NGG

Good afternoon, everyone, and welcome. Thank you to those of you joining us in the room and online. I've been really looking forward to presenting to you today. As Chief Executive, my ambition is clear: to build on National Grid's strong foundations, sharpen execution, and advance us as a world-class business. Strong execution is the foundation of confidence for customers, regulators, governments, and investors. We must continue to transform our business as the external environment changes at pace. Let me start with our full-year results. These strong results demonstrate the momentum we're building. We delivered a step-up in CapEx of more than 20% to GBP 11.6 billion, driving asset growth of 10.9%. Underlying operating profit increased to GBP 5.7 billion, reflecting strong operational delivery. This supported 8% growth in underlying EPS at constant currency, in line with our guidance.

We also grew our dividend per share by 3.8%, in line with U.K. CPIH inflation. These results show we are delivering on our commitments. They also provide the reference point for the observations I've made since arriving and the strategic priorities we're now driving forward. Since becoming Chief Executive last autumn, I've spent significant time across our U.K. and U.S. operations and with colleagues at every level of the organization. I've engaged to listen and learn and to reinforce that safety remains one of our foundational values. These conversations will ensure that whatever changes we make are grounded in today's realities and informed by broad input. I've also spent time with our external stakeholders, consumers, customers, suppliers, strategic partners, and with many of you. I've invested significant time with regulators and governments on both sides of the Atlantic.

It's through working together that we can navigate the trade-offs between affordability, security of supply, resilience, and sustainability. All of this underscores for me that National Grid has strong foundations and is differentiated from our peers. Our portfolio is well-diversified across geographies, regulatory frameworks, and energy mix. We have clear visibility on investment and growth, deep engineering capability, and regulatory expertise. Our colleagues understand the critical role we play in the energy system, and they take that responsibility seriously. These strengths underpin our long-standing track record as one of the most reliable and resilient companies in the sector. My focus now is ensuring the way we work reflects the scale, complexity, and opportunities ahead. I'm guided by what has served me well throughout my career, a belief that every organization can and must improve its performance.

As a first step, I strengthened the executive leadership team and took actions to improve decision-making and clarifying accountabilities. This has included creating a new growth forum to provide more effective challenge on capital and bringing together the T3 capital execution under one team. From there, I've mobilized the organization. We've brought together our senior leaders and top talent to rigorously test our ambition against not just best-in-class peers, but also industries and other world-class leaders. This work focused on identifying the levers that would de-risk our plans to create the capacity to absorb uncertainties and to outperform where opportunities emerge. I'll share some practical examples of these later. We've also moved quickly to enhance delivery through specific actions like streamlining our governance processes and deepening our performance rigor. These early quick wins were targeted at improving ways of working and reinforcing a more dynamic, action-orientated culture.

We're a large company, 33,000 strong, and so I'm realistic that agility is not built in a day. This work has culminated in a refreshed strategic framework, now rolled out across the business to sharpen focus and to support consistent execution. This is not a change in direction, but instead provides a coherent structure under which we are unifying our efforts. This progress gave Andy and I the confidence to set out our updated five-year framework in March. We'll invest at least GBP 70 billion, our largest ever capital investment program, supporting annual asset growth of 10%, upgrading our underlying EPS growth of 8%-10%, and our progressive dividend offering. Before I walk through our strategic framework, it's worth stepping back to look at the market forces reshaping our industry and the opportunity that drew me to National Grid. We're operating in an energy system that is fundamentally changing.

The drivers of that change are interconnected, reinforcing one another, and unfolding at different speeds. Taken together, they create powerful tailwinds for our business. At the heart of this shift is a shift in supply mix. In the U.K., a key driver today is the change in generation mix. Our role is to connect 35 GW of new generation to our transmission network in the next five years alone. The sheer magnitude of it, transforming a legacy grid that flows north to south into a mesh that connects massive wind farms, distributed generation, and battery resources, it's an enormous feat. In the U.S., we have a different picture. Continued investment is vital for ensuring reliability across our networks, while demand is growing rapidly due to reshoring and data center demand. The scale of work underway in our upstate New York transmission assets is emblematic of how the system is evolving.

Natural gas also remains an important part of the energy mix for resilience and affordability, which underscores the criticality of our gas system. Demand is also evolving across our jurisdictions and will lead to a second wave of growth. AI and electrification are driving a step change in power demand. New large load customers like data centers and industrials want connection solutions that are faster, more certain, and resilient, which is changing the competitive landscape. In the U.K., we are ready to connect 19 GW of new demand over the next five years, representing a four-fold increase compared to the previous price control period. In the U.S., peak demand is projected to rise by more than 15% by 2029, requiring grid expansion to be delivered around 5x faster than in the past two decades. What does this all mean?

Customer expectations for reliability, security of supply, and system performance are rising, and in periods of greater geopolitical volatility, this is further amplified. Taken together, these structural shifts are expected to drive substantial growth in electricity demand across our markets over the next decade. Gas demand is expected to remain broadly stable, but investment remains essential to reliably meet periods of peak demand. Affordability is a defining challenge for the whole system. Our role is to deliver well-planned, well-executed network investments that lower costs across the system. Our opportunity is defined by the visibility of the growth that we have and what is likely to emerge. It's an opportunity underpinned by powerful long-term tailwinds, driven by structural market growth. In all scenarios, grids will be at the center of these trends, enabling the most efficient market formations.

The critical question, which I'll come to next, is how we translate these tailwinds into disciplined delivery and sustainable value. That market context is exactly why we've refreshed our strategic framework, to sharpen our focus on the actions that create value today while positioning National Grid to capture the growth ahead. Starting first with our mission, we bring energy to power possibilities. Our job is to unlock the full range of possibilities that energy can drive. That mission is grounded in our values, which have not changed. Doing the right thing, make it happen, and find a better way. These values are not separate from the strategy. They are how we deliver it. From there, the framework has two core components, the brilliant basics and the big shifts. The brilliant basics are the foundations of our business, where we're focused on delivering world-class performance.

This is where the overwhelming majority of our organization is focused. Calling them basics doesn't mean they're simple, nor static. Quite the opposite. These areas require relentless improvement, disciplined execution, and the thoughtful deployment of proven technology. Done well, this continuous improvement compounds into a step change in performance. Capital is about best-in-class delivery of our largest ever investment program. This is non-negotiable and central to our value creation story. It requires industry-leading capability in planning, assurance, supply chain readiness, and execution discipline. Across our assets, it's about getting the very best from the existing capital employed, improving reliability and resilience, extending asset life, and using data and insights to optimize performance and investment over time. For customers, it's about providing consistently strong experiences, from reliability and service through to faster, more predictable connections and transparent, proactive communication.

In our functions, the priority is to enhance control and oversight while reducing friction in how we operate, so the organization can move with greater pace and clarity. These brilliant basics de-risk the plan in front of us, but the market forces I described earlier require more than incremental improvement. They also require us to transform how we lead, how we innovate, and how we shape our external environment. They require three big shifts. The first is leadership, people, and our performance culture. Delivering our strategy at pace requires absolute clarity of accountability, stronger performance management, and investment in leadership. That's why we've aligned organizational performance management to our new strategic framework, running a red thread from our business objectives all the way through to individual goals. The second is technology and innovation. The complexity of the energy system we're building cannot be managed in traditional ways.

We must use technology, including digital, data, and AI, much more systematically. This will enable us to improve productivity, get more out of our networks, accelerate delivery, and improve customer experience. We have a number of examples of this across our business, and we'll cover those shortly. The third is external positioning and policy advocacy. As system needs evolve, existing policy and regulatory frameworks must too. We will be deliberate in shaping outcomes that support affordability, resilience, and growth. That means prioritizing where we engage, taking clearer positions, and building coalitions to shape the debate on both sides of the Atlantic. A good example of this is the regulatory engagement we're currently undertaking on ED3 as we seek to get the right blend of investment and flexibility to deliver affordable solutions.

Put simply, the brilliant basics de-risks today's plans, the big shifts position National Grid to lead the next phase of the energy evolution, and executing this will enable us to build a platform for exploring longer-term growth opportunities over time. Let me first bring our delivery to life by covering our five-year plans in both the U.K. and the U.S. Starting with the U.K., where we have clear visibility over the largest ever investment program, which is driving a step change in growth over the next five years. As the biggest FTSE-listed investor in the U.K., we are driving economic growth, both the scale and long-term visibility of our investment and the network capacity we create. We plan to invest around GBP 40 billion across our U.K. regulated businesses, reflecting both the magnitude of the energy transition and the critical role infrastructure plays in enabling it.

We're reshaping the backbone of the U.K. energy system, nearly doubling the amount of power that can flow across the network. Across transmission and distribution, we're building major new substations and delivering around 7,500 km of new or upgraded network infrastructure, equivalent to the distance from London to New York and halfway back again. It also means building the workforce to deliver it, where over the next five years, we expect to recruit around 6,000 full-time employees in the U.K., in which 2,000 will be graduates and apprentices. Of course, there's also a multiplier effect in our investment across our contractors, supply chain, and into the broader economy. Much of this investment is already underpinned by clear and stable regulatory frameworks.

RIIO-T3 gives us the mandate and visibility to invest at scale in transmission, and in distribution, we are now engaging on ED3, where the direction of travel provides confidence in our growth. The focus in our investment is very clear, enabling a fundamental shift in how the system operates. In transmission, we expect to invest around GBP 31 billion, a 150% increase over our previous five-year investment, including connecting up to 35 GW of generation and 19 GW of new demand. In distribution, we're investing around GBP 9 billion to build more flexible, intelligent networks, enabling electric vehicles, heat pumps, distributed generation, and new demand, all while maintaining reliability and performance at a local level. This translates into U.K. regulated asset value growth of more than 60% over the next five years to over GBP 60 billion, creating a strong platform for sustained earnings growth.

Alongside our onshore regulated networks, our 7.8 GW of interconnection portfolio is the largest in the world. It plays a critical role in linking the U.K. to neighboring European markets, which is improving security of supply, enabling the two-way flow of lower-cost energy, and supporting resilience. The U.K. opportunity is clear. Well-established regulatory frameworks delivering a step change in both supply and demand connectivity and building long-term value for all stakeholders. Turning now to the U.S., where we see a different but equally compelling growth story. We plan to invest around GBP 29 billion across our New York and New England businesses over the next five years. This reflects both the size of the opportunity and the regulatory construct we operate within. Our regular rate case cycle is typically every three to five years.

This provides us clear visibility on our investment plans and allows us to adapt to evolving system needs, policy and regulatory priorities, and emerging growth opportunities. In New York, we expect to invest around GBP 17 billion over the next five years, around 30% higher than the previous period, and in New England, around GBP 12 billion, an increase of approximately 50%. This step-up is driven by ongoing investment to maintain our resilience across gas and electric, as well as increased demand connections, with expected demand growth at around 3x previous levels. It's not just about data-intensive load growth. The planned Micron chip fabrication facility in central New York is a good example of the U.S. commitment to reshoring manufacturing. The underlying fundamentals of the U.S. Northeast are very encouraging for future investment.

At the same time, we're strengthening and modernizing our networks across both electricity and gas. In electricity, this includes transmission upgrades, new connections, and accelerating the deployment of smart meters. In gas, our local distribution businesses continue to play a critical role in system resilience, safety, and in affordability, which is supported by our ongoing investment in pipeline replacement and network modernization. As in the U.K., our investment translates into clear long-term value creation. Across our U.S. businesses, we expect to grow our regulated asset base by around 50% over the next five years to more than GBP 45 billion. The U.S. story is one of scale, resilience, and growth in every part of our business, with a portfolio that's well-positioned to deliver sustainable value over the long term.

If that is the scale of the opportunity and the growth ahead, let me now explain what makes me confident in our delivery. There's already good progress in our capital portfolio today, with key projects well underway on both sides of the Atlantic. We have 2/3 of our GBP 70 billion investment covered by regulatory agreements, and delivery mechanisms secured for 3/4 of it, including 100% of the primary supply chain for our ASTI projects. In the last six months, we've contracted GBP 2.5 billion for the Eastern Green Link 3 and 4 cable and converters, and a further GBP 1 billion on phase II of our CLCPA program in New York. Our assets continue to deliver world-class reliability and resilience, including 99.99999 reliability in our U.K. transmission business. While in Massachusetts, we now have 34% of customers covered by FLISR.

That's a self-healing network technology that restores customer power within a couple of minutes of an outage. Over the last six months, customers in Massachusetts have in aggregate avoided more than 15 million minutes of power outages because of this technology. We're also using advanced satellite and AI-based vegetation management tools to help reduce outages proactively as well. Both of these initiatives are allowing us to demonstrate the significant value of our investments in prevention rather than response, which enhances our resiliency and ensures that our reliability is critical as we engage on future rate cases. For the third consecutive year, we received awards from the Edison Electric Institute for our storm response. I'm not surprised by this when I see the dedication of our teams doing everything they can to restore customers quickly during the most challenging periods. We're also using advanced technology in our customer processes.

For example, by migrating to a new contact center digital platform in the U.S., we've consolidated millions of call interactions across fragmented systems into a single cloud platform. Finally, underpinning all of this, we have a solid operational backbone in our functions. Our core processes, systems, and teams provide strong controls while supporting the business in consistent delivery. It's from here that we are now focusing on how we go further, sharpening performance and lifting ourselves towards best in class across each of these areas. Let me begin with how we're sharpening performance on capital. From the early engineering and planning stages all the way through to execution, we are systematically optimizing our delivery plans. This will improve cost and schedule performance across the portfolio. There are two key areas that we focused on. Firstly, project assurance.

Our new capital control tower is already delivering benefits in the early stages of project development, using agentic capabilities to assess optioneering and documentation at each stage gate. It gives project managers real-time feedback, enhancing regulatory recovery and allowing them to adjust early before changes become more costly when in construction. When you've delivered as many projects as we have, there are inevitable learnings along the way, and the control tower is making those lessons available much faster to leaders across all of our projects, from large to small, informing our full GBP 70 billion plan and giving us confidence in its robustness. We're also capturing synergies across our portfolio. For example, bringing together ASTI and non-ASTI delivery from UK Electricity Transmission into a centralized delivery function. This is improving supply chain coordination, optimizing scheduling, and accelerating our learnings as we build world-class capability and systems. Secondly, capital optimization.

AI will also help generate robust project plans and test thousands of delivery scenarios. It'll help us to plan system access outages, continuously optimizing schedules as conditions evolve across the portfolio, not just on individual projects. This means we can deliver better integrated decisions and drive faster, more predictable, and lower cost delivery. System access outages are increasingly difficult to secure, being able to optimize our access needs is essential. Another key lever is standardization. By using more consistent equipment and designs, we can reduce engineering cycle times, simplify procurement, and lower unit costs. We've standardized our HVDC cable designs, aligning with European standards to make procurement faster and give us access to a wider range of suppliers. We're also moving to fewer substation designs and enabling more modularization of our equipment.

Taking together, these actions strengthen our resilience to cost pressures and position us to outperform against our regulatory incentives. Turning next to our assets, where our focus is on improving maintenance and operations and unlocking more of the latent design capacity of our assets. One early focus is our frontline field operations, where there's a clear opportunity to improve productivity through technology, better use of data, and more effective management. As a case study, in our New York gas business, we've piloted a set of operational improvements. First, reducing the administrative burden on supervisors, simplifying processes, and using AI to free up their time so they can focus on driving performance and removing obstacles in the field. Second, improving planning and scheduling, ensuring crews are deployed more effectively using analytics and AI to optimize routes and increase utilization. This has improved productivity through a 30% reduction in crew travel time.

Finally, strengthening performance management using clearer, more integrated metrics to give real-time visibility to productivity. Across our networks, we see opportunities to mature our asset management capabilities. We will drive greater performance through better intelligence using technology to manage risks and implement consistent standards. This drives value on several fronts. It allows us to sustain our industry-leading reliability as the system becomes more complex and, at the same time, improves productivity to reduce costs to serve. In terms of our customers, we're committed to improving our response to their rapidly evolving expectations. We're now serving a broader and more diverse range of customers than ever before, from households through to large industrial and technology customers, each with very different needs. Our focus is on how we evolve our offering to meet those needs with more speed and transparency.

In the U.S., we've rolled out advanced smart meters to over two million of our customers. By combining these with a market-leading digital customer platform, we'll deliver a step change in customer service. This gives customers the tools to understand and manage consumption and gives us powerful real-time data on exactly how energy is being used. This allows us to both use our networks more flexibly and save customers money. Alongside that, we're modernizing our contact centers, using new platforms and digital tools to improve first-call resolution, reduce wait times, and lower the cost to serve. We are already seeing the results, with an 18% increase in our after-call customer satisfaction scores across our U.S. contact centers over the past year. We're also improving how we connect and partner with our customers, particularly as demand grows and becomes more complex.

This is especially true for large loads and data centers and industrial customers, as well as generators, where expectations on timing, certainty, and engagement are fundamentally different. Over recent months, we've increased our direct engagement with these customers to better understand their needs and their frustrations. This has reinforced the importance of pace, clarity, and predictability in how we operate. In response, we're clarifying and elevating ownership of our customer relationships, as well as continuing to focus on reducing the time to connect. The Connections Reform Program in the U.K. is an important opportunity for the industry, and we're fully committed to playing a leading role in improving how it works for customers. This is about evolving our model from a one-size-fits-all approach to a more responsive service that better meets the needs of different customer groups.

To bring to life what we're doing across capital, asset, and customer, we have a short video to share with you.

[Presentation]

Some super examples there. I look forward to highlighting more of these in future updates. Now, I want to spend some time on one of the three big shifts, technology and innovation, as I believe it's an overlooked strength of our business and one that I'll be spending more time amplifying and scaling across the organization. You've already heard how we're deploying technology across capital, assets, and customer, where it's improving planning, enhancing operations, and strengthening customer outcomes. I also want to explain how we're driving innovation as well. This is where we prioritize and scale new ideas, not just for incremental improvement, but to create step changes in performance and open up future growth opportunities. One of the ways we do this is through National Grid Partners, our corporate venture capital and innovation arm.

Here, we both invest in and help scale startups at the intersection of energy and emerging tech. We have many success stories across the 50+ companies we've invested in since 2018. In many cases, we have been the first to deploy innovative new technologies that we've been able to learn from. Some examples: GridCARE is a tool that identifies where flexibility can unlock additional capacity on our networks, which gives faster connections on new large industrial and AI load. This has the potential to reduce time to power for customers and enhance our credibility as a responsive partner. In our first collaboration, GridCARE identified 650 MW of connection capacity on our network in New York for large, flexible loads. This, in turn, reduces the customer connection time and costs.

Another National Grid Partners-backed company, Emerald AI, is a flexibility management platform for AI infrastructure that we're trialing. It can make large data centers flex their load when the network needs it. In our recent trial in partnership with NVIDIA, it achieved up to 40% reductions in data center load demand without any performance loss. LineVision's dynamic line rating sensors are allowing us to get more capacity out of our existing networks. Following a successful deployment in upstate New York, one of the first in the U.S., we're now rolling them out across our U.K. network with our dynamic line rating program expected to save U.K. customers up to GBP 50 million over the next five years. National Grid Partners-backed technologies therefore support more capacity on our networks, quicker connections, and underpin improved affordability for customers.

To drive further innovation leadership, we'll look to accelerate the progression from successful pilots into enterprise-wide deployment. This will support us in evolving from being a traditional infrastructure operator to a true technology-enabled system orchestrator, able to manage a more complex, more dynamic energy system while creating new value over time. This will be an area you'll hear much more from us on as we continue to develop and scale our approach. To bring some of what we are already doing to life, we have a final video to share. A clear demonstration of the innovation that is already happening at National Grid. Let me now talk about how we think about our long-term growth optionality. As I said at the start, our growth visibility over the next five years is sector-leading, driven by investment in our regulated networks.

The strength of our pipeline means my focus is as much on executing what is in front of us today as it is on positioning us for what comes next. Delivering the brilliant basics and transforming our capabilities gives us the platform to do both. It allows us to sustain growth across our businesses while creating additional options in parallel. Within our regulated networks, that includes continuing to shape our policy and regulatory environment, not just for the next price control, but for the longer term. It also means working closely with partners across the system to meet evolving expectations. Large load customers will be an increasingly important driver of growth, whether through data centers, industrial electrification, or new technologies. How we attract, connect, and serve these customers will be critical. It is clear that the energy landscape is changing rapidly, creating new opportunities to accelerate growth.

We will therefore be open to exploring opportunities through our National Grid Ventures business, where we can leverage our capabilities in planning, building, and operating major infrastructure. Our approach to growth is clear. Our investors value us for long duration, predictable cash flows, and low-risk returns, and maintaining these characteristics remains fundamental to how we assess any new opportunities. With that, let me hand you over to Andy, who will bring to life the outcome of our strategy through our full-year results and talk through the five-year framework and the resilience of our business model.

Thank you, Zoe, good afternoon, everyone. I'd like to highlight that, as usual, we're presenting our results on an underlying basis and at constant currency. I want to start by expanding on what Zoe has just said about the strong foundations from which we will build and deliver our new strategic frame. Over the last five years, we've ramped up capital delivery, driven by increased spend in each of our regulated networks, including UK Electricity Transmission, where our capital investment this year was almost 4x the level we delivered five years ago. The step up in CapEx has been supported by regulatory outcomes across our group, which are designed to deliver the network investment our regulators, customers, and investors value. This has enabled the group to deliver strong earnings growth and our progressive dividend policy.

The scale of what we have already delivered is significant, and combined with the regulatory visibility of growth, it provides a very strong position for us to build upon. Turning to our financial performance and highlights across the business units. Starting with UK Electricity Transmission, where underlying operating profit was GBP 1.7 billion, GBP 254 million higher than last year. This is driven by higher revenues reflecting higher allowances and indexation, alongside delivering flat controllable costs. Capital investment of GBP 4.4 billion was up 46% versus the prior year, delivering RAV growth of 16% to GBP 23.8 billion.

Investment included a more than doubling of CapEx on our ASTI projects, including HVDC capacity reservation payments for Eastern Green Link 4 and Sea Link, alongside the continued ramp-up of our Wave 1 projects, higher customer connections investment, and project spend on the Uxbridge Moor substation, which will connect data center customers to the west of London, and our new state-of-the-art control center in the Midlands. We've achieved an 8.2% return on equity, 100 basis points ahead of baseline allowance, with 109 basis points on average across the price control. This outperformance drives value not just for shareholders, but also our consumers. Over the five years of RIIO-T2, our operational outperformance has delivered nearly GBP 1 billion in direct consumer savings. In March, we accepted the RIIO-T3 price control, which will run to March 2031.

The price control includes key improvements to de-risking our capital delivery, including agreeing allowances in parallel with supply chain engagement, as well as adjustments to cost-sharing mechanisms. We're confident that the T3 package enables delivery of an overall return on equity above 9% on average across the price control through a combination of operational and ongoing financial performance. This operational performance is expected to be delivered through a balance of TotEx efficiencies as well as more powerful Output Delivery Incentives, or ODIs, in T3. These include new incentives on on-time delivery and innovation, as well as reducing constraint costs. ODI performance will be recognized as it's delivered, reflecting that the innovation incentive is awarded in years two and four, and the performance against the new on-time delivery incentive will ramp up over the price control as projects are delivered.

We're focused on delivering a strong first year of T3, including starting construction on four of our Wave 2 ASTI projects, as well as submitting all remaining planning applications. Moving to UK Electricity Distribution. Underlying operating profit was GBP 1.2 billion, GBP 35 million higher than the prior year, reflecting an increase in net revenue from higher TotEx allowances, indexation, and incentive performance alongside lower storm costs, partly offset by increased depreciation. Capital investment was GBP 1.6 billion, 13% higher than last year, with increased investment in asset replacement and reinforcement work. Reflecting this, the RAV grew 7% to GBP 13.1 billion. This year, we also reached an important milestone by delivering our GBP 100 million group synergies target six months ahead of schedule from areas such as procurement and operations.

