National Grid plc (LON:NG), a leading energy transmission and distribution company, has announced its Full Year results for the period ended 31 March 2024. Alongside these results the company has announced a fully underwritten equity raise of £7 billion through a Rights Issue.
John Pettigrew, Chief Executive, said:
“Today is a defining moment for National Grid as we announce a significant increase in investment that cements our position as a leader in the energy transition on both sides of the Atlantic.
Governments and regulators are moving with increased urgency to attract the levels of investment required to meet their net zero ambitions, giving us improved visibility and confidence over our medium term investment plan. That is why we’re announcing today a new five-year financial framework. We will be investing £60 billion in the five years to the end of March 2029 – that’s nearly double the level of investment of the past five years. We expect this significant step-up in capital investment will deliver annual group asset growth of around 10%, and 6-8% underlying EPS CAGR from a 2024/25 baseline, supported by a comprehensive financing plan that includes a £7 billion equity raise.
This is an unprecedented time for our industry that is creating significant opportunities for National Grid today, over the next five years and for decades to come. Our new five-year investment plan will deliver long-term value and returns for our shareholders, support over 60,000 more jobs, and accelerate the decarbonisation of the energy system for the digital, electrified economies of the future.
Our readiness to take this step is underscored by another year of strong financial and operational performance, with underlying operating profit and underlying EPS both up 6% at constant currency, with record investment of £8.2 billion across the Group. In the UK, our 17 major onshore and offshore transmission projects are moving ahead at pace, and in the US our $4 billion ‘Upstate Upgrade’ is underway representing the largest investment in New York’s electricity transmission network for over a century. Our sixth interconnector, the Viking Link to Denmark, came online in December and is the world’s longest onshore and subsea HVDC cable, demonstrating the world-class capabilities within National Grid.
Alongside our new five-year financial framework, we are also today further evolving our strategy to focus on networks and will therefore be streamlining our business as we announce our intention to sell Grain LNG, our UK LNG asset, and National Grid Renewables, our US onshore renewables business.”
| Financial Summary – Year ended 31 March Continuing operations only (not including UK Gas Transmission) | ||||||||||
| Statutory results | Underlying1,2 | Underlying at constant currency1,3 | ||||||||
| 2024 | 2023 | % change | 2024 | 2023 | % change | 2023 | % change | |||
| Operating profit (£m) | 4,475 | 4,879 | (8%) | 4,773 | 4,582 | 4% | 4,518 | 6% | ||
| Profit before tax (£m) | 3,048 | 3,590 | (15%) | 3,395 | 3,258 | 4% | 3,215 | 6% | ||
| Earnings per share (p) | 60.0 | 74.2 | (19%) | 78.0 | 74.5 | 5% | 73.6 | 6% | ||
| Dividend per share (p) | 58.52 | 55.44 | 6% | |||||||
| Capital investment4 (£m) | 8,235 | 7,593 | 8% | |||||||
3,692 million weighted average shares for 2023/24 (2022/23: 3,659 million).
1. Prior year comparatives have been restated to reflect the change in our underlying earnings definition to remove the deferred tax in UK regulated businesses (NGET and NGED).
2. ‘Underlying’ represents statutory results from continuing operations, but excluding exceptional items, remeasurements, major storm costs (when greater than $100 million), timing and the impact on underlying results of deferred tax in our UK regulated businesses (NGET and NGED). These and a number of other terms and performance measures used in this document are not defined within accounting standards and may be applied differently by other organisations. We have provided definitions of these terms on page 85 and reconciliations of these measures on pages 87 to 91. These measures are not a substitute for IFRS measures, however the Group believes such information is useful in assessing the performance of the business on a comparable basis.
3. Constant currency calculated using current year average exchange rate of $1.262 (2023: actual average exchange rate was $1.216).
4. Prior year comparatives have been restated to reflect the change in our ‘capital investment’ definition (an alternative performance measure, or APM), which now comprises: additions to property, plant and equipment and intangible assets, equity contributions to joint ventures and associates and capital expenditure prepayments made during the period; but no longer includes the Group’s investments by National Grid Partners. This definition now aligns with our statutory segmental disclosure of capital investment in note 2(c) to the financial statements and as such, is no longer considered to be an APM.
Highlights
A new exciting phase
■ A refreshed strategy; to be a pre-eminent pureplay networks business[1].
