2,239
|
(11%)
|
Net
finance costs1
|
(685)
|
(624)
|
10%
|
Share of joint ventures and associates (after tax)
|
71
|
51
|
39%
|
Tax
|
(307)
|
(447)
|
(31%)
|
Non-controlling interest
|
(1)
|
-
|
n/a
|
Statutory
IFRS earnings1 (see financial
statements note 8)
|
1,063
|
1,219
|
(13%)
|
Less:
exceptional items and remeasurements (after tax)
|
(101)
|
(302)
|
(67%)
|
Less:
timing (after tax)
|
(87)
|
265
|
(133%)
|
Underlying
earnings2
|
875
|
1,182
|
(26%)
|
EPS -
statutory IFRS (pence)1 (see financial
statements note 8)
|
28.8
|
33.4
|
(14%)
|
EPS -
underlying (pence)2
|
23.8
|
32.4
|
(27%)
|
Interim dividend per share (pence)
|
19.40
|
17.84
|
9%
|
|
|
|
|
Capital investment:
|
|
|
|
Capital expenditure (including NECO additions within held for
sale)
|
3,706
|
3,717
|
0%
|
Add:
investments in JVs and associates
|
151
|
129
|
17%
|
Add:
investments in financial assets (National Grid
Partners)
|
11
|
37
|
(70%)
|
Capital
investment1
|
3,868
|
3,883
|
0%
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
2.
Non-GAAP alternative performance measures (APMs). For further
details and reconciliation to GAAP measures, see 'Alternative
performance measures/non-IFRS reconciliations' on pages 63 -
67.
Statutory IFRS earnings were £1,063 million in the
first six months of the year, £156 million,
or 13% lower than the six months to September 2022. The
prior period included £197 million of net
exceptional gains, comprising £511 million on the
disposal of NECO and £33 million property damage
insurance income, partly offset
by £61 million of cost efficiency programme
expenditure and £65 million of transaction,
separation and integration costs. The current period
includes £43 million of net exceptional gains
relating to £92 million further property damage net
insurance proceeds offset by £39 million of
cost efficiency programme costs and £11 million of
transaction, separation and integration costs. In the current
period, tax on exceptional items
was £1 million credit (2022: £221 million charge). Statutory
results were less favourably impacted this half by derivative
remeasurements with post-tax net gains
of £58 million (2022: £105 million net gains).
Timing net over-recoveries were £106 million in
the first six months compared
to £361 million net under-recoveries
(£349 million at constant currency) in the prior
period.
Underlying operating profit of £1,796 million was
down 15% and underlying EPS of 23.8p was
down 27% against the prior period. The biggest
driver of the decrease being £221 million lower property
income than during the prior period which benefitted from
sales of a number of sites following our exit from the St William
joint venture in 2021/22. An improved performance in UK
Electricity Transmission and in NG Partners, was more than offset
by lower results in our other businesses, partly related to
the sale of NECO (in New England) in May 2022 and business
interruption insurance proceeds in NGV in the prior period.
Underlying net revenues of £5,546 million were
down £51 million (1%) compared to the prior
period, with higher UK regulated business revenues and increases in
New England and New York rates being offset by lower property
sales, lower interconnector revenues, the sale of NECO and the
impact of exchange rates. Regulated controllable costs were lower
on a constant currency basis, with higher workload and inflationary
increases being more than offset by efficiency savings. Pension and
other post-employment benefit costs were higher, driven by no
repeat of a £40 million buy-out gain in Niagara Mohawk
(New York) in the prior period. Depreciation was higher from our
ongoing investment programme. Other costs were higher, principally
related to higher storm response costs, environmental provisions,
US property taxes, bad debt provisions and also higher costs to
deliver outputs as agreed with our regulators which are offset
by higher revenues. These factors along with the impact of a higher
UK corporation tax rate, which increased to 25% (2022/23: 19%),
resulted in underlying earnings
of £875 million for the first six months of
2023/24,
down £307 million or 26%.
Reconciliation of different measures of profitability and
earnings
The table below reconciles our statutory profit measures for
continuing operations, at actual exchange rates, to adjusted and
underlying versions.
Reconciliation of profit and earnings from continuing
operations
|
|
|
Operating profit
|
|
Profit after tax
|
|
Earnings per share (pence)
|
(£ million)
|
|
2023
|
2022
|
|
2023
|
2022¹
|
|
2023
|
2022¹
|
Statutory results
|
|
1,985
|
2,239
|
|
1,064
|
1,219
|
|
28.8
|
33.4
|
Exceptional items and remeasurements
|
|
(83)
|
(483)
|
|
(101)
|
(302)
|
|
(2.7)
|
(8.3)
|
Adjusted results
|
|
1,902
|
1,756
|
|
963
|
917
|
|
26.1
|
25.1
|
Timing
|
|
(106)
|
361
|
|
(87)
|
265
|
|
(2.3)
|
7.3
|
Major storm costs
|
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
Underlying results
|
|
1,796
|
2,117
|
|
876
|
1,182
|
|
23.8
|
32.4
|
1.
Comparative amounts for statutory results and exceptional items and
remeasurements from continuing operations have been re-presented to
reflect the classification of the FAA option as held for sale and
within discontinued operations.
Segmental income statement
The following tables set out the income statement on adjusted and
underlying bases.
Segmental analysis for continuing operations
|
|
Adjusted
|
|
Underlying
|
£ million
|
2023
|
2022
|
change %
|
|
2023
|
2022
|
change %
|
UK Electricity Transmission
|
839
|
499
|
68%
|
|
656
|
564
|
16%
|
UK Electricity Distribution
|
476
|
531
|
(10%)
|
|
563
|
579
|
(3%)
|
UK Electricity System Operator
|
443
|
147
|
201%
|
|
34
|
52
|
(35%)
|
New England
|
(32)
|
193
|
(117%)
|
|
218
|
316
|
(31%)
|
New York
|
(30)
|
(18)
|
67%
|
|
119
|
202
|
(41%)
|
National Grid Ventures
|
219
|
259
|
(15%)
|
|
219
|
259
|
(15%)
|
Other
|
(13)
|
145
|
(109%)
|
|
(13)
|
145
|
(109%)
|
Total operating profit
|
1,902
|
1,756
|
8%
|
|
1,796
|
2,117
|
(15%)
|
Net finance costs
|
(711)
|
(732)
|
(3%)
|
|
(711)
|
(732)
|
(3%)
|
Share of post-tax results of joint ventures and
associates
|
59
|
70
|
(16%)
|
|
59
|
70
|
(16%)
|
Profit before tax
|
1,250
|
1,094
|
14%
|
|
1,144
|
1,455
|
(21%)
|
Tax
|
(287)
|
(177)
|
62%
|
|
(268)
|
(273)
|
(2%)
|
Profit after tax
|
963
|
917
|
5%
|
|
876
|
1,182
|
(26%)
|
EPS (pence)
|
26.1
|
25.1
|
4%
|
|
23.8
|
32.4
|
(27%)
|
UK Electricity Transmission statutory operating
of £838 million was
up from £493 million in
the prior period and included exceptional charges
of £1 million as
part of our cost efficiency programme (2022: £6 million).
Adjusted operating profit of £839 million increased
by £340 million compared
to the prior period and included £248 million favourable
swings driven by the collection of prior
period balances and an in-year over-recovery due to changes to UK
capital allowances legislation. Underlying
operating profit was £656 million compared
to £564 million in
the prior period. This increase was driven by inflationary uplifts
partly offset by the net impact to allowed revenues from
taxes (higher UK corporation tax rate, more than offset by a
change to first-year UK capital allowances). Separately, prior
period revenues were adversely impacted by £69 million related
to the return of Western Link liquidated damages to
customers.
UK Electricity Distribution statutory operating profit
of £472 million was
down from £522 million in
the prior period and included exceptional charges
of £4 million for transaction
and integration costs (2022: £9 million).
Adjusted operating profit decreased by £55 million to £476 million (2022: £531 million)
and included £39 million adverse
timing swings mainly related to under-recovery of inflation
true-ups, recovery of pass-through costs and the return of prior
period balances. Underlying operating profit decreased
by £16 million to £563 million (2022: £579 million).
Underlying net revenues increased as a result of inflation and
higher allowances for the increase in the UK corporation tax rate,
but were offset by a decrease due to the impact of first-year UK
capital allowances and also adversely impacted by reduced
incentives opportunities in the new RIIO-ED2 framework. The
prior year also included a gain on disposal of a smart
metering business.
UK Electricity System Operator statutory operating profit
of £443 million was
up from £146 million in
the prior period and included exceptional charges
of £1 million in
the prior period as part of our cost efficiency programme. Adjusted
operating profit was £443 million compared
to £147 million in
the prior period. There has been a material impact on both
statutory and adjusted operating profit from an over-collection of
allowed revenues during the first six months of the year. This has
arisen from the BSUoS fixed price tariff substantially exceeding
the actual costs incurred during the period. This tariff is set
ahead of the current financial year, with the objective of NG ESO
to recover the estimated system balancing costs forecast to arise
in the current period. The £409 million in-year
over-collection will be returned by means of an adjustment to
tariffs in 2024/25. Underlying operating profit
was £34 million compared
to £52 million in
the prior period, principally as a result of lower incentives and
accelerated depreciation of intangible assets.
New England statutory operating loss
of £47 million was down from a statutory
operating profit of £720 million in the prior
period and included an exceptional charge of £6 million (2022:
£33 million) as part of our cost
efficiency programme, an exceptional charge of £3 million
(2022: £511 million gain) related to the disposal of NECO
(Rhode Island business sold in 2022/23) and commodity derivative
remeasurement losses of £6 million (2022:
£49 million gains). New
England incurred an adjusted operating loss
of £32 million, £225 million adverse
to the prior period (£217 million adverse on a
constant currency basis). This was principally driven by
a £131 million adverse timing swing related to
under-recoveries of net metering credits and energy efficiency
programme costs. In-year timing under-recoveries
were £250 million (2022: £123 million under-recoveries,
or £119 million under-recoveries at constant
currency). Underlying operating profit
was £218 million (2022: £316 million,
or £304 million at constant currency),
primarily as a result of the disposal of NECO which contributed
£53 million to underlying operating profit for the two months
owned in the prior period (£69 million contribution to
adjusted operating profit). Underlying operating profit benefitted
from increases in revenues from higher rates (through the
performance based regulation), increased returns in wholesale
networks and capital trackers and bad debt recoveries, but these
were more than offset by an adverse impact from higher storm costs,
increased depreciation, increased bad debt provisions and higher
costs from both workload and inflation.
New York statutory operating profit
of £8 million was up from a statutory operating
loss of £26 million in the prior period and
included exceptional charges of £9 million (2022: £24
million) as part of our cost
efficiency programme and commodity derivative remeasurement gains
of £47 million (2022: £16 million gains). Adjusted operating loss
of £30 million in the first six months
was £12 million adverse to the prior period.
This included a favourable £71 million timing
swing primarily from higher wholesale transmission auction sales,
partly offset by collection of downstate New York surcharges.
In-year timing under-recoveries
were £149 million (2022: £220 million under-recoveries,
or £212 million under-recoveries at constant
currency). Underlying operating profit
was £119 million, £83 million lower
than the prior period (£76 million lower at constant
currency). Underlying net revenues
were £46 million higher principally from
increases in rates and an increase in energy efficiency programme
funding partly offset by exchange rate movements. Controllable
costs were lower with inflationary impacts more than offset by
efficiency savings. Pension expense was higher as a result of a
£40 million gain from a Niagara Mohawk pension buy-out in
the prior period. Bad debts increased by £17 million,
with a benefit in the prior period related to the Bill Relief
Program. Other costs were higher related to property taxes,
environmental reserves and also energy efficiency programme costs
(funded in revenue).
National Grid Ventures' statutory operating profit
of £310 million was up
from £308 million in the prior period and
included exceptional IFA1 fire property damage net insurance
proceeds of £92 million (2022: £50
million) and exceptional charges of £1 million
(2022: £1 million) as part of our cost
efficiency programme. Adjusted
operating profit
of £219 million was £40 million lower
than the prior period, driven by IFA1 interconnector profits which
were lower (principally related to insurance recoveries in the
prior period) and fewer projects completed in NG Renewables this
year, partly offset by higher North Sea Link interconnector
revenues and a gain on disposal of a smart metering
business.
'Other' activities' statutory operating loss
of £39 million was down from a statutory
operating profit of £76 million in the prior
period and included exceptional charges of £23 million (2022:
£4 million credit) as part of our cost
efficiency programme, exceptional charges of £3
million (2022: £56
million) related to transaction and separation costs for disposal
of a 60% share of our UK Gas Transmission and Metering business in
2022/23 and an exceptional charge of £17 million in our
captive insurance business in the prior
period. The
adjusted operating loss
of £13 million (2022: £145 million profit)
was substantially lower than the prior period, which was the result
of the non-repeat of the higher level of profits in the prior year
in our Commercial Property business (£201 million related to
site sales in the prior year, following our exit from the
St William joint venture in 2021/22), partly offset by higher
captive insurance profits and favourable fair value movements in NG
Partners.
Financing costs and tax
Net finance costs
Statutory net finance costs
of £685 million were up
from £624 million in the prior period and
included derivative remeasurement gains
of £26 million (2022: £108 million).
Adjusted net finance costs for continuing operations
of £711 million (2022: £732 million)
were £21 million, or 3% lower than the
prior period (£10 million, or 1% lower
at constant currency). This was driven by lower inflation on
RPI/CPI-linked debt, lower bridge financing costs (in relation
to the acquisition of National Grid Electricity Distribution) and
higher capitalised interest, partly offset by new financing
requirements to fund our ongoing capital investment programme
and the impact of higher interest rates.
Joint ventures and associates
The Group's share of net profits from joint ventures and associates
on a statutory basis
was £71 million (2022: £51 million)
and included derivative fair value remeasurement gains
of £12 million (2022: £19 million losses).
On an adjusted basis, share of net profits from joint ventures
and associates
was £59 million (2022: £70 million)
with the decrease mainly driven by the sale of our interest in the
Millennium gas pipeline during 2022/23.
Tax
The statutory tax charge for continuing operations
was £307 million (2022: £447 million)
including the impact of tax on exceptional items and remeasurements
of £20 million charge (2022: £270
million charge). The adjusted tax charge for continuing
operations was £287
million (2022: £177 million), resulting in an
effective tax rate for continuing operations (excluding profits
from joint ventures and associates) of 24.1% (2022: 17.3%) and an
underlying effective tax rate for continuing operations (excluding
profits from joint ventures and associates) of 24.7% (2022: 19.7%).
The underlying effective tax rate is higher than in the prior
period primarily due to the increase in UK corporation tax rate to
25% from 1 April 2023 and the profit mix including the higher level
of Property disposals incurring a lower tax charge in the prior
period.
Net debt
Net debt is a measure derived from IFRS (comprising cash and cash
equivalents, current financial investments, borrowings and bank
overdrafts and financing derivatives) and is defined and reconciled
to these balances in note 11 to the financial
statements.
During the first six months of the year, net debt increased
to £43.9 billion, £2.9 billion higher than
at 31 March 2023. This was driven by cash generated from
operations (continuing operations) of £3.1
billion and dividends received on financial investments
of £0.1 billion, offset by £3.6 billion of
cash outflows for capital investment (net of disposals) and
movements in financial investment outside net debt, £0.2
billion of tax paid, £0.7
billion of interest outflows, £1.3
billion paid in dividends, £0.1
billion accretions on index-linked debt and exchange movements
on opening net debt of £0.2 billion.
During the period we raised
around £3.0 billion of new long-term senior
debt to refinance maturing debt and to fund a portion of our
significant capital programme. As at 30 September 2023, we have
£8.0 billion of committed facilities available for general
corporate purposes.
There are no significant updates relating to credit agency actions.
National Grid's balance sheet remains robust, and we remain
committed to a strong, overall investment grade credit
rating.
Interim dividend
The Board has approved an interim dividend of 19.40p per ordinary
share ($1.1899 per
American Depositary Share). This represents 35% of the total
dividend per share of 55.44p in respect of the last financial year
to 31 March 2023 and is in line with the Group's dividend
policy. The interim dividend is expected to be paid on
11 January 2024 to shareholders on the register as at 24
November 2023.
Since 2021/22, the Board's aim has been to grow the annual dividend
per share in line with UK CPIH, thus maintaining the dividend per
share in real terms. The Board will review this policy regularly,
taking into account a range of factors including expected business
performance and regulatory developments.
The scrip dividend alternative will again be offered in respect of
the 2023/24 interim dividend. As previously announced, we do not
expect to buy back the scrip shares issued during
2023/24.
GROWTH
A balanced portfolio to deliver asset and dividend
growth
National Grid seeks to create value for shareholders through
developing a balanced portfolio of businesses that offer an
attractive combination of asset growth and cash
returns.
£3.9 billion of capital investment for continuing operations
across the Group
We continued to make significant investment in energy
infrastructure in the first six months of the year. Capital
investment across the Group was £3,868 million, a
decrease of £15 million or 0.4% at actual exchange
rates (an increase of 2% at constant currency) compared
to the first half of 2022/23. Of this total, investment in our
regulated businesses reached a record £3,529 million, up 10%
on the prior period at constant currency (7% at actual
exchange rates).
Group capital investment (continuing operations)
|
|
|
|
|
|
|
|
Six
months ended 30 September
(£
million)
|
|
At actual exchange rates
|
|
At constant currency
|
|
2023
|
20221
|
% change
|
|
20221
|
% change
|
UK Electricity Transmission
|
|
800
|
629
|
27%
|
|
629
|
27%
|
UK Electricity Distribution
|
|
608
|
584
|
4%
|
|
584
|
4%
|
UK Electricity System Operator (ESO)
|
|
75
|
42
|
79%
|
|
42
|
79%
|
New England
|
|
789
|
801
|
(1%)
|
|
771
|
2%
|
New York
|
|
1,257
|
1,242
|
1%
|
|
1,195
|
5%
|
National Grid Ventures
|
|
326
|
539
|
(40%)
|
|
531
|
(39%)
|
Other
|
|
13
|
46
|
(72%)
|
|
46
|
(72%)
|
Total Group capital investment (continuing operations)
|
|
3,868
|
3,883
|
0%
|
|
3,798
|
2%
|
1.
Comparative amounts have been re-presented to reflect NGV as a
separate operating segment and the reclassification of our US LNG
operations from New England to NGV following an internal
reorganisation in the period.