We saw improved ROE this year, achieving 8.1%, including 50 basis points of outperformance in line with our guidance. Looking ahead, in December, we'll submit our business plan for ED3, including the investment levels we believe are needed across our U.K. distribution networks. Moving now to the U.S. Our New York business achieved a 9% return on equity, 96% of its allowance and 30 basis points higher than last year. Underlying operating profit was GBP 1.7 billion, GBP 342 million higher than the prior year. This reflects higher net revenues, including a catch-up for previously unremunerated costs alongside updated rates reflecting growing investment in our networks. This is partly offset by higher storm costs, property taxes, and increased depreciation.

Capital investment grew 11% to GBP 3.4 billion, driven by higher electric spend on our upstate upgrade projects, including the completion of the Smart Path Connect transmission project on time and on budget. Our increased investment delivered rate base growth of 10% to $25.4 billion. On the regulatory front, this year we agreed our new Niagara Mohawk electric and gas rate case with an allowed ROE of 9.5%. This rate case enables us to maintain reliable, resilient, and cost-effective energy for more than two million customers. Downstate, we'll file new rate proposals for our gas businesses, KEDNY and KEDLI, before the summer. Turning to New England, where we achieved above our target, delivering a return on equity of 9.2%, 96% of the allowed return.

Underlying operating profit of GBP 866 million was broadly flat, reflecting updated rates in our Massachusetts electric business through our capital tracker mechanism, offset by the impact of customer refunds following the recent FERC ruling on New England transmission operators, high depreciation, and capital-related OpEx. Capital investment was GBP 2 billion, 24% higher, driven by electric investment from increased system capacity work, as well as the continued rollout of our fault detection and restoration technology, FLISR, and advanced metering infrastructure for customers. With this, the rate base grew 12% to $13.6 billion. Looking ahead, we expect to agree the Massachusetts gas rate case later this year, and we'll begin rolling out the digital customer service platform across the U.S.

Moving to National Grid Ventures, where underlying operating profit, including joint ventures, was GBP 401 million, GBP 52 million lower than the prior year. A higher overall contribution from our interconnector portfolio was more than offset by lower profit from Grain LNG following the sale in November 2025. Capital investment was GBP 109 million, down 70%, reflecting lower capital expenditure in the business following the sales of National Grid Renewables and Grain LNG. Moving now to cash flow. Cash generated from continuing operations was GBP 7.9 billion, up 15% compared to the prior year, driven by operational performance across our regulated businesses and working capital inflows. Net cash outflow at GBP 6 billion was broadly in line with the prior year, reflecting both higher operational performance and increased capital investment.

Combined with disposal proceeds from the sale of National Grid Renewables and Grain LNG, we saw an increase in net debt of GBP 2.8 billion-GBP 44.2 billion at constant currency. Net finance costs were GBP 1.3 billion, GBP 37 million lower than the prior year, with the impact of higher refinancing costs, where we have issued GBP 4.2 billion of debt during the year, more than offset by higher capitalized interest, reflecting the continued ramp-up of our major projects. In turning to the five-year frame and our full year 2027 guidance, where as usual, more detailed disclosure was provided in our results statement. In March, we set out our new five-year financial framework, which will see us invest at least GBP 70 billion.

We have significant visibility of our growth with around 2/3 of this already covered by regulatory agreements. Our investment will drive asset growth of around 10% per annum, an underlying EPS CAGR of 8%-10%, and continued growth in our dividend per share in line with CPIH inflation. Under this framework, we expect to maintain comfortable headroom against our current rating thresholds in line with our commitment to deliver a strong overall investment-grade credit rating. With asset and earnings growth now more aligned, this supports shareholder returns and balance sheet capacity. Looking beyond the next five years, we see continued balance sheet strength and retain the full suite of funding options, including significant levels of unused hybrid debt capacity. We will be relentlessly focused on efficiency, including keeping controllable costs well below the level of inflation while growing our asset base by nearly 60%.

Turning to FY 2027, the first year of the new framework, where we expect capital investment to grow 10% to nearly GBP 13 billion. We expect to deliver underlying EPS growth of 13%-15% from our FY 2026 baseline of GBP 0.78. This reflects higher allowed revenue as we step up delivery from RIIO-T2 into T3. Our five-year frame and investment case are underpinned by the visibility and resilience of our business model. Even in volatile macro conditions like today, given ongoing geopolitical events, that stability doesn't change. It's built into how we operate, how we deliver our capital projects, and how we finance the business, allowing us to deliver predictable growth over the long term. Our regulatory frameworks protect us from risks outside our control, and we work hard to manage those risks that we can influence.

More broadly, in the U.K. businesses, inflation protections across our regulated asset base provide a strong natural hedge and underpin real equity returns as we continue to invest at scale. In the U.S., around 90% of our supply chain is domestically sourced, which reduces exposure to global pricing and tariffs. We have a proven track record of managing inflation by using alternative suppliers and pacing discretionary spend. Our businesses have limited exposure to wholesale energy prices. In the U.S., we procure energy for our customers, and we receive full recovery for those costs. Our financing strategy is designed to ensure stability. Leverage is broadly matched to our regulatory frameworks across our operating companies to enable the efficient recovery of debt costs through our regulatory mechanisms. We're also deliberate in managing our currency exposure. We hedge around 70% of our U.S. gross assets with dollar-denominated debt.

From an earnings perspective, that means a $0.05 move in the dollar/sterling exchange rate across the year translates to around a GBP 0.01 impact on EPS, limiting volatility for shareholders. All of this supports our confidence in delivering within the ranges set out in our five-year financial framework. This underpins our differentiated investment case that supports our aim to deliver double-digit investor returns. Thank you for listening, and I'll now hand you back to Zoe.

Thanks, Andy. Let me leave you with three key messages. First, National Grid has strong foundations and the visibility to deliver our upgraded capital investment program of at least 70 billion GBP. Second, we are sharpening performance across the business to de-risk execution and drive efficiency. The brilliant basics are how we build credibility and deliver at scale and pace. Third, we're transforming our capabilities across people, technology, and policy. These are targeted, high-impact shifts that respond directly to structural change in our markets and strengthen our position for the future. Together, this is how we continue to move National Grid towards being a truly world-class business and build an enhanced platform for the future. By delivering our strategy, we create value for all stakeholders through a more affordable, secure, reliable, and sustainable energy system, all of which underpins our investment case.

For investors, National Grid offers a genuinely differentiated investment case, combining high visibility growth with a resilient business model. In terms of growth, our confidence is rooted in the visibility of our investment program. We expect to deliver 8%-10% underlying earnings growth over the next five years, aligned with our asset growth of around 10%, providing a clear and predictable trajectory. That growth is driven by multiple structural tailwinds, including network resilience and modernization, the connection of low-carbon generation, and the expansion of our networks to support electrification and rapidly growing demand, including from AI and data centers and reshoring. Importantly, this investment is going into critical infrastructure assets, generating long-duration cash flows with low risk, attractive returns. Alongside that growth, our business model is highly resilient.

Our strong regulatory capabilities, proven delivery track record, disciplined balance sheet, and resilience to macro volatility provides a unique stability even as the system becomes more complex. The combination of these two factors matters. Visible asset-backed growth drives earnings and expansion. Resilience ensures consistency, minimizes volatility, and supports sustainable returns. Taken together, our strategy will deliver a compelling financial outcome. Strong underlying EPS growth and a progressive dividend, which is designed to deliver attractive double-digit returns for our shareholders. Let me finish by simply saying how excited I am to be the CEO of National Grid. To be leading a company with a mission as important as this one, doing a job on which millions depend at a time of great change, it's a challenge and a real privilege.

Andy and I are now happy to take your questions, and I'll hand over to Angela, who is gonna help us to moderate the Q&A session.

Alright. Just before we move to Q&A, I wanted to take a moment to introduce Andrew Downey, who is going to be covering for me as interim IR Director whilst I'm out on maternity leave. Andrew, it is great to have you on the team, you are all left in very good hands. I'm also pleased to say that a number of our U.K. based Group Exec are with us today, let me briefly introduce them. Justine Campbell, Emma Hardaker-Jones, Nicola Medalova, Cordi O'Hara, Steve Smith, and Carl Trowell. Let's get to your questions. If you could raise your hand in the room, and we'll bring a mic over to you. For the benefit of those on the webcast, please could you state your name and institution.

For those of us joining us online, please use the tab at the bottom of the webcast to submit a written question. All of today's materials are available on our website. Of course, for any questions that you've got after the presentation, please do feel free to reach out to the IR team. Right. Maybe we'll start with some questions in the room. If I go first to Pavan.

Thank you, Angela, and thank you, Zoe and Andy, for the presentations. Pavan Mahbubani from JPMorgan. Zoe, my questions are both for you. Can I start with, over the last six months, how you think about National Grid's portfolio mix? I'm thinking U.S., U.K., gas, electricity, regulated, unregulated. How do you think about that mix, and what do you think are the strengths and maybe opportunities there? My second question builds on that in terms of the building optionality for disciplined growth. Can you share a bit more color on what opportunities you think you're well-positioned for and what that growth could look like in terms of, you know, technologies, businesses, and would that be organic or would you consider M&A in that mix as well? Thank you.

Thanks, Pavan. I'll take both of the questions to kick us off. Firstly, as you know, there's been a lot of portfolio streamlining that's been done over recent years. The portfolio that we now have, I think, is something we really like, both the geographic diversity, the exposure to transmission and distribution, but also I think the broader energy mix in the U.S. around gas and electric. I think the portfolio that we have today is very strong. I think the other thing I'd say is that because we have such a significant amount of our business under regulatory frameworks, we've also got a lot of visibility and confidence around what the growth provides us into the future, which perhaps bleeds into the second question that you've got.

The first thing I think important to highlight is the biggest priority that we have is delivering on the GBP 70 billion of investment ahead. That is primarily the greatest focus of the entire executive team to ensure that we nail the delivery ahead of us. That said, of course, we can see that the markets are changing. We've said that we would be open to considering in our NGV portfolio some opportunities where perhaps we have some competitive strengths to bring to bear. Some examples that you might think of is offshore hybrid interconnectors, which would build on an existing portfolio, of course, that we have. We also have continued to look at competitive transmission in the U.S.

Of course, as we get closer to some of our data center developers, really understanding how we might provide innovative solutions to some of our new partners.

Okay. Thank you very much. Maybe if we go to Jenny next.

Hi. Thanks very much. It's Jenny Ping from Citi. Thank you for outlining the strategic framework and how you look at grid from an outsider new perspective and all of the discussions around AI. I just wondered how that translates into numbers in terms of, you know, your 8%-10% that you see as we stand today. Is that a relatively conservative number based on all the opportunities that you see, especially on the cost side with the implementation of AI? Yeah, whether you can sort of help us to quantify some of the opportunities, even though they're not, you know, they're further down the line, but obviously an opportunity. Thank you.

Thanks, Jenny. I think it's important to say that firstly, we've got a really good history and track record at being able to predict and forecast the results of our business, and so we build on a really strong foundation. There's a couple of things that then I think important to highlight. Some of the examples that we have shared with you will actually give us some capacity to absorb what could be uncertainties on the horizon, so it gives us greater confidence, and it de-risks our projections of the future plan.

The other thing I think worth noting is that in some cases, the regulatory framework may mean that some of the efficiencies that we drive as a business will be provided to customers. They may get the benefit more so than we may see in our forward forecast. It's the right thing to do, and in an affordability context, we all know pleasing the customer pleases the regulators and pleases the political context, which helps us to sharpen and improve the next regulatory discussions that we have. Finally, there's the potential that some of the additional work that we're doing helps us to deliver upside.

Of course, Andy and I only just updated the five-year frame in March. I think it's fair to say too early to say how that may play forward. We'll continue to do as National Grid has in its past, be really diligent about making sure that we continue to have that discipline in how we forecast going forward.

Thanks, Jenny. Maybe if we go next to Ajay.

Hi, Ajay Patel at Goldman Sachs, and thank you very much for the presentation today. I have two. If you give that 8%-10% growth rate, is there any chance you could put that in the context of the ROE that you look to achieve of over this plan on average, and maybe frame some of these out-performance levers in the context of that to help us understand the proposition on that side? Secondly, I noticed on the presentation you mentioned the word at least GBP 70 billion. In the event that the opportunity arises and there is the ability to invest more, how would you think about capital allocation and funding to just to understand your mindset on that? Thank you.

Yeah. Thanks, Ajay. Why don't you take the first one, Andy.

Sure

10% growth rate ROE and outperformance levers, and then I can come back to the second one around at least GBP 70 billion in for.

Sure. No, thanks. Thanks, Ajay, for the question. I think, when we think about the financial frame, you know, we don't necessarily think about the offer driving profitability and then think about returns separately. They're part and parcel of the overall outcome. I think we always look to challenge ourselves at ROE, and we tend to measure that at an operating company basis because the regulatory frameworks work differently across the U.K. versus the U.S. I think we've consistently looked to deliver north of 95% of our allowed returns in the U.S. You'll have seen in our presentation today, you know, we've successfully maintained that again in New York and, you know, actually we've seen progressive improvements in New England.

I'm really pleased that we've hit that in New England as you can see. That's obviously what we expect to be doing as we go forward over the five years. In the U.K., as we did back in March, we've guided for the five years of T3 to be delivering north of 9%, including operating and financial performance. Of course, we've guided to the remaining two years of RIIO-ED2, where we expect to be up towards 100 basis points of outperformance, you know, by the last year. Obviously too early to start talking about RIIO-ED3. That will come as we work through and understand much more about how the RIIO-ED3 framework will land. That's sort of how we're thinking about returns.

Maybe on the GBP 70 billion, the question around the at least GBP 70 billion. In March, as Andy and I looked to extend the forecast, we of course extended the frame to full year 2031. We also had at that point the visibility around what came in under the RIIO-T3 negotiations, the GBP 31 billion that was put under the RIIO-T3 framework. I think we also see that there are multiple drivers behind our capital growth. Some of it's around offshore assets, around different generation, some of it's around data centers, some of it's around the resilience of the existing system. When you take those things in concert, we've got a lot of resilience around how we see that capital being deployed, hence we were confident that the number would be at least GBP 70 billion.

Anything you would like to add there?

No. I think that's a good summary.

Sounds good.

Thanks.

Maybe could we go to Alex next?

Thanks. It's Alex Wheeler, RBC. Two questions from me, please. Given Andy just said too early to start talking about RIIO-ED3, one of these may be slightly redundant, but I will ask it anyway. I guess just on RIIO-ED3, I was just interested in whether there was anything specific that you may be pushing for, perhaps that either wasn't reflected in RIIO-ED2 or is a learning from going through the RIIO-T3 process. My second question is just on power demand in your respective geographies. You talked about it a little bit in your presentation. I'd just be interested in what you're seeing as the key drivers in the U.K. and the U.S. and whether they are fundamentally different.

Yeah. Thank you. Why don't I just frame a little bit of RIIO-ED3, but then it'd be useful for you to talk through both the learnings and I think how we see that playing out, and then we'll come to power demand. I think we do expect next week actually, on the 21st of May, we expect the government to release the sector-specific methodology around RIIO-ED3. We've got Cordi, who's sitting here in the room, who has helped to influence, I think, the way in which we look at the scenarios for which RIIO-ED3 frames.

We're quite confident in the GBP 9 billion that we have allocated into the forward investment program as being the right balance between where we need to do investments in primary backbone infrastructure and where we may be able to leverage further demand or flex around how customer take-up of things like EV or heat pumps will actually be adapted as the program rolls forward. Maybe talk about-

No, sure. Thanks, Alex. I think my comment earlier was trying to get too precise at this stage. SSMD is obviously still quite an early step in the process. I think the type of things we'll be looking out for is Ofgem have previously said they want to see T3 as a foundation from a financial perspective and look to build on that. We'd be absolutely looking for a bit more clarity around things like will they roll forward semi-nominal cost of debt, what were the sort of framing around returns. We'd expect T3 returns to be the launchpad for that, we'll have to wait and see.

I think where will they look for levers around speed of cash, you know, as they did in T3? What will that look like in distribution? I think, you know, if I broaden out from the pure financial frame, I think some of the other learnings from RIIO-ED2, as you asked, are, you know, we've seen that things like the real price effects mechanisms, and we've talked about that in previous years. That's clearly something we want to work with Ofgem to try and improve and refocus that. That mechanism has worked very well for us in transmission to keep the costs in balance, not so well in distribution, so that's where we want to see progress.

Of course, you know, like, the other learning from transmission is the importance of output incentives, ODIs, and I think how we calibrate those with Ofgem to get the right incentives that really drive customer value but then can reward, you know, the company if we're successful in doing that. That's just sort of the framing that we'll be looking for.

Coming back to your second question on power demand, I think the best way to bring it to life is probably through our U.K. connections process. Because what we have seen, if you take RIIO-T3, we've got 19 GW of demand that comes onto the system in the next five years, of which about 10 GW sits in the data centers or AI growth. That kind of gives you a bit of a sense of how that's growing. When we look at the broader funnel around the demand queue, if you want to call it that, on demand, it stands at about 75 GW. I think we've been quite prudent in our assessment of what we think is realistic that'll come into the next sort of five-year frame.

Undoubtedly, as we look to some of the technologies where we can identify greater pockets of opportunity, and through Alice and her team, we've got four AI growth zones in the U.K. that we're focusing on, where we've been able to identify 500 MW of capacity as a priority place for which data centers can connect. We've been doing a lot of work around what we call our Connections Accelerator Service. The best example probably to bring to life is in Blyth, where we've got a data center with Blackstone and QTS, where we've been working through eight projects through a pilot to see how we can enhance that power speed of connection and seeing some really good early insights around how we can try and enhance and visibly deliver accelerated connection times.

Great. Maybe if we could go next to Charles.

Don't know. Okay. Sorry. Hi, Charles Swabey HSBC. I have one on cost inflation, particularly for the key metals such as copper. Could you give us an indication how the current prices compare to the assumptions in the investment plan? Then an idea of percentage of investments which are effectively locked in, and then for the portion which isn't, can you give us a just a sort of reminder on the cost recovery mechanisms there? Thank you.

Do you want to take that one, Andy?

Yeah, sure. I think at the highest level, what I'd start with one of the stats I think we covered this afternoon, which is effectively, you know, if you look at our supply chain positioning, we're already 3/4 contracted across the five-year frame. And that includes obviously, you know, we recognize the challenges, you know, given the situation in the Middle East. We recognize that there will be, you know, potential impacts on supply chain. At this point, that remains our firm position on the 3/4.

Beyond that, as I touched on the previous question around real price effects, is we do have the ability in the way those operate to where allowances will flex if you started to see unusual or significant movements in some of those underlying costs. As I said before, that's worked very well for us in transmission, where it has provided a good hedge for us as we've gone through the T2, and we'd expect that to continue as we go into T3.

Good, thanks. Let's go next to Mark.

Hey, thank you. I have two questions for actually for Alice and Carl. Alice, just on maintenance of the existing, I can't see her, maintenance of the existing assets. I mean, there was a big backlog, you know, an underspend in RIIO-T2 that Ofgem expressed surprise at for the whole industry. Can you talk about the process to catch up there and deal with the existing assets? Secondly, for Carl, I mean, you talk about framework agreements and securing supply chain, but contractors are notoriously bad at, you know, equipment and people not showing up at the last minute. Can you talk about the steps that you've got to ensure that the supply chain does actually do what they've told you they're going to do?

Mark, if you don't mind, I'm gonna have a go at taking these. Then there'll be the opportunity as we mingle a little bit later, if you'd like to follow up in additional depth, you'd be welcome. I encourage you to do that. The first thing I think worth saying around reliability is clearly when you have a business, as Alice is running around that world-class 99 point, and I keep saying you can't say five nines because you might write that down as a five and then a nine, and you need to write that down as literally five nines. That there really is world-class benchmark. You have to start from a position of saying that the delivery of our system is exceptional.

The second thing, of course, we must continue to recognize as the system becomes more complex, how do we get visibility on the vulnerabilities on the underlying asset base? We've been talking about what are we doing from a reliability point of view, and how do we make sure we've got a right grip of how not just we're maintaining, but how do we operate the assets in the right envelope that we operate within our existing installed capacity? Post the recent North Hyde incident, Ofgem did an asset health audit. You'll see those results published on their website, and they confirmed that after they looked across the ET business, that they were very pleased to see the strength of the practices for which we deploy within the ET business.

I think, of course, you, this is the kind of space like safety, you never rest on your laurels. You always make sure you're on your toes, and no doubt when I go and visit the team in ET, they are absolutely steadfastly focused on ensuring asset health is foundational to all that we do. I think then maybe if I may, and again, you'd be welcome to speak to Carl a little later. Capital, of course.

We've got four of our Wave 1 ASTI projects currently in execution. We are absolutely at that place where the rubber hits the road in terms of not just navigated the optioneering, the planning, but now we've worked with the partnerships that we have in place around both the supply chain, but also the execution of those in the field. Now that's one of those things that, dare I say, it's a bit of a daily grind. It's a little bit like what you described in our Greenpoint facility around making sure we have the right visibility of productivity, we understand what's on the critical path, and every single day when people show up for work, they're deployed to the right work front and getting the right work done that we're expecting.

I think there's a lot of learnings that we have, both within our capital that we can transfer from our history as well in operating our complex assets.

Great. Thank you, Zoe. I'm gonna move to this side of the room, and we'll go to Harry next.

Hi. Thank you. It's Harry Wyburd from BNP Paribas. It's one question, but I'm sorry it's quite a long one for Zoe. I think that's the most mentions of performance I've heard in an earnings presentation for any company for a long time. I guess we've always thought about National Grid as a return on capital company, which you've heavily emphasized as well today. Sitting here, it also makes you wonder whether National Grid is an operational outperformance company or an operational improvement company or a cost improvement company? Given the amount of, you know, statements in the presentation about sharpening performance, et cetera, what's your internal KPI for performance sharpening? Say, is it qualitative? Is it quantitative?

Might we have a part of the earnings bridge each year, which is, you know, cost improvements like some of your peers do, which is quite significant. That's part one. The other part to it is, it's quite a unique situation. You've come into the industry as an outsider at a very senior level, right? You can bring some outside perspective into an industry which, you know, on the whole promotes internally. If you come to an organization with that operational focus, what can you do to make sure you get paid for it? Not you personally, obviously, but the company gets paid for it. Is this something you're gonna speak with to your counterparts at Ofgem about, is the sharing correct?

Is it right that if you work incredibly hard to make this organization more efficient, that most of that goes to customers? If that's the case, you know, is that where you should be spending your time, or is there an opportunity you think maybe through RIIO-ED3 to say, I think I can really transform this organization. Can I keep a bit more of the fruit of my labor and give it to shareholders?

Two great questions. Let me just start by the performance that we need to deliver is across capital, asset, customer, and the functional competitiveness, the way in which we do our work, the back way in which we manage control and execution. It's across each of those that we really have to keep our focus. The reason we have to do that, of course, we have a huge capital program ahead of us, so we're doing a lot of work, and you saw the examples between the capital control tower or just how now we've got a Strategic Infrastructure group because of the large ASTI projects that we're delivering in the U.K., which is allowing us to get those learnings to some of the smaller projects that we would have delivered in the past.

We're now able to bring a completely different mindset. We talked about, for example, the Great Grid Partnership upgrade. We're now doing the same approach in New England. We're doing the same under ET 'cause we've recognized that that actually helps you to deliver productivity. We've also talked about things like how do we improve the optioneering? How do we make sure that we have smaller numbers of design so that we can be much faster or modularized or work with our partners to actually deliver much stronger capital execution at the outset?

The focus on our performance is very much one across that entire domain, delivering the capital program that we have ahead of us, making sure that we ensure reliability or get the best out of our capital installed today, and then of course making sure that our customer outcomes are equally improved because of the business that we have in the U.S. in particular, where we of course have the ownership of the end customer, which is different than we have here in the U.K. In a way, I am going to sort of, why do we do that? Well, because it's a little bit in answer to your second question about how do we get rewarded for it.

If at the end of the day, the work that we're delivering drives an efficiency and that the customers are paying less, in time, that gives us the visibility of what it is that's driving our business and helps us to come back as we negotiate the next rate case to understand what is the right split of reward between what we get benefits from and what ultimately is translated to our customer. I think, some of that may lag a little bit of time, but if we do the right thing, particularly today, when affordability is absolutely pressing on everyone's minds, it makes sure that we deliver that today, and then we can factor that into the way we think about the next regulatory discussion.