■ A significant step up in investment, around £60 billion over the five years to March 2029, nearly double the prior five years. This is expected to drive 10% Group asset growth CAGR, with group assets heading towards £100 billion by 2029.
■ Of the £60 billion capital investment over the five years to March 2029, around £51 billion aligned to the EU Taxonomy to decarbonise energy networks.
■ Nearly 80% of capital investment going into our Electricity Networks; Group mix moving towards 80%/20% electricity/gas by 2029.
■ Investment programme backed by a balanced, comprehensive financing plan, including a £7 billion fully-underwritten Rights Issue, providing funding clarity out to at least the end of RIIO-T3.
■ Streamlining of the group – announcing our intention to sell Grain LNG, our UK LNG business, and National Grid Renewables, our US onshore renewables business.
Strong financial delivery
■ Underlying operating profit of £4.8 billion was up 4% at actual exchange rates (6% at constant currency). This was principally driven by growth in revenues in UK Electricity Transmission through the RIIO-T2 price control, non-recurrence of Western Link liquidated damages, and higher rates in New York and New England[2]; partly offset by lower RIIO-ED2 incentives for UK Electricity Distribution, lower interconnector revenues, and lower property sales principally related to the St William transaction.
■ Statutory operating profit for continuing operations was down 8% to £4.5 billion. This was principally driven by non-cash exceptional charges in 2023/24 versus gains on disposals (NECO and our Millennium investment) in the prior year; partly offset by favourable timing and commodity swings and higher underlying performance versus the prior year. Statutory earnings per share (EPS) for continuing operations was down by 19% to 60.0p from 74.2p in the prior year.
■ Underlying EPS was up by 5% compared to the prior year at actual exchange rates (6% at constant currency), driven by the above reasons impacting underlying operating profit.
■ Recommended final dividend of 39.12p to bring full year dividend to 58.52p, up 5.55% and in line with policy.
Record capital investment across our energy networks
■ Capital investment of £8.2 billion for continuing operations, an increase of 8% at actual exchange rates (11% on the prior year at constant currency). This increase was principally driven by 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, including our Smart Path Connect project, and 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 projects including the IFA1 Sellindge converter station rebuild, Grain LNG expansion and Viking Link interconnector as these projects neared completion.
Entered a new phase of capital delivery
■ Good progress on early ASTI projects, including the signing of joint construction projects with ScottishPower Energy Networks for Eastern Green Link 1 (EGL1) in August, and with Scottish and Southern Electricity Networks (SSEN) Transmission for Eastern Green Link 2 (EGL2) in June. Construction contracts signed for both projects.
■ Development consent granted for our Yorkshire GREEN ASTI project; planning examination completed for development consent of our Bramford to Twinstead network reinforcement project.
■ Launched the ‘Great Grid Partnership’ with seven industry partners that will initially help to deliver network design and construction works on nine major onshore ASTI projects (part of a £9 billion supply chain framework which will also support infrastructure projects beyond 2030).
■ Launched our HVDC supply chain framework which, together with SSEN Transmission and ScottishPower Energy Networks, aims to secure the supply chain required for offshore cabling requirements across UK networks beyond 2030.
■ Launched our $4 billion ‘Upstate Upgrade’, a collection of more than 70 transmission enhancement projects through 2030 to deliver a modernised, stronger, and cleaner energy network in Upstate New York.
■ Executed contracts to secure the supply chain for the Upstate Upgrade, including circuit breakers and power transformers.
■ 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.
■ Commissioned our sixth interconnector, the 1,400 MW Viking Link to Denmark, the world’s longest subsea interconnector.
Continued capital re-allocation from National Gas Transmission
■ Completed the sale of a further 20% equity interest in National Gas Transmission to the consortium led by Macquarie Asset Management and British Columbia Investment Management Corporation (the Consortium), 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.
Good regulatory progress underpinning future growth
■ Welcomed the enactment of the UK Energy Act 2023 which provides for an operationally independent National Energy System Operator (NESO), introduces onshore competition for networks and implements a ‘net zero’ duty for Ofgem.
■ Further progress from Ofgem and government to support the step-up in investment required across UK energy networks, namely the Future System and Network Regulation (FSNR), Ofgem’s Sector Specific Methodology Consultation (SSMC), and the Electricity System Operator’s ‘Beyond 2030’ publication.
■ Filed a joint proposal for new rates at our downstate New York gas distribution businesses, KEDNY and KEDLI, including an allowed Return on Equity (RoE) of 9.35%, and an increase of around 30% in capital investment compared to 2022/23.