UK Electricity Transmission
invested £800 million for the first six months
of the year, an increase of £171 million on the prior period,
primarily driven by the progression of Strategic Infrastructure
(SI) projects, as well as higher spend on refurbishment projects
and customer connections (for further information on SI projects,
please refer to page 23 of the Business Review). UK Electricity
Distribution invested £608 million, an increase of
£24 million on the prior period, principally driven by
higher spend in connections, asset replacement and non-operational
capex (including IT and vehicles).
Investment in New York was £1,257 million, an
increase of £15 million over the period at actual exchange
rates (an increase of £62 million at constant
currency). This was primarily driven by higher spend on our new
transmission projects to assist large scale renewable connections,
such as our Smart Path Connect project; higher electric network
control system spend; and higher mandated work on our gas
distribution networks. For New England, investment
reached £789 million, a decrease of £12 million
at actual exchange rates (an increase
of £18 million at constant currency). This was
principally driven by capital expenditure which occurred
in NECO last year, more than offset by increased electric
distribution expenditure through higher customer connection
requests and Grid Modernization. In addition, electric transmission
spend was higher compared to the prior period driven by asset
condition work across our New England Power (NEP)
assets.
Investment in NGV during the period
was £326 million, a decrease of £213 million at
actual exchange rates (£205 million at constant
currency) on the prior period. The decrease was primarily through
lower spend on the Sellindge (IFA1) converter station rebuild,
Grain LNG expansion work, and Viking Link as these projects
near completion.
BUSINESS REVIEW
UK ELECTRICITY TRANSMISSION
Operations and capital expenditure
UK Electricity Transmission has continued to deliver good levels of
performance and our capital investment programme has progressed as
expected.
Capital expenditure reached £800 million, up £171
million on the prior period. This increase was primarily driven by
the progression of Strategic Infrastructure (SI) projects (see
below for further information), and an increase in spend versus the
prior period on asset health work and customer
connections.
Progress continues on our London Power Tunnels 2 (LPT2) project
where we reached the completion of tunnelling in October in line
with our timetable. The £1 billion project is for the
construction of 32.5 kilometres of underground cable tunnels
connecting Wimbledon to New Cross, New Cross to Hurst, and Hurst to
Crayford by 2027. In August, we reached 1,000,000 hours worked
without a Lost Time Injury (LTI) on the project.
We continue to make good progress on our £1 billion
Hinkley-Seabank project where we are building a new
high voltage electricity connection between Bridgewater and
Seabank. We have completed the installation of all 116
T-pylons as part of the project (the first new pylon design in
nearly a century), and the 57-kilometre connection is on track for
completion by December 2025.
We have also continued progress on our Visual Impact Provision
(VIP) projects, where we are removing overhead transmission lines
in Areas of Outstanding Natural Beauty (AONB) and replacing them
with underground cables to reduce our visual impact on the natural
environment. During the half year, we energised new lines in Dorset
and the Peak District, with our Dorset project being shortlisted as
one of four final schemes in the upcoming National APM Awards for
the Engineering, Construction and Infrastructure Project of the
Year award.
Strategic Infrastructure (SI) projects
Strategic Infrastructure is a part of National Grid Electricity
Transmission (NGET) and is responsible for delivering the 17 ASTI
projects to connect more clean, low-carbon power to the
transmission network in England and Wales. SI ensures the
efficient and effective delivery of ASTI projects, which are
transferred to UK Electricity Transmission once they are complete
and ready to be accepted onto the wider network.
UK Electricity Transmission will then be responsible for the
ongoing operation and maintenance of the infrastructure when
in service[9].
We have made good progress on our ASTI projects, including:
signing JVs with Scottish Power for Eastern Green Link 1
in August, and with SSE for Eastern Green Link 2 in June; selecting
the preferred suppliers for converter stations and cables at
Eastern Green Links 1 and 2; completing the 'examination' stage of
our Development Consent Order (DCO) application for the Yorkshire
Green project; and launching the procurement process
for the 'Great Grid Upgrade Partnership', the contractual
model that will be used to deliver the majority of our onshore
projects.
The Great Grid Upgrade Partnership is the opportunity for supply
chain partners to help deliver the 'Great Grid Upgrade', the
largest overhaul of the grid in generations. SI is seeking supply
chain partners to deliver £4.5 billion of onshore network
construction under an 'enterprise' partnership approach. This
approach aims to deliver integrated planning and working between
projects, enabling the supply chain to combine capacity,
capability, knowledge and experience to accelerate delivery and
generate cost efficiencies. This, in turn, will deliver value for
money for consumers whilst working with local communities to leave
a positive legacy. The model has been designed on industry best
practice, with contracts expected to be awarded early in the new
year.
Customer Connections
Over the last five years, UK Electricity Transmission has connected
10 GW of new clean energy and interconnectors to the electricity
transmission network. In the first half of 2023/24 the business
connected 2,970 MW of generation and 314 MVA of demand
capacity, including the world's largest offshore wind farm Dogger
Bank and first Transmission connected solar farm. Of the 2,970 MW
of generation, 1,400 MW is the connection of the Viking Link
interconnector; 1,200 MW the first part of the Dogger Bank
connection; 70 MW for solar; and the remaining 300 MW a mix of
technologies including battery storage.
Regulatory progress
In our third year of RIIO-T2, we continue to make good progress in
delivering the agreed regulatory outputs despite challenging global
supply chain conditions. During the half year, we continued to
outperform on network reliability targets, achieving 99.9999%
during the period.
We have seen good regulatory progress in the UK across a number of
areas this year, including: Royal Assent for the Energy Act 2023;
Ofgem's publication of the FSNR decision document; publication of
the ENC's report and recommendations on reducing timelines for
delivering onshore and offshore transmission network
infrastructure; publication of proposed arrangements for the CSNP
and future transmission network planning. For further information
and background on each of these developments, please refer to pages
8 - 10 in the Strategic Overview section.
UK ELECTRICITY DISTRIBUTION
Operations and capital expenditure
UK Electricity Distribution continues to perform well in the first
year of RIIO-ED2. During the period, capital expenditure
reached £608 million, £24 million higher than
the prior period principally driven by higher spend in connections,
asset replacement and non-operational capex (including IT and
vehicles).
Our larger capital investment projects remain on track, including
the £65 million Hinkley Point connection to link the new
nuclear power station and UK Electricity Transmission's 400 kV
circuit between Bridgwater and Seabank (UK Electricity Distribution
is providing 'safe space' around these assets). The vast majority
of works are now complete, and UK Electricity Transmission has
taken on the responsibility for works at Seabank. The project is
expected to complete in 2024.
Over the last three years, we have been targeting specific 'green'
investment at parts of our network where we anticipate there will
be a high density of Low Carbon Technologies to support the
country's path to net zero. Investment in 17 projects will directly
benefit Motorway Service Areas (MSA) and equivalent trunk roads in
England and Wales by delivering over 100 MW of capacity, enough to
support around 700 150 kW Rapid EV Chargers. The seven projects
still to complete in this portfolio include a £7 million
investment at Tibshelf Services in Derbyshire to allow for network
reinforcement and expansion of EV chargers expected to complete
before the end of calendar year 2023.
Customer connections
During the period we connected 51 renewable customers to the
network, reaching a total of 323 MW. At domestic level, we also
connected 750 energy storage technologies; 7,700 EV chargers; 3,500
heat pumps; and 15,400 solar PV installations across the
period.
UK Electricity Distribution has taken further action on connections
reform. In September, we announced plans to release 10 GW of grid
capacity for the connection of renewable generation assets to our
network. For further background on the work we have been involved
in to reform the connections process, please refer to pages 9 - 10
of the Strategic Overview section.
Regulatory Progress
On 1 April, UK Electricity Distribution began the first year of new
price controls under RIIO-ED2, running for five years until 31
March 2028. As we announced at our UK Electricity Distribution
Investor Event in July, we are targeting outperformance of 100 to
125 bps across the price control period. This will largely be
achieved through incentives delivery and totex efficiency,
underpinned by synergies from the acquisition. To date, we
have delivered £18 million of our £100 million synergy
target that we announced in July 2023.
In August, the ENA named UK Electricity Distribution as the largest
flexibility provider of all UK DNOs, having procured 846 MW of
flexibility volume. This capacity mainly relates to Demand, EV and
solar contracts across a range of flexibility products, including
managing peak load demand on the network and pre-emptively reducing
network load when necessary, and supporting the network in the
event of specific faults such as during maintenance
work.
UK ELECTRICITY SYSTEM OPERATOR (ESO)
The ESO has performed well during the first half of the year.
Capital expenditure reached £75 million in the
first half, £33 million higher than prior period, driven
primarily by higher IT spend.
Progress on network connection reform
During the half year, we have continued to work with stakeholders
to improve and reform the connections process to the
transmission network. We have been working on two major aspects,
the shorter term Five Point Plan, and a longer full connection
reform process. The transmission connection queue now stands at
over 400 GW for Great Britain, which represents a significant over
subscription of what is required to connect to meet the scenarios
in the ESO Future Energy Scenario publication. For further
background on the work we have been involved in to reform the
connections process, please refer to pages 9 - 10 of the Strategic
Overview section.
Winter outlook
In September, the ESO published the electricity Winter Outlook for
the upcoming winter in Great Britain. Despite the ongoing conflicts
in Ukraine and the Middle East, the broad European energy market
has improved since last year. The market has bolstered European gas
storage and supplies, and the French nuclear fleet capacity is back
to pre-pandemic levels. The ESO has built on the experience of the
2022/23 winter and continued to build resilience and minimise the
potential impact of risks and uncertainties in the energy markets.
As such, the System Operator's Base Case scenario is that there
will be adequate margins (4.4 GW/7.4%) through the forthcoming
winter to ensure Great Britain remains within the reliability
standard.
For more information on the Winter Outlook, please refer to page 10
of the Strategic Overview section.
Progress on ESO separation
The Energy Act 2023, which received Royal Assent in October,
includes legislation to enable the separation of the ESO from
National Grid and the formation of an ISOP. The ISOP will have a
critical role in delivering strategic, whole system energy planning
and oversight as we continue to invest in and transform the UK's
energy infrastructure, and we expect the ISOP to be established as
a Public Corporation in 2024 with responsibilities across both the
electricity and gas systems.
NEW ENGLAND
Operations and capital expenditure
We achieved good operational performance across New England during
the half year.
Capital expenditure remains on track
with £789 million deployed during the half
year, (1%) lower at actual exchange rates (2% higher
at constant currency) than the prior period. This was principally
driven by capital expenditure which occurred in NECO last year,
more than offset by increased electric distribution expenditure
through higher customer connection requests and Grid Modernization.
In addition, electric transmission spend was higher compared to the
prior period driven by asset condition work across our New England
Power (NEP) assets.
Our LPP replacement programme also continues on track with 61 miles
of gas pipeline replaced between April 2023 and September
2023.
Storm activity
National Grid was pleased to receive two Edison Electric Institute
Awards in June for outstanding storm response for the two most
severe winter storms in New England last year (on 23 December 2022,
and 13 March 2023).
During the first half of this year, our Emergency Response
Organization was activated on six occasions in response to storms,
including Hurricane Lee, a large system that impacted parts of New
England and Canada. As a comparison, during the same period in
2022/23 the Emergency Response Organization was activated on four
occasions. Emergency Response performance was strong with outages
restored for five events in less than 24 hours, and reconnections
following the 8 September storm (which affected over 125,000
customers) were completed in less than 72 hours.
Regulatory progress
On 1 September, we filed our Electric Sector Modernization Plan
(ESMP) in Massachusetts. The plan outlines the investment required
in our electric distribution network over the next five years and
beyond to help the state meet its clean energy goals under the
2050 Clean Energy and Climate Plan (CECP). Under the plan, we have
proposed to invest up to $2 billion over the next five years. For
further background on the ESMP filing, please refer to page 11 of
the Strategic Overview section.
The proposed investment under the ESMP is not currently part of any
rate order for our service territory. We remain on track to file
for new rates for our Massachusetts Electric business in
mid-November 2023, and we will propose a mechanism for recovery of
the ESMP investment as part of that filing.
In October, the Twin States Clean Energy Link was selected by the
US Department of Energy (DOE) as one of three projects in the US to
enter capacity contract negotiations through the DOE's Transmission
Facilitation Program. Twin States is a bidirectional transmission
project being proposed by National Grid and Citizens
Energy Corporation. If built, the line will deliver 1,200 MW
of hydro-sourced generation from Canada to New England when it is
needed. For further background on the project, please refer to page
11 of the Strategic Overview section.
Finally, in October, we were awarded $50 million through the
Federal Infrastructure Investment and Jobs Act for our 'Future
Grid' proposal which will deploy digital technologies in our New
York and Massachusetts electric distribution networks to improve
system reliability and resilience.
Customers and communities
During the half year we have continued to build upon our customer
and community outreach programme across our Massachusetts service
territory. In June, we launched our four Clean Energy Academy
summer pilots, building on the successful launch of our spring
pilots in March 2023. This Strategic Workforce Development
Initiative is designed to educate and inspire interest in STEM,
energy and utility industries. The academies have provided
participants from historically marginalised and underrepresented
groups with career experience, development and employment
opportunities. Our Clean Energy Career Academy offered over 70
college engineering students the opportunity to learn more about
clean energy, be mentored, visit our facilities and network with
National Grid engineers and executives. In addition, our Clean
Energy STEM and Tech Academies offered 270 middle and high school
students aged 14 to 18 career exploration pathways in the energy
industry. Our Energy Infrastructure Academy, for work-ready-adults,
has already resulted in 22 individuals securing a job with National
Grid and its vendor partners.
In September we held our 'Week of Service' across Massachusetts,
which involved 250 National Grid employees volunteering in support
of community organisations across the state. Events included
promoting environmental protection through beach clean-ups in
Dorchester; supporting veterans and their families in Worcester;
preparing meals for home-bound people in Jamaica Plain; and packing
critical winter clothing items for children throughout
Massachusetts who need them most in wintertime. The Week of Service
was part of National Grid's 'Grid for Good' programme, a
company-wide initiative that supports communities we serve through
volunteering, charitable contributions to organisations focused on
workforce development and STEM education, and environmental
sustainability. This year, the Company has a goal to engage
colleagues in more than 14,500 hours of service across
Massachusetts.
The Massachusetts Advanced Meter Infrastructure (AMI) programme
successfully kicked off in September 2023 with stakeholder
engagement across business teams. Our improved self-service and
digital channels continue to improve customer experience and have
reduced the number of calls by over 2 million. Customers using
digital channels to report and monitor electric outage
communications reached a new storm high of 97%.
NEW YORK
Operations and capital expenditure
Our New York business delivered good operational performance during
the half year.
Capital expenditure
reached £1,257 million during the half year, an
increase of £15 million at actual exchange rates (£62
million at constant currency) compared to the prior
period. This was primarily driven by higher spend on our new
transmission projects to assist large scale renewable connections,
such as our Smart Path Connect project; higher electric
network control system spend; higher mandated work on our gas
distribution networks; partly offset by higher 'right of use'
lease additions in the prior period. Excluding these lease
additions in the prior year, capital expenditure increased by
£153 million at actual exchange rates (£193 million at
constant currency).
Of our large-scale electric transmission projects:
■ Smart Path Connect remains on track for
energisation in December 2025. The $550 million project
includes the rebuild and upgrade of approximately 55 miles of our
Adirondack-Porter 230 kV transmission circuits to 345 kV in
Northern New York.
■ Construction
has begun on the first stage of our substation upgrade as part of
the $800 million CLCPA Phase 1 funding for transmission upgrades.
This also includes projects such as Inghams-Rotterdam and
Churchtown-Pleasant Valley circuit rebuilds (129 miles) to support
330 MW of incremental headroom capacity for renewable
generation.
■ Engineering contracts were awarded in October for
transmission projects as part of the $2.1 billion CLCPA Phase 2
funding for transmission networks and modernising the electric
network.
Our LPP replacement programme continued on track with
148 miles of pipeline replaced between the start of April and
the end of September. During the half year, we also officially
began operations at our Newtown Creek renewable gas recovery system
that recovers biogas from the Newtown Creek Wastewater Treatment
Plant in Brooklyn.
Storm activity
During the half year, New York State has prepared 32 times for
storms and severe weather, including five major storm events. To
date, the storm season has delivered an equal to slightly increased
amount of activity compared to previous years. However, New York
has not seen a storm with significant intensity in the current
financial year. Where our service territories have been affected by
storm activity, we have restored electricity to 95% of disconnected
customers within 9 to 12 hours.
Regulatory progress
On 1 September, PSC Staff responded to our rate filing that we made
for our downstate gas business, KEDNY-KEDLI, in April.
National Grid responded to the PSC Staff position on
22 September, and we plan to move forward in settlement
negotiations, aiming to reach a Joint Proposal with stakeholders in
the first quarter of calendar year 2024. For further information on
our KEDNY-KEDLI filing, and the PSC Staff response, please refer to
page 11 of the Strategic Overview section.
We remain on track to file for new rates at our Niagara Mohawk
(NIMO) electric and gas business (upstate New York) in summer
2024.
Finally, in October 2023 we were awarded $50 million through the
Federal Infrastructure Investment and Jobs Act for our 'Future
Grid' proposal which will deploy digital technologies in our New
York and Massachusetts electric distribution networks to improve
system reliability and resilience.
Customers and communities
Our ongoing commitment to customers and communities has continued
during the half year. To celebrate the third year of our Project C
initiative, we expanded the Company's annual day of service to a
week of service. This included more than 2,000 company employee
volunteers engaging in 200 events taking place in communities
across New York. This year's theme, 'Live together. Grow
together.', highlights the importance of creating meaningful change
in the communities we serve. As part of the week of service our
employees also pledged to complete Acts of Kindness, including
collecting and donating books, food and clothing to a local
charity, and donating blood to a blood bank. Across the whole
Project C initiative, New York employees also contributed over
15,000 hours of volunteering in local communities during the half
year.
NATIONAL GRID VENTURES (NGV)
Capital investment, including joint ventures,
reached £326 million in the half year, a
decrease of £213 million at actual exchange
rates (£205 million at constant currency) on the
prior period. The decrease was primarily through lower spend on the
Sellindge (IFA1) converter station rebuild, Grain LNG expansion
work and Viking Link as these projects near
completion.