Of course, if there's a high trust that we do the right thing, we're using our money in a way that's efficient and deployed as world-class, then we will have the license to continue to invest in the future in a number of different areas of our business. I think the two are very much connected in terms of how we create arguably our own weather to provide the right conditions for the best regulatory discussions. What did I miss, Andy, that you'd like to add?

No, I think that's a really good summary. I think it's the nature of the sector we're in, and it's what regulation is designed to incentivize, that incentivizes us both in the short and long term to drive as great efficiency, both in our capital delivery and our operating performance. We share that benefit between consumers and shareholders. As you say, that's the credibility then which you have when you're negotiating the next regulatory price control or rate case.

Yeah.

Thanks, Andy and Zoe. I'm gonna go to one from the web 'cause it's a little bit related, with our Ofgem relationship, and then I'll go next to Deepa after that in the room. This question is from Sarah Lester at Morgan Stanley. She asks on U.K. regulation, do you anticipate any impact on National Grid's business from the recent broadening of Ofgem's powers?

Thanks, Sarah, for the great question. Yeah, I think that we see, actually it's very helpful to see Ofgem wrestling through. There are three key things that came out of the recent report that was issued so that they continue to focus on net zero. They also make sure that there is economic prosperity or that the stimulation of demand on the system is a focus and that they continue to protect the vulnerable customers. Actually, we see that those three things are absolutely central to what we too need to make sure that we're delivering.

In many respects, when we think previously about how do we balance between the investments that we're making towards generation, what are we putting in towards the demand or the data centers, I think having our regulator having that full ownership end to end around what drives the right economic prosperity here in the U.K. actually is a very positive outcome, in my opinion.

Thank you, Zoe. Deepa.

Thank you. Is this on? Hi, Deepa Venkateswaran from Bernstein. I have two questions. Zoe, the first question to you. In six months you seem to have done a lot. Could you highlight maybe the biggest change you've done internally in the company? Hopefully we will see the results of that in the coming years.

Maybe one biggest thing. Another question on RIIO-ED3 again. If I look at the GBP 9 billion, yes, it is a step up, but it's 12.5% increase over the last five-year plan. Some of your peers, including, you know, someone who's recently made an acquisition, they're talking about TotEx increases of 30%-40%. We've also recently seen, you know, solar panel sales in the U.K. going up, EV sales going up. Are you undercooking on RIIO-ED3, or are you assuming that flexibility allowances will probably push you over that GBP 9 billion?

Super. Thanks, Deepa. Why don't I take the first one, and then you can take the second one on RIIO-ED3.

Sure, yep.

Our assumptions. You asked for one big thing, and I hope this isn't a cheat, but I'm gonna tell you the one big thing, is that basically asked everyone, and everyone on my team, to take a look at the plans and the area of accountability that they have and to test against the ambition for the future and making sure that that was benchmarked against best in class to then test where we stood today and that we were really clear about which levers we needed to move to take ourselves from where we are today to that benchmark view of best practice for the future. We have done that consistently.

It's the reason why capital, asset, customer functions, we've done that, and we also took a look at how we were doing that in external policy and advocacy, technology and innovation, and in our leadership and people and culture. It was one process, but across seven domains that gave us the confidence that now we've been able to get what we call quick wins. Much of what you saw in the sharpening our performance is people having done that process at the very back end of last year, have now mobilized and have started to get much of that work in place over the last six months. RIIO-ED3?

Yeah. Thanks, Deepa. I think two things I'll say, and one Zoe touched on in answer to a previous question actually, which is, you know, we're working very closely with Ofgem in what is the appropriate rate of capital investment into the distribution networks. I think recognizing the need for primary reinforcement, you know, the top end of the network, but recognizing that we need to stay ahead of, you know, the rollout of sort of low-carbon technologies, but do it on an appropriately phased basis, and I think that's the dialogue we're having. I think, you know, we're trying to reflect that in our projections, and I think you'll see some of that when our business plans come out later in the year.

The other thing simply is a timing thing, which is, remember our five-year frame includes the last two years of RIIO-ED2 as well as the first three years of RIIO-ED3. It's not quite like for like in terms of, you know, the way you might be doing the math. Yeah.

Right. Thank you. Why don't we go next to James?

James.

James.

James Brand from Deutsche Bank. Couple questions. First on demand, you said you thought there could be 19 GW as a kind of central case of extra U.K. demand over the next five years. That's pretty huge, and I don't recall, while I'll admit, in exactly what was factored into the last four-year forward capacity auction, but I don't think the capacity auction was kind of set up for massive increases in demand like that. I guess the question is, do you think the U.K. market is set up for that kind of demand growth? Is it something that people should really be thinking very hard about to make sure that we start building new gas or whatever to prepare for it? Secondly, on demand, you mentioned the 10 GW of data centers.

That's very useful to have that estimate. Could you just flesh out a little bit more about maybe kind of if we think, you know, in next five years or 10 years, what are kind of reasonable ranges and how you think about assessing how a, you know, what's likely to go ahead? There's kind of huge speculation around this in the markets and how much data centers we'll actually see being built. It's very interesting. Would be interesting to just hear your thoughts on that. Second question was, I guess as a third question, that's because that was kind of a two-parter, is for T3, there's obviously been some big changes in terms of the incentives on TotEx being weakened quite a bit, but the incentives around delivery on time being very significantly strengthened.

You also mentioned the ODIs, which my impression is they have been significantly strengthened as well. Is there any kind of indication you could give us in terms of like a rough split of how the operational performance might look in this coming period, whereas in the past it's been very dominated by TotEx. Thank you.

Okay. Well, how about James, I'll try and take the second question around the 10 GW and the range that we may have around that. Perhaps Andy, if you'd like to touch on the T3 TotEx, and perhaps also, maybe the supply side of the 35 GW, and I think the capacity options and how they've matched.

Sure.

On the second one, I think it's fair to say that of the 19 GW of demand, that 10 GW that we have in data centers, when you go out and talk to all of the data center companies or those that are trying to buy into the data center sort of capacity, there is so much more demand than what we have based in our current plan for the next five years. I think that was what I was trying to get at before, where we've got, you know, 10 GW in data center demand, but the queue of the demand stands much closer to that 75 GW.

You could debate how much of the 75 GW is real, or how much of that maybe is distributed in multiple queues, but there's no question, and I think we all sort of experience this a little bit in our own world. There's that kind of aha moment about just how much, you know, AI can do for you. As you think through that, whilst there will be efficiencies in chips, the extension of the power that's required just continues to go up. Now the big factor around that is gonna be pace. How quickly can you get connections onto power?

Whilst there will be some data centers who will build with sort of behind the meter generation, you do find, particularly in the U.S. I would say, much of the data centers will come with their own generation, which I think sort of answers a little bit of your question around how do we get enough capacity, then they'll eventually get into the grid connection, which is the most efficient way for the data centers to run the reliability that they need. I think, you know, can there be more capacity?

Well, as we've been, and it's one of the reasons why we brought the technology question to the fore, if we can continue through things like GridCARE, find 650 MW in our U.S. system, how do we continue to leverage that, as Alice has done here, to find four pockets of AI growth zones with 500 MW that can be delivered before 2030? I think what we'll start to do, combined with the Connections Accelerator scheme, find ways to get the data centers through the system faster, as well as being able to find capacity without having to build more and more infrastructure to deliver that. I think that then helps to create the right zones for which data centers will develop and deliver. Andy?

Yeah. Thanks. Thanks, James. I mean, on T3, as we said earlier, the way we're thinking about our performance opportunity for us is a little bit different, as you said, from T2. T2, you're right, it was very predominantly driven by TotEx performance, particularly in the capital delivery space. I think we've guided to probably be more evenly split between some TotEx performance still, but also, as you say, from output incentives, although, as I said in my presentation, we would expect that to build over time, as some of them are time linked, you know, to output, delivery, date linked and so forth.

I think in total, we've said that, you know, we'd expect a probably a similar level of total operational outperformance to what we've delivered in T2. I mean, I think to some extent your first and second questions are a little bit linked actually, in terms of, you know, is there really capacity for this? I think you have to take a step back at first and say, our role is to create the capability and the capacity to add this to the network. It's clearly not our job to make sure that the generation actually turns up. That is obviously others, people in the energy system.

You know, the same investment that we'll be delivering over T3 is also designed to increase generation capacity by 35 GW as well. You know, yes, you're right, you need future auction rounds to be successful to ensure that generation comes forward on top of what's already been delivered today. As Zoe said, you're also looking at some of the areas where is there, you know, pockets of capacity within the network today that our reinforcement allows you to access, which doesn't necessarily require new generation at the peak, but it allows better utilization of some of that capacity that exists today.

It's slightly more complex, but I know, you know, as we said at the start, we've got some other people in the room, including Alice Delahunty from Transmission business, who will be, I'm sure, happy to take you through that in a bit more detail.

Thanks, Andy. Can we go next to Marcin?

Yes. Thank you. That's Marcin Wojtal from Bank of America. I have a question on your U.S. business. It sounds like you're very positive on the outlook for the U.S., but I'm just wondering, as part of that review that you've been conducting in recent months, have you perhaps considered any new ways of increasing engagement with your U.S. investor base? Perhaps something going over and beyond the ADR program, perhaps some of a full U.S. listing at some point in the future. My second question is on the point that was made in the outlook statement regarding financial leverage.

You mentioned that regulatory gearing will be at high 60% by the end of the business plan, but then you say that you retain that there'll be balance sheet strength extending beyond that. What do you specifically mean by that comment on balance sheet strength extending? Do you mean that this is the peak for leverage and thereafter it actually comes down?

I'm sure Andy would love to answer both of those questions.

Sure. Well, thanks, Marcin, and let me take them in the order you asked them. I think the first thing I'd say is we're very pleased with our U.S. investor engagement as part of our, you know, total investor engagement program, and actually we have a, you know, for a U.K.-listed business, a very high level of U.S. investors are in the stock. Of course, we need to continue to deliver on all the execution that we've talked about today.

But we're, you know, we've got a successful ADR program and at this point, you know, we're very comfortable with the listing that we have at this point in time. On the leverage point, I think what we've guided to, as you said, is over the five-year frame, we would expect leverage, which has been obviously reduced as a result of the equity raise two years ago, to increment back up. As you said, it's 61% today. We expect that to gradually move back up to the high 60s towards the end of the frame. My comment is, you know, leverage is just one measure.

When we think about the strength of the balance sheet, we look much more at the whole suite of credit metrics, which is what really the agencies focus on. So our commentary on the strength of the balance sheet is about, you know, where we believe the level of comfort will be in those other metrics, RCF, FFO, and so forth. Signaling that, you know, based on our forecast today, we see ourselves with a good level of headroom, even at the point we exit the five-year frame.

The commentary around hybrid debt is obviously that's often one of the first tools that you might be asked about and to turn to, and to make the point that we're not expecting to issue hybrid debt within the five-year frame, and therefore, by the end of 2031, we will have significant levels of unused capacity.

Right. Thank you, Andy. It looks like we've got Ahmed in the room, and then we'll probably close on one question from the web.

Hi. Ahmed from Jefferies. A few questions from my side. I wanted to come back to RIIO-ED3 and next week. I was wondering if you would give us more context on the debate about the cash advancing measures, if there is sort of, you know, give a sense of the debate, whether that debate is more focused on depreciation or capitalization allowances, and if you are expecting a much clearer position from Ofgem next week. That's the first one. The second one is on RIIO-ED2, the 50 basis points outperformance that you are, over the next two years, trying to get to 100%, 100 basis points.

Can you give us a sense of the visibility and the confidence around it and the discussion we have had around performance and delivery, even if there's any scope for upside to this target? Just finally, you mentioned pacing investments, as I understand, as an inflation managing tool in the U.S. How easy or sort of what's the process of sort of implementing if you were to use that tool in the U.S.? Is there a complex regulatory process around it, or is that quite quick to sort of use that tool to sort of use as a lever for inflation protection?

Do you want to have a go at the first two and maybe touch on the third?

Sure

I can add.

Sure. Yeah, thanks, Ahmed. In terms of the RIIO-ED3 questions, I think I'm just gonna go back to what I said briefly earlier on, which is I wouldn't want to start second guessing what we will and won't see next week. I think it's still quite early in the overall process, so I think in terms of, you know, cash measures, some of the ones you listed, you know, will they look to things like asset lives? Will they look to capitalization rates as in transmission? I think it's clear that, you know, capitalization rates has a slightly muted impact on the distribution business, which is why I think they've had depreciation rates in the mix, so to speak.

I think it's too early to say, will we get a very clear steer which direction, or will they still keep sort of all those options on the table? We'll have to wait and see. I think, you know, hopefully, we've been very clear in our guidance on our performance opportunities in ED over the remaining years of RIIO-ED2. We guided off the back of the challenges last year with the real price effects mechanism I touched on earlier to deliver the 50 basis points, and we've done that this year. A lot of that has come from some of the ODI incentives that, you know, particularly in the distribution system operator side. We've guided to around 70 basis points next year, getting up to 100 basis points by the last year of RIIO-ED2.

Hopefully, we've given good visibility. That will come from a mix of things, as always, continued delivery against incentives, continued cost efficiency as well. Obviously, we will still face that drag from real price effects. It's a sector-wide challenge. It's not gonna go away until we get to look to solve that through RIIO-ED3. I mean, in terms of the pacing of investment points in the U.S., I think it's something we've always looked to do, which is, you know, be clearly, you know, transparently with our regulators, work about what's the appropriate level of investment.

I think, you know, whereas in the U.K. you have a firm five-year price control, in the U.S., you tend to have sort of tracker mechanisms and other things which true up CapEx over a period of time. That does give you just a little bit more discretion potentially around the pace at which you need to deploy that CapEx. I don't think there is anything new there. We are just reaffirming that that's that approach remains available to us in the U.S.

Good. I think that is all of the questions in the room, so maybe if we could close on one final question from the web, from Dominic Nash at Barclays. This one is sticking in the U.S. He says you've been exiting gas in the U.K., but retain sizable gas networks in the U.S. How should we think about the long-term role of U.S. gas within National Grid as electrification and decarbonization accelerate, particularly in terms of future investment and capital allocation?

Thanks, Dominic. I think firstly, like I said earlier, we like the portfolio that we have. We certainly see, perhaps on both sides, but particularly in the U.S. where we have our gas LDCs, continued recognition of the role that they play in providing stability to the system. That was certainly amplified in the recent storms that we had. Winter Storm Fern is an example where we really recognized that gas became very critical in making sure that we could balance and supply the system with the energy that it needed. I think that one of the things that we just wanna, sort of course, make sure we don't have any direct exposure to the gas volatility nor the gas price.

As you know, in the U.S. business, of course, we do have to purchase the gas on behalf of our customers, but that's a pass-through mechanism, so we don't have the direct access to volatility. I think at the moment, we like the business we have. We see that the investment that we have in the gas business is essential. We do a lot of the leak-prone pipe replacements, which is also part of the program that we have underway, and we see that that investment is going to be still critical for some period of time to come.

Okay. Thank you, Zoe. I think that is all of the questions that we've got. Zoe, I'll hand it back to you to close us.

Thank you very much. A few things just in closing. Firstly, thank you very much for joining us today, and thank you very much for your investments in us. It means a lot, and I think it helps us to continue to deliver the incredible work that our teams do for the countries for which we're operating within. I look forward to seeing many of you on the road in the coming weeks. Maybe if I can with just a couple of takeaways. The first, I'm really excited for the work program that we have ahead of us. Very visible asset-backed growth and resilient, sustainable returns. Maybe if I could finish by saying a big thank you to Angela, who won't be with us for a period of time as she takes her well-deserved maternity leave.

Thank you very much, Angela, for all that you've done in this community and helping prepare us for today. Thank you for being here today. We never were quite sure, but we're really pleased to have Angela here, and best of luck for your maternity leave.

Thank you very much.

With that, thank you very much.

Good morning, and welcome to National Grid's half year results presentation. I'm Angela Broad, Head of Investor Relations, and it's great to have so many of you on the call today. Firstly, please can I draw your attention to the cautionary statement at the front of the pack. As usual, a Q&A will follow the presentation. [Operator Instructions] All of today's materials are available on our website. And of course, for any further queries after the call, please do feel free to reach out to me or one of the IR team. So with that, I'd now like to hand you over to our CEO, John Pettigrew. John?

Many thanks, Angela. Good morning, everyone, and thank you for joining us today. Well, as you know, this is my last set of results, and I'll be handing over to Zoe who becomes Chief Executive on the 17th of November. So before we get started with the results presentation, let me pass it over to Zoe to say a few words.

Thank you, John, and good morning, everyone. Today's results are an important moment for National Grid and for me personally, as I pick up the baton from John. I want to take a moment to recognize his remarkable contribution over a decade as CEO. The strong foundation he leaves behind are a testament to his leadership and the dedication of our National Grid team. Since joining as CEO Designate on the 1st of September, I've had the privilege of meeting with many colleagues and stakeholders. What stands out to me is the scale and ambition of what we're delivering, transforming our networks and investing at pace. Our GBP 60 billion capital investment is not just a number. It's a commitment to future-proofing networks so we can meet the surge in demand we're seeing and ensure the millions of homes and businesses we serve have the reliable and clean energy they need at a price they can afford. As I step into my role in the coming days, my immediate focus will be on maintaining momentum, staying focused on performance and delivering safely and responsibly. I will approach this with a clear-eyed view of the challenges and exciting opportunities ahead. I believe in the vital function energy companies play in driving growth and prosperity. I'm committed to ensuring National Grid plays its part with an unrelenting focus on operational excellence and capital discipline as we continue to deliver for our customers and create value for our shareholders. I look forward to meeting all of you in due course, but for now, I'll hand to John and Andy to take you through the results.

Thank you, Zoe. So turning to our half year results. As ever, I'm here with Andy Agg and once we've been through our respective presentations, we'll be happy to answer your questions. It's been a really positive first half as we've continued to build on our strong foundations to deliver excellent operational and financial performance. . The investments we're making in our networks have never been more important to ensure continued resilience, enable economic growth, deliver cleaner energy and meet growing power demand. And it's these drivers that underpin the strong visibility we have in our investment program, supported by our regulators. This, in turn, gives me huge confidence in National Grid's ability to carry on delivering a compelling investment proposition with investment growth around 10% per annum and underlying earnings per share growth of 6% to 8%, whilst maintaining a strong balance sheet and delivering an inflation-protected dividend. Before I come to our performance, I want to highlight three key areas which reinforce my confidence in our ability to deliver on our plans. Firstly, the strong progress we've made in securing the supply chain to deliver record levels of investment. As you know, a big focus over the last 2 years has been to secure the supply chain for our largest suite of major projects in the U.K., the accelerated strategic transmission investment or ASTI. Today, I'm pleased to say we're in a really strong position. All 6 of our Wave 1 projects are already under construction with work progressing well. Our GBP 9 billion Great Grid Partnership covering the delivery of the 8 onshore projects within Wave 2 is now up and running with our 7 strategic partners. And we're making great progress with the remaining 3 Wave 2 offshore projects where we've completed the contracting for Sea Link and announced the preferred suppliers for Eagle 3 and 4 with contracts expected to be signed in the next few months. Once complete, we'll have secured the supply chain for all 17 ASTI projects, a significant achievement. And as a result, over 3/4 of our GBP 60 billion investment plan is now underpinned by delivery mechanisms enabling us to ramp up our capital delivery. We've invested over GBP 5 billion in the first half, another record for the group, and we remain on track to deploy over GBP 11 billion of capital investment this year, in line with our guidance. The second area to highlight is the continued momentum we're seeing from both a regulatory and policy perspective. On the regulatory front, we've built on the strong foundations we set last year in the U.S. with around 75% of our 5-year investment plan approved within our rate cases. We've also seen some important policy developments. As you know, New York State announced last year that it's likely to miss its target of 70% renewable generation by 2030. As a result, we've seen a shift in the last half towards an all-of-the-above approach when it comes to balancing clean energy goals with affordability and reliability. For example, in September, following submission of our long-term gas plan, the PSC issued an order supporting the proposed Northeast Supply Enhancement or NESE pipeline. If built, the capacity provided by the pipeline would materially enhance reliability and resilience whilst also potentially reducing energy costs for New Yorkers by up to $6 billion. In the U.K., I'll come to regulatory development shortly. But on the policy front, the government is continuing to look at different ways to support faster delivery of infrastructure and accelerate economic growth. Alongside their planning reform legislation targeted at large infrastructure projects which should support delivery of projects in the 2030s, they've also launched consultations, which include proposals to allow electricity distribution network operators to carry out simple reinforcement activities without full planning permission and a revised fast track consenting process. If implemented, this could have important benefits for future transmission projects. So it's clear we're seeing strong regulatory support for the investments we're making as well as the policy progress to assist in the delivery of future projects. And then thirdly, the near-term actions we're taking to support load growth in the U.K. We're working with the government and industry, including U.S. big tech companies, as they seek to develop the U.K.'s AI infrastructure, including the creation of data centers within AI growth zones like the recently announced ones in and Cobalts Park. These projects represent tens of billions of pounds of investment in U.K. infrastructure and are evidence of the demand growth we forecast in our RIIO-T3 business plan. which is designed to connect up to 19 gigawatts of additional demand over the 5 years to March 2031, around half of which is expected to be connecting data centers. We're now working hard to facilitate these connections, including working with the government through the AI Energy Council to support the development of more AI growth zones, so we can deliver the investment needed to meet growing energy requirements. So let me now turn to our financial performance, where we've delivered a strong set of results in the first half. On an underlying basis, that is excluding the impact of timing and exceptional items, operating profit was up 13% to GBP 2.3 billion, reflecting increased regulatory revenues across our U.S. and U.K. electricity transmission businesses. This strong operating performance drove an increase in underlying earnings per share of 6% to 29.8p. As you've already heard, our business delivered a record GBP 5.1 billion of investment, up 12% year-on-year at constant currency. And in line with the policy, the Board has declared an interim dividend of 16.35p per share. Turning next to reliability and safety. I'm pleased to say reliability has remained strong across our U.K. and U.S. networks over the first half of the year. As we look ahead to the winter we're well prepared with winter readiness plans in place. The NESO recently published its winter outlook report for the U.K., in which they forecast electricity margins around 10%, the highest since 2019. In the U.S., whilst we anticipate adequate electricity margins, gas availability across the coldest days of winter remain a focus, especially in extreme weather events, and so our teams will work closely with upstream suppliers to mitigate any risks. And in July, the NESO published its report investigating the outage following the fire at our North Hyde substation and we're working closely with the government, NESO, Ofgem and industry to progress the report's recommendations. Safety, as always, remains a critical focus across our business. In the last 6 months, our lost time injury frequency rate was 0.09, inside our group target. We continue to promote a culture of safety excellence including, for example, identifying new ways to enhance our safety protocols, such as the use of digital job briefs to increase hazard recognition in the field. Moving now to our operating performance across the group, starting with Electricity Distribution. Capital investment increased by 17% and to GBP 756 million, reflecting increased asset replacement and load-related reinforcement activity. I'm pleased to say that we've now delivered over GBP 100 million of synergy savings, 6 months ahead of target following the U.K. electricity distribution acquisition in 2021. These synergies have been achieved through smarter procurement, operational efficiencies across our shared sites and integration of support functions in the group. In October, we also saw the publication of Ofgem's sector-specific methodology consultation for RIIO-ED3, which builds on the foundations of the T3 framework. We welcome the fact that Ofgem has directed networks to use a long-term planning horizon. This will ensure that delivery of the next price control also takes into account investment drivers in the decades ahead. including load growth, asset health, resilience and renewable generation. We've also made good progress on connections reform, including preparing flexible offers to customers that are likely to secure a cue position. This allows them to progress their projects ahead of a formal offer, enabling faster connections for renewables and low-carbon technologies. And finally, we continue to build our system -- our distribution system operator capabilities with the launch of the demand turner flexibility market, incentivizing increased demand as an alternative to curtailing generation. Moving to U.K. Electricity Transmission, where capital investment increased by 31% to GBP 1.7 billion, including construction of new substations to support load growth and progress on our GBP 1 billion London Power Tunnels project where we've now energized the first 2.5 kilometers during substation and. We've also been working hard to find innovative ways to expand system capacity. For example, we began work on a new substation in Uxbridge Moor, West London, with an innovative design, which will have a 70% smaller footprint and avoids the use of SF6, a potent greenhouse gas. This substation will support over a dozen new data centers and is expected to deliver 1.8 gigawatts of new capacity equivalent to powering a mid-sized city. We've also leveraged the approach to procurement frameworks using our strategic infrastructure business, including, for example, in July, when we signed an GBP 8 billion electricity transmission partnership with 7 regional partners to deliver substation infrastructure across the U.K. transmission network. Turning to policy. We're working closely with NESO and customers to support connections reform. Once NESO publishes this updated queue, we'll have a clear view of the sequencing of the specific projects required, and we can then turn our efforts to meeting these connection dates at pace. On regulation, Ofgem published its draft determination for the RIIO-T3 framework in early July, with our response published in late August. This included changes we believe are needed to the baseline return and the incentive framework to allow high-performing networks to achieve a globally competitive overall return. We've also proposed a number of refinements to streamline our funding mechanisms, enable us to recover the efficient cost of our investments and progress projects at a pace expected by our stakeholders. As you'd expect, we've engaged heavily with Ofgem at all levels of the organization ahead of the final determination, which is expected in early December. And we expect to take a decision in late February or early March following the license drafting process. Turning now to strategic infrastructure. As you've heard, our focus has been to ramp up delivery of the Wave 1 ASTI projects, whilst also ensuring we're securing the supply chain and relevant consents for Wave 2. specifically on our Wave 1 projects, examples of our progress include our offshore Eagle 1 and 2 projects where the cable manufacturing and site works for the southern converter stations are underway, our onshore Yorkshire Green upgrade project where the last of 8 200-ton transformers has now been delivered and the North London Reinforcement project where we finished reconducting 3 circuits, installing over 190 kilometers of cables. We've also completed 4 public consultations this year, including the submission of 2 major development consent order applications, Sea Link and Norwich to Tilbury, with both submissions now accepted by the planning inspectorate, a major milestone. On the regulatory front, we continue to engage with Ofgem to find a resolution to our request for a delay event on the Eagle 1 project and are encouraged by the discussions to date. We expect these negotiations to reach a final decision over the next few months. Coming to the U.S. and starting with New York, where we've continued to make strong progress across our operations. Capital investment reached GBP 1.6 billion, up 5%, driven by an increase in mains replacement expenditure. In addition, we've continued to make strong progress on our $4 billion upstate upgrade, including our Smart Path Connect transmission project, where our segment is on track to be ready to energize at the end of the year and our Climate Leadership and Community Protection Act, or CLCPA Phase 1 and 2 projects, where we expect the first round of permit approvals for the end of the calendar year. On the regulatory and policy front, in addition to the order from the PSC on the NESE pipeline and the approval of the Niagara Mohawk joint proposal, we're also engaging on the draft New York State Energy Plan. Released earlier this year, the plan outlines long-term strategies to meet New York's energy needs. It emphasizes the importance of infrastructure investment and recognizes the enduring role of the gas network in maintaining reliability, affordability and security of supply. Once finalized later this year, the plan will influence future regulatory decisions and utility planning across the state. In New England, capital investment increased by 23% to GBP 1 billion, reflecting increased spend on asset condition and system capacity in both electricity transmission and distribution, 220,000 smart meter installations and the further rollout of our fault location isolation and service restoration program. We've also agreed partners for our strategic procurement framework which will support over $3 billion of contracts over the next 5 years. And finally, on regulation and policy, we've agreed around $600 million of allowances under the Electric Sector Modernization Plan largely focused on electric vehicle highway charging and IT infrastructure, and we're continuing to work with the governor's office to advance the Energy Affordability Bill. Moving to National Grid Ventures. Capital investment was GBP 69 million, supporting asset refurbishment across our Interconnector and U.S. Generation portfolios. Operationally, we've had a strong 6 months with our Interconnector fleet at 90% availability and our Generation fleet achieving 96% reliability. We've also progressed the Propel transmission project through our Transco joint venture, where EPC contracts are now under development. Once complete, the project will help to deliver power from Long Island to the Bronx in New York City and Westchester County. We've also streamlined our portfolio, having completed the sale of National Renewables in May and announced the sale of Grain LNG in August. With all regulatory approvals received, we expect completion in the coming weeks. So let me stop there and hand over to Andy to walk you through the numbers before I come back to talk about our priorities for the second half. Andy?

