National Grid(NGG) - 2024 Q4 - Annual Report

Investment Plans and Financial Growth - National Grid announced a £60 billion investment plan over the next five years, nearly double the investment of the past five years, aiming for 10% annual group asset growth and 6-8% underlying EPS CAGR from a 2024/25 baseline[8] - Total cumulative capital investment over the five-year period from 2024/25 to 2028/29 is expected to be around £60 billion[29] - Group asset growth CAGR is projected to be around 10% from a FY24 baseline, driven by a strong balance sheet[29] - Underlying EPS CAGR is expected to be 6-8% from a 2024/25 baseline, adjusted for the Rights Issue[29] - The company expects to invest around £60 billion in energy networks and adjacent businesses over the next five years, with group assets projected to reach £100 billion by March 2029[120] - In the UK, the company plans to invest £23 billion in Electricity Transmission and £8 billion in Electricity Distribution over the next five years[121] - In the US, the company expects to invest £17 billion in New York and £11 billion in New England over the next five years, with 60% allocated to electricity networks[122] - The company anticipates a CAGR in underlying EPS of 6-8% from 2024/25 to 2028/29, with a total DPS of 58.52p/share for 2023/24[126][128] - Total Group capital investment for 2023/24 is expected to be around £10 billion, with Group Asset Growth projected at 10%[145] - Group expects capital investment of around £10 billion for continuing operations in 2024/25[194] Operational Performance and Profitability - The company reported a 6% increase in underlying operating profit and underlying EPS at constant currency, with a record investment of £8.2 billion across the Group[10] - The company's underlying operating profit for continuing operations was £4.8 billion, up 4% at actual exchange rates (6% at constant currency)[20] - National Grid's statutory operating profit for continuing operations decreased by 8% to £4.5 billion, with statutory EPS down 19% to 60.0p[20] - Underlying operating profit for continuing operations increased by 6% to £4,773 million in 2023/24[41] - Return on Equity (RoE) across the Group decreased by 210 basis points to 8.9% in 2023/24[44] - Adjusted earnings for 2023/24 were £3,100 million, up 33% from the prior year, including a timing over-recovery after tax of £688 million[154] - Underlying operating profit for continuing operations increased by 4%, driven by higher allowed revenues in UK Electricity Transmission and rate increases in KEDNY/KEDLI and NIMO[156] - Adjusted operating profit increased by £1,168 million (27%) or 29% on a constant currency basis, driven by improved performance in UK Electricity Transmission, New York, and New England[170] - Statutory operating profit decreased primarily due to exceptional net charges of £1,011 million, partly offset by favourable year-on-year movements in timing net over-recoveries and commodity derivative remeasurements[170] - Statutory IFRS earnings for 2023/24 were £2,216 million, down 18% from the previous year, impacted by £1,011 million in exceptional net charges[153] Capital Investment and Asset Growth - The company's capital investment for continuing operations increased by 8% to £8.2 billion, driven by early investment in UK Electricity Transmission and new transmission projects in New York[18] - Capital investment for continuing operations increased by 11% to a record £8,235 million in 2023/24[30] - UK Electricity Transmission capital investment increased by 47% to £1,912 million in 2023/24[30] - Renewable energy connected to the UK Transmission and Distribution Grids increased by 1,752% to 2,444 MW in 2024[31] - Total capital investment for continuing operations in 2023/24 was £8,235 million, an 8% increase (£642 million) at actual exchange rates and 11% at constant currency[194] - UK Electricity Transmission capital investment increased by 47% to £1,912 million in 2023/24 compared to £1,301 million in 2022/23[195] - New York capital investment rose by 8% to £2,654 million in 2023/24, with a 12% increase at constant currency[195] - National Grid Ventures (NGV) capital investment decreased by 32% to £662 million in 2023/24 due to largely completed projects in the prior year[195] - UK regulated asset base (RAV) increased by 7.3% in 2023/24, influenced by higher CPI inflation on RAV indexation[199] - US rate base grew by 11.5% in 2023/24, reflecting strong capital investment[199] - NGV and Other businesses increased assets due to ongoing capital investment, contributing to overall asset growth[199] - UK Gas Transmission capital investment in 2022/23 was £301 million, prior to the business disposal in January 2023[198] Renewable Energy and Environmental Initiatives - National Grid connected 3,030 MW of renewable energy across its UK and US