Business Context and Reporting Period
National Grid plc, a foreign private issuer incorporated in England and Wales, filed this Form 6-K on October 5, 2023. The filing serves as a pre-close update regarding the half-year period ending September 30, 2023 (HY24). The company states that overall group performance continues to align with expectations, with full half-year results scheduled for announcement on November 9, 2023.
Key Financial Metrics
The filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity for the period. Instead, it offers qualitative guidance on the expected weighting of operating profit across the business segments for the half-year.
- UK Regulated Businesses: Expected to contribute broadly evenly to operating profit across the full year.
- US Regulated Businesses: Expected to be more heavily weighted towards the second half of the year.
- New York Business: Expected to deliver 10-15% of its full-year operating profit in the first half due to a higher non-cash environmental provision charge.
- National Grid Ventures and Other: Expected to have a broadly even split of operating profit between the first and second half.
- Underlying EPS: Expected to have a greater weighting to the second half of the year.
Material Changes and Segment Performance
Management expects HY24 operating profit weightings to be more reflective of historic periods compared to HY23. The primary material change noted is the specific impact on the New York business, where a non-cash environmental provision charge is reducing first-half profitability relative to the full year. No other specific material changes in financial position or operations were quantified in this update.
Guidance, Outlook, and Risks
Outlook: The company anticipates that underlying earnings per share (EPS) will be weighted more heavily toward the second half of the fiscal year. The full results will be released on November 9, 2023.
Risks and Contingencies: The filing includes a comprehensive cautionary statement regarding forward-looking statements. Key risks identified include:
- Regulatory changes, including RIIO-T2 and RIIO-ED2 price controls and the creation of a future system operator.
- Climate-related risks, environmental laws, and major storm costs.
- Network failures, infrastructure damage, and IT system breaches.
- Fluctuations in exchange rates, interest rates, and commodity prices.
- Restrictions on borrowing, funding costs, and access to financing.
- Performance of pension schemes and post-retirement benefit schemes.
- Integration of the UK Electricity Distribution business and the sale of the UK Gas Transmission and Metering business.
Investor Verification Checklist
- Verify the specific impact of the non-cash environmental provision charge on the New York business when full results are released.
- Confirm the actual split of operating profit between the first and second half for US regulated businesses versus the guidance provided.
- Review the upcoming November 9, 2023, announcement for detailed revenue, profit, and cash flow figures not present in this update.
- Monitor regulatory developments regarding RIIO-T2 and RIIO-ED2 price controls that could affect future earnings.
- Assess the progress of the UK Electricity Distribution integration and the UK Gas Transmission sale as potential sources of future volatility.