Thank you, John, and good morning, everyone. I'd like to highlight that, as usual, we're presenting our underlying results excluding timing, U.K. deferred tax and exceptional items and the dual results are provided at constant exchange rates unless specified. So starting with our overall performance in the first half. We've delivered strong results with underlying operating profit on a continuing basis at GBP 2.3 billion, a 13% increase from the prior year, primarily driven by higher regulated revenues in U.K. electricity transmission reflecting growth in the asset base and higher revenues in our U.S. regulated businesses following recent rate cases, partially offset by the sale of the electricity system operator last year. Strong operating profit growth partially offset by higher finance costs and a full impact in the half from the rights issue shares has led to a 6% increase in earnings per share to 29.8p. We've continued to make good progress with our capital program. with investment from continuing operations at GBP 5.1 billion, another record level, and up 12% year-over-year. In line with our policy, the Board has declared an interim dividend of 16.35p per share, representing 35% of last year's full year dividend. Moving now to our business segments, starting with U.K. Electricity Distribution. Underlying operating profit was GBP 551 million, down GBP 22 million versus the prior year. reflecting lower revenues due to headwinds from Ofgem's real price effects mechanism, which more than offset the benefit of revenue indexation and recovery of higher totex allowances and higher depreciation. In the period, we exceeded our cumulative 3-year target of GBP 100 million of synergy benefits by FY '26, 6 months ahead of schedule through leveraging our increased buying power, delivering savings from integrating support functions and working more efficiently at joint transmission and distribution sites across the U.K. Capital investment was GBP 756 million for the half year. an increase of GBP 109 million compared to the prior period, primarily driven by higher asset replacement and refurbishment and higher load-related network reinforcement. In our U.K. Electricity Transmission business, underlying operating profit was GBP 846 million, up GBP 122 million compared with the prior period. A strong first half performance was driven by higher allowed revenues partially offset by higher depreciation. Capital investment was GBP 1.7 billion, 31% higher than the prior period. This reflects our ongoing spend on substation build-out as well as the significant step-up in investments on our ASTI projects and ASTI enabling works. Moving now to the U.S., where underlying operating profit for New York was GBP 443 million, GBP 167 million higher than the prior year as a result of higher net revenue reflecting the growth of the business as we upgrade and reinforce our networks and the recovery of previously unremunerated costs following recent rate case updates. This was partially offset by increased depreciation, reflecting a higher asset base and higher costs, including property taxes and environmental provisions. Capital investment was GBP 1.6 billion. This was GBP 82 million higher than the prior year. from a further step-up in the pace of our mains replacement activity under our downstate gas rate case and increased spend on smart meters, partially offset by lower costs on Smart Path Connect as we near completion of this project. In New England, underlying operating profit was GBP 292 million, GBP 65 million higher than the prior period, following higher revenues reflecting our growing asset base and improved incentive performance, partly offset by higher depreciation and other investment-related costs as we ramp up the capital program. Capital investment was GBP 958 million, GBP 178 million higher than the prior year. This was driven by increased asset condition and system capacity investments and smart meter installations, partly offset by reduced mains replacement work. Moving to National Grid Ventures, where the underlying contribution was GBP 227 million, including joint ventures. The increase of GBP 19 million compared to the prior year was primarily due to the benefit of depreciation having ceased in Grain LNG following its classification as held for sale. This accounting treatment for Grain, along with the sale of National Grid Renewables, drove a reduction in capital investment to GBP 69 million. And our other activities reported an operating loss of GBP 27 million, GBP 11 million lower than the prior period. principally driven by lower insurance costs and the non-repeat of fair value losses in the National Grid Partners portfolio. Turning to financing costs and tax. Net finance costs were GBP 678 million, an increase of 4% compared with the prior year due to higher average net debt and the impact of higher inflation on indexed linked debt. The underlying effective tax rate before joint ventures was 11.3%, 60 basis points lower than the prior year, principally due to the benefit of higher capital allowances in our U.K. regulated businesses. and a change in the profit mix. Underlying earnings were GBP 1.5 billion, up 16% with earnings per share at 29.8p. On cash flow, Cash generated from continuing operations was GBP 3.6 billion, up 35% compared to the prior year. This increase is driven by improved profitability across the U.K. and U.S. and favorable movements in working capital. In total, net debt increased by GBP 1.5 billion to GBP 41.8 billion in the period with strong cash inflows from operations and the GBP 1.5 billion of National Grid Renewable sale proceeds, helping to offset the continued growth in capital investment. For the full year, we expect net debt to increase by around GBP 1 billion from the half year. including the Grain sale proceeds and assuming a USD 1.35 exchange rate. As John said out earlier, we've continued to make significant progress in capital delivery securing the supply chain and advancing our regulatory and policy agenda. As I previously set out, our plans were designed to be robust against a range of outcomes with respect to interest and exchange rates, and I remain confident in our ability to deliver in line with our 5-year framework. Turning to forward guidance, and we've included detailed guidance for the full year in our results statement as usual. Following strong performance over the first half of the year, we expect a modestly higher underlying EPS relative to our guidance in May. The impact of a weaker U.S. dollar and a slightly higher share count due to scrip uptake is expected to be more than offset by improved operating performance in the regulated businesses and slightly lower financing costs. With that, I'll hand you back to John.

Many thanks, Andy. Now before we move to Q&A, I want to spend the final few minutes setting out our priorities for the remainder of the year as we continue to invest across our networks. Starting in the U.S. and New York where we have a number of priorities. including further work with the state on its energy plan to shape a road map that balances decarbonization, affordability and reliability. Ongoing work with Williams in our role as the sole offtaker of the NESE pipeline, as they look to secure regulatory approvals, which are expected later this year and preparing for our Downstate New York gas filing due for submission next spring, ensuring we're able to continue to invest in safety and reliability while supporting customer needs and managing affordability. In Massachusetts, our priorities include filing our gas distribution rate case, which is now planned for January to allow us more time to engage with new stakeholders and propose measures aligned with evolving state policy goals, working with the state on its affordability bill and producing our climate compliance plan, an important enabler of the cleaner energy transition. Turning to the U.K. In Electricity Transmission, our priorities are clear: to engage with Ofgem to deliver a RIIO-T3 framework that allows high-performing networks to achieve a globally competitive overall return and mechanisms that enable us to deliver at the scale and pace required. Work with the AI Energy Council as part of our efforts to collaborate across the energy and tech industries, and build on the good progress we've made in ramping up construction across our Wave 1 ASTI projects, whilst also engaging closely with stakeholders and communities as we progress our development consent orders. In Electricity Distribution, our key priority is preparing our response to the RIIO-ED3 sector-specific methodology consultation ahead of Ofgem's decision expected in the spring. And in National Grid Ventures, we have 2 key priorities: developing and winning new competitive transmission opportunities in the U.S., including an ISO-led opportunity in New England, and closing the sale of Grain LNG completing our announced divestments. Now before we take your questions, as this is my last results presentation, I want to reflect briefly on the journey I've been privileged to be part of over the past 10 years. It's been a truly transformative decade for National Grid. When I presented my first set of results back in 2016, the business looked very different with the majority of our operations in gas. Today, we're over 3/4 electric, a fundamental shift that reflects the successful portfolio repositioning that has enabled us to pivot towards growth and a geographical footprint that is more balanced across the U.K. and the U.S. I'm incredibly proud of how we've responded as an organization to meet the needs of our customers by delivering extraordinary organic growth. We've deployed nearly 3x the level of capital investment compared to 2016, and the growth in regulated asset base is expected to be over 10% this year compared to just 4% a decade ago. Our business is incredibly strong, giving me huge confidence in National Grid's ability to continue to deliver a compelling investment proposition. Beyond the numbers, I'm very proud to be handing over an organization where our values and the critical role we play for our customers are the driving force of our ambitions. Zoe is the right person to lead National Grid into this next chapter and I know she will find the clarity of our mission, the scale of the opportunities ahead to be a source of strength in the years to come. So let me stop there and give you the opportunity to ask Andy and I any questions.

Okay. So we've got lots of questions. So I'm going to perhaps start with Pavan from JPMorgan. And then after Pavan, perhaps I could ask Sarah from Morgan Stanley to ask her question. So Pavan, if we can have your question, please.

And John, I just wanted to congratulate you on the results you've delivered during your leadership. I wish you all the best for your future beyond National Grid. So I've got 2 questions, please. Firstly, on T3 expectations? Can you give a bit more color on your dialogue with Ofgem looking at particularly some of the data points we've had earlier this year on the U.K. water CMA provisional determinations? And on do you foresee upward pressure on the return on equity? And then my second question is on net debt and the net debt guidance looks better for the full year than in May, even accounting for the proceeds of disposals. You highlighted the working capital effect in your speech. I was wondering if you could give a bit more color on the drivers of this and whether it's sort of -- that is something that should persist into the future years? Just trying to get an idea of the basis.

Thanks, Pavan. Let me do a question one, then I'll hand over to Andy to do question 2. And thank you for your kind remarks. In terms of RIIO-T3, if I just take you back to our response to the draft determination, in that, we said very clearly to Ofgem, there were 2 fundamental areas that we wanted to focus on between the draft determination and the final determination. The first was the overall investable framework and the second was the workability of the regulatory framework. In terms of the investment framework itself, you would have seen in our draft determination that we made the argument that we believe the overall return needs to be comparable with what we'd see internationally. And therefore, based on what was in the draft determination, we set up that we felt that the base return should be higher. I think given what we've seen in the provisional CMA decision on water and things like I think that reinforces some of the argues that we've made. We also said as part of the financial package that we needed a lot more detail on the incentives, and that's been an area of focus since we made that response to the draft determination with Ofgem at all levels of the organization. In addition to the financial framework, we also said we needed a framework that was actually deliverable. And in particular, what we meant by that was given the scale of the CapEx that we need to deliver we need to have the ability to be able to make decisions quickly and then to move nimbly through the process, in particular, in terms of when Ofgem sets the allowances and actually agrees that the projects are needed, that it aligns with the development framework for the projects. So that has been the focus, as you can imagine, with what, 4 weeks to go. There continues to be a lot of dialogue, but the dialogue remains in those 2 broad categories. And with that, I'll hand to Andy.

Pavan, thanks. So you remember back at year-end, we guided to an increase in net debt of around GBP 6 billion, but that was before you take account as you say, of any of the transaction proceeds. By the time you allow for the 2 disposals and the FX movement that we've seen, it's a relatively small difference, net difference compared to the sort of the GBP 1.5 billion increase that we're now guiding to after you take account of all of that. And that small difference is a combination of the slightly higher script uptake that we've seen over the summer and as you say, a little bit of working capital, but it's relatively small in the context of our balance sheet. So I don't see that as being a significant sort of enduring shift.

Thanks, Andy. So shall I go to Sarah from Morgan Stanley next and then perhaps Mark Freshney from UBS after that. Sarah?

Firstly, a very big welcome, Zoe. It's always nice to hear another Aussie accent. And John, another very big thank you to you and wishing you all the best in the next chapter. So 2 questions from me, please. And actually, they're both on U.K. Electricity Distribution. So firstly, on the ED operational RoRE performance, please. Just wondering any further color you can provide on how that's tracking against this year's 50 basis points guide and then as we look forward, anything clearly you can please add on that pathway back to the 100 basis points. And then quickly, a bit more on last month's SSMC ED, completely appreciate very early days, but wondering if you can add a bit more on your thoughts, please. If there was anything that surprised you in the document, or mostly, as you already mentioned, mainly just building on what we've already seen through the process.

Yes. Thanks, Sarah. I mean, in terms of the operational performance of ED, I'd say it's very much on track to where we expected to be at the half year. As you would have seen in the results, we continue to get the impact of the real price effects that we talked about in May, but we are seeing improved performance this year. So we're on track and are guiding towards the 50 basis points of outperformance this year. And we remain of the view that we'll get closer to the 100 basis points by the end of ED. So that is very consistent with what we said in May and the performance of the first 6 months is sort of reinforcing that. In terms of the sector-specific methodology consultation, I'd say it's -- I mean it's very broad, which I think is a good thing at this stage. It very much align with our expectations. I think we were particularly pleased to see that often is set up that they intend to take a very long-term strategic view of distribution going forward over multiple price control periods and that ED3 will be set in that context. I think we're also pleased to see that in the document, they talked about the need for the investment in distribution to stay ahead of the needs of customers. So given that we're expecting to see an increase in EVs and heat pumps and those types of things, then I think we're pleased to see that. It was very consistent in terms of its messaging in terms of the need for an investable proposition and also that the incentives for things like innovation would be important. So broad I would say it met our expectations. It's very broad, and I think it's given us a landscape in which we can respond quite sensibly in time for the decision in the spring. Okay. So if I can move to Mark at UBS and then perhaps after Mark, we can take Dominic from Barclays. So Mark?

John, congratulations and looking forward to seeing what you'll be doing next. I have 2 questions. Firstly, looking back over the last 2 or 3 Ofgem price controls, do you feel that Ofgem have given you allowances sufficiently -- that are sufficient for you to do all of the maintenance that you would have liked to have done? And just secondly, on infrastructure in general, I mean National Grid has been the center of capital delivery in the U.K. at a time when there wasn't much of it around. Clearly, there's -- government have been clear we're not going to cut capital investment in the U.K. We're going to keep going. What would -- what do you think the U.K. needs to do to get all of this CapEx done, not just in your area, but across the whole piece?

So thank you, Mark. So in terms of in context of the last 2 or 3 price controls and have we had sufficient allowances, I think the blunt answer to that is yes. When I look at the outcomes, which is probably the most important thing, we've continued to deliver world-class reliability at 99.69, as you know I quote quite often. But also, if I just take a broader perspective and look at the number of unplanned outages we have on the network, so unexpected failures of assets today compared to 10 years ago, that actually it's about half as many today. So actually, the overall health of the network looks very resilient and strong. And therefore, I think we have had sufficient maintenance CapEx to do the work that we need to do. Obviously, as we look to T3, that continues to be dialogue with Ofgem as we get towards the FD. But certainly in the past, I think we've got a network that's reliable and resilient. And when I look at the data, suggests it's in a strong position. In terms of infrastructure and the broader question, I mean, for me, I think the things that are important, Mark, I think there's bipartisan recognition that infrastructure investment is a key enabler of economic growth in the U.K. In order to do that efficiently, having stable and predictable fiscal and regulatory frameworks is really important and something that we're focused on. I think we still like to see more done around the planning regime in the U.K. The planning legislation is going through, and I think that will streamline the process. But I do think there's more opportunity to do more so that the infrastructure can be built more efficiently and more quickly to enable that economic growth. So for me, I think those are 2 things that are really important. Okay. Let me move on to Dominic. And then perhaps after Dominic, we could do Ahmed at Jefferies. So Dominic, do you want to ask your question?

Yes. Thank you, John, for your sort of decade as CEO and I think 30-ish years at Grid and also to welcome Zoe to the role and wish her all the best for the future. Two questions for me, please. Firstly, there's clearly a U.K. government focus on some sort of affordability. And within that, I think the Select Committee last week brought up network windfalls again. And I think Ofgem are now made sort of a consultant is by think beginning of 2026. So maybe you could give us an update on whether this Select Committee recommendation will change Jim's point of view on network windfalls? And secondly, on the GBP 35 billion of that you had in your draft for RIIO-T3, there's clearly a lot of uncertainty around that. I think NESO is publishing a new connection regime shortly. And I was hoping that you could provide us color as to actually what you expect to be in it like what's going to change? And will that -- how much clarity will that actually put onto the totex number that will get published in the FD on how much that's already could be secured?

Yes. So thanks, Dominic. So in terms of the Select Committee last week, actually, it was an issue that has already been looked at. So this -- so just to be clear, the work that we've done demonstrates that we certainly not received any windfall profits. The analysis that they were talking about the Select Committee, I think, was a snapshot looking at expected inflation versus actual inflation. But if you look at it over the medium to long term, then it's very clear that there is no windfall profit. So I think that was the debate that was going on there. Ofgem, as you know, have already looked at this issue and have concluded that it's not in consumer's interest to reopen it. So from that perspective. And I think Ofgem actually responded to the consultation already looked at it as well. So the consultation you mentioned of next spring, actually, I don't think it's got anything to do with the windfall profit. I actually think it's to do with the way that network charges are allocated through the standing charge for suppliers. And I think it's that Ofgem are looking at, so rather than the windfall profit. In terms of the GBP 35 billion totex that you referenced, so just to be clear, so when we submitted the business plan for RIIO-T3, we said that over that 5-year period, we could spend up to GBP 35 billion, depending on basically, how quickly connections come forward. The GBP 35 billion was split out into sort of baseline CapEx, which included the traditional reliability, resilience asset help as well as those projects we had absolute certainty on but it then had a significant amount of CapEx that would be linked to the speed by which connections come forward. What we're expecting to see over the next period is new connection offers will go out to those customers that are classed protected, which means they've got planning consent and have started construction for connections in '27, '28 in January next year. For those for 2030, it will go out in Q2 and for those beyond 2030 in Q3. So I think we're going to get a sort of a lifting of the mist over the course of next year as to exactly what connections are going to be delivered within the RIIO-T3 period. We know to a large extent, where the sort of the primary spines of investment are, what the connections reform process will do will allow us to specifically know which substations in which locations are going to be invested. So I think we'll get a better view as we move through the course of next year, but it's going to take a little bit of time. Okay. So I'm going to move on to Ahmed at Jefferies and then Harry at BNP. So Ahmed?

A warm welcome to Zoe in her new role. A few questions, maybe just starting out with on the T3 process. One of the other things you talked about in your response to the DD was the workability and the simplifying of the funding framework for -- and reopen decision-making. Could you give us a sense of how is the debate on that front? And if you have been -- if you're confident you'll be able to achieve the improvements you're seeking? Another topic that's been, I think, in the press and among stakeholders is the budget for auctions is out and there's some debate whether that's enough to be able to deliver on the government's offshore wind targets. I just want to understand a little bit better how sensitive or more is the sort of the transmission CapEx plan to sort of achieving offshore wind development targets in the U.K. either T3 or T or more medium term? And then finally, just 1 for Andy. Andy, could you just give us a little bit more on the drivers for the upgrade or modest upgrade as you sort of call it, for the FY '26 outlook? You referenced regulated -- better performance in regulated businesses. I'll just love to understand that better.

Yes. Thanks, Ahmed. So start with the first question on the workability. So this was 1 of the areas that we focused on in our response to the draft determination, I mean in simple terms, as I said to Dominic's answer, quite a bit of the CapEx is going to be agreed as we move through the price control period. So as big projects are defined, then we have to go through a process of agreement with Ofgem, the pre-engineering, then off to MacGreen that it's the right project to move forward and ultimately agreeing the allowances. And for us, what's really important is that those regulatory decisions dovetail and align with the project development time scale so that we're not left in a position where either we're having to spend in advance of getting the approval from Ofgem that it's the right project and/or we having to wait for clarity on what the allowances are. So it's very much about the workability of the framework and making sure that we've got a good drumbeat with Ofgem to allow us to deliver what is a significant level of CapEx at speed and at pace. So that has been a lot of discussions have been had since they're after termination at the working level to make sure we've got the right framework. And of course, we'll wait to see whether we've got the right place of the FD at the beginning of December. In terms of and the offshore wind auction, I think I'll go back to what we said in May, just to remind people that, to a large extent, we are relatively insensitive to what happens in the offshore wind auctions because Ofgem has already taken the decision that for the ASTI projects, we have a license obligation to deliver them and that it's in consumers' interest to progress those projects sort of independent of what the time scales are. And that's partly because, of course, there's an expectation that not only will it enable the flow of increased energy across the network, but it will also reduce what is an expected significant increase in constrained costs of around GBP 12 billion. So we don't see a huge amount of sensitivity between our GBP 60 billion 5-year plan and then finally, on question 3, I'll look to Andy.