Interconnectors
North Sea Link (NSL) delivered strong reliability and operated at
over 99% availability during the first half of the year. IFA1
operated at 80% availability during the half year following outages
relating to the newly commissioned bipole which was reinstated
following the Sellindge converter station rebuild.
In July, the final length of cable was laid on the Viking Link and
was successfully tested in August, marking the end of the cable
installation process. We remain on track to commission the world's
longest interconnector, stretching 760 kilometres, by the end of
calendar year 2023.
On our other interconnectors, IFA2 (France) operated at 97%
availability during the half year; Nemo Link (Belgium) at 97%
availability; and BritNed (Netherlands) at 96%. BritNed has
historically been one of the best performing interconnectors in the
world in terms of safety with over 4,500 days without a Lost Time
Injury (LTI).
Offshore Hybrid Asset (OHA) projects
In 2022, Ofgem opened an OHA pilot seeking to work with selected
developer(s) on establishing an investible OHA regime. OHAs are the
next phase of interconnection, not only linking two countries but
also connecting with offshore wind generation. The two projects in
the Ofgem OHA pilot are Lion Link and Nautilus, both NGV projects,
which provides us an opportunity to shape the OHA regime and
prepare it for further investment.
Ofgem further consulted on the regulatory regime for OHAs in June
and NGV responded to the consultation. Ofgem has also been
assessing Lion Link and Nautilus, and the regulator also expects to
consult in December 2023 on their Initial Project Assessment (IPA).
A final decision on regulatory parameters and IPA is expected in
March 2024.
Grain LNG
Grain LNG continues to perform well and in line with expectations.
This half year we launched the 'Cap29' auction process for expiring
capacity at Grain from 2029. The auction is expected to complete in
December.
The expansion programme to deliver additional LNG storage on site
(Capacity 25) continues, with the delivery of major structural
elements of the project expected by the end of calendar year 2023.
When complete, the expansion will increase total site storage
to 1,200,000 cubic metres and total regasification capacity to
800 GWh/day, equivalent to one-third of UK gas demand. The
project remains on track to be ready for commercial operations in
summer 2025.
Providence LNG
In May, we commissioned an LNG facility at Fields Point
(Providence), Rhode Island, at a previously existing LNG storage
site. The facility has existing natural gas supply infrastructure
that can be used for liquefaction, requiring no new gas pipelines.
It serves three commercial customers for storage and vaporisation
services: Boston Gas and Rhode Island Energy
on long-term contracts, and Con Edison on a rolling
short-term contract. For liquefaction services, the asset has two
customers: Boston Gas and Rhode Island Energy.
Long Island (LI) Generation
In the half year, Long Island Generation produced 2,694 GWh of
energy and remains above target in terms of its availability.
Emissions for the first half of 2023/24 are 8% lower than the first
half of 2022/23 and remain on track to deliver the 2023/24
target.
US Renewables
On 24 October, the New York State Energy Research and Development
Authority (NYSERDA) announced three successful projects that will
receive Offshore Renewable Energy Certificates (ORECs) as part of
New York's third large-scale offshore wind solicitation. COSW, our
JV with RWE, was selected as one of the successful projects with a
provisional offtake award of 1.3 GW. For further background on the
NYSERDA announcement, please refer to page 12 in the Strategic
Overview section.
In August 2023, COSW also submitted an offtake bid for up to 1.3 GW
in response to the New Jersey Board of Public Utilities (BPU)
solicitation and we await selection decisions in the first or
second quarter of calendar year 2024.
In October, we announced the start of operations at our 274 MW
Yellowbud solar project in Ohio. The project, located in the
Pennsylvania-Jersey-Maryland (PJM) market, has a Power Purchase
Agreement (PPA) for its offtake with Amazon. This takes the total
operating capacity of National Grid Renewables to 1,308 MW with a
further 801 MW currently under construction.
NGV Transmission Projects
National Grid Ventures has had a successful first half of the year
through New York Transco, a partnership of New York's major
utilities, including NGV.
In June 2023, New York Transco's Propel NY Energy transmission
project was selected by the New York Independent System Operator
(NYISO) to deliver increased transmission capacity between the
mainland and Long Island. The project is in partnership with the
New York Power Authority. This follows the bid New York Transco
submitted in October 2021 as part of the NYISO's Long Island
Offshore Wind Export Public Policy Transmission Need solicitation.
Total investment for the project is $2.8 billion, of which NGV's
share is around $340 million.
Also in June 2023, our New York Energy Solution transmission line
upgrade project was fully energised. This project was selected by
the NYISO to provide transmission upgrades to New York's power
system, while enhancing reliability and facilitating
upstate clean energy resources to downstate demand centres.
Total investment for the project is $670 million, of which NGV's
share is around $100 million.
OTHER ACTIVITIES
Capital investment in Other activities
was £13 million during the half
year, £33 million lower than the prior period,
principally driven by fewer National Grid Partners (NGP)
investments in the first half.
APPENDIX
Unless otherwise stated, all financial commentaries in this results
statement are given on an underlying basis at actual exchange rates
for continuing operations. Underlying represents statutory results
excluding exceptional items, remeasurements, timing and major storm
costs. The underlying basis is further defined on page
63.
Alternative Performance Measures derived from IFRS
The following are terms or metrics that are reconciled to IFRS
measures and are defined on pages 63 to 67:
Net revenue
Adjusted profit measures
Underlying results
Constant currency
Timing impacts
Capital investment; including Capital investment (regulated
networks)
Net debt - defined in note 11 on page 55.
PROVISIONAL 2023/24 FINANCIAL TIMETABLE
Date
|
Event
|
9
November 2023
|
2023/24 half-year
results
|
22
November 2023
|
ADRs go
ex-dividend for 2023/24 interim dividend
|
23
November 2023
|
Ordinary
shares go ex-dividend for 2023/24 interim dividend
|
24
November 2023
|
Record
date for 2023/24 interim dividend
|
30
November 2023
|
Scrip
reference price announced for 2023/24 interim dividend
|
11
December 2023 (5pm
London time)
|
Scrip
election date for 2023/24 interim dividend
|
11 January 2024
|
2023/24 interim
dividend paid to qualifying shareholders
|
23
May 2024
|
2023/24 Preliminary
Results
|
6
June 2024
|
Ordinary
shares and ADRs go ex-dividend for 2023/24 final dividend
|
7
June 2024
|
Record
date for 2023/24 final dividend
|
13
June 2024
|
Scrip
reference price announced for 2023/24 final dividend
|
24
June 2024 (5pm London
time)
|
Scrip
election date for 2023/24 final dividend
|
10
July 2024
|
2024 AGM
|
19
July 2024
|
2023/24 final
dividend paid to qualifying shareholders
|
7
November 2024
|
2024/25 half-year results
|
CAUTIONARY STATEMENT
This announcement contains certain statements that are neither
reported financial results nor other historical information. These
statements are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
statements include information with respect to National Grid's (the
Company) financial condition, its results of operations and
businesses, strategy, plans and objectives. Words such as 'aims',
'anticipates', 'expects', 'should', 'intends', 'plans', 'believes',
'outlook', 'seeks', 'estimates', 'targets', 'may', 'will',
'continue', 'project' and similar expressions, as well as
statements in the future tense, identify forward-looking
statements. This document also references climate-related targets
and climate-related risks which differ from conventional financial
risks in that they are complex, novel and tend to involve
projection over long-term scenarios which are subject to
significant uncertainty and change. These forward-looking
statements are not guarantees of National Grid's future performance
and are subject to assumptions, risks and uncertainties that could
cause actual future results to differ materially from those
expressed in or implied by such forward-looking statements or
targets. Many of these assumptions, risks and uncertainties relate
to factors that are beyond National Grid's ability to control,
predict or estimate precisely, such as changes in laws or
regulations, including announcements from and decisions by
governmental bodies or regulators, including those relating to the
RIIO-T2 and RIIO-ED2 price controls and proposals for the future of
the electricity system operator in the United Kingdom; the timing
of construction and delivery by third parties of new generation
projects requiring connection; breaches of, or changes in,
environmental, climate change and health and safety laws or
regulations, including breaches or other incidents arising from the
potentially harmful nature of its activities; network failure or
interruption (including any that result in safety and/or
environmental events), the inability to carry out critical non
network operations and damage to infrastructure, due to adverse
weather conditions including the impact of major storms as well as
the results of climate change, due to counterparties being unable
to deliver physical commodities, or due to the failure of or
unauthorised access to or deliberate breaches of National Grid's IT
systems and supporting technology; failure to adequately forecast
and respond to disruptions in energy supply; performance against
regulatory targets and standards and against National Grid's peers
with the aim of delivering stakeholder expectations regarding costs
and efficiency savings, as well as against targets and standards
designed to deliver net zero; and customers and counterparties
(including financial institutions) failing to perform their
obligations to the Company. Other factors that could cause actual
results to differ materially from those described in this
announcement include fluctuations in exchange rates, interest rates
and commodity price indices; restrictions and conditions (including
filing requirements) in National Grid's borrowing and debt
arrangements, funding costs and access to financing; regulatory
requirements for the Company to maintain financial resources in
certain parts of its business and restrictions on some
subsidiaries' transactions such as paying dividends, lending or
levying charges; the delayed timing of recoveries and payments in
National Grid's regulated businesses, and whether aspects of its
activities are contestable; the funding requirements and
performance of National Grid's pension schemes and other
post-retirement benefit schemes; the failure to attract, develop
and retain employees with the necessary competencies, including
leadership and business capabilities, and any significant disputes
arising with National Grid's employees or the breach of laws or
regulations by its employees; the failure to respond to market
developments, including competition for onshore transmission; the
threats and opportunities presented by emerging technology; the
failure by the Company to respond to, or meet its own commitments
as a leader in relation to, climate change development activities
relating to energy transition, including the integration of
distributed energy resources; and the need to grow the Company's
business to deliver its strategy, as well as incorrect or
unforeseen assumptions or conclusions (including unanticipated
costs and liabilities) relating to business development activity,
including the integration of its UK Electricity Distribution
business, the sale of its UK Gas Transmission business, and the
separation and transfer of the ESO to the public sector. For
further details regarding these and other assumptions, risks and
uncertainties that may impact National Grid, please read the
Strategic Report section and the 'Risk factors' on pages 225 to 228
of National Grid's most recent Annual Report and Accounts, as
updated by the principal risks and uncertainties statement on page
60 of this announcement. In addition, new factors emerge from time
to time and National Grid cannot assess the potential impact of any
such factor on its activities or the extent to which any factor, or
combination of factors, may cause actual future results to differ
materially from those contained in any forward-looking statement.
Except as may be required by law or regulation, the Company
undertakes no obligation to update any of its forward-looking
statements, which speak only as of the date of this
announcement.
UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
Consolidated income statement
|
|
|
|
|
|
for the six months ended 30 September
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
Notes
|
|
Before
exceptional
items and remeasurements
£m
|
Exceptional
items and remeasurements
£m
|
Total
£m
|
Continuing operations
|
|
|
|
|
|
Revenue
|
2(a),3
|
|
8,489
|
-
|
8,489
|
Provision for bad and doubtful debts
|
|
|
(91)
|
-
|
(91)
|
Other operating costs
|
4
|
|
(6,508)
|
83
|
(6,425)
|
Other operating income
|
|
|
12
|
-
|
12
|
Operating profit
|
2(b),4
|
|
1,902
|
83
|
1,985
|
Finance income
|
4,5
|
|
123
|
(8)
|
115
|
Finance costs
|
4,5
|
|
(834)
|
34
|
(800)
|
Share of post-tax results of joint ventures and
associates
|
2(b),4
|
|
59
|
12
|
71
|
Profit before tax
|
2(b),4
|
|
1,250
|
121
|
1,371
|
Tax
|
4,7
|
|
(287)
|
(20)
|
(307)
|
Profit after tax from continuing operations
|
4
|
|
963
|
101
|
1,064
|
Profit after tax from discontinued operations
|
6
|
|
7
|
58
|
65
|
Total profit for the period (continuing and
discontinued)
|
|
|
970
|
159
|
1,129
|
Attributable to:
|
|
|
|
|
|
Equity shareholders of the parent
|
|
|
969
|
159
|
1,128
|
Non-controlling interests
|
|
|
1
|
-
|
1
|
Earnings per share (pence)
|
|
|
|
|
|
Basic earnings per share (continuing)
|
8
|
|
|
|
28.8
|
Diluted earnings per share (continuing)
|
8
|
|
|
|
28.7
|
Basic earnings per share (continuing and discontinued)
|
8
|
|
|
|
30.6
|
Diluted earnings per share (continuing and
discontinued)
|
8
|
|
|
|
30.5
|
|
|
|
|
|
|
20221
|
Notes
|
|
Before
exceptional
items
and remeasurements
£m
|
Exceptional
items
and remeasurements
£m
|
Total
£m
|
Continuing operations
|
|
|
|
|
|
Revenue
|
2(a),3
|
|
9,444
|
-
|
9,444
|
Provision for bad and doubtful debts
|
|
|
(52)
|
-
|
(52)
|
Other operating costs
|
4
|
|
(7,636)
|
(61)
|
(7,697)
|
Other operating income
|
4
|
|
-
|
544
|
544
|
Operating profit
|
2(b),4
|
|
1,756
|
483
|
2,239
|
Finance income
|
4,5
|
|
69
|
(32)
|
37
|
Finance costs
|
4,5
|
|
(801)
|
140
|
(661)
|
Share of post-tax results of joint ventures and
associates
|
2(b),4
|
|
70
|
(19)
|
51
|
Profit before tax
|
2(b),4
|
|
1,094
|
572
|
1,666
|
Tax
|
4,7
|
|
(177)
|
(270)
|
(447)
|
Profit after tax from continuing operations
|
4
|
|
917
|
302
|
1,219
|
Profit after tax from discontinued operations
|
6
|
|
121
|
(84)
|
37
|
Total profit for the period (continuing and
discontinued)
|
|
|
1,038
|
218
|
1,256
|
Attributable to:
|
|
|
|
|
|
Equity shareholders of the parent
|
|
|
1,038
|
218
|
1,256
|
Non-controlling interests
|
|
|
-
|
-
|
-
|
Earnings per share (pence)
|
|
|
|
|
|
Basic earnings per share (continuing)
|
8
|
|
|
|
33.4
|
Diluted earnings per share (continuing)
|
8
|
|
|
|
33.2
|
Basic earnings per share (continuing and discontinued)
|
8
|
|
|
|
34.4
|
Diluted earnings per share (continuing and
discontinued)
|
8
|
|
|
|
34.2
|
1. Comparative
amounts have been re-presented to reflect the classification of the
Further Acquisition Agreement (the FAA option) as held for sale and
within discontinued operations.
.
Consolidated statement of comprehensive income
|
|
|
|
|
for the six months ended 30 September
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
2022¹
|
|
Notes
|
|
£m
|
£m
|
Profit after tax from continuing operations
|
|
|
1,064
|
1,219
|
Profit after tax from discontinued operations
|
|
|
65
|
37
|
Other comprehensive income from continuing operations
|
|
|
|
|
Items from continuing operations that will never be reclassified to
profit or loss:
|
|
|
|
|
Remeasurement
losses on pension assets and post-retirement benefit
obligations
|
12
|
|
(263)
|
(631)
|
Net
(losses)/gains in respect of cash flow hedging of capital
expenditure
|
|
|
(2)
|
14
|
Tax
on items that will never be reclassified to profit or
loss
|
|
|
64
|
159
|
Total items from continuing operations that will never be
reclassified to profit or loss
|
|
|
(201)
|
(458)
|
Items from continuing operations that may be reclassified
subsequently to profit or loss:
|
|
|
|
|
Retranslation
of net assets offset by net investment hedge
|
|
|
118
|
2,360
|
Exchange
differences reclassified to the consolidated income statement on
disposal
|
|
|
-
|
(145)
|
Net
gains in respect of cash flow hedges
|
|
|
201
|
450
|
Net
gains/(losses) in respect of cost of hedging
|
|
|
40
|
(64)
|
Net
losses on investments in debt instruments measured at fair value
through other
comprehensive
income
|
|
|
(16)
|
(47)
|
Share
of other comprehensive income of associates, net of
tax
|
|
|
-
|
1
|
Tax
on items that may be reclassified subsequently to profit or
loss
|
|
|
(59)
|
(86)
|
Total items from continuing operations that may be reclassified
subsequently
to profit or loss
|
|
|
284
|
2,469
|
Other comprehensive income for the period, net of tax, from
continuing operations
|
|
|
83
|
2,011
|
Other comprehensive loss for the period, net of tax, from
discontinued operations
|
6
|
|
(9)
|
(86)
|
Other comprehensive income for the period, net of tax
|
|
|
74
|
1,925
|
Total comprehensive income for the period from continuing
operations
|
|
|
1,147
|
3,230
|
Total comprehensive income/(loss) for the period from discontinued
operations
|
6
|
|
56
|
(49)
|
Total comprehensive income for the period
|
|
|
1,203
|
3,181
|
Attributable to:
|
|
|
|
Equity shareholders of the parent
|
|
|
|
From
continuing operations
|
|
1,146
|
3,227
|
From
discontinued operations
|
|
56
|
(49)
|
|
|
1,202
|
3,178
|
|
|
|
|
Non-controlling interests
|
|
1
|
3
|
1. Comparative
amounts have been re-presented to reflect the classification of the
FAA option within the UK Gas Transmission business disposal
group.