transmission and distribution networks, an increase of 2,344 MW compared to the prior year[24] - The company achieved a 5.9% reduction in Scope 1 and 2 emissions versus 2022/23, and a 11.8% reduction against the 2018/19 baseline[24] - Renewable energy connected to the UK Transmission and Distribution Grids increased by 1,752% to 2,444 MW in 2024[31] - 3,030 MW of renewable energy connected across UK and US networks, with a 1.4 GW increase in interconnector capacity from Viking Link[106] - The company engaged with 50 carbon strategic suppliers in the UK and 74 in the US, accounting for over 30% of GHG emissions from purchased goods and services[109] Dividend and Shareholder Returns - The company's recommended final dividend is 39.12p, bringing the full-year dividend to 58.52p, up 5.55%[20] - The Board recommended a 5.55% increase in the final dividend to 39.12p per ordinary share, bringing the full-year dividend to 58.52p per ordinary share[188] Strategic Business Focus and Divestments - National Grid plans to sell Grain LNG and National Grid Renewables as part of its strategy to focus on networks, streamlining its business[11] - National Grid's asset base shifted to 75% electricity following the sale of a 20% stake in National Gas Transmission, up from 60% in March 2021[61] - The disposal of a further 20% interest in UK Gas Transmission generated £681 million in proceeds, contributing to the reduction in regulatory gearing[181][186] Infrastructure Projects and Upgrades - The Great Grid Upgrade plan aims to build more than five times the amount of new electricity transmission infrastructure in the next six years compared to the past 30 years[50] - National Grid's share of the £2.5 billion investment in the Eastern Green Link 1 (EGL1) project is £1.5 billion, with construction set to begin in 2025[52] - The Eastern Green Link 2 (EGL2) project involves a total investment of £4.4 billion, with National Grid contributing £2.4 billion, and will be the UK's longest HVDC cable[52] - National Grid selected seven supply chain partners for £4.5 billion worth of network infrastructure design and construction work through 2030[55] - The HVDC supply chain framework aims to secure over 14,000 kilometres of cabling with a provision for around £60 billion of investment[58] - National Grid plans to invest over $4 billion in the Upstate Upgrade project in New York, including over 1,000 miles of transmission line and 45 substations[62][63] - National Grid's share of the$2.8 billion Propel NY Energy transmission project is around $340 million[68] - The New York Energy Solution transmission line upgrade project involved a total investment of$670 million, with National Grid contributing around $100 million[69] - National Grid's Smart Path Connect project includes a$550 million investment to upgrade 55 miles of transmission circuits in Northern New York[67] - Smart Path Connect transmission project in New York to unlock over 1,000 MW of renewable resources, with a 10.3% RoE[92] - Proposed $2 billion investment over five years in Massachusetts under the Electric Sector Modernization Plan (ESMP)[93] Regulatory and Financial Metrics - Up to £58 billion investment into UK electricity transmission networks through the 2030s, with a 65$924 million capital investment for KEDNY and $646 million for KEDLI in the first rate year, with a 9.35$450 million in 2024/25, primarily due to proposed rate settlements[139] - Operating cash flow from continuing operations is expected to decrease by around 5% in 2024/25, primarily due to the reversal of ESO's timing over-recovery[146] - Net debt is expected to decrease by around £0.5 billion, driven by proceeds from the Rights Issue, with regulatory gearing reducing to the low 60% range[147] - Weighted average number of shares (WAV) is expected to increase by approximately 938 million to 4,688 million in 2024/25 due to the Rights Issue[148] - Timing over-recoveries in 2023/24 included £363 million in UK Electricity Transmission and £800 million in UK Electricity System Operator[165] - Deferrable storm costs in the US for 2023/24 were $285 million, eligible for future recovery under rate plans[166] - Underlying tax charge for the year was £515 million, with an underlying effective tax rate of 15.6$1.8 million to US partners through the Energy Support Fund to assist customers affected by rising energy costs[111] - In Massachusetts, the company facilitated over $18 million in home energy assistance funding and enrolled more than 250,000 customers on income-based discount rates[112] - National Grid colleagues volunteered 77,918 hours in 2023/24, with a cumulative total of 179,480 hours since 2020, achieving 36% of the 500,000-hour target[113] Efficiency and Cost Management - £139 million of Group efficiency savings in 2023/24, exceeding the £400 million target by £113 million[101]