Yes. Thanks, Ahmed. In terms of the guidance, I think we said it versus our original guidance at the start of the year, we've obviously seen the 2 headwinds, firstly, from the dollar movement. So we're now guiding at 1.35 for the remainder of the year, which is, as you know, a small headwind, and secondly, with a slightly higher scrip uptake, there's an element of EPS dilution from that for the full year. But that is more than offset by a stronger operating performance from across the group, actually. I wouldn't call out any particular business unit. It is from across our regulated businesses. And all of that means that it puts us in a net or a modest upgrade position compared to our original guidance when we look ahead to the full year.

Okay. Thank you, Andy. I'm going to go to Harry at BNP and then James at Deutsche. So Harry, we have your question, please.

And I'll add my congratulations and all the best and also hello to Zoe. So I have 2 questions, please. The first 1 is on the U.S. Now you just had a slew of sort of Democrat election wins and New York Mayor race dominated by affordability and the cost of living. I think you've been quite clear in the past that in the U.S., you are sheltered from this debate because regulation is done at the state level, et cetera. But if there was a federal move to clamp down on energy prices in the U.S. ahead of the midterms, where do you think the pain would be felt? And I have been clearly in mind that when this happened in Europe in 2022, it was painful across a wide range of business models, although less so in networks. So I'd be interested just to understand how you think or where the axe could potentially fall if energy prices really grew into a major, major political issue in the U.S. The second one is on T3. So looking at your consensus around the time that the draft determinations came out, there's several key uptick in expectations for FY '27, which is, I think, all of us looking at the fast money numbers and the Ofgem models have concluded that, that might bump your revenue for next year. How comfortable do you feel with that if we just take what we've had in the draft determination, so clearly, we'll get more in December and things might look different? But if we're just looking at what we've got in the draft, do you think we are collectively as sell-side analysts being conservative enough here? And do you think that there is a rational reason that EPS might be higher next year because of the past money?

Thanks, Harry. Let me take the first question, and then I'll ask Andy to take the second. Probably just sort of a broader answer to the specifics as well, which is, so first of all, we're very conscious of the affordability debate, not just in the U.S. and the U.K. So we always take that massively into account when we think about price controls and rate cases in the U.K. and the U.S. With regards to the Mayor election, just to put that into context as well. So for New York City, they are our largest customer for our downstate gas business. We have a huge amount of interaction with them, particularly on the construction programs because quite often, where the city is doing work, we have to move our pipelines, for example. So they're a key stakeholder. And like any key stakeholder, we will engage with them to make sure we understand how we're working together, but also what their aspirations are around, and we understand that affordability is a big issue. But ultimately, for National Grid, things like our CapEx plans and affordability sit at the state level. And as you saw last year, we were very successful in agreeing with the regulator at the state level, a 3-year plan for NIMO of $5.6 billion which will take us right through to 2028. In terms of the sort of interaction between state and federal, I mean, for utility rates, then obviously, federal today don't have any jurisdiction. So I think in terms of the affordability debate, it would still sit at the state level. We need to be very mindful of that. And the way we approach that as a National Grid is when we look to do a rate case and we'll do this when we do in the coming months, we'll first reach out to all our key stakeholders and understand what are their expectations, what do they want from National Grid and how does that fit in the envelope of affordability. And quite often, that will shape the capital plan that we put forward as part of the rate case. We'll also spend a significant amount of time thinking about our vulnerable customers. You might remember in our rate case, for example, we set aside $290 million to support most vulnerable customers. And of course, we're always trying to drive the efficiency of the business through innovation as well to find more efficient ways of delivering what we need from customers. So I think for all those reasons, that's what we'll continue to do. We'll engage with stakeholders and think very carefully about what that rate case looks like in the envelope of affordability. From a federal perspective, and I think I'll reflect on what we've seen over the last 12 months, which is 1 of the key focus areas in New York, for example, has been how do you address the wholesale prices and you would have seen that the PSC has indicated they're supportive of the NESE pipeline. Based on the analysis that we did on the NESE pipeline, not only does it improve resilience and reliability in New York, but it increases the volume of supply by about 14% and potentially has about $6 billion of benefit for New Yorkers. So I think there's an interaction between federal government when you get into things like transmission pipelines and the states that I suspect will continue to be a focus going forward. Andy?

Harry, thanks for the question. Yes, I think, obviously, this morning, you'll have heard that we've reaffirmed our 5-year frame guidance through to '29. And you remember when we set out that guidance, it was deliberately designed to be robust to a range of different outcomes as well. So I think it's important to take that into account. And clearly, at this stage, as you've heard from John, a couple of times now, our focus is working with Ofgem to ensure that we get to an appropriate final determinations. And that will be the point that we'll determine whether there is further guidance to be given, and that will be the point that we would do that. The other thing I'd just mentioned, of course, at this stage, we're also 1 of the topics we talk to Ofgem about is the profiling of any increases of revenue and how they fall across the 5 years of the price control. So that's something else that will be part of the mix that we'll be looking at.

I'm going to move on to James at Deutsche and then perhaps we can go to Deepa at Bernstein after that.

It's James Brand from Deutsche. Also, congrats to John and also to Zoe and good luck for the future. . I have 2 questions. The first is on demand. So you said that you were kind of positioning yourselves to be ready to connect up to 19 gigawatts of additional demand Obviously, that will be absolutely huge, particularly if it was all heat demand. What's your kind of realistic expectation of how much demand growth we might see over the next 5 years? I know there's like a lot of data center connection requests, but how much do you think we can realistically expect to be added on the data center side. Maybe that's a difficult question to answer, but any thoughts around that would be super interesting. And then the second question is on coming back again to the energy affordability debate in the U.K. So obviously, the kind of noise around that has increased quite substantially. How do you view your own positioning in regards to that debate? I guess, potentially reasonably well protected given that you'll have the transmission price control locked in pretty shortly, and you can argue that the investments that are cutting our curtailment costs quite substantially. But longer term, is this a bit of a risk for you? And if you were to make any recommendations for ways to put electricity bills in the U.K. given that we have pretty much the most expensive electricity bills in the developed world, what would you recommend?

Okay. Thanks, James. Let me start with the demand question. So a little bit of context. So because a lot of the demand -- a lot of the excitement is coming through the potential connection of data centers. So today, about 2.6% of all the demand that we have in the U.K. comes from data centers. You may have seen that NESO does its future energy scenarios, and it was projecting that, that could increase to about 9% by 2035. What we've seen over the last 12 months is quite a surge of requests for connections to the transmission network to support data centers and generative AI. So in our RIIO-T3 plans, our assumption is that we're expecting to see about demand growth of around about 19 gigawatts or we're going to build the network out to support that. I think it works out at about 4% growth in demand per annum. And about half of that is assumed to be for data center demand. And that's backed up by the connection agreements that have been signed in the time frame for RIIO-T3. So I think we feel comfortable that we've got a reasonably good handle on what the demand is going to do over the next 5 years or so. and a reasonably good handle on what's being expected in terms of growth in data center demand and where it will connect. And of course, you may have seen National Grid is working with the government through the AI Council to really identify where are the best locations in the U.K. to locate those data centers based on where is their access fair capacity today or where the time frame interconnections would be shorter than other places, which is an important determinant for data centers. In terms of energy affordability, I think when we stand back from our position, yes, we see an increase in the transmission element of the charge as we deliver out all these ASTI projects and the RIIO-T3 CapEx but actually against the expected constrained cost net-net, it's a reduction. So in a way, us getting on with the investment is very beneficial to consumers because it ultimately reduces the cost for them. Having said that, we're very mindful the affordability is a significant issue, which is why in our business plan we set out why it's important to have incentives around innovation to drive efficiency and indeed why we propose an efficiency measure as well. So we're very mindful of it. We're very conscious that it's a difficult time for customers. But in terms of the transmission element of the bill, I'd say we're very focused on making sure we can deliver the infrastructure to relieve those constrained costs, which result in a net-net reduction. I'm going to move to Deepa and then to Martin at BofA. So Deepa, should we take your question?

First of all, thank you so much for your service for all these years and all the best for the next steps and Zoe a warm welcome. So my 2 questions. First 1 is on the RIIO-T3 draft. where do you see the risk reward on the incentives? If not the financial returns, that's very clear, you want it to be higher than what's there. But as things stand right now, where do you see the risk reward and how close is that to the 200 bps or so you would need in order to get closer to that 10% overall nominal return? And in your discussion so far with Ofgem, what's your sense on, are they moving in the right direction taking your feedback into account? So that's my first question. And the second one, I noticed that you are looking at U.S. transmission opportunities. And I think this is something that used to be talked about a long time back. Nothing has ever happened about it. So has there anything changed in the U.S. transmission landscape that is making you look at that again? And again, how big could this opportunity be?

Yes. Thanks, Deepa. I guess I'll put the innovation in the context of the incentives framework, which I think is really important to help me get to an overall return that we think is appropriate to give the scale of investment going forward. So actually, the work that we've been doing with Ofgem is focusing on sort of 4 key incentives. One is being incentivized to make available the connection capacity that customers want in a timely fashion. Secondly, it's about delivering the major projects as quickly as possible and being incentivized against that in the same way as we are for the ASTI projects. Thirdly is looking at how we can reduce the cost constraints in our role as the transmission operator working with the system operator. And we've done some of that in the existing price control, and we think there's opportunity for more of that as we move forward. And then thirdly -- sorry, fourthly, it's the incentives as well. So we've been having conversations with Ofgem about that to really -- to find a framework that ideally allows us to look for opportunities to extend new technologies onto the network in a way that will reduce cost for customers. So if I give you an example, so Dynamic Ratings is a good example that we've started to deploy in our transmission divisions in the U.K. It is new technology. It allows you to get more power down the line without having to build new lines and we think those types of incentives are going to be really important if we're going to get to the overall package that works. But we're thinking about those 4 incentives as a package and innovation is a key 1 within that. In terms of the U.S. opportunities, you might recall, when we refined the strategy in May last year, we talked about the fact that our focus was going to be on transmission, both regulated and competitive and that we did see opportunities for transmission opportunities in the U.S. So our National Grid Ventures business has been looking at that. And I referenced in the speech this morning that one particular one on the horizon is a transmission line potentially from Maine down to New England that will help to reduce bills for New England customers that we -- the ISO is doing a solicitation on. So we're looking at that as a project. It's obviously in a region that we are very familiar with and understand very clearly. And obviously, we've got good capabilities with National Grid Ventures. So we are seeing some solicitations for competitive transmission in the U.S. And as part of our National Grid Ventures business, we are looking at them very carefully. We will only take them forward, as we said in the past, if we could get to a view that we're sensibly positioned to be able to win them, earn sensible returns, but that is 1 that's specifically on the short-term horizon at the moment. Just looking who is left. So Martin, if we could go to you next, I think that's the last question that I've got.

Right. Congratulations on the results and all the best for the future. I actually wanted to come back to this topic of potentially new opportunities in transmission in the U.S. that you referenced. Could that be something that is material in terms of investments and in terms of CapEx and presumably that would come on top of your existing guidance of GBP 60 billion? So could you just give us some perspective as to how relevant this opportunity could be? And question number two, just on hybrid bonds. We have not really seen any hybrid issuance, I believe so. Is that still part of your financing toolbox?

Thanks, Martin. I think Andy can take couple of those.

Yes. Thanks. Martin. So on the transmission opportunities, as John said, we're in the early stages of looking at these. And so we'll have to wait and see how that may or may not grow as we go forward. But I'll remind you, if you go back to the financing strategy we set out in detail when we did the equity raise 18 months ago, we were very clear that where we do see incremental opportunities, particularly in our Ventures business, above -- that might take us above the GBP 60 billion, we would need to look for ways to finance those through the Ventures business as well in terms of potential partnering, other types of sort of off-balance sheet finance and other routes, et cetera. So i.e., it wouldn't impact our delivery or use of the equity proceeds to underpin the GBP 60 billion. And that remains absolutely the case today. In terms of hybrids, you're right. And again, when we made our financing strategy announcements 18 months ago, we were very clear that we wouldn't expect to issue any hybrid for several years. Again, that remains the case. Hybrids remain a very useful potential tool to us. We have a lot of unused hybrid capacity. At this stage, we don't have anything in the near term as you'd expect, but it will remain a tool that we can deploy appropriately later if we think that's the right thing to do.

Thank you, Andy. So I don't have any further questions. So let me just wrap up by just saying, I guess, a summary of our half year results is good operational and financial performance in the last 6 months. I think we're very well positioned for the second half. And hopefully, you've taken away from today's presentation, we're very much on track to deliver the GBP 60 billion over the 5 years 18 months in. . This is my last results presentation. I'd like to say I'm just incredibly proud of the organization, what it's achieved over the last decade, but I'm also delighted to be handing over to Zoe who I think is going to be an incredible CEO. So thank you, everybody, for joining us today, and I'll see some of you very soon.

Good morning, and welcome to National Grid's Full-Year Results Presentation. I'm Angela Broad, Head of Investor Relations, and it's great to have so many of you on the call today. Firstly, please, can I draw your attention to the cautionary statement at the front of the pack. As usual, a Q&A with John and Andy will follow the presentation. [Operator Instructions] All of today's materials are available on our website. And of course, for any further queries after the call, please do feel free to reach out to me or one of the IR team. So with that, I'd now like to hand you over to our CEO, John Pettigrew. John?

Many thanks, Angela. Good morning, everyone. Thank you for joining us to discuss our full-year results. I hope to see many of you later today at our building our energy future event for a deep dive on major capital projects we are delivering across the UK and the Northeast U.S. As ever, I'm here with Andy Agg. And once we've been through our respective presentations, we'll be happy to answer your questions. Last May, we announced a refined strategy focused on pure-play networks. We also set out a new five-year financial framework and our plans for £60 billion of capital investment. This will drive asset growth around 10% per annum and underlying earnings per share growth of 6% to 8%, whilst maintaining a strong balance sheet and delivering an inflation-protected dividend. Alongside this, we set that our comprehensive financing strategy, including our £7 billion equity raise, providing clarity over our funding to at least 2031. In the first year of the five-year framework, we've accomplished a huge amount despite the turbulent economic and geopolitical environment. We've delivered record capital investment of £9.8 billion, in line with our plan, and 20% higher than last year. This reflects the scale of the activity across all of our regulated businesses, including significant progress within our ASTI portfolio, where all six of our Wave 1 projects are now under construction, a step-up in asset health and network reinforcement in Electricity Distribution, over 350 miles of gas mains replacement across Massachusetts and New York and good progress with our Smart Path Connect project in U.S. Electricity Transmission. We've also secured the supply chain and delivery mechanisms for more than two-thirds of our £60 billion of capital investment. For ASTI, this includes contracts with the delivery of 12 onshore and two offshore projects, while also making good progress on Eastern Green Links 3 and 4 and Sea Link. And in New York, we've made further progress with our $4 billion Upstate Upgrade, awarding contracts for the first phase as well as the engineering works for Phase 2. The policy and regulatory agenda on both sides of the Atlantic has also continued to move forward, further enhancing visibility on our investment plan. In the UK, the government published its Clean Power Action Plan in December, and Ofgem published its decision on connections reform last month, which embeds, is it ready and is it needed criteria into the connections process. This will deliver a rationalized queue of projects aligned with the Clean Power Plan and clarify the specific investments in locations required in the outer years of T3. New legislation on planning reforms was also introduced in March, which aims to reduce the time it takes to deliver infrastructure projects. Whilst the reforms will be more impactful in the 2030s, there are important measures in the bill that have the potential to further derisk our ASTI projects. In the U.S., we refreshed all three of our New York rate plans and agreed new rates for our Electricity Distribution business in Massachusetts over the last year. Altogether, this means that we've now agreed over 70% of our U.S. investment with regulators over our five-year frame. We also expect to receive approval for our electricity sector modernization plan in Massachusetts where we filed through up to $2 billion of capital investment over the next five years to help deliver the state's clean energy policy. So the combination of these firm foundations of our resilient business model, which provides strong regulatory protections from macroeconomic uncertainty and no significant exposure to energy prices or merchant risk means that we are very well positioned and hugely confident in our ability to deliver our £60 billion investment program. We will have much more to share on capital delivery at our investor event this afternoon, where we will showcase the sheer scale of our Electricity Transmission projects and how we've transformed the way we are delivering them. So turning now to some of the key highlights for the year. We've delivered a strong performance, with underlying operating profit increased 12% to £5.4 billion at constant currency. This reflects robust operational performance as a result of increased regulated revenues and flat controllable costs achieved through our focus on agreeing the right regulatory frameworks and efficient delivery. Underlying earnings per share was slightly ahead of guidance at 73.3p and up 2%, reflecting the impact of a higher share count following the rights issue. A record £9.8 billion of capital investment helped to drive regulated asset growth of 10.5%. And in accordance with our policy to grow the dividend in line with the U.K. CPIH, the Board has declared a final dividend of 30.88p per share. This takes the total dividend for the year to 46.72p, an increase of 3.21% on last year's rebased dividend. Moving next to reliability and safety. Reliabilities remain strong across our UK and U.S. networks despite severe weather events across our jurisdictions. An example of this is Storm Darragh last December, a once-in-a-decade storm that hit our UK electricity distribution networks, causing significant damage across the Southwest, South Wales and West Midlands. Our teams were tirelessly around the clock restoring power to 95% of customers within 48 hours. Last week, the NESO published its interim report investigating the outage following the fire at our North Hyde substation in March. We welcome the report, which establishes a time line and sequence of events, and outlines further steps required to deliver the final report in June. On safety, our lost time injury frequency rate was 0.1%, in line with our group target. As our workload increases, we continue to invest heavily in attracting, developing and retaining a qualified and competent workforce with robust training programs built around the culture of safety. We've also set protocols for our contractors so that high safety standards are maintained right across the workforce. Turning to our operating performance across the group, starting with the UK Electricity Transmission. Investment increased by 57% to £3 billion, reflecting the ramp-up in the first wave of six ASTI projects, major substation upgrades and a further 4 gigawatts of generation being connected to the network. This included the UK's largest battery storage unit at Lakeside in North Yorkshire and a 1.2 gigawatt offshore wind farm in Dogger Bank. The business delivered a return on equity of 8.3%, outperforming its allowed return by 100 basis points. Turning to regulatory developments. In December, we submitted our £35 billion RIIO-T3 business plan, representing the most significant investment in the UK's Electricity Transmission network in a generation. This ambitious plan will nearly double the power that can flow across the country, directly connecting 35 gigawatts of generation and 19 gigawatts of demand and create optionality for a further 26 gigawatts, all whilst maintaining world-class levels of reliability. Our submission also included clear evidence of the need for an investable financial framework, including a real 6.3% allowed cost of equity, appropriate levels of cash generation and incentive mechanisms that will deliver benefits to both networks and consumers. Under our proposals, we expect our investment plans to avoid constraint costs of around £12 billion over the price control period, offsetting the impact of investment to customer bills. In addition, we are also pleased to see Ofgem's decision on the advanced procurement mechanism. This will provide funding for transmission owners to secure supply chain capacity, covering items like switchgear and transformers. This builds on the approach Ofgem adopted under the ASTI regime, and we plan to utilize the framework from the middle of this year. Finally, on policy developments. In addition to the connections reform I mentioned earlier, the government published its planning and infrastructure bill. The bill includes a number of proposals that are important to us, including giving certain projects the flexibility to choose the type of consenting regime used and providing opportunities to accelerate the consenting process. The bill also includes proposals intended to increase public acceptability of Electricity Transmission projects, alongside guidance for wider community benefits. Moving to strategic infrastructure. This will get a lot of focus this afternoon, but to summarize, we now have the Great Grid Partnership up and running, the HVDC framework agreement in place, the supply chain secured for all 12 onshore projects, all Wave 1 projects under construction, and we've continued to build our internal capabilities and the workforce now stands at over 1,000 employees. So in the last year, we put the platform in place and delivery is well underway. Carl and his team will provide a lot more detail on our progress later today. Turning to UK Electricity Distribution. Capital investment increased by 14% to £1.4 billion, driven by increased spending on asset health, network reinforcement and connecting nearly 600 megawatts of renewable generation. The business achieved a return on equity of 7.9%. And whilst this reflects the benefit of our synergy savings program, it was heavily impacted by costs from Storm Darragh as well as lower-than-anticipated allowances from Ofgem's real price effects mechanism that haven't matched what we were expecting when the price control was agreed. We are working hard to address the ongoing headwind and expect performance to improve over the remainder of the price control period. This year, we also made good progress in developing our role as this distribution system operator, or DSO, including our leading role in the development of flexibility markets. We now operate the largest market across all DSOs, allowing us to avoid over 200 gigawatt hours of renewable generation curtailment, lowering costs for consumers. On the regulatory front, Ofgem published the ED3 framework decision at the end of April, which gives us an early indication of their thinking in the next price control period, and is the starting point for the development of the sector-specific methodology. And as I mentioned earlier, we were pleased to see Ofgem's decision on connections reform. Electricity Distribution has been playing a leading role in driving forward these reforms. And over the last year, we've been able to implement the industry's technical limits initiative, accelerating the connection office dates on around 3 gigawatts of distributed generation and removed over 4 gigawatts of capacity from connections queues. Turning to the U.S. Our investment in New York increased by 24% to £3.3 billion. This reflects a further 218 miles of gas mains replacement and a continued ramp-up in our $4 billion Upstate Upgrade program, including the reinforcement and upgrade works as part of CLCPA Phase 1 and continued strong progress on Smart Path Connect, where we are rebuilding over 100 miles of transmission lines to connect large-scale renewable generation. Again, we will have much more to say on our Upstate Upgrade program this afternoon. We achieved a return on equity of 8.7%, 94% of allowed and 20 basis points higher than the prior year, reflecting strong performance in our downstate gas businesses in the first year of our new rate plans. On the regulatory front, we reached a joint proposal in April our new rates for Niagara Mohawk business, which includes an improved return on equity of 9.5% and increased CapEx of around 50% over the three years, reflecting our step-up in Electricity Transmission investment and funding to modernize our electric and gas networks and support New York's clean energy goals. The joint proposal also includes provisions to mitigate bill impacts for customers by spreading increases over the three years of the plan and putting in place assistance programs for low-income households. In New England, capital investment increased by 5% to £1.8 billion, reflecting continued gas mains replacement and increased asset condition and grid modernization work across our electric network. Our achieved return on equity was 9.1%, 92% of allowed, benefiting from six months of the new rate agreements in our Massachusetts Electric business. We've also seen a greater focus on affordability in the state, following increased builds from a colder winter. To assist Massachusetts gas customers, we agreed with the regulator to reduce winter gas builds by 10% during March and April, with a deferral to be recovered over the summer. On the regulatory front, in September, the DPU issued its rate case order for our Massachusetts Electric business, approving a five-year plan, with an allowed return of 9.35%. The order includes a new regulatory recovery mechanism that provides timely funding for growing capital investment, an updated performance-based rate mechanism providing inflation protection for operating and maintenance costs and increased allowances to cover the increasing cost of storms. Taken together, these enhanced recovery mechanisms are helping us to earn closer to allowed return. And as I mentioned earlier, the DPU has also approved our electricity sector modernization plan for anticipatory investments to support the decarbonization of our networks. And from a policy perspective, last month, we submitted our Climate Compliance Plan, setting up the strategy to enable our Massachusetts gas network to advance data carbonization goals, whilst maintaining safe, reliable and cost-effective service for our customers. And finally, last November, Governor Healey approved legislation that reforms the permitting process for utility infrastructure. This new approach sets maximum time frames for approvals, capital projects in the state. And finally, in National Grid Ventures, capital investment was 43% lower at £378 million, following completion of the Viking Link to Denmark last year. During the year, we've seen good operational performance across the National Grid Ventures portfolio, including good availability from our interconnector fleet, high levels of availability and utilization at our Long Island generation business and at our Grain LNG terminal, where we are making good progress on the construction of the new tank. On the regulatory front, last month, Ofgem published the decision on the regulatory framework for Offshore Hybrid Assets, an important next step as we continue to develop our LionLink project as a next-generation interconnector. So as I said at the start, we've achieved significant progress across all areas of the business in the last year as we continue to efficiently deliver safe, secure and clean networks for the future. Let me stop there and hand over to Andy to walk you through the numbers before I come back and talk about the priorities for the coming year. Andy?