Consolidated statement of changes in equity
|
for the six months ended 30 September
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Share premium account
|
Retained earnings
|
Other equity reserves
|
Total
share-holders' equity
|
Non-controlling interests
|
Total
equity
|
|
Notes
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 April 2023
|
|
488
|
1,302
|
31,608
|
(3,860)
|
29,538
|
24
|
29,562
|
Profit for the period
|
|
-
|
-
|
1,128
|
-
|
1,128
|
1
|
1,129
|
Other comprehensive (loss)/income for the period
|
|
-
|
-
|
(199)
|
273
|
74
|
-
|
74
|
Total comprehensive income for the period
|
|
-
|
-
|
929
|
273
|
1,202
|
1
|
1,203
|
Equity dividends
|
9
|
-
|
-
|
(1,325)
|
-
|
(1,325)
|
-
|
(1,325)
|
Scrip dividend-related share issue
|
|
1
|
(1)
|
-
|
-
|
-
|
-
|
-
|
Issue of treasury shares
|
|
-
|
-
|
20
|
-
|
20
|
-
|
20
|
Transactions in own shares
|
|
-
|
-
|
(1)
|
-
|
(1)
|
-
|
(1)
|
Share-based payments
|
|
-
|
-
|
19
|
-
|
19
|
-
|
19
|
Cash flow hedges transferred to the statement
of financial position, net of tax
|
|
-
|
-
|
-
|
2
|
2
|
-
|
2
|
At 30 September 2023
|
|
489
|
1,301
|
31,250
|
(3,585)
|
29,455
|
25
|
29,480
|
At 1 April 2022
|
|
485
|
1,300
|
26,611
|
(4,563)
|
23,833
|
23
|
23,856
|
Profit for the period
|
|
-
|
-
|
1,256
|
-
|
1,256
|
-
|
1,256
|
Other comprehensive (loss)/income for the period
|
|
-
|
-
|
(564)
|
2,486
|
1,922
|
3
|
1,925
|
Total comprehensive income for the period
|
|
-
|
-
|
692
|
2,486
|
3,178
|
3
|
3,181
|
Equity dividends
|
9
|
-
|
-
|
(1,119)
|
-
|
(1,119)
|
-
|
(1,119)
|
Scrip dividend-related share issue
|
|
1
|
(1)
|
-
|
-
|
-
|
-
|
-
|
Issue of treasury shares
|
|
-
|
-
|
14
|
-
|
14
|
-
|
14
|
Transactions in own shares
|
|
-
|
5
|
(3)
|
-
|
2
|
-
|
2
|
Share-based payments
|
|
-
|
-
|
20
|
-
|
20
|
-
|
20
|
Cash flow hedges transferred to the statement
of financial position, net of tax
|
|
-
|
-
|
-
|
3
|
3
|
-
|
3
|
At 30 September 2022
|
|
486
|
1,304
|
26,215
|
(2,074)
|
25,931
|
26
|
25,957
|
Consolidated statement of financial position
|
|
|
|
|
|
|
|
|
|
|
|
|
30 September 2023
|
31 March 2023
|
|
Notes
|
|
£m
|
£m
|
Non-current assets
|
|
|
|
|
Goodwill
|
|
|
9,905
|
9,847
|
Other intangible assets
|
2(c)
|
|
3,717
|
3,604
|
Property, plant and equipment
|
2(c)
|
|
67,396
|
64,433
|
Other non-current assets
|
|
|
570
|
567
|
Pension assets
|
12
|
|
2,352
|
2,645
|
Financial and other investments
|
|
|
871
|
859
|
Investments in joint ventures and associates
|
|
|
1,414
|
1,300
|
Derivative financial assets
|
10
|
|
325
|
276
|
Total non-current assets
|
|
|
86,550
|
83,531
|
Current assets
|
|
|
|
|
Inventories and current intangible assets
|
|
|
931
|
876
|
Trade and other receivables
|
|
|
3,340
|
3,883
|
Current tax assets
|
|
|
18
|
43
|
Financial and other investments
|
11
|
|
1,680
|
2,605
|
Derivative financial assets
|
10
|
|
60
|
153
|
Cash and cash equivalents
|
11
|
|
227
|
163
|
Assets held for sale
|
6
|
|
1,441
|
1,443
|
Total current assets
|
|
|
7,697
|
9,166
|
Total assets
|
|
|
94,247
|
92,697
|
Current liabilities
|
|
|
|
|
Borrowings
|
11
|
|
(2,691)
|
(2,955)
|
Derivative financial liabilities
|
10
|
|
(321)
|
(222)
|
Trade and other payables
|
|
|
(4,465)
|
(5,068)
|
Contract liabilities
|
|
|
(159)
|
(252)
|
Current tax liabilities
|
|
|
(231)
|
(236)
|
Provisions
|
|
|
(361)
|
(288)
|
Liabilities held for sale
|
6
|
|
(51)
|
(109)
|
Total current liabilities
|
|
|
(8,279)
|
(9,130)
|
Non-current liabilities
|
|
|
|
|
Borrowings
|
11
|
|
(42,106)
|
(40,030)
|
Derivative financial liabilities
|
10
|
|
(1,116)
|
(1,071)
|
Other non-current liabilities
|
|
|
(1,004)
|
(921)
|
Contract liabilities
|
|
|
(1,904)
|
(1,754)
|
Deferred tax liabilities
|
|
|
(7,318)
|
(7,181)
|
Pensions and other post-retirement benefit obligations
|
12
|
|
(615)
|
(694)
|
Provisions
|
|
|
(2,425)
|
(2,354)
|
Total non-current liabilities
|
|
|
(56,488)
|
(54,005)
|
Total liabilities
|
|
|
(64,767)
|
(63,135)
|
Net assets
|
|
|
29,480
|
29,562
|
Equity
|
|
|
|
|
Share capital
|
|
|
489
|
488
|
Share premium account
|
|
|
1,301
|
1,302
|
Retained earnings
|
|
|
31,250
|
31,608
|
Other equity reserves
|
|
|
(3,585)
|
(3,860)
|
Total shareholders' equity
|
|
|
29,455
|
29,538
|
Non-controlling interests
|
|
|
25
|
24
|
Total equity
|
|
|
29,480
|
29,562
|
Consolidated cash flow statement
|
|
|
|
|
for the six months ended 30 September
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
Notes
|
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
|
|
Operating profit from continuing operations
|
2(b)
|
|
1,985
|
2,239
|
Adjustments for:
|
|
|
|
|
Exceptional
items and remeasurements
|
4
|
|
(83)
|
(483)
|
Other
fair value movements
|
|
|
(19)
|
31
|
Depreciation,
amortisation and impairment
|
2(c)
|
|
1,021
|
932
|
Share-based
payments
|
|
|
19
|
20
|
Changes
in working capital
|
|
|
119
|
(306)
|
Changes
in provisions
|
|
|
39
|
82
|
Changes
in pensions and other post-retirement benefit
obligations
|
|
|
27
|
(54)
|
Cash flows relating to exceptional items
|
|
|
(46)
|
(101)
|
Cash generated from operations - continuing operations
|
|
|
3,062
|
2,360
|
Tax paid
|
|
|
(201)
|
(88)
|
Net cash flow from operating activities - continuing
operations
|
|
|
2,861
|
2,272
|
Net cash flow from operating activities - discontinued
operations
|
|
|
-
|
256
|
Cash flows from investing activities
|
|
|
|
|
Purchases of intangible assets
|
|
|
(269)
|
(224)
|
Purchases of property, plant and equipment
|
|
|
(3,210)
|
(3,258)
|
Disposals of property, plant and equipment
|
|
|
18
|
63
|
Investments in joint ventures and associates
|
|
|
(151)
|
(376)
|
Dividends received from joint ventures and associates
|
|
|
121
|
107
|
Disposal of interest in The Narragansett Electric
Company¹
|
|
|
-
|
2,968
|
Disposal of financial and other investments
|
|
|
65
|
70
|
Acquisition of financial investments
|
|
|
(32)
|
(62)
|
Contributions to National Grid Renewables
and Emerald Energy Venture LLC
|
|
|
(5)
|
(8)
|
Net movements in short-term financial investments
|
|
|
885
|
599
|
Interest received
|
|
|
69
|
20
|
Cash inflows on derivatives
|
|
|
103
|
-
|
Cash outflows on derivatives
|
|
|
(4)
|
(377)
|
Cash flows relating to exceptional items
|
4
|
|
-
|
33
|
Net cash flow used in investing activities - continuing
operations
|
|
|
(2,410)
|
(445)
|
Net cash flow used in investing activities - discontinued
operations
|
|
|
-
|
(181)
|
Cash flows from financing activities
|
|
|
|
|
Proceeds from issue of treasury shares
|
|
|
20
|
14
|
Transactions in own shares
|
|
|
(1)
|
2
|
Proceeds received from loans
|
|
|
3,033
|
9,047
|
Repayments of loans
|
|
|
(839)
|
(9,049)
|
Payments of lease liabilities
|
|
|
(61)
|
(78)
|
Net movements in short-term borrowings
|
|
|
(444)
|
380
|
Cash inflows on derivatives
|
|
|
68
|
201
|
Cash outflows on derivatives
|
|
|
(60)
|
(230)
|
Interest paid
|
|
|
(779)
|
(669)
|
Dividends paid to shareholders
|
9
|
|
(1,325)
|
(1,119)
|
Net cash flow used in financing activities - continuing
operations
|
|
|
(388)
|
(1,501)
|
Net cash flow used in financing activities - discontinued
operations
|
|
|
-
|
(334)
|
Net increase in cash and cash equivalents
|
|
|
63
|
67
|
Reclassification to held for sale
|
|
|
-
|
(5)
|
Exchange movements
|
|
|
1
|
15
|
Net cash and cash equivalents at start of period
|
|
|
163
|
182
|
Net cash and cash equivalents at end of period
|
|
|
227
|
259
|
1. The
balance for the period ended 30 September 2022 consists of
cash proceeds received, net of cash disposed.
Notes to the financial statements
1. Basis of preparation and new accounting standards,
interpretations and amendments
The half year financial information covers the six month period
ended 30 September 2023 and has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as issued by
the International Accounting Standards Board (IASB) and as adopted
by the United Kingdom (UK); and the Disclosure and Transparency
Rules of the Financial Conduct Authority. This condensed set of
financial statements comprises the unaudited financial information
for the half years ended 30 September 2023 and 2022, together
with the audited consolidated statement of financial position as at
31 March 2023. The half year financial information has been
prepared applying consistent accounting policies to those applied
by the Group for the year ended 31 March 2023 and are expected
to be applicable for the year ending 31 March 2024. The notes
to the unaudited financial information are prepared on a continuing
basis unless otherwise stated.
The financial information for the six months ended
30 September 2023 does not constitute statutory accounts
as defined in Section 434 of the Companies Act 2006. It should
be read in conjunction with the statutory accounts for the year
ended 31 March 2023, which were prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
IASB and as adopted by the UK, and have been filed with the
Registrar of Companies. The Deloitte LLP audit report on those
statutory accounts was unqualified, did not contain an emphasis of
matter and did not contain a statement under Section 498 of the
Companies Act 2006.
The key sources of estimation uncertainty and areas of judgement
for the period ended 30 September 2023 are aligned to those
disclosed in the Annual Report and Accounts for year ended
31 March 2023, with the following amendments:
●
whilst the entirety of the UK Electricity System Operator
(ESO) is expected to transfer out of the Group to become part of an
independent system operator public body, the Independent System
Operator and Planner (ISOP), we have concluded that the held for
sale criteria were not met as at 30 September 2023 due to the ESO
not being available for sale in its present condition given the
formation of the ISOP at the half year remained subject to
legislative approval. The Group has identified this as an
additional area of judgement in the period. The ESO was
subsequently classified as held for sale at the end of October 2023
(see note 17); and
●
the value attributable to GasT TopCo Limited in determining
the fair value of the options over the Group's 40% interests (see
note 6) is no longer considered to represent a key source of
estimation uncertainty.
Our consolidated income statement and segmental analysis (see note
2) separately identify financial results before and after
exceptional items and remeasurements. The Directors believe that
presentation of the results in this way is relevant to an
understanding of the Group's financial performance. Presenting
financial results before exceptional items and remeasurements is
consistent with the way that financial performance is measured by
management and reported to the Board and improves the comparability
of reported financial performance from year to year. Items which
are classified as exceptional items or remeasurements are defined
in the Annual Report and Accounts for the year ended
31 March 2023.
1. Basis of preparation and new accounting standards,
interpretations and amendments (continued)
Going concern
As part of the Directors' consideration of the appropriateness of
adopting the going concern basis of accounting
in preparing the half year financial information, the
Directors have considered the Group's principal risks (discussed on
page 60) alongside potential downside business cash flow scenarios
impacting the Group's operations. The Directors specifically
considered both a base case and a reasonable worst-case scenario
for business cash flows. The assessment is prepared on the
conservative assumption that the Group has no access to the
debt capital markets.
The main additional cash flow impacts identified in the reasonable
worst-case scenario are:
●
the timing of the sale of assets classified as held for
sale;
●
adverse impacts of inflation and incremental spend on our
capital expenditure programme;
●
adverse impact from timing across the Group (i.e. a net
under-recovery of allowed revenues or reductions in
over-collections) and slower collections of outstanding
receivables;
●
higher operating and financing costs than expected; including
non-delivery of planned efficiencies across the Group;
and
●
the potential impact of further significant storm costs in
the US.
As part of their analysis, the Board also considered the following
potential levers at their discretion to improve the position
identified by the analysis if the debt capital markets are not
accessible:
●
the payment of dividends to shareholders;
●
significant changes in the phasing of the Group's capital
expenditure programme, with elements of non-essential works and
programmes delayed; and
●
a number of further reductions in operating expenditure
across the Group.
As at 30 September 2023, the Group had undrawn committed
facilities available for general corporate purposes amounting to
£8.0 billion. Based on these available liquidity
resources and having considered the reasonable worst-case scenario,
and the further levers at the Board's discretion, the Group has not
identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant
doubt on its ability to continue as a going concern for the
foreseeable future, a period not less than 12 months from the date
of this report.
In addition to the above, the ability to raise new and extend
existing financing was separately included in the analysis, and the
Directors noted the c.£3.0 billion of new long-term
senior debt issued in the period from 1 April to
30 September 2023 as evidence of the Group's ability to
continue to have access to the debt capital markets
if needed.
Based on the above, the Directors have concluded the Group is well
placed to manage its financing and other business risks
satisfactorily, and have a reasonable expectation that the Group
will have adequate resources to continue in operation for at
least 12 months from the signing date of these consolidated interim
financial statements. They therefore consider it appropriate to
adopt the going concern basis of accounting in preparing
the half year financial information.
New IFRS accounting standards, interpretations and amendments
adopted in the period
There are no new standards, interpretations or amendments, issued
by the IASB or by the IFRS Interpretations Committee (IFRIC), that
are applicable for the period commencing on 1 April 2023 and
have had a material impact on the Group's results.
New IFRS accounting standards, interpretations and amendments not
yet adopted
There are no new accounting standards and amendments to existing
standards that have been issued, but are not yet effective or have
not yet been endorsed by the UK that were not disclosed in our
Annual Report and Accounts. The Group has not early adopted any
standard, amendment or interpretation that has been issued
but is not yet effective.
2. Segmental analysis
Revenue and the results of the business are analysed by operating
segment, based on the information the Board use internally for
the purposes of evaluating the performance of each operating
segment and determining resource allocation between them. The
Board is National Grid's chief operating decision maker (as defined
by IFRS 8 'Operating Segments') and assesses the profitability of a
profit measure that excludes certain income and expenses. We call
that measure 'adjusted profit'. Adjusted profit excludes
exceptional items and remeasurements (as defined in note 4) and is
used by management to monitor financial performance as it is
considered that it aids the comparability of our reported financial
performance from year to year. As a matter of course, the Board
also considers profitability by segment, excluding the effect of
major storms and timing adjustments relating to revenue and certain
pass-through costs. However, the measure of profit disclosed
in this note is operating profit before exceptional items and
remeasurements, as this is the measure that is most consistent with
the IFRS results reported within these financial
statements.
In the year ended 31 March 2023, the National Grid Ventures
(NGV) operating segment met the quantitative thresholds set out in
IFRS 8 to be identified as the Group's sixth separate reportable
segment. Accordingly, the Group's operating segments were modified
and the data relating to previous periods has been restated to
reflect this change. The results of our six principal businesses
are reported to the Board and are accordingly treated
as reportable operating segments. All other operating segments
are either reported to the Board on an aggregated basis or do not
meet the quantitative threshold in order to be considered a
separate operating segment. The following table describes the main
activities for each reportable operating segment:
UK Electricity Transmission
|
The
high-voltage electricity transmission networks in England and
Wales. This includes our Accelerated Strategic Transmission
Investment projects to connect more clean, low-carbon power
to the transmission network in England and Wales.
|
UK Electricity Distribution
|
The electricity distribution networks of NGED in the East Midlands,
West Midlands and South West of England and South
Wales.
|
UK Electricity System Operator
|
The Great Britain system operator. The ESO has not met the criteria
to be classified as held for sale as at 30 September
2023.
|
New England
|
Gas distribution networks, electricity distribution networks and
high-voltage electricity transmission networks in New
England.
|
New York
|
Gas distribution networks, electricity distribution networks and
high-voltage electricity transmission networks in New
York.
|
National Grid Ventures
|
Comprises all commercial operations in LNG at the Isle of Grain in
the UK and Providence, Rhode Island in the US, our electricity
generation business in the US, our electricity interconnectors in
the UK and our investment in National Grid Renewables Development
LLC, our renewables business in the US. NGV operates outside
our regulated core business. Our US LNG operations were
reclassified from the New England segment following an internal
reorganisation in the period.
|
The New England and New York segments typically experience seasonal
fluctuations in revenue and operating profit due to higher delivery
volumes during the second half of the financial year, for example
as a result of colder weather over the winter months driving
increased heating demand. These seasonal fluctuations have
a consequential impact on the working capital balances
(primarily trade debtors and accrued income) in the consolidated
statement of financial position at 30 September 2023 when
compared to 31 March 2023. The majority of UK revenues are
derived from the supply of network capacity rather than the supply
of commodities and therefore are not subject to the same seasonal
fluctuations as in New York and New England.
Other activities that do not form part of any of the segments in
the above table primarily relate to our UK property business
together with insurance and corporate activities in the UK and US
and the Group's investments in technology and innovation companies
through National Grid Partners.
2. Segmental analysis (continued)
(a) Revenue
Six months ended 30 September
|
2023
|
|
2022²
|
Total sales
|
Sales between segments1
|
Sales to third parties
|
|
Total sales
|
Sales
between segments1
|
Sales to third
parties
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Operating segments - continuing operations:
|
|
|
|
|
|
|
|
UK
Electricity Transmission
|
1,356
|
(19)
|
1,337
|
|
969
|
(14)
|
955
|
UK
Electricity Distribution
|
850
|
(2)
|
848
|
|
1,005
|
(8)
|
997
|
UK
Electricity System Operator
|
1,734
|
(17)
|
1,717
|
|
2,060
|
(15)
|
2,045
|
New
England
|
1,441
|
-
|
1,441
|
|
1,760
|
-
|
1,760
|
New
York
|
2,365
|
-
|
2,365
|
|
2,758
|
-
|
2,758
|
National
Grid Ventures
|
666
|
(27)
|
639
|
|
685
|
(9)
|
676
|
Other
|
142
|
-
|
142
|
|
253
|
-
|
253
|
Total revenue from continuing operations
|
8,554
|
(65)
|
8,489
|
|
9,490
|
(46)
|
9,444
|
|
|
|
|
|
|
|
|
Geographical areas:
|
|
|
|
|
|
|
|
UK
|
|
|
4,309
|
|
|
|
4,589
|
US
|
|
|
4,180
|
|
|
|
4,855
|
Total revenue from continuing operations
|
|
|
8,489
|
|
|
|
9,444
|
1.
