Business Context and Reporting Period
Company: National Grid plc
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Full year ended 31 March 2025
Filing Date: 15 May 2025
Overview: National Grid reported its first full year of results under a new five-year financial framework. The company executed a strategic pivot to become a pure-play networks business, completing the sale of the UK Electricity System Operator (ESO) and the final stake in National Gas Transmission. The business model focuses on regulated asset growth in the UK and US to deliver secure, affordable, and clean energy.
Key Financial Metrics
| Metric (£m unless stated) | 2025 | 2024 | % Change |
|---|---|---|---|
| Statutory Operating Profit | 4,934 | 4,475 | 10% |
| Underlying Operating Profit (Constant Currency) | 5,357 | 4,768 | 12% |
| Profit Before Tax (Statutory) | 3,650 | 3,048 | 20% |
| Statutory EPS (pence) | 60.0 | 55.5 | 8% |
| Underlying EPS (pence) | 73.3 | 72.1 | 2% |
| Capital Investment | 9,847 | 8,235 | 20% |
| Net Debt (at 31 Mar) | (41,371) | (43,607) | (5%) |
| Regulatory Gearing | 61% | 69% | -800 bps |
| Dividend Per Share (Total) | 46.72p | 58.52p | (20%) |
| Dividend Per Share (Rebased) | 46.72p | 45.26p | 3% |
Note: Dividend per share decreased nominally due to the Rights Issue; the rebased figure reflects a 3% increase in line with UK CPIH inflation.
Material Changes vs. Prior Period
- Profit Growth: Underlying operating profit rose 12% at constant currency, driven by strong performance in regulated businesses, particularly new rate settlements in New York (KEDNY/KEDLI) and Massachusetts (MECO), and higher allowances in the UK.
- Capital Investment: Record investment of £9.8 billion (up 20%) was deployed, primarily in UK Accelerated Strategic Transmission Investment (ASTI) projects and US leak-prone pipe replacement.
- Balance Sheet: Net debt decreased by £2.2 billion to £41.4 billion, aided by £6.8 billion in net proceeds from a Rights Issue and divestment proceeds, despite high capital spend.
- Divestments: Completed the sale of the UK ESO to the UK Government (£673m proceeds) and the final 20% stake in National Gas Transmission (£686m proceeds). Agreed to sell National Grid Renewables and launched the divestment process for Grain LNG.
- Impairments: Recognised a £303 million exceptional impairment charge related to the Community Offshore Wind joint venture due to market uncertainty and paused development.
Guidance, Outlook, and Risks
Five-Year Financial Framework (2024/25 – 2028/29)
- Investment: Cumulative capital investment of approximately £60 billion.
- Asset Growth: Regulated asset growth CAGR of around 10%.
- Earnings: Underlying EPS CAGR of 6-8% from a 2024/25 baseline of 73.3p.
- Gearing: Regulatory gearing expected to trend back to the high 60% range by the end of the RIIO-T3 period.
2025/26 Forward Guidance
- Underlying EPS expected to be in line with the 6-8% CAGR range.
- Capital investment expected to exceed £11 billion.
- Net debt expected to increase by just over £6 billion, driven by investment, with regulatory gearing in the low-mid 60% range.
Risks and Contingencies
- Regulatory: Outcomes of upcoming rate cases and price controls (RIIO-T3 in UK, NIMO in NY) impact revenue allowances.
- Operational: Network reliability risks from severe weather (e.g., Storm Darragh) and the ongoing investigation into the North Hyde substation fire.
- Market: Policy uncertainty affecting offshore wind development (Community Offshore Wind impairment) and supply chain constraints for HVDC cables.
- Financial: Fluctuations in exchange rates, interest rates, and commodity prices.
Investor Verification Checklist
- Dividend Policy: Verify the sustainability of the dividend growth policy (linked to UK CPIH) against the increased share count from the Rights Issue.
- Divestment Timeline: Monitor the completion dates and final proceeds for the sale of National Grid Renewables and Grain LNG, currently classified as held for sale.
- Regulatory Approvals: Track the finalisation of the NIMO rate case in New York and the RIIO-T3 business plan submission in the UK, which underpin future revenue.
- Capital Execution: Assess the ability to deliver the £60 billion investment plan, specifically the supply chain readiness for Wave 2 ASTI projects.
- Offshore Wind Exposure: Review the status of the Community Offshore Wind joint venture and potential further impairments if policy uncertainty persists.