Thank you, John, and good morning, everyone. I'd like to highlight that, as usual, we are presenting our results on an underlying basis and at constant currency. I want to start by expanding on what John has said about National Grid's financial resilience. The visibility that our business model provides and the stability it gives is unwavering, however volatile the macro environment, including times such as now. A large part of that can be attributed to our regulatory frameworks, but it is also a consequence of our efficient delivery, with controllable costs broadly flat this year and our robust procurement and financing strategies. Together, these enable us to manage the impacts of inflation and cost pressures, changing interest rates and fluctuations in exchange rates. And importantly, that enables us to deliver stable and predictable growth through our significant capital program. Many of you will also know that we have substantial inflation and cost protections, particularly in our UK regulated businesses with indexation of our regulated asset base. In the U.S., around 90% of our supply chain is domestically sourced. And even if higher costs do come through, we can manage this through alternative suppliers or the pace of discretionary spend with any additional spend ultimately being picked up in the following rate case. We are also positioned so that the impact of exchange rate volatility from our U.S. businesses is limited. We consistently hedge around 70% of our U.S. gross assets with dollar-denominated debt. This means, from an earnings perspective, our general rule of thumb is that for every $0.05 move in the average U.S. dollar to sterling exchange rate, we only expect to see a 1p impact on EPS on an annualized basis. Finally, from a financing perspective, our regulated operating businesses broadly match leverage to our regulatory frameworks, which enables us to efficiently recover debt costs. We also hold around 30% of our debt book at the holdco level with maturities out to the 2030s, and any higher expected interest cost of refinancing have been factored into our five-year financial frame. We've also set out our comprehensive financing plan, which sees us fully funded until at least the end of RIIO-T3. So as I say, all of these things add up to create a very stable platform from which to operate and deliver on our plans. Now let me take you through our financial performance. I'm pleased to be reporting a strong start to our five-year plan. Underlying operating profit on a continuing basis increased by £589 million to £5.4 billion, up 12% on the prior year. This was mainly driven by strong performance across our regulated businesses, including higher revenues and strong cost efficiency, partly offset by expected lower revenues from our interconnectors. Higher operating profit combined with lower finance costs has led to an underlying earnings per share increase of 2% to 73.3p per share, slightly above guidance and including the impact of a higher share count following the rights issue. Group return on equity was 9%, supported by the growth in our regulated earnings, offset by a higher denominator reflecting the rights issue. In line with our policy, the Board has recommended a final dividend of 30.88p, taking the full-year dividend to 46.72p per share, representing a 3.2% increase compared to the prior year rebased dividend and in line with average CPIH inflation. As John said, we've continued to deliver record levels of investment, with capital investment from continuing operations increasing 20% to £9.85 billion, helping drive regulated asset growth of 10.5%. Now turning to our business segments. And starting with UK Electricity Transmission, where underlying operating profit was £1.4 billion, 9% higher than last year. This was helped by increased totex allowances, indexation and higher allowed returns, partly offset by increased depreciation, reflecting growth in the asset base. Capital investment of £3 billion was up 57% versus the prior year. This included the ramp-up of our Wave 1 ASTI project spend, including Eastern Green Links 1 and 2 as well as the four onshore projects and construction activities on new customer connections, partly offset by lower spend on London Power Tunnels two and the Hinkley connection. We've achieved an 8.3% return on equity, delivering outperformance of 100 basis points, and we remain on track to achieve 100 basis points of average annual outperformance throughout RIIO-T2. We also saw underlying operating profit of £115 million from our Electricity System Operator over the first half of the year prior to its sale to the UK government. Moving to UK Electricity Distribution. Underlying operating profit was £1.2 billion, £51 million higher than the prior year, reflecting an increase in revenues from indexation, partly offset by higher depreciation and one-off costs and incentive revenue impacts following the severity of Storm Darragh. Capital investment was £1.4 billion, 14% higher than last year, with increased investments in asset replacement and reinforcement work. We are on track to deliver our £100 million group synergies target by 2026, having achieved £88 million as of the end of this year from areas such as procurement and operations. We achieved an ROE of 7.9% in the year, outperforming our allowance by 20 basis points, which is lower than our aim to achieve 100 basis points to 125 basis points of outperformance. This reflects the one-off impacts from Storm Darragh and an impact arising from the real price effects, or RPE mechanism, where lower than anticipated allowances due to reductions in commodity indices since the start of the RIIO-ED2 period have not tracked actual costs incurred. We are working hard to mitigate this headwind and expect to improve in year outperformance towards 100 basis points by the end of ED2. Moving now to the U.S. Our New York business achieved an 8.7% return on equity, 94% of its allowance and 20 basis points higher than last year. Underlying operating profit was £1.45 billion, 43% higher than the prior year. This reflects rate increases in our downstate gas businesses and cost efficiencies enabling us to deliver broadly flat controllable costs, partly offset by higher depreciation on our increased asset base. Capital investment was £3.3 billion, 24% up on the prior year. This was driven by higher electric investment, including our Upstate Upgrade projects with Smart Path Connect on track to energize in December 2025 as well as higher gas investment driven by a further ramp-up in gas mains replacement and our updated downstate rate cases. In New England, the return on equity was 9.1%, 92% of its allowance. This was 10 basis points lower than the prior year and 40 basis points higher after adjusting for a one-off property tax recovery last year. Underlying operating profit was £924 million, up 15%. This was driven by higher rates in our gas and electricity businesses, including through our new capital tracker and delivery of cost efficiencies, partly offset by higher depreciation and other costs. Capital investment was £1.75 billion, 5% higher, driven by higher electric investments for increased asset health and maintenance work and the advanced metering infrastructure rollout. We also continue to invest in our gas networks, including a replacement of 135 miles of gas mains this year. Moving to National Grid Ventures. Underlying operating profit, including joint ventures, was £455 million, £116 million lower than the prior year. Higher profitability from a full-year of Viking operations was more than offset by expected lower revenues on IFA2 and the North Sea Link. Capital investment was £378 million, down 43% reflecting the commissioning of our Viking Link in connector last year and the classification under IFRS of National Grid Renewables and Grain LNG has held for sale from the end of September, which means investments into these businesses are excluded from reported group capital investment. During the year, our Community Offshore Wind joint venture paused development activity in line with the broader slowdown of the U.S. offshore wind industry. Whilst there are longer-term trends that give us confidence in the need for offshore wind generation in the Northeast, significant nearer-term policy uncertainty has led us to recognize an accounting impairment as an exceptional charge. We recorded an operating loss for other activities of £143 million, including adverse fair value movements in the National Grid Partners portfolio. Net finance costs were £1.36 billion, £116 million lower than the prior year, with the benefits of lower net debt following the rights issue and lower inflation on index-linked debt, partly offset by the impact of higher refinancing costs where we have issued £3.2 billion during the year. For the full-year, the underlying effective tax rate, excluding the share of joint ventures, was 15.4%, 20 basis points lower than the prior year. This reflects higher levels of capital expenditure qualifying for full expensing compared to last year. Underlying earnings were £3.5 billion, with EPS of 73.3p, up 2% on the prior year. Moving now to cash flow. Cash generated from continuing operations was £7 billion, down 4% compared to the prior year. This decrease was driven by timing as we returned balancing charges within the ESO in the first half of the year, following over-recoveries in the prior year. Net cash inflow of £954 million, was £4.6 billion higher than the prior year, reflecting the proceeds of our rights issue, partly offset by the increase in capital investment. Combined with disposal proceeds from the ESO and the remaining 20% stake in Gas Transmission, we saw a reduction in net debt of £1.7 billion to £41.4 billion. Moving to our FY2026 guidance, which is presented at an assumed exchange rate of $1.3 to sterling. EPS growth is expected to be at the lower end of the 6% to 8% range, reflecting a headwind of a slightly weaker dollar. Capital investment is expected to be over £11 billion next year, driving asset growth of around 11%, and net debt is expected to increase by just over £6 billion, excluding expected proceeds from the National Grid Renewables and Grain LNG sales. As usual, detailed business unit guidance has been provided in our results statement. Turning to the five-year framework. As I said at the beginning, as a result of our visibility and resilience, we are reconfirming our financial framework from April 2024 to March 2029. We still expect to invest around £60 billion over five years, driving asset growth of around 10% and EPS growth of 6% to 8% from this year's baseline of 73.3p. Our aim remains to grow the dividend in line with average CPIH, and we remain committed to maintaining our current investment-grade credit rating. With that, I'll hand you back to John.

Many thanks, Andy. Before we move to your questions, I want to spend just a few minutes setting out National Grid's priorities for the coming year and the journey that we are on to support economic development, energy security and decarbonization across our jurisdictions. Starting in the U.S., where nearly half of our investment will be spent over the five-year frame. From a regulatory perspective, we have a number of key priorities. In New York, having reached a joint proposal for our Niagara Mohawk business, we will continue to engage with the PSC ahead of the anticipated approval by the commission in the summer. In Massachusetts, we will continue to work with the DPU to agree the recovery mechanisms under the electric sector modernization plan. We will also be preparing our next rate filing for Massachusetts Gas, and we'll work with the DPU to put forward a plan that balances investment needs and customer affordability. On policy, we will continue to work closely on its state energy plan to develop a comprehensive roadmap to a clean, resilient and affordable feature for our customers. In Massachusetts, having filed our climate compliance plan last month, we will be supporting the discovery phase over the coming months, and we will work with the state as they advance the NG affordability bill. And across our U.S. businesses, we are supporting our policymakers to understand the impacts and opportunities of increasing demand growth from data centers, and we are supporting federal policymakers as they begin to look at resource adequacy in the region. Moving to the UK. In Electricity Transmission, our priority will be to continue to ramp up capital delivery, including commissioning two further circuits to our London Power Tunnels project. Our primary regulatory focus for the year is to reach agreement with Ofgem on an investable RIIO-T3 framework that will allow us to deliver at the unprecedented scale and pace that is needed to meet the UK's ambitious climate goals. We expect Ofgem's draft determination to be published in June, with a final determination in December, ahead of a new regulatory period starting in April 2026. We will also be focused on supporting the NESO with the recontracting of the connections queue, which in turn will clarify the specific investments in locations required in the outer years of T3. Staying on the topic of connections, we are also seeing significant increases in data center requests, with 15 gigawatts of signed contracts now in our pipeline. Our RIIO-T3 plan has been developed to meet this demand, and we are also supporting the government's recently formed AI Energy Council. Here, we are working to meet the challenges of increased power demand, including proposals for AI growth zones dedicated to data center development. On the policy front, we expect to see the planning legislation progress through Parliament, and we will continue to advocate for wider planning reforms. Through our input into the NESO, we will support progress on the longer-term Strategic Spatial Energy Plan, which should align with the government's forthcoming industrial strategy. And we want to see a skill strategy developed, which together with industry, creates a collective view of the workforce needed in 2030 and beyond. In strategic infrastructure, our priority is to continue to ramp up the ASTI program, where we will be focused on stepping up work on the six Wave 1 projects that are now under construction and finalizing the procurement contracts, the remaining offshore projects. Once complete, we will have secured Tier 1 supplier contractors for all 17 of our ASTI projects. We will also be focused on the consenting process with a total of eight consultations planned this year. In our Electricity Distribution business, our priority is to complete our targeted £100 million synergy benefits and deliver improved returns. And following the publication of the ED3 framework decision document, we look forward to engaging in the sector-specific methodology consultation later in the year. Turning finally to National Grid Ventures. Our priorities will be to complete the sale of National Grid Renewables, agree the sale of Grain LNG having launched the process at the end of April and to continue the development of our LionLink project in the UK and the Propel transmission project through our New York Transco joint venture. So in summary, it's been another year of enormous progress. As you'll have seen, I recently announced my decision to retire from National Grid, and I'm delighted that the Board has appointed Zoë Yujnovich as my successor. She has all the attributes required to deliver on the significant growth opportunity ahead. I'm looking forward to welcoming Zoë in the autumn and working with her before handing over the reins in November. It's been an immense honor for me to work with so many talented people over the years, and to lead the company I joined as a graduate. I'm very proud that National Grid is leading the way to a new energy era, building the next generation of networks to unleash the energy needed to meet increasing demand. We're delivering extraordinary change at National Grid, implementing the largest ever overhaul of our networks across all the jurisdictions that we serve. In a turbulent and unpredictable world, National Grid is a beacon of stability with an investment proposition that provides high asset growth, strong earnings growth and an inflation-protected dividend. In this context, we remain focused on delivering secure, affordable and clean energy for our customers and communities, whilst providing long-term value and returns for our shareholders. As you've heard, there is much to do in the coming months. And I remain fully focused on ensuring we don't miss a beat, so that I leave National Grid in the strongest possible position for its future success. Let me stop there and give you the opportunity to ask questions.

Okay. So there are lots of questions coming through. So I'm going to start with Dominic from Barclays. And then after that, I'll go to Sarah at Morgan Stanley. So Dominic, would you like to ask your question?

Hi there. Yes, thank you. It's Dominic Nash from Barclays. So thanks for your presentation. And also, I'd just like to say thank you, I appreciate your time at Grid and wish you all the best in your decision on moving on. A couple of questions from me, please. Firstly, on RIIO-T3, we clearly have the DD date now in the diary for the 25th of June. You submitted your business plans in December with, I think, a £35 billion totex program. And since then, clearly, there's been a few movements in UK policy and a few sort of projects sort of falling out and going sort of left and right. What do you – on your conversations that you've had with Ofgem, what do you expect to see different in the DD to sort of your business plan with regards to CapEx to the real nominal split in the debt calculation and on the returns where I think Ofgem was 5.5% real, and I think you quest a 6.3%. And then the second question is just sort of following up from that is that the Iberian blackout a couple of weeks ago. What sort of discussions have you had with policymakers and with the UK sort of regulators on kind of what happened and what the impact here? And what sort of opportunities or changes are potentially needed in the UK to ensure that something like that doesn't happen here? Thank you.

Okay. Thanks, Dominic. There's quite a lot in that. So why don't I start on RIIO-T3. I'll ask Andy to talk about nominal debt, and then I'll come back on the Spain blackout. I mean, as you said, we made the business plan submission in December. And I'd say since then, we've had really productive conversations with Ofgem. As you expect, we're in the sort of last few months of the RIIO-T3 process, that has been going for 2.5 years, I think. What I'd say is our focus at the moment is very much on the financial framework. You might be aware we had a roundtable with our investors and Ofgem recently, and I'd like to thank our investors who attended that who directly reinforce the message that we've been giving Ofgem around the importance of investable framework for RIIO-T3. Our focus continues to be as it was when we when we made the submission in December. There are three elements to the financial framework. The first is the returns. We've been very clear that we believe that in the range that Ofgem set out, the base return should be at the top end. And in our submission, we talked about 6.3 being an appropriate level. But also on top of that, the cash characteristics need to be right to get the right balance of earnings growth and asset growth, and also that the incentives are there as well to get to a sensible return that's comparable to what we see internationally. So all of that conversations are going on, as you'd expect. In terms of the investment levels, in terms of ASTI, which is a big part of the Electricity Transmission, we don't see the recent announcements impacting on that investment profile. And the £35 billion that we submitted is consistent with everything that we talked about with regards to ASTI and the £60 billion. So Electricity Transmission makes up about £23 billion of the £60 billion, different timeframes, but that £23 billion is consistent with the £35 billion we submitted in the business plan. Andy, do you want to just talk about nominal debt?

Yes. Thanks, Dominic. Yes, I think Ofgem were fairly clear in their SSMD about signaling the direction of travel on moving to a sort of a nominal debt approach. We've seen nothing since then that would indicate that's less likely than it was. Obviously, we'll have to wait and see what comes out on the 25th of June. But everything we're seeing at the moment is that remains the most likely direction of travel. But I think as John said, for us, that's one element of ensuring that the total package gives us the right balance and including cash characteristics overall. Clearly, a move to a nominal debt does serve to accelerate some level of cash, but it's only a portion of, I think, the overall level that we've asked for in our business plan. So yes, that's what we'll be looking for on the 25th.

In terms of the incident in Spain, Dominic, I mean, I think we're all waiting to see what comes out of the investigation. As far as I'm aware, there is no clarity yet on the root cause. Lots of speculation and lots of hypothesis. I mean I do think it is massively important that given the increasing dependency society has on electricity, not just for lighting, but for heat and transport going forward, the – actually things like resilience are looked at very carefully. I can talk about the UK in terms of – I've seen some of the hypotheses around renewables. And when the National Energy System Operator was part of National Grid as the Electricity System Operator, we started several years ago looking at pathway products, as we call them, which are effectively technical products that would be needed to support a renewable system. So things like frequency response from different sources, voltage control, reactive power and inertia. And I know the National Energy System Operator holds a certain level of inertia on the system depending on how much renewables are there. So that standard is in place in the UK. But the reality is we need to wait to see what comes out of the investigation, what the root cause is. And then from that, we'll be able to learn any lessons that are relevant for the UK. Thank you. Okay. So I was going to go to Sarah next from Morgan Stanley. And then after that, I'll go to Pavan at JPMorgan. So Sarah, would you like to ask your question?

Yes. Thank you very much. But first and foremost, John, congratulations for all you've achieved during your time at Grid. I've got two questions, please. The first one is slightly different, but similar vein to Dom's second question. Mine is specifically related to NESO's final recommendations and conclusion report on the North Hyde substation fire that we're expecting by the end of June that you mentioned. Just wondering what you expect to see in that, that's tangible for the direction of investment needs or maybe put differently, what would you like to see in that final report? And then secondly, a high-level question, please. And given the upcoming CEO succession, I feel like it's very much obligatory to ask a reflective question. So John, I'm curious, how would you pitch the National Grid equity story today versus how you would have pitched it on day one in the CEO seat? Thank you.

Thank you, Sarah. You made me laugh this morning, if nothing else. Look, let me talk about the North Hyde incident. So first of all, as you can imagine, we were pleased to see the interim report that came out from NESO last week. I think it was really sensible to set out the time frame, the sequence and the next steps as an initial sort of part of the report. We are working closely with NESO. We're providing all the information that you can imagine that is needed for that type of investigation. I'm hopeful that the report that comes out in June will cover all aspects of the incident. So as you know, from our perspective, it was a very rare event. In my very long career, I can't remember a circumstance we've had such a ferocious fire that's taken out the substation. But also power was also available into the local area into Heathrow right through that throughout two other substations. So I'm hoping it will look at the specifics of the asset failure at the substation. It will look at broader resilience issues. It will look at the interaction between transmission distribution and national critical infrastructure, and it will look more broadly around the changing nature of networks as they go forward. From the scope of the terms of reference I've seen, I think it will cover all those aspects, and we're look forward to seeing the report when it comes out at the end of June. In terms of – I didn't quite get the question, but in terms of the – as I move on from National Grid, the proposition that National Grid makes today to its equity investors is very clear. It is very much a growth and dividend proposition. And as you know, we've set out for the next five years that we're looking to grow the asset base by 10%, and we're looking to grow the dividend or policies to grow it in line with CPIH. And that very much is the focus for National Grid. I think from where I started back in 2016, growth was significantly lower. Back then, we were more typical, perhaps of what people expect in the utility. But as we look forward, growth is an important part of the proposition. And that is all underpinned, I think, by the fact that, as we said in our results today, what National Grid is, it's very predictable. It's very stable and has an incredibly resilient business model in a world in which there's quite a lot of turbulence. So that proposition of growth and yield, but also stability and predictability, I think, is the key to an equity proposition for our investors.

Perfect. Thank you.

Thanks, Sarah. Okay. So we'll go to Pavan. And then after that, we'll go to Mark at UBS.

Hi team. Good morning. Thanks for taking my questions. And John, I'd like to echo Dom and Sarah's congratulations on your career at National Grid. My two questions are, firstly, you mentioned, John, in your – some of the measures you're taking on affordability in Massachusetts. I guess if you can go into a bit more detail on what you're seeing on affordability pressure in the U.S.? Any pressure you're seeing on returns and how your conversations are going with the U.S. regulators and with U.S. policymakers on this topic? And my second question is on the planning and infrastructure bill. I appreciate it may not have on your five-year frame. And I think you say this in your statement. But are there any – can you talk about any positives that could be there in the five-year frame or certainly beyond that? How we should think about that affecting National Grid, please? Thank you.

Yes. Thanks, Pavan. I mean in terms of affordability, I mean, I think you're aware that National Grid thinks very carefully and thoughtfully around any rate case that we're doing to make sure we get the balance right between the investment that many of our regulators and policymakers wanted to make and ultimately, affordability. And therefore, we have lots of deep conversations with our regulators to make sure that any submission reflects that. In New York, you'll have seen that in terms of – if I take our latest rate case in NIMO, we've got a joint proposal, which is for three years. And within that, we've actually smoothed out the increase in the bills over that three-year period to reflect the fact that commodity prices have been quite high in the U.S. during the winter. And therefore, that's mitigated the impact for customers whilst doing the investment we need. We also set aside about $290 million to support vulnerable customers over that rate case period, with nearly $100 million in the first year. So again, that's us working closely with the regulator to make sure we got that balance right. In terms of returns, then in New York, as you saw in the joint proposal, we've actually got a joint proposal that increases our returns, I think, reflecting the nature of the investments that we're doing from 9% to 9.5% for Niagara Mohawk. And similarly, in Downstate New York, you would have seen the three-year rate case there where we saw an increase to 9.35%. So I think the regulators are thoughtful in making sure that it is an investable proposition as we do this significant investment, but we are careful as we think about affordability. In Massachusetts, you would have seen, and as I referenced in my speech, high commodity prices during the winter meant our gas customers were struggling a bit. And then we were very happy to work with the regulator to provide a 10% discount on bills in March and April, which we'll then recover in the summer when commodity prices are low. And as we look forward, again, we will be very thoughtful both in terms of how do we deliver the investment needed in our rate case for Massachusetts Gas and how do we reflect that in affordability. And you may have seen this week actually that the Governor of Massachusetts has launched an initial affordability bill. It's a 120-page document, and we will work through that with the governor's office and the PSC to see how we can support and contribute towards that as it goes through the sort of various machinations of committees and the Senate and Congress and so on. So that's sort of how we think about affordability, but it's an important issue, and you're quite right to raise it. In terms of billing and infrastructure, the planning and infrastructure bill, I mean, a lot of what's in that bill are things that National Grid has been advocating for. So we're sort of really pleased that the government is moving forward with that. So there's a lot in there that will streamline the planning process and make it more effective and shorter. There is some legislation in there to make the ability to challenge more focused. And of course, there's proposals for things like community benefits. There's also been a recent amendment actually to shorten the statutory consultation process that, again, could potentially take about a year out of the planning process in the UK. So we're very supportive of all of that. And in my speech, I referenced the fact that it will help to derisk, I think, some of the ASTI projects and some of the legislation will absolutely do that. But most of the ASTI projects were already in train. So as you've heard, our six projects that are Phase 1 are already – have planning and are in construction. We've got eight consultations running this year. So the time the legislation goes through, we would have been through the majority of our ASTI projects in terms of the planning process. So I think it really helps us as we move into the 2030s and beyond.

Thank you.

Okay. Thanks, Pavan. I'll go to Mark next and then Ahmed from Jefferies. So Mark, would you like to ask your questions?