Sales between operating segments are priced having regard to the
regulatory and legal requirements to which the businesses are
subject. The analysis of revenue by geographical area is on
the basis of destination. There are no material sales between the
UK and US geographical areas.
2.
Comparative amounts have been re-presented to reflect NGV as a
separate operating segment.
(b) Operating profit/(loss)
|
Before exceptional items and remeasurements
|
|
Exceptional items and remeasurements
|
|
After exceptional items and remeasurements
|
Six months ended 30 September
|
2023
|
2022¹
|
|
2023
|
2022¹
|
|
2023
|
2022¹
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
Operating segments - continuing operations:
|
|
|
|
|
|
|
|
|
UK
Electricity Transmission
|
839
|
499
|
|
(1)
|
(6)
|
|
838
|
493
|
UK
Electricity Distribution
|
476
|
531
|
|
(4)
|
(9)
|
|
472
|
522
|
UK
Electricity System Operator
|
443
|
147
|
|
-
|
(1)
|
|
443
|
146
|
New
England
|
(32)
|
193
|
|
(15)
|
527
|
|
(47)
|
720
|
New
York
|
(30)
|
(18)
|
|
38
|
(8)
|
|
8
|
(26)
|
National
Grid Ventures
|
219
|
259
|
|
91
|
49
|
|
310
|
308
|
Other
|
(13)
|
145
|
|
(26)
|
(69)
|
|
(39)
|
76
|
Total operating profit from continuing operations
|
1,902
|
1,756
|
|
83
|
483
|
|
1,985
|
2,239
|
|
|
|
|
|
|
|
|
|
Geographical areas:
|
|
|
|
|
|
|
|
|
UK
|
1,956
|
1,550
|
|
60
|
(32)
|
|
2,016
|
1,518
|
US
|
(54)
|
206
|
|
23
|
515
|
|
(31)
|
721
|
Total operating profit from continuing operations
|
1,902
|
1,756
|
|
83
|
483
|
|
1,985
|
2,239
|
1.
Comparative amounts have been re-presented to reflect NGV as a
separate operating segment.
|
Before exceptional items and remeasurements
|
|
Exceptional items and remeasurements
|
|
After exceptional items and remeasurements
|
Six months ended 30 September
|
2023
|
2022¹
|
|
2023
|
2022¹
|
|
2023
|
2022¹
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
Reconciliation to profit before tax:
|
|
|
|
|
|
|
|
|
Operating
profit from continuing operations
|
1,902
|
1,756
|
|
83
|
483
|
|
1,985
|
2,239
|
Share
of post-tax results of joint ventures
and associates
|
59
|
70
|
|
12
|
(19)
|
|
71
|
51
|
Finance
income
|
123
|
69
|
|
(8)
|
(32)
|
|
115
|
37
|
Finance
costs
|
(834)
|
(801)
|
|
34
|
140
|
|
(800)
|
(661)
|
Total profit before tax from continuing operations
|
1,250
|
1,094
|
|
121
|
572
|
|
1,371
|
1,666
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
2. Segmental analysis (continued)
(c) Capital expenditure
Capital expenditure represents additions to property, plant and
equipment and other intangible assets but excludes additional
investments in and loans to joint ventures and
associates.
|
Net book value of property, plant and equipment and
other intangible assets
|
|
Capital expenditure
|
|
Depreciation, amortisation
and impairment
|
|
30 September 2023
|
31 March 2023¹
|
|
30 September 2023
|
30 September 2022¹
|
|
30 September 2023
|
30 September 2022¹
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
Operating segments:
|
|
|
|
|
|
|
|
|
UK
Electricity Transmission
|
16,030
|
15,483
|
|
800
|
629
|
|
(250)
|
(235)
|
UK
Electricity Distribution
|
13,940
|
13,462
|
|
608
|
584
|
|
(105)
|
(104)
|
UK
Electricity System Operator
|
434
|
411
|
|
75
|
42
|
|
(52)
|
(40)
|
New
England
|
13,781
|
13,033
|
|
789
|
801
|
|
(204)
|
(184)
|
New
York
|
22,937
|
21,730
|
|
1,257
|
1,242
|
|
(321)
|
(292)
|
National
Grid Ventures
|
3,956
|
3,880
|
|
175
|
410
|
|
(84)
|
(73)
|
Other
|
35
|
38
|
|
2
|
9
|
|
(5)
|
(4)
|
Total
|
71,113
|
68,037
|
|
3,706
|
3,717
|
|
(1,021)
|
(932)
|
|
|
|
|
|
|
|
|
|
Geographical areas:
|
|
|
|
|
|
|
|
|
UK
|
33,475
|
32,343
|
|
1,649
|
1,594
|
|
(464)
|
(432)
|
US
|
37,638
|
35,694
|
|
2,057
|
2,123
|
|
(557)
|
(500)
|
Total
|
71,113
|
68,037
|
|
3,706
|
3,717
|
|
(1,021)
|
(932)
|
|
|
|
|
|
|
|
|
|
By asset type:
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
67,396
|
64,433
|
|
3,449
|
3,490
|
|
(868)
|
(829)
|
Other
intangible assets
|
3,717
|
3,604
|
|
257
|
227
|
|
(153)
|
(103)
|
Total
|
71,113
|
68,037
|
|
3,706
|
3,717
|
|
(1,021)
|
(932)
|
1.
Comparative amounts have been re-presented to reflect NGV as
a separate operating segment and the reclassification of our US LNG
operations from New England to NGV following an internal
reorganisation in the period.
3. Revenue
Under IFRS 15 'Revenue from Contracts with Customers', revenue is
recorded as or when the Group satisfies a performance
obligation by transferring a promised good or service to a
customer. A good or service is transferred when the customer
obtains control of that good or service.
The transfer of control of our distribution or transmission
services coincides with the use of our network, as electricity
and gas pass through our network and reach our customers. The Group
principally satisfies its performance obligations over time
and the amount of revenue recorded corresponds to the amounts
billed and accrued for volumes of gas and electricity
delivered/transferred to/from our customers.
Revenue for the six months
ended 30 September
2023
|
UK Electricity Transmission
£m
|
UK Electricity Distribution
£m
|
UK Electricity System Operator
£m
|
New
England
£m
|
New
York
£m
|
National Grid Ventures
£m
|
Other
£m
|
Total
£m
|
Revenue under IFRS 15
|
|
|
|
|
|
|
|
|
Transmission
|
1,299
|
-
|
5
|
43
|
283
|
426
|
-
|
2,056
|
Distribution
|
-
|
810
|
-
|
1,329
|
2,047
|
-
|
-
|
4,186
|
System Operator
|
-
|
-
|
1,712
|
-
|
-
|
-
|
-
|
1,712
|
Other1
|
9
|
36
|
-
|
4
|
7
|
75
|
-
|
131
|
Total IFRS 15 revenue
|
1,308
|
846
|
1,717
|
1,376
|
2,337
|
501
|
-
|
8,085
|
Other revenue
|
|
|
|
|
|
|
|
|
Generation
|
-
|
-
|
-
|
-
|
-
|
181
|
-
|
181
|
Other2
|
29
|
2
|
-
|
65
|
28
|
(43)
|
142
|
223
|
Total other revenue
|
29
|
2
|
-
|
65
|
28
|
138
|
142
|
404
|
Total revenue from continuing operations
|
1,337
|
848
|
1,717
|
1,441
|
2,365
|
639
|
142
|
8,489
|
Geographic split of revenue for the six months
ended 30 September
2023
|
UK Electricity Transmission
£m
|
UK Electricity Distribution
£m
|
UK Electricity System Operator
£m
|
New England
£m
|
New
York
£m
|
National Grid Ventures
£m
|
Other
£m
|
Total
£m
|
Revenue under IFRS 15
|
|
|
|
|
|
|
|
|
UK
|
1,308
|
846
|
1,717
|
-
|
-
|
430
|
-
|
4,301
|
US
|
-
|
-
|
-
|
1,376
|
2,337
|
71
|
-
|
3,784
|
Total IFRS 15 revenue
|
1,308
|
846
|
1,717
|
1,376
|
2,337
|
501
|
-
|
8,085
|
Other revenue
|
|
|
|
|
|
|
|
|
UK
|
29
|
2
|
-
|
-
|
-
|
(50)
|
27
|
8
|
US
|
-
|
-
|
-
|
65
|
28
|
188
|
115
|
396
|
Total other revenue
|
29
|
2
|
-
|
65
|
28
|
138
|
142
|
404
|
Total revenue from continuing operations
|
1,337
|
848
|
1,717
|
1,441
|
2,365
|
639
|
142
|
8,489
|
1.
The UK Electricity Transmission and UK Electricity Distribution
other IFRS 15 revenue principally relates to engineering recharges,
which are the recovery of costs incurred for construction work
requested by customers, such as the re-routing of existing network
assets. Within NGV, the other IFRS 15 revenue principally relates
to revenue generated from our NG Renewables business.
2.
Other revenue, recognised in accordance with accounting standards
other than IFRS 15, includes property sales by our UK commercial
property business, rental income, income arising in connection with
the Transition Services Agreements in place following the sales of
The Narragansett Electric Company (NECO) and the UK Gas
Transmission business, and an adjustment to NGV revenue in respect
of the interconnector cap and floor and Use of Revenue regimes
constructed by Ofgem.
3. Revenue (continued)
Revenue for the six months ended 30 September 2022
|
UK Electricity Transmission
£m
|
UK Electricity Distribution
£m
|
UK Electricity System Operator
£m
|
New England
£m
|
New York
£m
|
National
Grid Ventures¹
£m
|
Other¹
£m
|
Total
£m
|
Revenue under IFRS 15
|
|
|
|
|
|
|
|
|
Transmission
|
931
|
-
|
77
|
53
|
117
|
306
|
-
|
1,484
|
Distribution
|
-
|
940
|
-
|
1,675
|
2,617
|
-
|
-
|
5,232
|
System Operator
|
-
|
-
|
1,968
|
-
|
-
|
-
|
-
|
1,968
|
Other2
|
16
|
43
|
-
|
4
|
6
|
69
|
-
|
138
|
Total IFRS 15 revenue
|
947
|
983
|
2,045
|
1,732
|
2,740
|
375
|
-
|
8,822
|
Other revenue
|
|
|
|
|
|
|
|
|
Generation
|
-
|
-
|
-
|
-
|
-
|
224
|
-
|
224
|
Other3
|
8
|
14
|
-
|
28
|
18
|
77
|
253
|
398
|
Total other revenue
|
8
|
14
|
-
|
28
|
18
|
301
|
253
|
622
|
Total revenue from continuing operations
|
955
|
997
|
2,045
|
1,760
|
2,758
|
676
|
253
|
9,444
|
Geographic split of revenue for the six months
ended 30 September
2022
|
UK Electricity Transmission
£m
|
UK Electricity Distribution
£m
|
UK Electricity System Operator
£m
|
New England
£m
|
New York
£m
|
National
Grid Ventures¹
£m
|
Other¹
£m
|
Total
£m
|
Revenue under IFRS 15
|
|
|
|
|
|
|
|
|
UK
|
947
|
983
|
2,045
|
-
|
-
|
310
|
-
|
4,285
|
US
|
-
|
-
|
-
|
1,732
|
2,740
|
65
|
-
|
4,537
|
Total IFRS 15 revenue
|
947
|
983
|
2,045
|
1,732
|
2,740
|
375
|
-
|
8,822
|
Other revenue
|
|
|
|
|
|
|
|
|
UK
|
8
|
14
|
-
|
-
|
-
|
83
|
199
|
304
|
US
|
-
|
-
|
-
|
28
|
18
|
218
|
54
|
318
|
Total other revenue
|
8
|
14
|
-
|
28
|
18
|
301
|
253
|
622
|
Total revenue from continuing operations
|
955
|
997
|
2,045
|
1,760
|
2,758
|
676
|
253
|
9,444
|
1.
Comparative amounts have been re-presented to reflect NGV as a
separate operating segment.
2.
The UK Electricity Transmission and UK Electricity Distribution
other IFRS 15 revenue principally relates to engineering recharges,
which are the recovery of costs incurred for construction work
requested by customers, such as the re-routing of existing network
assets. Within NGV, the other IFRS 15 revenue principally relates
to revenue generated from our NG Renewables business.
3.
Other revenue, recognised in accordance with accounting standards
other than IFRS 15, includes property sales by our UK commercial
property business, rental income and income arising in connection
with the Transition Services Agreement with PPL Rhode Island
Holdings, LLC following the sale of NECO. In the period ended
30 September 2022 the Group also recognised other income relating
to an insurance claim.
4. Exceptional items and remeasurements
To monitor our financial performance, we use an adjusted
consolidated profit measure that excludes certain income and
expenses. We exclude items from adjusted profit because, if
included, these items could distort understanding of our
performance in the period and the comparability between periods.
With respect to restructuring costs, these represent additional
expenses incurred that are not related to normal business
and day-to-day activities. These can take place over multiple
reporting periods given the scale of the Group, the nature and
complexity of the transformation initiatives and due to the impact
of strategic transactions.
Remeasurements comprise unrealised gains or losses recorded in the
consolidated income statement arising from changes in the fair
value of certain financial assets and liabilities categorised as
held at fair value through profit and loss (FVTPL). Once the fair
value movements are realised (for example, when the derivative
matures), the previously recognised fair value movements are then
reversed through remeasurements and recognised within earnings
before exceptional items and remeasurements. These assets and
liabilities include commodity contracts and derivative financial
instruments to the extent that hedge accounting is either not
achieved or is not effective. We have also classified the
unrealised gains or losses reported in profit and loss on certain
additional assets treated as FVTPL within remeasurements. These
relate to financial assets (which fail the 'solely payments of
principal and interest test' under IFRS 9), the money market fund
investments used by Group Treasury for cash management purposes and
the net foreign exchange gains and losses on borrowing activities.
These are offset by foreign exchange losses and gains on financing
derivatives measured at fair value. In all cases, these fair values
increase or decrease because of changes in foreign exchange,
commodity or other financial indices over which we have no
control.
Six months ended 30 September 2023
|
Exceptional items
£m
|
Remeasurements
£m
|
Total
£m
|
Included within operating profit from continuing
operations
|
|
|
|
Cost
efficiency programme
|
(39)
|
-
|
(39)
|
Transaction,
separation and integration costs¹
|
(11)
|
-
|
(11)
|
IFA1
fire insurance proceeds
|
92
|
-
|
92
|
Net
gains on commodity contract derivatives
|
-
|
41
|
41
|
|
42
|
41
|
83
|
Included within net finance costs (note 5)
|
|
|
|
Net
gains on derivative financial instruments
|
-
|
34
|
34
|
Net
losses on financial assets at fair value through profit and
loss
|
-
|
(8)
|
(8)
|
|
-
|
26
|
26
|
Included within share of post-tax results of joint ventures and
associates
|
|
|
|
Net
gains on financial instruments
|
-
|
12
|
12
|
|
-
|
12
|
12
|
|
|
|
|
Total included within profit before tax from continuing
operations
|
42
|
79
|
121
|
Tax on exceptional items and remeasurements
|
1
|
(21)
|
(20)
|
Total exceptional items and remeasurements after tax
from
continuing operations
|
43
|
58
|
101
|
1.
Transaction, separation and integration costs represent the
aggregate of distinct activities undertaken by the Group in the
periods presented.
4. Exceptional items and remeasurements (continued)
Six months ended 30 September 2022¹
|
Exceptional items
£m
|
Remeasurements
£m
|
Total
£m
|
Included within operating profit from continuing
operations
|
|
|
|
Net
gain on disposal of NECO
|
511
|
-
|
511
|
Cost
efficiency programme
|
(61)
|
-
|
(61)
|
Transaction,
separation and integration costs2
|
(65)
|
-
|
(65)
|
IFA1
fire insurance proceeds
|
33
|
-
|
33
|
Net
gains on commodity contract derivatives
|
-
|
65
|
65
|
|
418
|
65
|
483
|
Included within net finance costs (note 5)
|
|
|
|
Net
gains on derivative financial instruments
|
-
|
140
|
140
|
Net
losses on financial assets at fair value through profit and
loss
|
-
|
(32)
|
(32)
|
|
-
|
108
|
108
|
Included within share of post-tax results of joint ventures and
associates
|
|
|
|
Net
losses on financial instruments
|
-
|
(19)
|
(19)
|
|
-
|
(19)
|
(19)
|
|
|
|
|
Total included within profit before tax from continuing
operations
|
418
|
154
|
572
|
Tax on exceptional items and remeasurements
|
(221)
|
(49)
|
(270)
|
Total exceptional items and remeasurements after tax
from
continuing operations
|
197
|
105
|
302
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
2.
Transaction, separation and integration costs represent the
aggregate of distinct activities undertaken by the Group in the
periods presented.
Cost efficiency programme: During
the period, the Group incurred a further £39 million
(2022: £61 million) of costs in relation to
the major cost efficiency programme announced in November
2021, that targeted at least £400 million savings per
annum across the Group by the end of three years. The costs
recognised in the period primarily relate to redundancy
provisions, employee costs and professional fees incurred in
delivering the programme. Whilst the costs incurred during the
period do not meet the quantitative threshold to be classified
as exceptional on a standalone basis, when taken in aggregate
with the £142 million of costs incurred since the
announcement of the programme, the costs qualify for exceptional
treatment in line with our exceptional items policy. Estimated
costs expected to be incurred over the remainder of the programme
to 31 March 2024 remain consistent with those disclosed in the
Annual Report and Accounts for year the ended 31 March 2023.
The total cash outflow for the period in relation
to these costs was £28 million (2022:
£38 million).