■ Filed for new rates for Massachusetts Electric (MECO), requesting a five-year rate plan with a RoE of 10.5%.
■ Filed the final version of 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[3].
Delivering on our responsible business and decarbonisation commitments
■ UK Electricity Transmission delivered network reliability of 99.999998%. Overall reliability of over 99.9% across all our electricity networks.
■ Updated our Responsible Business Charter to reflect our new portfolio, focused on key pillars: environment, customers and communities, and our people.
■ Achieved a 5.9% reduction in our Scope 1 and 2 emissions versus 2022/23, a 11.8% reduction against the 2018/19 baseline. Total Scope 3 greenhouse gas (GHG) emissions reduced by 1.7% year-on-year. Against our SBTi approved target (which excludes sold electricity) our Scope 3 GHG emissions increased by 0.8% principally driven by associated emissions linked to increased procurement spend for new energy infrastructure.
■ Connected 3,030 MW of renewable energy across our UK and US transmission and distribution networks, an increase of 2,344 MW compared to the prior year.
■ 78% of all Group capital expenditure[4] was aligned with EU Taxonomy principles for sustainable investment, compared to 75% in the prior year.
■ Continued to provide financial support to those severely affected by higher energy costs through our Energy Support Fund, with £13 million distributed in our UK and US network jurisdictions.
■ Provided almost 78,000 hours of employee volunteering across our communities, having now reached 36% of our ten year Group commitment of 500,000 volunteering hours.
■ Group Executive diversity reached 53.8%, an increase of 8.3% on the prior year. We remain on track for our 2025 management gender and ethnic diversity goals, reaching 35% and 17.6% respectively in 2023/24.
Delivered above our Group efficiency target
■ Delivered a further £139 million of Group efficiency savings during the year taking the cumulative efficiency savings to £513 million at actual exchange rates, significantly above our target of £400 million savings by the end of 2023/24.
Financial Outlook and Guidance
■ Guidance is based on our continuing businesses, as defined by IFRS, including the UK Electricity System Operator (ESO) until disposal. It excludes the minority stake in National Gas Transmission, which is classified as a discontinued operation.
■ Financial outlook over the five year period from 2024/25 to 2028/29:
■ Total cumulative capital investment of around £60 billion;
■ Group asset growth CAGRi of around 10% backed by strong balance sheet;
■ Driving underlying EPS CAGRii of 6-8% from a 2024/25 EPS baseline, once adjusted for the Rights Issueiii,iv;
■ Credit metrics consistent with current Group rating;
■ Regulatory gearing to fall to low 60% by March 2025, then trending back to the high-60% range by the end of RIIO-T3.
■ For 2024/25, whilst we continue to expect strong operational performance across the Group, we expect underlying EPS to be broadly in line with our underlying 2023/24 EPS once this has been adjusted by the number of bonus shares issued as part of the Rights Issue. We then expect underlying EPS CAGR of 6-8% from a 2024/25 baseline, through to 2028/29, assuming an exchange rate of £1:$1.25.
i. Group asset compound annual growth rate from a FY24 baseline. Forward years based on assumed USD FX rate of 1.25; and long run UK CPIH and US CPI. Assumes sale of ESO, Grain LNG, and National Grid Renewables before 2029. Assumes remaining 20% stake in UK Gas Transmission treated as a discontinued operation and therefore does not contribute group asset growth.
ii. Underlying EPS compound annual growth rate from FY25 baseline. Forward years based on assumed USD FX rate of 1.25; long run UK CPIH, US CPI and interest rate assumptions and scrip uptake of 25%. Assumes sale of ESO, Grain LNG, and National Grid Renewables before 2029. Assumes remaining 20% stake in UK Gas Transmission treated as a discontinued operation and therefore does not contribute to underlying EPS.
iii. For more detail on share count, see the 2024/25 Forward Guidance section. Our 2023/24 comparative underlying EPS of 70.8 pence per share is estimated based on the weighted average number of shares of 3,692 million adjusted for 374 million new shares (being the number of New Shares classified as ‘bonus shares’ pursuant to IAS33 calculated based on the closing middle-market share price of £11.275 on 22 May 2024). For 2024/25 all bonus shares will be included in the EPS calculation along with the pro-rated number of fully subscribed shares once the proposed Rights Issue completes.