John, so firstly, congratulations on the shareholder returns you've generated over the last nine or 10 years. And looking forward to seeing where you move on to once you retire from National Grid. But I have two questions, one for you, John, one for Andy. John, EGL1, which you haven't mentioned, is 16 months late, very early on in the project. It's a £2.5 billion project, and I think Ofgem's minded from their wording in their document there. They're clearly minded to give your penalty – you and your partners a penalty for that. Given – you speak a lot about the framework agreements and booking out the supply chain, but the supply chain is struggling, so how can we be sure that we're not going to see other further delays like this, 16 months delay to EGL1? My second question for Andy is just on community wind. When we spoke previously, my understanding was National Grid has certain protections to put the project back to your partners, RWE. You've written off what would seem most, if not all of it, today. Is there any chance of you recovering some of the cash somehow from that? Or is that £300 million completely a sum cost and now an impaired cost? Thank you.

Thanks, Mark, and thanks for your comments as well. I mean in terms of EG1, I don't think you should infer anything about the other ASTI projects when you look at EG1. EG1 actually has quite a long history, and a lot of it was developed under the lofty process rather than the ASTI process and all the regulatory frameworks that we put in place around that. Having said that, at the point at which we were asked to take the project forward because there was a debate about whether it's going to be pro to competition or not, we immediately went out to the market to see what was available in the supply chain. And the reaction from the supply chain was they get supported but in a slightly different timeframe. You've seen the consultation for Ofgem, in which they've said that they're not minded to give us the extension. But one of the things they say in the consultation is that they don't feel that we provided sufficient evidence on what the world supply chain looks like. So that consultation is still live. As you can imagine, we are going back to Ofgem. We believe we have significant evidence to demonstrate that actually, there was a limitation in terms of the time skills that, that supply chain could deliver at the point at which we were asked to take that project forward. For the other ASTI projects, as you know, we've got an awful lot of things in place, including advanced procurement mechanisms and also licensability associated with the supply chain. So I don't think you should read anything across from EG1 for the other projects. We'll talk a lot more about this, this afternoon at our event. But our focus at the moment is providing that data to Ofgem and the evidence to Ofgem that they require to get them comfortable that actually making a move in the date is an appropriate thing to do. Andy?

Yes. Good morning, Mark, thanks for the question. I guess just to remind you what I said in the presentation this morning, we've worked very closely and continue to work very closely with our partner, RWE, on both the short-term decisions around the pause in our development activity on Community Offshore Wind, but also continuing to be alive to how that may evolve in the future, and very much looking to continue to see options to take forward that commercial opportunity. So what we've announced this morning is very much an accounting impairment given the short-term uncertainty created by some of the recent pronouncements and other activities in the Northeast. From an accounting perspective, we believe it's appropriate to impair the value. To your question, it's – we fully impaired our investment down to zero with the £303 million that we've disclosed this morning. But as I said, and John said in his remarks, I think we continue to view that there are likely further energy needs in the Northeast. And to the extent that means this project comes back on, we will be very close working with RWE to pursue that. In terms of the protective rights, I think we've always said that, yes, we do have them, but they're attached to particular milestones through the course of the project. And of course, that will therefore be dependent on whether those projects go ahead as to whether those rights come into play.

Okay. Thank you very much.

Thank you, Mark. So I'll go to Ahmed now at Jefferies and then perhaps Deepa at Bernstein. So Ahmed?

Yes. Thank you. And firstly, again, best wishes from my side as well. I have three questions. Actually, just coming back to the comments you made about affordability in the New York region. I saw some press commentary from the New York Governor yesterday, which talks about the affordability and how sort of the bill rises sort of coming through from rate reviews. And that's obviously sort of coming despite sort of the measures that you have highlighted. So how should we think about particularly around the NIMO process from here? Is there something more to be done? Could the process be longer from here? Or there just needs to be better engagement between the stakeholders on what's actually sort of getting implemented? So that's my first question. My second question is I would be interested in your perspective on the other sort of big debate of zonal pricing in the UK, particularly if you think that would sort of – that could play a big role in defining transmission investments into the 2030 period in the UK. And then finally, one for sort of Andy. Andy, the guidance for this year seems to be ahead of where consensus expectations are. Is there anything specifically you will call out where you sort of see the outlook better versus consensus? Thank you.

Thanks, Ahmed. I mean in terms of – I'll start with the vulnerability and then zonal, and then Andy can talk about guidance. In terms of the affordability, I mean, I'll just reiterate, I think what I've said, which is we work very closely, not just with the PSC, but with the governor's office to make sure we get the balance right. And I was pleased that the joint proposal that we put forward was one that enabled us to be able to make those investments. It's about £5.5 billion across the three years, both electricity and gas, but with a single-digit increase in bills. And we didn't see any intervention from the governor in the same ways that's happened with other utilities, to be blunt. So I think we've tried to get the balance right, recognizing what's going on in New York. And as I said, there's quite a major investment in supporting vulnerability with the $290 million as well, which has been supported by PSC staff. So I think we're in a reasonable shape, but we're very conscious around that. In terms of zonal pricing, look, I mean, we spend a lot of time thinking about zonal pricing. It doesn't immediately impact on National Grid, to be honest. And people are talking about implementation because it's incredibly complex over a sort of five-year period, so something for the early 2030s. So it's not going to impact on our £60 billion capital investment program. Lots of debate in the industry, as everybody is aware, I mean, we can see that there are potential advantages for zonal pricing in terms of things like price discovery, locational signals and resolution of operational constraints. But at the same time, we can also see there's just a huge amount going on in the industry at the moment with retail reform, connections reform, the rollout of smart meters, the scale of investment right across the industry that requires a degree of sort of stability and certainty so that people are comfortable with that. So I think the bar for any incremental change on top of what's already going on should be very, very high. And my sense at the moment is that probably – now it's probably not the right time for introducing a major reconstruction of how the market operates through zonal pricing. And that in the 2030s, the networks will look very different. And I think maybe that's the time when you might potentially look at the advantages of zonal pricing. But to do it today, I think it just doesn't feel like the right time. Andy?

Yes. Ahmed, thanks for the question. Yes, as you'd be aware, this is the first time we're giving formal in-year guidance for FY2026. Previously, we've obviously given our five-year frame where we've guided to the 6% to 8% CAGR over the five years. And I think previously, we said that there was there was no reason we wouldn't expect sort of things to be relatively linear. So no, no real surprises for us. As you see, we've guided to being within the 6% to 8% range next year or in FY2026, albeit towards the lower end with the impact of the dollar move. That will continue to come from investment-driven growth in our businesses. And obviously, some of the new rate cases coming in, in the U.S., as John has mentioned as well. So continued asset growth in the UK and assets and rate case growth coming from our U.S. businesses.

Thank you.

Thanks, Ahmed. So let me go to Deepa at Bernstein. And then after Deepa, I'll go to Marcin of Bank of America. So Deepa?

Thank you so much. Congratulations, John, and thank you so much for your leadership. The two questions that I had. One was on ED underperformance. So you're now guiding that the outperformance is lower. Obviously, this year, you had the storm impact, but could you walk through what exactly is the cost item that's deviating on the RPEs? And is there any sort of read across to RIIO-T3? Could something similar kind of top up there? And what mechanisms will you use that? And my second question is on your RIIO-T3 plan. Out of the £35 billion of totex, roughly £9 billion or so is unconfirmed sort of projects. So I was just wondering, given everything else you've been seeing with the connections reform and 2030 Clean Power Plan, do you expect a substantial chunk of that £9 billion to also get implemented during RIIO-T3? And I do recognize that your five-year frame and the T3 frame is off by a couple of years, right? So where would you see that £35 billion realistically being delivered in RIIO-T3? Thank you.

Okay. Andy?

Yes. Good morning, Deepa, thanks for the question. Yes, as we said this morning, I think we've seen two headwinds flowing through the Electricity Distribution ROE for the year. One obviously due to Storm Darragh, where we've seen pretty much unprecedented certainly in recent memory, severity of that – the storm's impact. And that's flowed through both in terms of direct costs, but also in terms of how it impacts the incentive – the customer incentive performance and connections incentives, that's about half of the impact. And then the other half has come through from the RPEs. And the issue there, again, as I said in my presentation, is the way the indices are set up within ED2 means that effectively, they're more generic indices. And what they've done is the performance of those indices hasn't really tracked the cost experience that we've seen. I think we view this as a sector-wide issue. We – if you look across some of the other DNOs, and it is definitely something that we would look to take forward into the conversations with Ofgem around ED3, obviously, very early stages there. We will continue to look to offset that. You've seen in our guidance that we're guiding towards 50 basis points of outperformance next year and growing towards 100 by the end of ED2. In terms of your question around, is there a read across to transmission, no, everything we're seeing the way the indices are set up in transmission is they much better relate to the types of spends that we have, and the industries there demonstrated that the RPE mechanism is doing its job and making sure there is sort of protection in the way allowances shift within the transmission business.

And in terms of the RIIO-T3, Deepa, I mean, I'd say that – I think I said in my speech that of the £60 billion, £23 billion is ET, and we still believe that is our best view of what it's going to look like between now and 2029. Beyond that, we're still comfortable with the £35 billion that we set out in the RIIO-T3 business plan. I think one of the key things over the next 12 months that will give us a little bit more solidity at the back end of RIIO-T3 is the connections reform process. So as you know, Ofgem have now made the decision on connections reform moving from a first come first serve to a first ready and needed for CP 2030. Over the course of this year, NESO and the Electricity Transmission companies, including National Grid, have to now reorder the queue and it will be done in sort of chronological order, starting with 2027, 2028, 2029, 2030, and that needs to be done by December of this year. So I think that will help to give us a better indication of the makeup of the RIIO-T3 plan. As you recall, the way it was submitted to Ofgem was in two parts. There was £11 billion that was absolutely certain and then £24 billion that required some work to be done on it. So at the moment, we're still comfortable with that. But I think the connections reform process will give us a bit more solidity at the back end, and we'll be able to update once we've done that. So with that, I'm going to move to Marcin, which I think is the last question that we have. So Marcin, over to you.

Yes. Thank you for taking my questions and congratulations on a very distinguished career with National Grid. So my first question is related to the risk of higher tariffs in the U.S. You mentioned that 95% of the supply chain is domestic. But could you give us some examples what is included in that 5% that is not domestic? And what actions have you taken or you could be taking to mitigate any potential risks that could occur? And my second question is actually related to the guidance you have provided for the current financial year. So you're guiding for net financial expenses to be only increasing by £40 million, I believe, whereas you expect net debt to increase by as much as £6 billion. So why such a limited increase in financial expenses despite significantly higher net debt? Thank you.

Okay. Thanks, Marcin. I'll take the first, and then I'll let Andy take the guidance question. I mean in terms of high tariffs, just to reiterate, so we don't see it having a significant impact, partly because more than 90% of the products and services that we source in the U.S. are domestic. I mean if you just go down a level, we do have supply chain for things like pole-top transformers in Mexico and we do import some steel from other countries, including India and Canada. But we have the opportunity, as I said, even at the aggregate level, it's not particularly material, and then there are mitigations both through regulation, but also for looking at alternative sources as well. There are plenty of supply chain opportunities for things like pole-top transformers in the U.S., should we need to do that. So yes, so those are some of the examples. Andy?

Yes. And again, thanks for the question. Yes, so I think there's two things to factor into thinking about the guidance we've given on overall financing costs. One is, of course, as we continue to invest heavily in our capital program, that will – that means that although there will be increased funding costs, there will be a degree of increase in capitalized interest as well, which offsets the sort of the gross impact from a funding perspective. And then secondly, and you'll have seen that we were very explicit that our net debt increase excludes the potential proceeds from our disposals, both the completion of the NG Renewables business, but also the planned sale of LNG Grain. And therefore, effectively, our guidance on the interest line does make a net assumption for the impact of those.

Thanks, Andy. There doesn't seem to be any more questions. So let me just say, first of all, thank you, everybody, for your kind words and comments. I guess our key message today is there's been strong performance in the first year of our five-year plan. We're certainly seeing the benefits of the resilient business model we have here at National Grid, which delivers stable and predictable outcomes. And we're very well positioned with all the work that we've done in the first year to deliver on the five-year £60 billion capital investment plan. So with that, I'm going to thank everybody for joining us. And I hope, for those who are based in London, we'll see some of you this afternoon for our discussion in more detail on the capital investments, both in the UK and in the U.S. Thanks very much, everybody.

Good morning, and welcome to National Grid's Half Year Results Presentation. I'm Angela Broad, Head of Investor Relations, and it's great to have so many of you on the call today. Firstly, please kindly of draw your attention to the cautionary statement at the front of the pack. As usual, the Q&A with John and Andy will follow the presentation. [Operator Instructions] All of today's materials are available on our website. And of course for any further queries after the call, please reach out to me or one of the IR team. So with that, I'd now like to hand you over to our CEO, John Pettigrew. John?

Many thanks, Angela, and good morning, everyone. Thank you for joining us today. As ever I'm here with Andy Agg. And once we've been through our respective presentations, we'll of course be very happy to answer your questions. As you know, in May, we updated our strategy, and announced the actions we'd be taking to make National Grid the preeminent pure play networks business. This marked the beginning of an exciting new area of growth with unmatched visibility on around £60 billion of capital investment in our networks over the next five years and clarity on financing well beyond that. Over the last six months, the pace of change in our industry has continued as has the exciting momentum within National Grid. We successfully completed the £7 billion rights issue positioning our balance sheet to deliver this growth at pace. We're delivering on our major capital projects increasing investment to a record £4.6 billion in the first half. In the U.K. construction is already underway on five of our ASTI projects. And in the U.S. regulated CapEx increased 20% year-on-year as we've continued our $4 billion upstate upgrade program. And our policy agendas continue to move forward as well. We're encouraged by the start the new U.K. government has made against their energy priorities. As you would have seen the National Energy System Operator, or NESO was established on the first of October following our sale of the Electricity System Operator to £613 million. They've also formed mission control to help accelerate progress on energy projects needed for 2030. And at the end of this year they will settle their action plan to achieve this taking into account the advice set out this week by the NESO. The NESO's report is a welcome milestone towards clarity on the steps needed to deliver against this goal and we'll continue to play our part alongside the government regulator and industry. The government has also commissioned NESO to develop a strategic spatial energy plan setting out where energy assets need to be built and when to meet the country's 2015 net zero goals. We're pleased that the King's speech in July include the expected legislation to reform the planning system. This will help to accelerate the delivery of critical infrastructure something that we've long been advocating for. In the U.S. Massachusetts and New York policymakers are continuing to progress plans to align economic growth and system reliability needs with their clean energy and climate goals. Both states recognize the need for long-term holistic energy planning and we're encouraged that this is now underway. From a regulatory perspective, we've agreed new rates for our downstate New York gas business and for our Massachusetts electric business giving us even greater visibility on our investment plans. And in the U.K. Ofgem's publication of the sector-specific methodology decision mark the next step in the RIIO-T3 regulatory process. We've also achieved another important strategic milestone by completing in September the sale of our final 20% stake in our U.K. gas transmission business for £686 million. So as I say, exciting momentum and progress in the last six months that underpins our compelling investor proposition of delivering low-risk high-quality asset growth, strong earnings growth and an inflation protected dividend. Now turning to our financial performance for the first six months. On an underlying basis that is excluding the impact of timing and exceptional items, operating profit from continuing operations was £2 billion, 15% higher compared to the prior year at constant currency. This reflects good performance across all of our regulated businesses, which drove an increase in underlying earnings per share of 8% to 28.1p. Our business delivered a record £4.6 billion of investment, up 19% year-on-year at constant currency. And in line with our policy the Board has declared an interim dividend of 15.84p per share. Turning next to reliability and safety. Reliability remains strong across our U.K. and U.S. networks despite severe weather in most jurisdictions. Our teams restored outages rapidly and well within regulatory requirements, including in our New York region where during the most significant storms the average time to restore 95% of customers was just 12 hours. As we look ahead, NESO recently published its winter outlook report for the UK in which they're forecasting an electricity capacity margin of 8.8%, slightly higher than last year's and broadly in line with recent winters. Overall, we are confident in delivering our usual high standard reliability across our networks in the months ahead, and remain vigilant as we move through the winter in both the UK and the US. Safety as always remains a critical focus across the business. In the first six months, our Lost Time Injury Frequency rate Was 0.1 in line with our group target. With our significant increase in capital delivery, we are recruiting new contractors working for National Grid for the first time and so we've reinforced our protocols to ensure that our high safety standards are maintained. Now moving to our operating performance across the group starting with the UK electricity distribution. Capital investment increased by 6% to £647 million driven by increased customer connections asset health workload and network reinforcements. We've also made further progress to improve our customer service including in May when we launched ClearView Connect. This online tool provides visibility of grid supply point capacity, including a view of the generation connections pipeline to help prospective developers identify the quickest and cheapest connection points. And we've made good progress in reforming the connections process. By playing a leading role in the industry's technical limits initiative, we've been able to accelerate the connection offer date on over 280 megawatts of distribution generation. And as mentioned, at our Connections investor event in January, by reviewing projects that aren't progressing, we've been able to remove 3.7 gigawatts of capacity from the contracted connections queue. Looking ahead, whilst we're still more than three years remaining in ED2, we're already thinking about the next regulatory cycle. Yesterday, Ofgem issued its framework consultation which includes wide-ranging questions to help shape the ED3 price control and will respond early in the new year. Turning to UK Electricity Transmission where CapEx increased by 43% to £1.3 billion driven by an increase in customer connections with 2.3 gigawatts of new customer connections in the first half. And good progress on our £1 billion London Power Tunnels project where we successfully energized a 2.5-kilometer circuit between Hurst substation and Crayford. Looking further ahead we're seeing an increase in transmission scale connection requests for data centers that is driving significant investment for new and upgraded substations in the Southeast. On regulatory developments, Ofgem published in July their decision on the sector-specific methodology, marking the next step in the RIIO-T3 regulatory process that will run through to the final determination at the end of 2025. We are pleased to see that the document included our commitment to streamlining the overall framework to enable faster decision making on which projects proceed. Proposals for an advanced procurement mechanism, which enables us to secure supply chain capacity early and the introduction of mechanism similar to the ASTI approach to low funding on projects earlier than historically has been the case. As you'd expect we're engaging constructively with Ofgem as well as wider stakeholders to agree the right regulatory frameworks that delivers a net zero energy system and a fair return. Whilst we are encouraged by Ofgem's inclusion of a cost of equity range of 4.6% to 6.4% the allowed return needs to be at the top end of the range in order to continue to attract sufficient capital to the sector. Ofgem also concluded on its inflation consultation with the introduction of a nominal return on fixed rate debt, which will add better matching of allowances to actual debt costs and faster recovery of cash. On the policy front, we've seen progress on connections reform and I'm pleased that we now have consensus with government of Ofgem and NESO on the steps that need to be taken. In the second half of 2025 NESO is expected to implement reforms where projects must move through a two-stage process based on a combination of project readiness and alignment with the Clean Power Plan. Turning next to our strategic infrastructure business created last year to deliver the 17 ASTI projects. We're managing these projects in distinct waves. Wave one comprises the six most advanced projects and Wave two comprises the remaining land which are at earlier stages of development. We're well progressed with obtaining the required consents for the first wave of projects and we expect to have all the key equipment and material contracts in place by early next year. As I mentioned earlier, construction has started on five of the first wave including the offshore EGL Eastern Green Links 1 and 2, Yorkshire Green, North London Reinforcement and Bramford to Twinstead. With construction due to start shortly on the Grain to Tilbury project at the end of this fiscal year, we'll have broken ground in all six well Wave 1 projects. Turning to our Wave 2 projects, we had a number of public consultations running over the summer. And with further consultations planned in 2025, we're progressing well through the consenting process. We're making good progress on procurement and are well advanced in securing the supply chain and we're submitting early construction funding request to Ofgem on Eastern Green Links 3 and 4 in our sealing project to allow these projects to move forward at pace. Coming to the US and starting with New York. CapEx has continued to be strong increasing 29% to £1.6 billion in the first half. This reflects strong progress with our $4 billion upstate upgrade including our Smart Path Connect project which has reached the halfway point in construction well ahead of schedule. And the work approved under the Climate Leadership and Communities Protection Act, where construction on Phase 1 of the project is progressing well and we've just issued the procurement tenders for Phase 2. We've also increased investment in our gas network, replacing a further 161 miles of leak-prone pipe, as we continue to reduce our methane emissions. On the regulatory front in August our three-year rate case settlement for our KEDNY and KEDLI gas distribution businesses was approved by the commission. We expect to invest $5 billion over the next three years with an improved ROE of 9.35%. And we filed for new rates in our Niagara Mohawk business in Upstate New York. The filing proposes transmission investment to integrate renewables, line and substation upgrades and further investment in our leak-prone pipe replacement program. At the end of September as usual the PSC staff provided a rebuttal testimony including a 9.5% cost of equity against our current allowed return of 9% and smaller increases to our allowed – our proposed capital investment. The filing will now continue to progress as we enter settlement negotiations and we're confident we can reach a constructive outcome by the spring. Turning to policy. We're in July, a draft report from the New York PSC acknowledged for the first time that New York State is likely to miss its target of 70% renewable generation by 2030. In response to the report Governor Hochul administration has taken several actions including reconvening the state energy planning Board to draft road map for the state to build a clean energy system for New York taking into account resource adequacy and affordability. As a result a more pragmatic dialogue has opened up. And as you'd expect, we're engaged in supporting the process, which provides an opportunity to shape a more balanced approach to the energy transition. In New England capital investment increased by 7% to £814 million. This largely reflects the continued steady growth delivered through investment in grid modernization and asset health work and leak-prone pipe replacement activity. From a regulatory perspective, in September the DPU issued its rate case order for Massachusetts Electric business, approving a five-year plan with a revenue increase of around $100 million. The order includes a new regulatory recovery mechanism that provides timely funding for growing capital investment and updated performance-based rate mechanism providing inflation protection for operating and maintenance costs and increased allowances to cover the increase in cost of storms. Taken together, these enhanced recovery mechanisms will enable us to earn closer to a low return of 9.35%. The DPU has also approved our electric sector modernization plan as a strategic road map to support decarbonization investments. As part of this we filed for $2 billion of investment including upgraded power lines, transformers, substations and technology platforms over the next five years. We expect to propose costs and recovery mechanisms will be agreed ahead of the program starting next summer. And over the past summer Governor Healey's administration has been working to pass comprehensive energy and climate legislation. The proposed bill addresses critical issues we've been advocating for including setting out an accelerated time line for siting and permitting of clean energy infrastructure projects and we're hopeful it will progress before the end of the year. And finally in National Grid Ventures, capital investment was 11% lower at £279 million following completion of the Viking Link to Denmark last year partially offset by increased investment in National Renewables and the Isle of Grain. We've made good progress on the Propel transmission project through our New York Transco joint venture which will help to deliver offshore wind power from Long Island to the Bronx n New York City and Westchester County. We've made further progress in the fourth phase of the expansion of our Isle of Grain LNG facility which remains on track for completion next summer. And we've also commenced the sale process for National Grid Renewables. So as I said at the start we've achieved significant progress across all areas of the business in the first half as we continue to support and invest in the energy transition. Let me stop there and hand over to Andy to walk through the numbers before I come back to talk about priorities for the second half. Andy?