Transaction, separation and integration costs: During
the period, £11 million (2022: £65 million) of
transaction and separation costs were incurred in relation to the
disposals of NECO and the UK Gas Transmission business (see note 6)
and the integration of NGED. The costs incurred primarily relate to
legal fees, professional fees, and employee costs. The costs
have been classified as exceptional, consistent with similar costs
for the year ended 31 March 2023 and past precedent. The total cash
outflow for the period in relation to these costs was
£9 million (2022:
£59 million).
IFA1 interconnector insurance recovery: In
September 2021, a fire at the IFA1 converter station in Sellindge,
Kent caused significant damage to infrastructure on-site. In the
period, the Group recognised net insurance claims of
£92 million (2022: £33 million) which were
recognised as exceptional in line with our exceptional items policy
and consistent with related claims in the prior year. The total
cash inflow in the period in relation to the property damage
insurance proceeds was £nil (2022:
£33 million).
Net gain on disposal of NECO: During
the prior period, the Group recognised a gain of
£511 million on the disposal of 100% of the share
capital of NECO to PPL Rhode Island Holdings, LLC for cash
consideration of £3.1 billion ($3.9 billion). The
receipt of cash was recognised within net cash used in investing
activities within the consolidated cash flow
statement.
5. Finance income and costs
|
|
|
2023
|
2022¹
|
Six months ended 30 September
|
Notes
|
|
£m
|
£m
|
Finance income before exceptional items and
remeasurements
|
|
|
|
|
Interest income from financing activities
|
|
|
52
|
14
|
Net interest on pensions and other post-retirement benefit
obligations
|
|
|
51
|
41
|
Other interest income
|
|
|
20
|
14
|
|
|
|
123
|
69
|
Finance costs before exceptional items and
remeasurements
|
|
|
|
|
Interest
expense on financial instruments2
|
|
|
(903)
|
(878)
|
Unwinding of discount on provisions
|
|
|
(50)
|
(42)
|
Other interest
|
|
|
(8)
|
8
|
Less:
interest capitalised3
|
|
|
127
|
111
|
|
|
|
(834)
|
(801)
|
|
|
|
|
|
Net finance costs before exceptional items and
remeasurements
|
|
|
(711)
|
(732)
|
Total
exceptional items and remeasurements4
|
4
|
|
26
|
108
|
Net finance costs including exceptional items and
remeasurements
from continuing operations
|
|
|
(685)
|
(624)
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
2.
Finance costs include principal accretion on inflation-linked debt
of £149 million (2022: £240 million) and income
related to principal accretion on inflation-linked swaps of
£18 million (2022: £5 million
expense).
3.
Interest on funding attributable to assets in the course of
construction in the current period was capitalised at a rate of
4.7% (2022: 4.3%). In the UK, capitalised interest qualifies
for a current year tax deduction with tax relief claimed
of £21 million (2022: £13 million). In the US,
capitalised interest is added to the cost of property, plant
and equipment and qualifies for tax
depreciation allowances.
4.
Includes a net foreign exchange gain on borrowing activities,
offset by foreign exchange losses and gains on financing
derivatives measured at fair value.
6. Assets held for sale and discontinued operations
Assets
and businesses are classified as held for sale when their carrying
amounts are recovered through sale rather than through continuing
use. They only meet the held for sale condition when the
assets are ready for immediate sale in their present condition,
management is committed to the sale and it is highly probable that
the sale will complete within one year. Depreciation ceases on
assets and businesses when they are classified as held for
sale and the assets and businesses are impaired if their
carrying value exceeds their fair value less expected costs to
sell.
The
results and cash flows of assets or businesses classified as held
for sale or sold during the year, that meet the criteria of being a
major separate line of business or geographical area of operation,
are shown separately from our continuing operations, and presented
within discontinued operations in the income statement and cash
flow statement.
The
following assets and liabilities were classified as held for
sale:
|
30 September 2023
|
|
31 March 2023
|
|
Total assets
held for sale
£m
|
Total liabilities held for sale
£m
|
Net assets held for sale
£m
|
|
Total assets
held for sale
£m
|
Total liabilities held for sale
£m
|
Net assets held for sale
£m
|
Investment
in GasT TopCo Limited
|
1,441
|
-
|
1,441
|
|
1,443
|
-
|
1,443
|
FAA option
|
-
|
-
|
-
|
|
-
|
(109)
|
(109)
|
FAA forward
|
-
|
(7)
|
(7)
|
|
-
|
-
|
-
|
RAA option
|
-
|
(44)
|
(44)
|
|
-
|
-
|
-
|
Net assets held for sale
|
1,441
|
(51)
|
1,390
|
|
1,443
|
(109)
|
1,334
|
On
31 January 2023, the Group disposed of 100% of the UK Gas
Transmission business for cash consideration of £4.0 billion
and a 40% interest in a newly incorporated UK limited company, GasT
TopCo Limited. The other 60% was purchased by Macquarie
Infrastructure and Real Assets (MIRA) and British Columbia
Investment Management Corporation (BCI) (together, the
'Consortium'). The Group also entered into a Further Acquisition
Agreement (the FAA option) with the Consortium over its remaining
40% interest. The Group's interest in GasT TopCo Limited was
immediately classified as held for sale with effect from 31 January
2023 together with the FAA option, as detailed in note 10 of the
Annual Report and Accounts for the year ended 31 March 2023. The
Group has not applied equity accounting in relation to its
investment in GasT TopCo Limited.
On
19 July 2023, following the partial exercise of the FAA option by
the Consortium, the Group agreed to sell a further 20% out of
the remaining 40% interests in GasT TopCo Limited (the FAA
forward). Completion is expected in the second half of
calendar year 2023, subject to regulatory approval. As part of the
transaction, the Group entered into a new option agreement with the
Consortium, the Remaining Acquisition Agreement (the RAA
option), to replace the FAA option for the potential sale of all or
part of the remaining 20% equity interest in GasT TopCo Limited.
The RAA option is exercisable, at the Consortium's option, between
1 May 2024 and 31 July 2024. If the RAA option is partially
exercised by the Consortium, the Group will have the right to put
the remainder of its interests in GasT TopCo Limited to the
Consortium, which can be exercised by the Group between 1 December
2024 and 31 December 2024.
The
FAA forward to complete the sale of 20% of GasT TopCo Limited is a
Level 3 derivative and some of the assumptions which are used to
determine the fair value are specific to the contract and not
readily observable in active markets. The most significant
unobservable input is the valuation of GasT TopCo Limited's
unlisted equity.
The
RAA option is also a Level 3 derivative. Significant unobservable
inputs include the valuation and volatility of GasT TopCo
Limited's unlisted equity. These inputs are used as part of a
Black-Scholes option pricing model to provide the reported fair
values.
The
disposal of the Group's interests in GasT TopCo Limited is
considered to be the final stage of the plan to dispose of the UK
Transmission business first announced in 2021. As a result, the
results of the business prior to the recognition of the associate
and any remeasurements pertaining to the financial derivatives
noted above are shown separately from the continuing business for
all periods presented on the face of the income statement as a
discontinued operation. This is also reflected in the statement of
comprehensive income, as well as earnings per share (EPS)
being shown split between continuing and discontinued
operations.
6. Assets held for sale and discontinued operations
(continued)
The
summary income statements for the periods ended 30 September
2023 and 2022 are as follows:
|
Before exceptional items
and remeasurements
|
|
Exceptional items and remeasurements
|
|
Total
|
|
2023
|
2022¹
|
|
2023
|
2022¹
|
|
2023
|
2022¹
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
Discontinued operations
|
|
|
|
|
|
|
|
|
Revenue
|
-
|
805
|
|
-
|
-
|
|
-
|
805
|
Other operating costs
|
-
|
(465)
|
|
-
|
6
|
|
-
|
(459)
|
Operating profit
|
-
|
340
|
|
-
|
6
|
|
-
|
346
|
Finance income
|
9
|
9
|
|
-
|
-
|
|
9
|
9
|
Finance costs²
|
-
|
(173)
|
|
61
|
(88)
|
|
61
|
(261)
|
Profit/(loss) before tax
|
9
|
176
|
|
61
|
(82)
|
|
70
|
94
|
Tax
|
(2)
|
(55)
|
|
(3)
|
(2)
|
|
(5)
|
(57)
|
Profit/(loss) after tax from discontinued operations
|
7
|
121
|
|
58
|
(84)
|
|
65
|
37
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
2.
Exceptional finance costs include the remeasurement of the FAA
option, the FAA forward and the RAA option.
The summary statements of comprehensive income are as
follows:
|
2023
|
2022¹
|
|
£m
|
£m
|
Profit after tax from discontinued operations
|
65
|
37
|
Other comprehensive (loss)/income from discontinued
operations
|
|
|
Items from discontinued operations that will never be reclassified
to profit or loss:
|
|
|
Remeasurement
losses on pension assets and post-retirement benefit
obligations
|
-
|
(126)
|
Tax
on items that will never be reclassified to profit or
loss
|
-
|
31
|
Total losses from discontinued operations that will never be
reclassified to profit or loss
|
-
|
(95)
|
Items from discontinued operations that may be reclassified
subsequently to profit or loss:
|
|
|
Net
gains in respect of cash flow hedges
|
-
|
8
|
Net
gains in respect of cost of hedging
|
-
|
4
|
Net
losses on investments in debt instruments measured at fair value
through other
comprehensive
income
|
(12)
|
-
|
Tax
on items that may be reclassified subsequently to profit or
loss
|
3
|
(3)
|
Total (losses)/gains from discontinued operations that may be
reclassified subsequently to profit or loss
|
(9)
|
9
|
Other comprehensive loss for the period, net of tax, from
discontinued operations
|
(9)
|
(86)
|
Total comprehensive income/(loss) for the period from discontinued
operations
|
56
|
(49)
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
7. Tax from continuing operations
The tax charge from continuing operations for the six month period
ended 30 September 2023 is £307 million (2022: £447
million), and before tax on exceptional items and remeasurements,
is £287 million (2022: £177 million). It is based on
management's estimate of the weighted average effective tax rate by
jurisdiction expected for the full year. The effective tax rate
excluding tax on exceptional items and remeasurements is
22.9% (2022: 16.2%), which includes the impact of our share of
post-tax results of joint ventures and associates. The half year
effective tax rate before exceptional items and remeasurements,
including our share of post-tax results of joint ventures and
associates, primarily reflects seasonality of earnings in the
US Group and increase in the UK statutory tax rate from 19% to
25% from 1 April 2023.
For the full year, we expect the Group's effective tax rate
excluding tax on exceptional items and remeasurements to be around
25% which includes the impact of our share of post-tax results of
joint ventures and associates. The effective tax rate for the year
ended 31 March 2023 before exceptional items and
remeasurements was 21.4% including the impact of our share of
post-tax results of joint ventures and associates.
The legislation implementing the Organisation for Economic
Co-operation and Development's (OECD) proposals for a global
minimum corporation tax rate ('Pillar 2') was enacted into UK law
on 11 July 2023. The legislation includes an income inclusion rule
and a domestic minimum tax, which together are designed to ensure a
minimum effective tax rate of 15% in each country in which the
Group operates. Similar legislation is being enacted by other
governments around the world. The legislation is effective for
National Grid from 1 April 2024 and therefore the rules do not
impact the Group's consolidated financial statements for year ended
31 March 2024. We have applied the mandatory exception in the UK to
recognising and disclosing information about the deferred tax
assets and liabilities related to Pillar 2 income taxes in
accordance with the amendments to IAS 12 published by the IASB on
23 May 2023. The Group's work is ongoing to assess the potential
impact in the financial statements for year ended 31 March
2025.
8. Earnings per share
Earnings per share (EPS), excluding exceptional items and
remeasurements are provided to reflect the adjusted profit
subtotals used by the Group, as set out in note 1. The earnings per
share calculations are based on profit after tax attributable to
equity shareholders of the parent company which excludes
non-controlling interests.
(a) Basic earnings per share
|
Earnings
|
EPS
|
Earnings
|
EPS
|
Six months ended 30 September
|
2023
|
2023
|
2022¹
|
2022¹
|
£m
|
pence
|
£m
|
pence
|
Profit after tax before exceptional items and remeasurements -
continuing
|
962
|
26.1
|
917
|
25.1
|
Exceptional items and remeasurements after tax -
continuing
|
101
|
2.7
|
302
|
8.3
|
Profit after tax from continuing operations attributable to the
parent
|
1,063
|
28.8
|
1,219
|
33.4
|
Profit after tax before exceptional items and remeasurements -
discontinued
|
7
|
0.2
|
121
|
3.3
|
Exceptional items and remeasurements after tax -
discontinued
|
58
|
1.6
|
(84)
|
(2.3)
|
Profit after tax from discontinued operations attributable to the
parent
|
65
|
1.8
|
37
|
1
|
Total profit after tax before exceptional items and
remeasurements
|
969
|
26.3
|
1,038
|
28.4
|
Total exceptional items and remeasurements after tax
|
159
|
4.3
|
218
|
6.0
|
Total profit after tax attributable to the parent
|
1,128
|
30.6
|
1,256
|
34.4
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
millions
|
|
millions
|
Weighted average number of shares - basic
|
|
3,682
|
|
3,651
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
(b) Diluted earnings per share
|
Earnings
|
EPS
|
Earnings
|
EPS
|
Six months ended 30 September
|
2023
|
2023
|
2022¹
|
2022¹
|
£m
|
pence
|
£m
|
pence
|
Profit after tax before exceptional items and remeasurements -
continuing
|
962
|
26.0
|
917
|
25.0
|
Exceptional items and remeasurements after tax -
continuing
|
101
|
2.7
|
302
|
8.2
|
Profit after tax from continuing operations attributable to the
parent
|
1,063
|
28.7
|
1,219
|
33.2
|
Profit after tax before exceptional items and remeasurements -
discontinued
|
7
|
0.2
|
121
|
3.3
|
Exceptional items and remeasurements after tax -
discontinued
|
58
|
1.6
|
(84)
|
(2.3)
|
Profit after tax from discontinued operations attributable to the
parent
|
65
|
1.8
|
37
|
1
|
Total profit after tax before exceptional items and
remeasurements
|
969
|
26.2
|
1,038
|
28.3
|
Total exceptional items and remeasurements after tax
|
159
|
4.3
|
218
|
5.9
|
Total profit after tax attributable to the parent
|
1,128
|
30.5
|
1,256
|
34.2
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
millions
|
|
millions
|
Weighted average number of shares - diluted
|
|
3,700
|
|
3,668
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
9. Dividends
|
Pence
per share
|
Cash
dividend
paid
£m
|
Scrip
dividend
£m
|
Ordinary dividends
|
|
|
|
Final
dividend in respect of the year ended 31 March 2023
|
37.60
|
1,325
|
56
|
Interim
dividend in respect of the year ended 31 March 2023
|
17.84
|
488
|
163
|
Final
dividend in respect of the year ended 31 March 2022
|
33.76
|
1,119
|
114
|
The Directors are proposing an interim dividend of 19.40 pence per
share to be paid in respect of the year ending 31 March 2024.
This would absorb approximately £716 million of shareholders'
equity.
A final dividend for the year ended 31 March 2023 of 37.60
pence per share was paid in August 2023. The cash dividend paid was
£1,325 million with an additional £56 million settled via
a scrip issue.
10. Fair value measurement
Assets and liabilities measured at fair value
Included in the statement of financial position are certain
financial assets and liabilities which are measured
at fair value. The following table categorises these
assets and liabilities by the valuation methodology applied
in determining their fair value using the fair value hierarchy
described on page 197 of the Annual Report and Accounts for the
year ended 31 March 2023.
|
30 September 2023
|
|
31 March 2023
|
|
Level 1
£m
|
Level 2
£m
|
Level 3
£m
|
Total
£m
|
|
Level 1
£m
|
Level 2
£m
|
Level 3
£m
|
Total
£m
|
Assets
|
|
|
|
|
|
|
|
|
|
Investments held at fair value through profit and loss
|
1,007
|
-
|
483
|
1,490
|
|
1,764
|
-
|
452
|
2,216
|
Investments
held at fair value through other comprehensive income1
|
-
|
388
|
-
|
388
|
|
-
|
407
|
-
|
407
|
Financing derivatives
|
-
|
309
|
20
|
329
|
|
-
|
341
|
22
|
363
|
Commodity contract derivatives
|
-
|
54
|
2
|
56
|
|
-
|
62
|
4
|
66
|
|
1,007
|
751
|
505
|
2,263
|
|
1,764
|
810
|
478
|
3,052
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Financing derivatives
|
-
|
(1,219)
|
(95)
|
(1,314)
|
|
-
|
(997)
|
(122)
|
(1,119)
|
Commodity contract derivatives
|
-
|
(78)
|
(45)
|
(123)
|
|
-
|
(134)
|
(40)
|
(174)
|
Contingent
consideration2
|
-
|
-
|
(10)
|
(10)
|
|
-
|
-
|
(19)
|
(19)
|
|
-
|
(1,297)
|
(150)
|
(1,447)
|
|
-
|
(1,131)
|
(181)
|
(1,312)
|
Total
|
1,007
|
(546)
|
355
|
816
|
|
1,764
|
(321)
|
297
|
1,740
|
1.
Investments held include instruments which meet the criteria of
IFRS 9 or IAS 19.
2.
Contingent consideration relates to the acquisition of National
Grid Renewables Development LLC.
The
estimated fair value of total borrowings, excluding lease
liabilities, using market values at 30 September 2023 is
£38,354 million (31 March 2023: £38,219
million).
Our
level 1 financial investments and liabilities held at fair value
are valued using quoted prices from liquid markets and primarily
comprise investments in short-term money market funds.
Our level 2 financial investments held at fair value primarily
include bonds with a tenor greater than one year and are
valued using quoted prices for similar instruments in active
markets, or quoted prices for identical or similar instruments in
inactive markets. Alternatively, they are valued using models where
all significant inputs are based directly or indirectly on
observable market data.
10. Fair value measurement (continued)
Our
level 2 financing derivatives include cross-currency, interest rate
and foreign exchange derivatives. We value these derivatives by
discounting all future cash flows by externally sourced market
yield curves at the reporting date, taking into account the credit
quality of both parties. These derivatives can be priced using
liquidly traded interest rate curves and foreign exchange rates,
and therefore we classify our vanilla trades as level 2 under the
IFRS 13 framework.