iv. The securities offered with respect to the proposed Rights Issue will not be and have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Financial Key Performance Indicators
| Year ended 31 March | |||
| (£ million) | 2024 | 2023 | change % |
| Underlying operating profit (continuing) at constant currency1: | |||
| UK Electricity Transmission | 1,314 | 1,107 | 19% |
| UK Electricity Distribution | 1,152 | 1,230 | (6%) |
| UK Electricity System Operator | 80 | 31 | 158% |
| New England (prior year includes NECO) | 802 | 788 | 2% |
| New York | 1,016 | 842 | 21% |
| National Grid Ventures | 469 | 489 | (4%) |
| Other | (60) | 31 | (294%) |
| Underlying operating profit (continuing) at constant currency | 4,773 | 4,518 | 6% |
| Capital investment (continuing) at constant currency1: | |||
| UK Electricity Transmission | 1,912 | 1,301 | 47% |
| UK Electricity Distribution | 1,247 | 1,220 | 2% |
| UK Electricity System Operator | 85 | 108 | (21%) |
| New England (prior year excludes NECO) | 1,673 | 1,470 | 14% |
| New York | 2,654 | 2,363 | 12% |
| National Grid Ventures | 662 | 955 | (31%) |
| Other | 2 | 13 | (85%) |
| Capital investment (continuing) at constant currency | 8,235 | 7,430 | 11% |
| RCF/Net debt | 9.2 | 9.3 | -10bps |
| As at 31 March | |||
| Net debt | (43,607) | (40,973) | 6% |
| UK RAV | 30,356 | 28,292 | 7% |
| US rate base (£m at constant currency) | 25,097 | 22,517 | 11% |
| Total Group RAV and rate base (£m) | 55,453 | 50,809 | 9% |
| NGV and Other businesses (£m) | 7,593 | 6,639 | 14% |
| Total (£m) | 63,046 | 57,448 | 10% |
| Regulated asset growth | 9.7% | 11.4% | -170bps |
| Group return on equity | 8.9% | 11.0% | -210bps |
1. Constant currency calculated using current year average exchange rate of $1.262 (2023: actual average exchange rate was $1.216). See pages 88-91 for details. Statutory capital investment definition amended in year to include capital expenditure prepayments and additional equity investments in joint ventures and associates. Prior year comparatives have been restated, as explained on page 1.
ESG Key Performance Indicators
| PwC assurance1 | 2024 | 2023 | change | |
| Scope 1 and 2 greenhouse gas emissions (ktonnes CO2e) |  | 6,852 | 7,284² | (5.9%) |
| Scope 3 greenhouse gas emissions (ktonnes CO2e) | | 27,384 | 27,867² | (1.7%) |
| Renewable energy connected to the UK Transmission and Distribution Grids (MW) | | 2,444 | 132 | 1,752% |
| Renewable energy connected to the US Transmission and Distribution Grids (MW) | | 586 | 554 | 6% |
| Group Lost Time Injury Frequency Rate (LTIFR) | | 0.08 | 0.11 | (0.03) |
| Employee engagement index | 81% | 81% | – | |
| Diversity percentage of the workforce | ||||
| Percentage female | | 24.6% | 23.5% | 1.1% |
| Percentage ethnically and racially diverse | | 18.6% | 17.5% | 1.1% |
1. We engaged PricewaterhouseCoopers LLP (PwC) to undertake a limited assurance engagement, using International Standard on Assurance Engagements (ISAE) 3000 (Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ and ISAE 3410 ‘Assurance engagements on Greenhouse Gas Statements’ over a range of data points within our Responsible Business Report (RBR). The metrics identified with the leaf symbol above have been extracted from the RBR and included in the scope of their work. Details of PwC’s full limited assurance opinion and National Grid’s Reporting Methodology are set out in the RBR.
2. In setting our new near-term science-based targets, we follow the WRI/WBCSD GHG Protocol guidance and recalculated our new baseline (2018/19), aligning with our Recalculation Policy. This includes recalculating FY23 comparative figures to reflect improved calculation methodology.
| Results presentation and webcast | |
| John Pettigrew (CEO) and Andy Agg (CFO) will host the results presentation at the IET London, 2 Savoy Place, WC2R 0BL, at 09:15 (BST) today. A live webcast and Q&A will also be available. 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. | |
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The Annual Report and Accounts 2023/24 (ARA) will be published later today. When published, the ARA will be available on National Grid’s website at nationalgrid.com/investors