Our level 2 commodity derivatives include over-the-counter gas
swaps and power swaps as well as forward physical gas deals. We
value our contracts based on market data obtained from the New York
Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE)
where forward monthly prices are available. We discount based on
externally sourced market yield curves at the reporting date,
taking into account the credit quality of both parties and
liquidity in the market. Our commodity contracts can be priced
using liquidly traded swaps. Therefore we classify our vanilla
trades as level 2 under the IFRS 13 framework.
Our level 3 financing derivatives include inflation-linked swaps,
where the market is illiquid. In valuing these instruments we
use in-house valuation models and obtain external valuations to
support each reported fair value.
Our level 3 commodity contract derivatives primarily consist of our
forward purchases of electricity and gas that we value using
proprietary models. Derivatives are classified as Level 3
where significant inputs into the valuation technique are
neither directly nor indirectly observable (including our own
data, which are adjusted, if necessary, to reflect the assumptions
market participants would use in
the circumstances).
Our level 3 investments include equity instruments accounted for at
fair value through profit and loss. These equity holdings are part
of our corporate venture capital portfolio held by National Grid
Partners and comprise a series of relatively small,
early-stage non-controlling minority interest unquoted investments
where prices or valuation inputs are unobservable. Fifteen equity
investments (out of thirty-three) are fair valued based on the
latest transaction price (a price within the last 12 months),
either being the price we paid for the investments, marked to a
latest round of funding and adjusted for our preferential rights or
based on an internal model. In addition, we have eighteen
investments without a transaction in the last 12 months that
underwent an internal valuation process using the Black-Scholes
Murton Option Pricing Model (OPM Backsolve). Between 12 and 18
months a blend between OPM Backsolve and other techniques are
utilised such as proxy group revenue multiples, discounted cash
flow, comparable company analysis and probability weighted expected
return approach in order to triangulate a valuation. After 18
months the valuation is based on these alternative methods as the
last fundraising price is no longer a reliable basis for
valuation.
Our level 3 investments also include our investment in Sunrun
Neptune 2016 LLC, which is accounted for at fair value through
profit and loss. The investment is fair valued by discounting
expected cash flows using a weighted average cost of capital
specific to Sunrun Neptune 2016 LLC.
10. Fair value measurement (continued)
The
impacts on a post-tax basis of reasonably possible changes in
significant assumptions used in valuing assets and liabilities
classified within level 3 of the fair value hierarchy are as
follows:
|
Financing derivatives
|
|
Commodity contract derivatives
|
|
Other
|
Six months ended 30 September
|
2023
|
2022
|
|
2023
|
2022
|
|
2023
|
2022
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
10% increase in commodity prices
|
-
|
-
|
|
15
|
35
|
|
-
|
-
|
10% decrease in commodity prices
|
-
|
-
|
|
(15)
|
(36)
|
|
-
|
-
|
+10% market area price change
|
-
|
-
|
|
12
|
7
|
|
-
|
-
|
-10% market area price change
|
-
|
-
|
|
(11)
|
(7)
|
|
-
|
-
|
+20 basis point increase in Limited Price Index
(LPI) market curve
|
(38)
|
(51)
|
|
-
|
-
|
|
-
|
-
|
-20 basis point decrease in LPI market curve
|
38
|
51
|
|
-
|
-
|
|
-
|
-
|
+20 basis point increase between Retail Price Index (RPI)
and Consumer Price Index (CPI)
|
36
|
17
|
|
-
|
-
|
|
-
|
-
|
-20 basis point decrease between RPI and CPI
market curves
|
(33)
|
(16)
|
|
-
|
-
|
|
-
|
-
|
+50 basis points change in discount rate
|
-
|
-
|
|
-
|
-
|
|
(8)
|
(9)
|
-50 basis points change in discount rate
|
-
|
-
|
|
-
|
-
|
|
9
|
10
|
+10% change in venture capital price
|
-
|
-
|
|
-
|
-
|
|
30
|
-
|
-10% change in venture capital price
|
-
|
-
|
|
-
|
-
|
|
(30)
|
-
|
The impacts disclosed above were considered on a contract by
contract basis with the most significant unobservable inputs
identified. A reasonably possible change in assumptions for other
level 3 assets and liabilities would not result in a material
change in fair values.
The changes in fair value of our level 3 financial assets and
liabilities in the six months to 30 September are presented
below:
|
Financing derivatives
|
|
Commodity contract derivatives
|
|
Other1
|
|
Total
|
|
2023
|
2022
|
|
2023
|
2022
|
|
2023
|
2022
|
|
2023
|
2022
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
|
£m
|
£m
|
At 1 April
|
(100)
|
(187)
|
|
(36)
|
44
|
|
433
|
376
|
|
297
|
233
|
Net
gains/(losses) through the consolidated income statement for the
period2,3
|
25
|
76
|
|
(4)
|
44
|
|
26
|
30
|
|
47
|
150
|
Purchases
|
-
|
(133)
|
|
(10)
|
(56)
|
|
11
|
37
|
|
1
|
(152)
|
Settlements
|
-
|
-
|
|
7
|
(4)
|
|
3
|
(4)
|
|
10
|
(8)
|
At 30 September4
|
(75)
|
(244)
|
|
(43)
|
28
|
|
473
|
439
|
|
355
|
223
|
1.
Other comprises our investments in Sunrun Neptune 2016 LLC and the
investments made by National Grid Partners, which are accounted for
at fair value through profit and loss and the contingent
consideration arising from the acquisition of National Grid
Renewables Development LLC. Net gains and loss are recognised
within finance income and costs in the income
statement.
2.
Gains of £25 million (2022: gains of £93 million) are
attributable to derivative financial instruments held at the end of
the reporting period and have been recognised in finance costs
in the income statement.
3.
Losses of £15 million (2022: losses of £23 million) are
attributable to the commodity contract derivative financial
instruments held at the end of the reporting period
and have been recognised in other operating costs in the
consolidated income statement.
4.
There were no reclassifications in or out of level 3 (2022:
none).
The Group also has a number of financial instruments which are not
measured at fair value in the balance sheet. The carrying value of
current financial assets at amortised cost approximates their fair
values, primarily due to short-dated maturities.
11. Net debt
Net debt is comprised as follows:
|
30 September 2023
|
31 March 2023
|
|
£m
|
£m
|
Cash and cash equivalents
|
227
|
163
|
Current financial investments
|
1,680
|
2,605
|
Borrowings and bank overdrafts
|
(44,797)
|
(42,985)
|
Financing
derivatives1
|
(985)
|
(756)
|
Net debt (net of related derivative financial
instruments)
|
(43,875)
|
(40,973)
|
1. Includes
£4 million liability (31 March 2023: £4 million
liability) in relation to the hedging of capital expenditure. The
cash flows related to these derivatives are included within
investing activities in the consolidated cash flow statement which
is in the same manner as the transactions which are
the subject of the hedges. The financing derivatives balance
included in net debt exclude the commodity
derivatives.
The following table splits out the total derivative balances on the
face of the consolidated statement of financial position by
category:
|
30 September 2023
|
|
31 March 2023
|
|
Assets
£m
|
Liabilities
£m
|
Total
£m
|
|
Assets
£m
|
Liabilities
£m
|
Total
£m
|
Financing derivatives
|
329
|
(1,314)
|
(985)
|
|
363
|
(1,119)
|
(756)
|
Commodity contract derivatives
|
56
|
(123)
|
(67)
|
|
66
|
(174)
|
(108)
|
Total derivative financial instruments
|
385
|
(1,437)
|
(1,052)
|
|
429
|
(1,293)
|
(864)
|
12. Pensions and other post-retirement benefit
obligations
|
30 September 2023
|
31 March 2023
|
|
£m
|
£m
|
Present value of funded obligations
|
(17,502)
|
(18,934)
|
Fair value of plan assets
|
19,570
|
21,246
|
|
2,068
|
2,312
|
Present value of unfunded obligations
|
(264)
|
(292)
|
Other post-employment liabilities
|
(67)
|
(69)
|
Net defined benefit asset
|
1,737
|
1,951
|
Presented in consolidated statement of financial
position:
|
|
|
Assets
|
2,352
|
2,645
|
Liabilities
|
(615)
|
(694)
|
|
1,737
|
1,951
|
Key actuarial assumptions
|
30 September 2023
|
31 March 2023
|
Discount rate - UK past service
|
5.55%
|
4.80%
|
Discount rate - US
|
5.70%
|
4.85%
|
Rate of increase in RPI - UK past service
|
3.19%
|
3.17%
|
The net pensions and other post-retirement benefit (OPEB)
obligations position, as recorded under IAS 19,
at 30 September 2023 was an asset of
£1,737 million (31 March 2023:
£1,951 million asset). The movement
of £214 million primarily reflects asset performance
being less than the discount rate at the start of the period,
partially offset by increases in discount rates resulting in a
decrease in liabilities.
Net actuarial losses of £263 million have been reflected
within the consolidated statement of comprehensive income. There
was a loss of £1,754 million (UK
£1,155 million; US £599 million) relating to
asset performance which reflects returns on assets, both in the UK
and US, being less than the discount rate at the beginning of
the year. Changes in actuarial assumptions led to a gain on
liabilities of £1,491 million (UK £793 million;
US £698 million). This primarily reflected
movements in discount rates which resulted from large increases
in corporate bond yields.
The pension and OPEB surpluses in both the UK and the US of
£1,377 million and £975 million respectively
(31 March 2023: £1,672 million and
£973 million) continue to be recognised as assets under
IFRIC 14 as explained on page 175 of the Annual Report and
Accounts for the year ended 31 March 2023.
13. Commitments and contingencies
At
30 September 2023, there were commitments for future energy
purchase agreements of £13,824 million (31 March
2023: £19,194 million) and future capital expenditure
contracted but not provided for in relation to the acquisition of
property, plant and equipment of £3,218 million
(31 March 2023: £2,936 million).
We
also have contingencies in the form of certain guarantees and
letters of credit. These are described in further detail in note 30
to the Annual Report and Accounts for the year ended 31 March
2023.
Litigation and claims
Through
the ordinary course of our operations, we are party to various
litigation, claims and investigations. We do not expect
the ultimate resolution of any proceedings to have a material
adverse effect on our results of operations, cash flows or
financial position.
14. Exchange rates
The
consolidated results are affected by the exchange rates used to
translate the results of our US operations and US dollar
transactions. The US dollar to pound sterling exchange rates used
were:
30 September
|
2023
|
2022
|
Year
ended 31 March
2023
|
Closing rate applied at period end
|
1.22
|
1.12
|
1.23
|
Average rate applied for the period
|
1.25
|
1.21
|
1.22
|
15. Related party transactions
Related
party transactions in the six months ended 30 September 2023
were substantially the same in nature to those disclosed in note 31
of the Annual Report and Accounts for the year ended 31 March
2023. There were no other related party transactions in the period
that have materially affected the financial position or performance
of the Group.
16. Additional disclosures in respect of guaranteed
securities
Niagara Mohawk Power Corporation, a wholly owned subsidiary of the
Group, has issued preferred shares that are listed on a US national
securities exchange and are guaranteed by National Grid plc. This
guarantor commits to honour any liabilities should the company
issuing the debt have any financial difficulties. In order to
provide debt holders with information on the financial stability of
the company providing the guarantee, we are required to disclose
individual financial information for this company. We have chosen
to include this information in the half year financial
information.
The following summarised financial information is given in respect
of Niagara Mohawk Power Corporation as a result of National Grid
plc's guarantee, dated 29 October 2007, of Niagara Mohawk Power
Corporation's 3.6% and 3.9% issued preferred shares, which amount
to $23 million. National Grid plc's guarantee of Niagara
Mohawk Power Corporation's preferred shares is full and
unconditional. There are no restrictions on the payment of
dividends by Niagara Mohawk Power Corporation or limitations on
National Grid plc's guarantee of the preferred shares, and there
are no factors that may affect payments to holders of the
guaranteed securities.
The following summarised financial information for National Grid
plc and Niagara Mohawk Power Corporation is presented on a combined
basis and is intended to provide investors with meaningful and
comparable financial information, and is provided pursuant
to the early adoption of Rule 13-01 of Regulation S-X in lieu
of the separate financial statements of Niagara Mohawk Power
Corporation.
Summarised financial information is presented, on a combined basis,
as at 30 September 2023. The combined amounts are presented
under IFRS measurement principles. Intercompany transactions
between National Grid plc and Niagara Mohawk Power Corporation have
been eliminated. Investments in other non-issuer and non-guarantor
subsidiaries are included at cost, subject to
impairment.
|
National Grid plc and Niagara Mohawk Power Corporation
combined
£m
|
Combined statement of financial position
|
|
Non-current loans to other subsidiaries
|
126
|
Non-current assets
|
12,033
|
Current loans to other subsidiaries
|
15,557
|
Current assets
|
1,526
|
Current loans from other subsidiaries
|
(6,893)
|
Current liabilities
|
(1,263)
|
Non-current loans from other subsidiaries
|
(2,080)
|
Non-current liabilities
|
(13,703)
|
Net assets¹
|
5,303
|
Equity
|
5,303
|
|
|
Combined income statement - continuing operations
|
|
Revenue
|
1,594
|
Operating costs
|
(1,330)
|
Operating profit
|
264
|
Other income from other subsidiaries
|
-
|
Other income and costs, including taxation
|
(51)
|
Profit after tax
|
213
|
1.
Excluded from net assets above are investments in other
consolidated subsidiaries with a carrying value of
£14,480 million.
17. Post balance sheet events
At the end of October 2023, legislation required to enable the
separation of the ESO and formation of the ISOP was passed through
Parliament. The ISOP is expected to be established as a Public
Corporation in 2024, with responsibilities across both the
electricity and gas systems. As a result, the Group took the
judgement to classify the associated assets and liabilities
of the ESO as held for sale in the consolidated statement
of financial position at the end of October 2023 and the
ESO will be measured at the lower of its carrying amount or
fair value less costs to sell, which will take into consideration
the current over-collection of
allowed revenues as disclosed on page 19.
Principal risks and uncertainties
When preparing the half year financial information the risks as
reported in the Annual Report and Accounts for the year
ended 31 March 2023 (principal risks on pages 20-24
and inherent risks on pages 225-228) were reviewed to ensure that
the disclosures remained appropriate and adequate. Below is a
summary of our key risks as at 30 September
2023:
People risks
■ Failure
to build capability and leadership capacity required to deliver our
vision and strategy because of ineffective succession planning
and recruitment into leadership roles.
Financial risks
■ Failure
to fund our business efficiently as a result of lack of access to a
wide pool of investors, market volatility, unsatisfactory
regulatory outcomes or unsatisfactory financial or operational
performance of the business, leading to a lack of access to
capital, impacting our ability to achieve our strategic
objectives.
Strategic risks
■ Failure
to identify and/or deliver upon actions necessary to meet our
climate change targets and enable the wider energy transition
because of poor management of threats and opportunities associated
with migrating climate change, leading to a reputational impact of
not enabling us to meet our net zero
commitments.
■ Failure
to influence future energy policies and secure satisfactory
regulatory agreements because of lack of insight or
unsuccessful negotiations, leading to poor regulatory outcomes,
energy policies that negatively impact our operations, impacts on
market prices, reduced financial performance, fines/penalties,
increased costs to remain compliant and/or reputational
damage.
■ Failure
to position ourselves appropriately to societal and political
expectations because of a failure to proactively monitor the
landscape or, to anticipate and respond to changes leading to
reputational damage, political intervention, threats to the Group's
licences to operate, and our ability to achieve our
objectives.
Operational risks
■ Failure
to adequately anticipate and manage disruptive forces on our
systems because of a cyber-attack, poor recovery of critical
systems or malicious external or internal parties, resulting in an
inability to operate the network, damage to assets, loss of
confidentiality and integrity and/or availability of
systems.
■ Catastrophic
asset failure or bulk system failure because failure of a critical
asset or system, substandard operational performance or inadequate
maintenance, over-pressurisation, leak-prone pipe, third-party
damage and undetected system anomalies, leading to a significant
public and employee safety and/or environmental
event.
■ Failure
to predict and respond to a significant disruption of energy supply
because of climate change, asset failure, storms, attacks, market
failure or other emergency events leading to significant customer
harm, lasting reputational damage with customers, regulators, and
politicians, material financial losses, loss of franchise, and
damage to investor confidence.
■ Failure
to effectively predict or respond to fluctuations in energy supply
and inability to balance supply and customer demand, or
appropriately respond to energy supply constraints, due to
external, system or human factors leading to adverse impacts on
customers and/or the public.
■ Failure
to deliver on our major capital project programme within the
required timeframes because of: a lack of a clearly defined
regulatory and financial frameworks to incentivise investment;
complex planning requirements; external impacts on supply chain; or
a failure to demonstrate clear long-term economic benefits to
communities, leading to increased costs, compromised quality and
reputational damage and detrimentally impacting our ability to
deliver our clean energy transition strategy.
Statement of Directors' Responsibilities
The half year financial information is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half year financial information in accordance
with the Disclosure Guidance and Transparency Rules (DTR) of the
United Kingdom's Financial Conduct Authority.
The Directors confirm that to the best of their
knowledge:
a)
the condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
issued by the International Accounting Standards Board and as
adopted by the United Kingdom;
b)
the half year management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year);
and
c)
the half year management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
The Directors of National Grid plc are listed in the Annual Report
and Accounts for the year ended 31 March 2023, with the
exception of the changes in the period which are listed on page
13.
By order of the Board
...
..
John
Pettigrew
Andy Agg
8
November 2023
8 November 2023
Chief Executive
Chief Financial Officer
Independent Review Report to National Grid plc
Conclusion
We have been engaged by the Company (National Grid plc) to review
the condensed consolidated set of financial statements in the
half-yearly financial report for the six months
ended 30 September 2023 which comprises the
consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of changes in
equity, the consolidated cash flow statement and related
notes 1 to 17 (collectively referred to as the
'interim financial information').
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months
ended 30 September 2023 is not prepared, in all
material respects, in accordance with United Kingdom adopted
International Accounting Standard 34 and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard
on Review Engagements (UK) 2410 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the Financial Reporting Council for use in the United
Kingdom (ISRE (UK) 2410). A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has
been prepared in accordance with United Kingdom adopted
International Accounting Standard 34, 'Interim Financial
Reporting'.
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the Basis for Conclusion
section of this report, nothing has come to our attention to
suggest that the Directors have inappropriately adopted the going
concern basis of accounting or that the Directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going
concern.
Responsibilities of the Directors
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the Directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do
so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are responsible
for expressing to the Company a conclusion on the condensed
consolidated set of financial statements in the half-yearly
financial report. Our Conclusion, including our Conclusion Relating
to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with ISRE
(UK) 2410. Our work has been undertaken so that we might state
to the Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
8 November 2023
Alternative performance measures/non-IFRS
reconciliations
Within the Half Year Results Statement, a number of financial
measures are presented. Some of these measures have been
categorised as alternative performance measures (APMs), as per the
European Securities and Markets Authority (ESMA) guidelines and the
Securities and Exchange Commission (SEC) conditions for use of
non-IFRS Financial Measures.
An APM is a financial measure of historical or future financial
performance, financial position, or cash flows, other than a
financial measure defined under IFRS. The Group uses a range of
these measures to provide a better understanding of its
underlying performance. APMs are reconciled to the most directly
comparable IFRS financial measure where
practicable.
The Group has defined the following financial measures as APMs
derived from IFRS within the Half Year Results Statement: net
revenue, the various adjusted operating profit, earnings and
earnings per share metrics detailed in the 'adjusted profit
measures' section below and capital investment (including capital
investment (regulated networks)). For each of these we present
a reconciliation to the most directly comparable IFRS
measure.
Net revenue and underlying net revenue
'Net revenue' is revenue less pass-through costs, such as system
balancing costs, and gas and electricity commodity costs in the US.
Pass-through costs are fully recoverable from our customers and are
recovered through separate charges that are designed to recover
those costs with no profit. Any over- or under-recovery
of these costs is returned to, or recovered from, our
customers. Underlying net revenue further adjusts this to remove
the impact of 'timing', i.e. the in-year difference between allowed
and collected revenues, including revenue incentives, as governed
by our rate plans in the US or regulatory price controls in the UK
(but excluding totex-related allowances and
adjustments).
|
|
|
2023
|
|
|
Six months ended 30 September
|
Gross revenue
£m
|
Pass-
through
costs
£m
|
Net revenue
£m
|
Timing
£m
|
Underlying net revenue
£m
|
UK Electricity Transmission
|
1,356
|
(104)
|
1,252
|
(183)
|
1,069
|
UK Electricity Distribution
|
850
|
(114)
|
736
|
87
|
823
|
UK Electricity System Operator
|
1,734
|
(1,123)
|
611
|
(409)
|
202
|
New England
|
1,441
|
(690)
|
751
|
250
|
1,001
|
New York
|
2,365
|
(806)
|
1,559
|
149
|
1,708
|
National Grid Ventures
|
666
|
-
|
666
|
-
|
666
|
Other
|
142
|
-
|
142
|
-
|
142
|
Sales between segments
|
(65)
|
-
|
(65)
|
-
|
(65)
|
Total from continuing operations
|
8,489
|
(2,837)
|
5,652
|
(106)
|
5,546
|
|
|
|
2022
|
|
|
Six months ended 30 September
|
Gross revenue
£m
|
Pass-
through
costs
£m
|
Net revenue
£m
|
Timing
£m
|
Underlying net revenue
£m
|
UK Electricity Transmission
|
969
|
(90)
|
879
|
65
|
944
|
UK Electricity Distribution
|
1,005
|
(199)
|
806
|
48
|
854
|
UK Electricity System Operator
|
2,060
|
(1,783)
|
277
|
(95)
|
182
|
New England
|
1,760
|
(820)
|
940
|
123
|
1,063
|
New York
|
2,758
|
(1,316)
|
1,442
|
220
|
1,662
|
National Grid Ventures
|
685
|
-
|
685
|
-
|
685
|
Other
|
253
|
-
|
253
|
-
|
253
|
Sales between segments
|
(46)
|
-
|
(46)
|
-
|
(46)
|
Total from continuing operations
|
9,444
|
(4,208)
|
5,236
|
361
|
5,597
|
Adjusted profit measures:
In considering the financial performance of our business and
segments, we use various adjusted profit measures in order to aid
comparability of results year-on-year. The various measures are
presented on page 17 and reconciled below.
Adjusted results: These
exclude the impact of exceptional items and remeasurements that are
treated as discrete transactions under IFRS and can accordingly be
classified as such. Further details of these items are included in
note 4.
Underlying results: Further
adapts our adjusted results to take account of volumetric and other
revenue timing differences arising due to the in-year difference
between allowed and collected revenues, including revenue
incentives, as governed by our rate plans in the US or regulatory
price controls in the UK (but excluding totex-related allowances
and adjustments). As defined on page 56 of the Annual Report and
Accounts for the year ended 31 March 2023, major storm
costs are costs (net of certain deductibles) that are recoverable
under our US rate plans but expensed as incurred under IFRS.
Where the total incurred costs (after deductibles) exceed $100
million in any given year we also exclude the net amount from
underlying earnings. Group underlying EPS is one of the incentive
targets set annually and part of the LTPP target for remunerating
certain Executive Directors.
Constant currency: 'Constant
Currency Basis' refers to the reporting of the actual results
against the results for the same period last year which, in respect
of any US dollar currency-denominated activity, have been
translated using the weighted average US dollar exchange rate for
the six months ended 30 September 2023, which was
$1.25 to £1.00. The weighted average rate for the six
months ended 30 September 2022, was $1.21 to
£1.00. Assets and liabilities as at 30 September
2023 have been retranslated at the closing rate
at 30 September 2023 of $1.22 to £1.00.
The closing rate for the balance sheet date 31 March
2023 was $1.23 to £1.00.
Alternative performance measures/non-IFRS reconciliations
(continued)
Reconciliation of Statutory, Adjusted and Underlying Profits and
Earnings - at actual exchange rates - continuing
operations
Six months ended 30 September 2023
|
Statutory
|
Exceptionals and remeasurements
|
Adjusted
|
Timing
|
Major storm costs
|
Underlying
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
UK Electricity Transmission
|
838
|
1
|
839
|
(183)
|
-
|
656
|
UK Electricity Distribution
|
472
|
4
|
476
|
87
|
-
|
563
|
UK Electricity System Operator
|
443
|
-
|
443
|
(409)
|
-
|
34
|
New England
|
(47)
|
15
|
(32)
|
250
|
-
|
218
|
New York
|
8
|
(38)
|
(30)
|
149
|
-
|
119
|
National Grid Ventures
|
310
|
(91)
|
219
|
-
|
-
|
219
|
Other*
|
(39)
|
26
|
(13)
|
-
|
-
|
(13)
|
Total operating profit
|
1,985
|
(83)
|
1,902
|
(106)
|
-
|
1,796
|
Net finance costs
|
(685)
|
(26)
|
(711)
|
-
|
-
|
(711)
|
Share of post-tax results of JVs and associates
|
71
|
(12)
|
59
|
-
|
-
|
59
|
Profit before tax
|
1,371
|
(121)
|
1,250
|
(106)
|
-
|
1,144
|
Tax
|
(307)
|
20
|
(287)
|
19
|
-
|
(268)
|
Profit after tax
|
1,064
|
(101)
|
963
|
(87)
|
-
|
876
|
*Includes
Property.
|
6
|
-
|
6
|
-
|
-
|
6
|
Six months ended 30 September 2022
|
Statutory1
|
Exceptionals
and remeasurements1
|
Adjusted
|
Timing
|
Major storm costs
|
Underlying
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
UK Electricity Transmission
|
493
|
6
|
499
|
65
|
-
|
564
|
UK Electricity Distribution
|
522
|
9
|
531
|
48
|
-
|
579
|
UK Electricity System Operator
|
146
|
1
|
147
|
(95)
|
-
|
52
|
New England
|
720
|
(527)
|
193
|
123
|
-
|
316
|
New York
|
(26)
|
8
|
(18)
|
220
|
-
|
202
|
National Grid Ventures
|
308
|
(49)
|
259
|
-
|
-
|
259
|
Other*
|
76
|
69
|
145
|
-
|
-
|
145
|
Total operating profit
|
2,239
|
(483)
|
1,756
|
361
|
-
|
2,117
|
Net finance costs
|
(624)
|
(108)
|
(732)
|
-
|
-
|
(732)
|
Share of post-tax results of JVs and associates
|
51
|
19
|
70
|
-
|
-
|
70
|
Profit before tax
|
1,666
|
(572)
|
1,094
|
361
|
-
|
1,455
|
Tax
|
(447)
|
270
|
(177)
|
(96)
|
-
|
(273)
|
Profit after tax
|
1,219
|
(302)
|
917
|
265
|
-
|
1,182
|
*Includes
Property.
|
227
|
-
|
227
|
-
|
-
|
227
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
Reconciliation of Adjusted and Underlying Profits - at constant
currency
|
|
|
At constant currency
|
Six months ended 30 September 2022
|
Adjusted
at actual exchange rate
|
|
Constant currency adjustment
|
Adjusted
|
Timing
|
Major storm costs
|
Underlying
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
UK Electricity Transmission
|
499
|
|
-
|
499
|
65
|
-
|
564
|
UK Electricity Distribution
|
531
|
|
-
|
531
|
48
|
-
|
579
|
UK Electricity System Operator
|
147
|
|
-
|
147
|
(95)
|
-
|
52
|
New England
|
193
|
|
(8)
|
185
|
119
|
-
|
304
|
New York
|
(18)
|
|
1
|
(17)
|
212
|
-
|
195
|
National Grid Ventures
|
259
|
|
(1)
|
258
|
-
|
-
|
258
|
Other*
|
145
|
|
-
|
145
|
-
|
-
|
145
|
Total operating profit
|
1,756
|
|
(8)
|
1,748
|
349
|
-
|
2,097
|
Net finance costs
|
(732)
|
|
11
|
(721)
|
-
|
-
|
(721)
|
Share of post-tax results of JVs and associates
|
70
|
|
(1)
|
69
|
-
|
-
|
69
|
Profit before tax
|
1,094
|
|
2
|
1,096
|
349
|
-
|
1,445
|
*Includes
Property.
|
227
|
|
-
|
227
|
-
|
-
|
227
|
Alternative performance measures/non-IFRS reconciliations
(continued)
Earnings per share calculations from continuing operations - At
actual exchange rates
The table below reconciles the profit after tax from continuing
operations per the previous tables back to the earnings per share
from continuing operations for each of the adjusted profit
measures. Earnings per share is only presented for those
adjusted profit measures that are at actual exchange rates, and not
for those at constant currency.
Six months ended 30 September 2023
|
Profit after tax
£m
|
Non-controlling interest
£m
|
Profit after tax attributable to the parent
£m
|
Weighted average number of shares
Millions
|
Earnings
per share
pence
|
Statutory
|
1,064
|
(1)
|
1,063
|
3,682
|
28.8
|
Adjusted (also referred to as Headline)
|
963
|
(1)
|
962
|
3,682
|
26.1
|
Underlying
|
876
|
(1)
|
875
|
3,682
|
23.8
|
Six
months ended 30 September
2022
|
Profit after tax
£m
|
Non-controlling interest
£m
|
Profit after tax attributable to the parent
£m
|
Weighted average number of shares
Millions
|
Earnings
per share
pence
|
Statutory1
|
1,219
|
-
|
1,219
|
3,651
|
33.4
|
Adjusted (also referred to as Headline)
|
917
|
-
|
917
|
3,651
|
25.1
|
Underlying
|
1,182
|
-
|
1,182
|
3,651
|
32.4
|
1.
Comparative amounts have been re-presented to reflect the
classification of the FAA option as held for sale and within
discontinued operations.
Timing impacts from continuing operations
Under the Group's regulatory frameworks, the majority of the
revenues that National Grid is allowed to collect each year are
governed by a regulatory price control or rate plan. If National
Grid collects more than this allowed level of revenue, the balance
must be returned to customers in subsequent years, and if it
collects less than this level of revenue, it may recover the
balance from customers in subsequent years. These variances between
allowed and collected revenues give rise to 'over and
under-recoveries'. A number of costs in the UK and the US are
pass-through costs (including commodity and energy efficiency costs
in the US), and are fully recoverable from customers. Timing
differences between costs of this type being incurred and their
recovery through revenues are also included in over and
under-recoveries. In the UK, timing differences include an
estimation of the difference between revenues earned under revenue
incentive mechanisms and associated revenues collected. UK timing
balances and movements exclude adjustments associated with changes
to controllable cost (totex) allowances or adjustments under the
totex incentive mechanism. Opening balances of over and
under-recoveries have been restated where appropriate to correspond
with regulatory filings and calculations.
|
UK Electricity Transmission
£m
|
UK Electricity Distribution
£m
|
UK Electricity System Operator
£m
|
New
England1
£m
|
New
York1
£m
|
Total
£m
|
1 April 2023 opening
balance2
|
(217)
|
(119)
|
78
|
(394)
|
699
|
47
|
Over/(under)-recovery
|
183
|
(87)
|
409
|
(250)
|
(149)
|
106
|
30 September 2023 closing
balance
to (recover)/return
|
(34)
|
(206)
|
487
|
(644)
|
550
|
153
|
|
|
|
|
|
|
|
|
UK Electricity Transmission
£m
|
UK Electricity Distribution
£m
|
UK Electricity System Operator
£m
|
New
England1
£m
|
New
York1
£m
|
Total
£m
|
1 April 2022 opening
balance
|
(85)
|
25
|
(127)
|
(332)
|
636
|
117
|
Over/(under)-recovery
|
(65)
|
(48)
|
95
|
(119)
|
(212)
|
(349)
|
Disposal
in the year3
|
-
|
-
|
-
|
(17)
|
-
|
(17)
|
30 September 2022 closing
balance
to (recover)/return
|
(150)
|
(23)
|
(32)
|
(468)
|
424
|
(249)
|
1.
New England and New York in-year over/(under)-recovery and all New
England and New York balances have been translated using the
average exchange rate for the half year ended 30 September
2023.
2.
Opening balances have been restated to reflect the finalisation of
calculated over/(under)-recoveries in the UK and the
US.
3.
Disposal of NECO (Rhode Island) in May 2022.
Alternative performance measures/non-IFRS reconciliations
(continued)
Capital investment
Capital investment is not a statutory measure as it is not a
defined term under IFRS. 'Capital investment' or 'investment'
refers to additions to plant, property and equipment and intangible
assets, and contributions to joint ventures and associates. We also
include the Group's investments by National Grid Partners during
the period (which are classified for IFRS purposes as non-current
financial assets on the Group consolidated statement of financial
position). References to 'capital investment' or 'capital
expenditure' in our regulated networks include the following
segments: UK Electricity Transmission, UK Electricity Distribution,
UK Electricity System Operator, New England and New York, but
exclude National Grid Ventures and 'Other'.
|
At actual exchange rates
|
|
At constant currency
|
Six months ended 30 September
|
2023
|
20221
|
% change
|
|
2023
|
20221
|
% change
|
£m
|
£m
|
|
£m
|
£m
|
UK Electricity Transmission
|
800
|
629
|
27%
|
|
800
|
629
|
27%
|
UK Electricity Distribution
|
608
|
584
|
4%
|
|
608
|
584
|
4%
|
UK Electricity System Operator
|
75
|
42
|
79%
|
|
75
|
42
|
79%
|
New
England2
|
789
|
801
|
(1%)
|
|
789
|
771
|
2%
|
New York
|
1,257
|
1,242
|
1%
|
|
1,257
|
1,195
|
5%
|
National Grid Ventures
|
175
|
410
|
(57%)
|
|
175
|
407
|
(57%)
|
Other
|
2
|
9
|
(78%)
|
|
2
|
9
|
(78%)
|
Group capital expenditure (continuing)
|
3,706
|
3,717
|
0%
|
|
3,706
|
3,637
|
2%
|
|
|
|
|
|
|
|
|
Memo: Capital expenditure (regulated networks)
|
3,529
|
3,298
|
7%
|
|
3,529
|
3,221
|
10%
|
Six months ended 30 September - at actual exchange
rates
|
2023
|
20221
|
% change
|
£m
|
£m
|
Capital expenditure
|
3,706
|
3,717
|
0%
|
Equity investments in joint ventures and associates
|
151
|
129
|
17%
|
Increase in financial assets (National Grid Partners)
|
11
|
37
|
(70%)
|
Group capital investment (continuing)
|
3,868
|
3,883
|
0%
|
|
|
|
|
Memo: Capital investment (regulated networks)
|
3,529
|
3,298
|
7%
|
Six months ended 30 September - at constant currency
|
2023
|
20221
|
% change
|
£m
|
£m
|
Capital expenditure
|
3,706
|
3,637
|
2%
|
Equity investments in joint ventures and associates
|
151
|
124
|
22%
|
Increase in financial assets (National Grid Partners)
|
11
|
37
|
(70%)
|
Group capital investment (continuing)
|
3,868
|
3,798
|
2%
|
|
|
|
|
Memo: Capital investment (regulated networks)
|
3,529
|
3,221
|
10%
|
1.
Comparative amounts have been re-presented to reflect NGV as a
separate operating segment and the reclassification of our US LNG
operations from New England to NGV following an internal
reorganisation in the period.
2.
New England comparative amounts include NECO.
[1] UK
Electricity Transmission, UK Electricity Distribution,
UK Electricity System Operator, New England and New
York.
[2]
Excluding UK Electricity Distribution, UK Gas Transmission and
Metering and the UK Electricity System
Operator.
[3] ASTI
capital expenditure is reported as part of the UK Electricity
Transmission segment.
[4] The
reliability standard is set at less than three hours Loss of Load
Expectation (LOLE).
[5]
Excluding UK Electricity Distribution, UK Gas Transmission and
Metering and the UK Electricity System
Operator.
[6] Our
previous SBT was to reduce Scope 1 and 2 emissions by 50% by 2030
from a 2015/16 baseline.
[7]
Full-year underlying EPS (2020/21) as reported on 20 May
2021.
[8] With
our 40% stake in National Gas Transmission accounted for as held
for sale, it is not included in our underlying EPS guidance for
2023/24.
[9] ASTI
capital expenditure is reported as part of the UK Electricity
Transmission segment.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
|
NATIONAL GRID
plc
|
|
|
|
|
By:
|
/s/Sally Kenward
_______________________
|
|
|
Sally Kenward
Senior Assistant Company Secretary
|
Date:
9 November
2023
National Grid (NYSE:NGG)
Historical Stock Chart
From Jul 2024 to Aug 2024
National Grid (NYSE:NGG)
Historical Stock Chart
From Aug 2023 to Aug 2024