Thank you, John and good morning, everyone. I'd like to highlight that as usual we're presenting our underlying results excluding timing UK deferred tax and exceptional items and that all results are provided at constant exchange rates unless specified. Our final 20% stake in National Gas is reported as a discontinued operation up until 26th of September when it was sold. As such all earnings from this business have been excluded from the underlying earnings of the continuing group. So starting with our overall performance in the first half. We've delivered strong results with underlying operating profit on a continuing basis at £2 billion a 15% increase on the prior year, primarily driven by higher revenues across our UK and US regulated businesses and the non-repeat of a prior year environmental charge in our New York business partially offset by a lower profit in National Grid Ventures. Underlying earnings per share of 28.1p was 8% higher than the prior year restated figure. This reflects the improved performance from across our regulated businesses and a slight decline in finance costs which more than offset the increased share count following the rights issue. As John said we've made excellent progress with our capital program with investment from continuing operations at £4.6 billion another record level and up 19% year-over-year. This has been driven by more connections in our electricity transmission business, accelerated delivery of our ASTI projects, increased pipe replacement across our US gas businesses and a step-up in our Smart Path Connect and CLCPA transmission projects in upstate New York. In line with our policy, the Board has declared an interim dividend of 15.84p per share representing 35% of last year's rebased full year dividend. Turning now to our business segments starting with UK electricity distribution. Underlying operating profit was £573 million up £10 million versus the prior year. Increased revenues were partially offset by higher controllable costs which were £21 million higher as we prioritized activities to strengthen the business for the remainder of RIIO-ED2. This included spend on field customer and asset management teams and cost to implement new distribution system operator functionality. We expect the full year controllable cost performance to be broadly in line with the prior year. We're also on track to deliver our target of £100 million of synergy benefits by FY 2026 having delivered £58 million to-date through leveraging our increased buying power, working more efficiently at the 48 joints transmission and distribution sites across the UK and delivering savings from combining support functions. Capital investment was £647 million for the half year, an increase of £39 million compared to the prior period primarily driven by higher spend on reinforcement work and asset replacement. In our UK electricity transmission business, Underlying operating profit was £724 million up £68 million compared with the prior period. A strong first half performance was driven by higher allowed revenues and lower controllable costs as we deliver further cost efficiencies. Capital investment was £1.3 billion, 43% higher than the prior period. This reflects work on our RIIO-T2 projects including customer connections as well as the step-up in investments our ASTI projects notably Eastern Green Link 1, Yorkshire Green and our North London reinforcement projects. Finally in the UK, the electricity system operator delivered an underlying operating profit of £115 million. Moving now to the US, where underlying operating profit for New York was £288 million, £173 million higher than the prior year reflecting higher net revenue driven by an increase in rates and a non-repeat of environmental charge in the prior period. This was partially offset by an increase in depreciation, reflecting the new rate case in our downstate gas businesses KEDNY and KEDLI. Capital investment was GBP 1.6 billion. This was GBP 352 million higher than the prior year helped by a further step-up in investments in the Smart Path Connect and CLCPA transmission projects in Upstate New York and increased investments in our gas distribution networks, reflecting the additional workload approved in our downstate gas rate case. In New England, underlying operating profit was GBP 237 million GBP 26 million higher than the prior period. This reflects higher rates in our Massachusetts electric and gas businesses driven by the annual performance-based rate mechanism and higher rates from the capital tracker in the gas business, partly offset by higher depreciation and controllable costs. Capital investment was GBP 814 million, GBP 50 million higher than the prior year. This was driven by increased asset condition work in our electricity distribution business and higher gas spend, including leak-prone pipe replacement. Moving to National Grid Ventures, where the underlying contribution was GBP 207 million, including joint ventures. The decrease of GBP 70 million compared to the prior year was, primarily due to the one-off post construction review adjustment on the North Sea Link interconnector in the prior period and lower profitability across the US Ventures businesses. Capital investments across National Grid Ventures was GBP 279 million, GBP 33 million lower than the prior period, largely reflecting the completion of the Viking interconnector, and partially offset by higher investment at our Grain LNG facility, as we move closer to completing the fourth phase of capacity expansion. Following the announced intention to sell Grain LNG and National Grid Renewables, these assets will be treated as held for sale for accounting purposes from the 30th of September. Our other activities reported an operating loss of GBP 38 million, GBP 25 million higher than the prior period. This was principally driven by changes in the value of National Grid Partners' investments, which are held at fair value partially offset by a greater number of property sales in the first half compared with the prior period. Turning to financing costs and tax. Net finance costs were GBP 670 million, down 4% compared to the prior year. The benefits of lower average net debt following the rights issue and lower inflation on index-linked debt were partially offset by the impact of higher refinancing costs, where we have issued GBP 1.8 billion over the first half. The underlying effective tax rate before joint ventures was 11.9% 180 basis points higher than the prior year, principally due to a change in profit mix reflecting the one-off charges impacting the U.S. business last year. Underlying earnings were GBP 1.27 billion with EPS at 28.1p. On cash flow. Cash generated from continuing operations was GBP 2.7 billion down 12% compared to the prior year. This decrease is driven by timing as we returned to prior year balancing charge over recoveries in the system operator. Excluding timing cash flow from operations is GBP 570 million higher due to improved cash generation across the U.K. and U.S. regulated businesses. In total net debt decreased by GBP 5.1 billion to GBP 38.5 billion compared to the prior year-end reflecting a net cash inflow from continuing operations of GBP 3.5 billion, including the receipt of the rights issue proceeds. Beneficial movements in exchange rates and other non-cash movements of GBP 1.4 billion, and receipt of GBP 686 million from the final 20% sale of National Gas. For the full year, we expect net debt to decrease by around GBP 1.5 billion from the March level, assuming a USD 1.3 exchange rate. In terms of forward guidance, we've included detailed guidance for the full year in our results statement as usual. Relative to our guidance in May, we expect a slightly stronger operating profit for the full year, reflecting the high ESO contribution prior to sale and higher net revenues in our New York business, partially offset by a weaker US dollar outlook. Therefore, we continue to expect strong operational performance and year-on-year operating profit growth of around 10%, as well as reduced financing costs due to lower average net debt. We anticipate this improved performance to be largely offset by the additional share count. Before I hand back to John, I wanted to return to the five-year framework we set out in May, where we anticipated investment of around £60 billion will drive group asset growth of around 10% per annum over the next five years, and a strong underlying EPS CAGR of 6% to 8% from an FY 2025 baseline. Our framework is underpinned by a supportive regulatory and policy environment, and increasing level of certainty over our multiyear investment program, and a track record of delivery both operationally and financially. Alongside this, we set out a comprehensive financing plan, which supports our investment program and allows us to maintain our strong investment-grade credit rating. And looking ahead, with an expected asset base of around £100 billion by FY 2029 funding clarity, strong earnings growth and an inflation-protected dividend, we've further enhanced what I believe is a compelling investor proposition, delivering value creation through both higher asset growth and an attractive dividend yield. With that, I'll hand you back to John.

Many thanks, Andy. Before we move to Q&A, I want to spend the final few minutes setting out our priorities for the remainder of this year, as we continue to focus on efficiently delivering our investment program. Starting with the US, where nearly half of the £60 billion investment will be spent between now and 2029. Following the result of the US presidential election earlier this week, National Grid is looking forward to working with the new administration. As a reminder, the vast majority of our investment is determined at the state level, so we'll also continue to focus on working closely with state regulators and policymakers, to deliver the infrastructure needed in both our gas and electricity businesses. From a regulatory perspective, we have three key priorities for the remainder of this year. Firstly, having now filed the new rates in our Niagara Mohawk business, and received the [indiscernible] in September, our aim is to reach a settlement next spring. Secondly, with the new rate plan and enhanced recovery mechanisms in place for our Massachusetts Electric business. Our priority is now to work to earn closer to the [indiscernible] return. And thirdly, we're focused on agreeing the costs and recovery mechanisms for our recently approved electricity sector modernization plan in Massachusetts. Turning to policy. As mentioned earlier, in New York, the governor is developing a new state energy plan, which we expect will supplement the CLCPA scoping plan and address important issues such as resource adequacy and affordability. We're working closely with our stakeholders to ensure it's a comprehensive road map, to a clean resilient and affordable feature for our customers. Alongside this, the New York PSC is now working to identify urgent and long-term infrastructure projects to support transportation and building electrification, ahead of deploying integrated gas and electricity planning processes. We've advocated for this proactive approach and we expect to file our response, identifying the near-term infrastructure needs at the end of the month. And finally, Massachusetts will file our Climate Compliance Plan next spring. This will set out the investments required in our Massachusetts gas network over the next five years and beyond to align to state decarbonization goals, whilst maintaining safe reliable and cost-effective service for our customers. Moving to the UK, where our priorities are squarely focused on delivery of our suite of major projects. As mentioned earlier, we expect to have construction underway on the first wave of ASTI projects by the end of this year. Our priority for the second wave is to finalize supply chain contracts. We're already well progressed on this and I'm confident that by early next year, we'll have secured the Tier 1 supply chain contracts for all 17 of the ASTI projects. This includes awarding the HVDC and converter station contracts raised in Green Links 3 and 4 and Sea Link. We also expect to finalize our £59 billion HVDC framework, which will ensure we have a route to market for procuring materials for offshore projects in the 2030s and beyond. Outside of the ASTI portfolio, we continue to make good progress on the Hinkley connection. We expect the majority works will be completed by the middle of next year. And on our London Power Tunnels project we'll commission the Littlebrook to Crayford section over the winter. And finally, we're on track to connect a total of 4.5 gigawatts of clean energy this year including the Sofia Offshore Wind Farm and the Green Link interconnector. On the regulatory front, a key priority will be the development of our RIIO-T3 business plan, which we'll submit in December. Our totex submission will comprise two elements: a baseline where we have a high degree of cost certainty, including the first wave of our ASTI projects; and a more extensive pipeline covering the second wave of ASTI projects, as well as further projects aligned to the holistic net-zero pathway in the NESO's future energy scenarios. In submitting this plan, we expect the outputs of the government's Clean Power Plan and changes driven by connection reform to impact our totex submission to a degree. However we don't anticipate significant change to our £23 billion of expected investment in electricity transmission to 2029 given the high degree of clarity we have over the first few years in RIIO-T3. The second priority will be to continue to engage with Ofgem to ensure they recognize the intense level of international competition for capital by putting forward evidence to support the requirement for an attractive financial framework, including returns being at the high end of Ofgem's range, appropriate cash characteristics and further opportunities for incentives that will drive value for consumers and National Grid. When it comes to policy our priority is to continue to work closely with DESNZ and the newly created mission control as they develop their plan for clean power by 2030 and beyond. We'll continue to advocate for prioritizing a fast track consenting route for electricity transmission projects as part of a broader set of reforms to the planning regime, bringing forward with urgency a community benefits framework for electricity transmission and developing a clean energy skills pipeline including reforms to sequential funding. So in summary, a new and exciting era of growth is firmly underway at National Grid. Having set out our strategy for the next five years, we've started to deliver on a £60 billion network investment on both sides of the Atlantic. Major capital projects in the UK and US are well underway and the business is organized and focused to sustain this progress going forward. This momentum combined with the unparalleled visibility on our investment plans underpin our investment proposition of low-risk high-quality asset growth, strong earnings growth and an inflation protected dividend. This is a huge and exciting time for our industry that will create -- which will continue to create significant opportunities for National Grid today and for many decades to come, a bedrock from which we will deliver long-term value and returns for our shareholders. So let me stop there and give you the opportunity to ask me and Andy any questions.

Okay. So just looking at who we got questions from. So we start with Pavan from JPMorgan.

Hi, everyone. Good morning. Thank you for taking my question. I've got two please. Firstly, can you remind us when you will be submitting your business plan for the RIIO-ED3 period? And is there any early flavor you can give on what we should be expecting especially when it comes to the mix of CapEx, how you're thinking about baseline versus uncertainty and how that ties into your five-year frame? And then my second question is on any comment you have on the outcome of US elections? And do you expect this to change your plans for US investment to 2029? Thank you.

Yes. Thanks Pavan. Well, in terms of the business plan, the timetable is we do submit the business plan in December this year at the end of December then we'd expect to get a draft determination from Ofgem in the summer probably June next year and then final determination in December 2025. In terms of the flavor, as I said in my speech, effectively the plan is separated into two halves. The first half is a baseline, which includes all the projects that we've got confidence that are going to be moving forward or full confidence they're going to be moving forward and also certainty on cost so things like the ASTI Wave 1 projects. The second bit will be a pipeline that will include all the projects that are aligned with the NESO's future energy scenarios and we're doing that because that's the request from Ofgem in terms of how they want to see the business plan submitted. As I said in my speech, I think different to previous business plans we've had at this stage, because some of the CapEx will be impacted by the connections reform in terms of the location of substations for example and also by where the government gets with the Clean Power Plan following the advice from NESO this week. Some of that pipeline will vary. We don't think it will impact on the £23 billion that we set out as part of the £60 billion that takes the CapEx to 2029. But we will see some change in that in the early months of next year as we see the outcome of the connections reform. So it's slightly different than what we've seen typically, but at the high level it's split into two levels a baseline and then a pipeline that will give us the confidence we can deliver what we need right out to the end of RIIO-T3. In terms of the US elections. I mean, first of all, to say we're looking forward to working with the new administration. As you know energy in the US, it's important both the federal and at the state level. We've heard from the new administration how important it is to keep energy prices low and how important security to supply it is. From our perspective, the vast majority of our capital investment program is determined at the state level with state policymakers and state regulators. So we're not expecting it to have a significant impact on the £60 billion that we set out in May that we'll deliver between now and 2029. Okay. Should I go to Deepa at Bernstein next.

Thank you for taking my questions. I have now three questions. So a couple of them are on ED3 then one on ED. So on ED3 you mentioned you want the ROE to be at the upper end of the range. Do you have any expectations on how much operational incentives the package needs to deliver? The reason I'm asking is clearly on the ASTI you want to limit your downside. So presumably the upside on Totex might be lower. So if you could just characterize how you think beyond the allowed return where else you might be able to get some extra returns? The second question is on the nominal debt allowance in ED3 that really helps from a cash flow perspective. How does National Grid -- how is National Grid thinking about fast money versus slow money in the business plan? Any sort of early hints on that would be helpful. And the last one is a clarification on ED. I think you've generally talked about 100 bps to 125 bps of operational outperformance in that business. But I see your latest regulatory financial performance reporting you forecasted 70 bps for ED2. So I was just wondering what's the divergence presumably given you're seeing the synergies et cetera are on track? Thank you.

Okay. Thanks, Deepa. I'll take the first and then I'll ask Andy to cover the second two. I mean first of all in terms of ROE as we said in May we were pleased to see as part of the sector-specific methodology decision document that Ofgem had recognized, the importance of the regulatory framework being one that is attractive to investors. And in the words that they used within the document itself the range that they set out which is 4.6 to 6.4. They talked about the fact that there are reasons where it potentially could be at the top end of that range. And obviously one of our focal points going forward is to have that conversation and dialogue with Ofgem about why that's so important. Outside of the rate of return in terms of the incentives, we think and going to continue to have dialogue with Ofgem on that there are a number of incentives Deepa that would be beneficial to consumers and would be obviously if we perform well beneficial to National Grid shareholders as well which is in areas like delivering projects early. So obviously with the size and scale of the capital program we've got clearly being incentivized to deliver those projects as early as possible makes a lot of sense and we'll create value for customers. And secondly things like constraint management. So as you've seen over the last few years the cost of balancing system has increased. There are potentially actions that we can take as a constructive maintainer of the assets that potentially could reduce those constrained costs. So we think there's an opportunity for incentives in those areas as well. So those are the types of things that we're discussing with Ofgem at the moment. Andy?

Yes. Thanks. So on the ED3 or the ED2 question around the 100 to 125. Yes I think we would always anticipate some differences between our overall forecast for the five years of the rate case or the price control versus what's reported on an annual basis within the RRP. There's several reasons for that. There are some differences between within RoRE and how it's calculated. But also as we think about our efficiency plans and how we look to deliver that over the life we would see -- record those improvements through the reported return as we crystallize those efficiencies in the outer year. So not all of it will be in the early years of the RRP. And as I said we'll get report as we move through the outer years.

So the cost for [indiscernible] in your RRP wasn't the last year?

No, to that point as well. Apologies. Yes. So as you said the SSMD was very clear from Ofgem that they've chosen that particular approach in terms of the cost of debt allowance going forward. I think in terms of your broader point there around fast versus slow, I think if you take a step back, we've always said that we are focused on both the return the allowed return coming out in T3, but also the overall cash characteristics. I think nominal debt is a good step in the right direction in terms of it will accelerate cash. But I think we will continue to work with Ofgem to make the case that the -- whether it's through changes in asset lives the fast slow mix they are all different elements. As you know in T2, we were around 15%. So a natural rate may be somewhat lower than that, but it would always be something that we'd be looking to have as part of the overall package that we work through with Ofgem.

I'll go to Dominic next and then after Dominic I'll go to Jenny from Citi. Dominic from Barclays.

Hi, there. Good morning and thanks for your presentation. Just a couple of questions from me kind of following on from earlier ones I guess. Firstly, on your earnings expectation of the 6% to 8% out in your business plan. I mean, clearly you're using the exchange rate and CPIH that may or may not be looking a little bit on the high end. But coming back to the ED3 review, how much wiggle room do you have to manage your own earnings going forward in light of a nominal return on debt and then your capitalization ratios sort of moving from the natural rates? And how will you be looking at putting that thing through in order to sort of manage your earnings? And subsequent on that one there do you expect ED3 to also have a nominal cost of debt? My second question is on the U.S. election. Could you just remind me again how much of your capital spend in the U.S. is from imported goods? And what impact and what mitigation strategies could you put in case if there was a material increase in import tariffs? Thanks.

Okay. Well, why don't I let Andy take the first and I'll take the second. I'll do the second first Andy. I mean, in terms of the -- our CapEx in the U.S. to most Dominic the vast majority of it is sourced domestically. So, historically, when I look back a relatively small proportion of it has been imported on things like steel, but the vast majority of the equipment comes from domestic equipment manufacturers like GE. So it doesn't impact us hugely if there are any changes to trade tariffs. Andy?

Yes. Thanks Dominic for the questions. I think in terms of the overall impact of T3 on earnings if you go back to what we said in May, when we set out the 6% to 8% I think we were clear that we've made what we believe to be sensible and prudent assumptions across the five years. And obviously that would have taken into account what we expected in terms of some of the initial steps that we were seeing through the SSMC the consultation at that point. So the question specifically at nominal debt doesn't -- you shouldn't automatically assume that that will be additive. I think as always what will be important with the T3 plan going back to the points John made around the scale of CapEx in there is that we will be looking for an overall outcome that delivers what Ofgem has said around being both financeable and importantly investable and that will, of course, include the right cash characteristics whether that comes through the normal debt impact or other things like fast slow or capitalization rate. So we will continue to work on that. But as much from a ensuring it's the right framework in terms of the impact on earnings. And then secondly on your question around will nominal debt flow through to ED3. Actually I think it's been implemented now that approach by Ofgem for the sector as a whole. So I see no reason why it shouldn't read across into ED3.

I'll go to Jenny. And then after Jenny I'll go to Mark Freshney at UBS. So Jenny.

Hi, thanks very much. A couple of questions from me please. Firstly to John, can you just put it into numbers in terms of that Tier 1 supply chain, what it means in terms of the total CapEx that's covered for the 17 ASTI projects? And then, secondly, for Andy two questions please. On the U.S., if I remember correctly your guidance -- your earnings guidance is based on a pre-deferred tax for the U.K. but not for the U.S. Can you just talk a little bit about what you think a change -- a reduction in U.S. tax rate, would do to the deferred tax line and therefore your earnings line on a hypothetical basis? If I remember correctly, we had this conversation at Trump 1.0, but if you can just remind us the direction of travel there. And then secondly just on the ESO, obviously there's a lot of cash that's already recognized because of timing. So can you give us a sense of the actual cash that you're going to receive at the closing of the ESO, just so that we can get our net debt numbers, right? Thank you.

Okay. Thanks Jenny. Well, let me pickup the first and then leave this two and three to Andy. Let me sort of give a broader sort of perspective in terms of where we are in the supply chain, because I know it's a key issue. So I think hopefully people are aware that over the last 18 months or so we've fundamentally reviewed the way that we engage and contract and procure with the supply chain. So we've made really good progress. So we've talked in the past about how we ensure that we've got the contractors we need in terms of the work resource. And I was really pleased that we put in place what we call the Great Grid Partnership with seven of our supply chain which is a GBP 9 billion home contract that gives them the visibility to the work that we want them to do and gives us access to that work gives us confidence that we'll have the contractors that we need. We've also been progressing the as I mentioned in my speech the HVDC and converter station framework agreement which is a GBP 59 billion contract. And actually I've been really pleased with the response that we've had all the major cable manufacturers and converter station manufacturers have responded to that framework agreement and we're hopeful that will be in place very, very soon. And then when you get down into the individual projects we've separated ASTI into the first wave of six projects, five of them we have contracts in place already and are already in the process of starting construction. And the sixth which is The Grain to Tilbury project we will have planning in place by the end of the calendar year and the contracts in place by the end of the fiscal year. So for that first wave, we feel very confident that we've got the contractors and the equipment that we need. We're then moving on to the second wave. So these are projects like EGL 3 and 4 Norwich to Tilbury, those types of projects. And again, we're working through the procurement process. We're looking at opportunities to standardize equipment so that we have more access to the supply chain. We're actually extending the length of contracts that we have. So across the group actually more than 50% of all the [indiscernible] transformer that we need have already been procured out to 2030 puts us in a very strong position. We'll also have agreement with Ofgem that we can actually make upfront payments to the supply chain to lock in capacity that we need for manufacturing. So again, when we look across all of that we feel confident for the Tier 1 contractors that we'll have everything we need in place early next year for all of the 17 ASTI projects. So Andy?

Yeah. Thanks Jenny. Firstly on U.S. and potential tax changes, I mean clearly it's very early days and there's been lots of things talked about or muted that may happen. We will of course have to wait and see precisely what does or doesn't happen in the New Year. But as a quick reminder, as you said, when the rate was changed a few years ago it's effectively economically neutral for us because the way U.S. regulation works is effectively tax, the net tax charge is included with the amounts we're allowed to collect from customers and therefore a change in the rate will effectively flow through into rates as well. So net-net there's no underlying earnings impact. And of course, in terms of cash impacts that will need to be worked through based on what we see if any rules do change and then how that's reflected in regulation. But we wouldn't expect any significant earnings impact from that. And in terms of the system operator sale, the actual cash received was very close to the 630. If you look back in the depths of the results statement this morning, we're very clear that the provision for the remaining return of the over collected recoveries from the previous year is included in the held-for-sale business as is the cash that was associated with giving that money back. So that was already stripped out of our numbers. And therefore, we did receive very close to the 630 and therefore that's what you should allow for in your net debt projections.

Thanks. Should we go to Mark Freshney? And after Mark we'll go to Robert, Morgan Stanley. So, Mark can we have your question please?

Thanks for taking my question. So, when I listen to your response to earlier questions the potential change in Ofgem remuneration of debt costs moving to a nominal cost potential lower deferred tax charge in the U.S. less netting that off on the asset base which was in response to the last question. It seems to me that if I add up all of these things within the five-year frame, there's certainly a lot of upside pressure on earnings. And my question to you is would you agree with that? And just secondly, you spoke about being in a strong position on transformers which I think is one major, major crunch point. But if I had to really try to pin you down John, I mean we know that one customer has basically taken up all of one supergrid transformers for two years and has caused a lot of panic with some of your competitors in the U.S. In one word, are you confident of getting all the transformers you expect to get through to 2030?

Thanks Mark. Let me take the second and then I'll ask Andy to take the first. I mean the simple answer is Mark that we've always known or we've known for a couple of years now that there was going to be an elongation in the lead-time for supergrid transformers. You would have seen some articles this week that people talked about three to four years. But we've been adjusting for that for quite a while now. And therefore we do have confidence that we can gain access to the supergrid transformers both in the U.K. and in the U.S. that we need over the period. As I said we've been extending the timeframes that we're sharing with the equipment manufacturers so they've got visibility of what's needed. And when we come to the procurement process we found that actually we have been able to get access to and to procure those supergrid transformers. Let me just to add a little bit more flavor to it. One of the things we have done in the last 12 months is built up a stronger relationship with the equipment manufacturers outside of the sort of normal contracting process and separating out quite often the procurement of equipment from the EPC contracts. And in the U.S. we've also been extending the supplier base for transformers and bring us new manufactures which we started about 18 months ago. So, we remain confident that we are able to access the equipment, albeit, we didn't recognize the lead-times are longer, but we're reflecting in our planning processes.

Yes. Thanks Mark. I mean to try and pull together sort of the elements of your question. I think again go back to when we set out the 6% to 8% guidance for our five-year earnings CAGR back in May. Of course it was deliberately designed to be robust to a range of different outcomes. And nothing that we've seen since then has moved us outside that range. So it remains our very clear guidance today. As I said in answer to one of the earlier questions of course we made sensible assumptions around regulatory outcomes based on what we knew at the time. And so you shouldn't assume that things like nominal debt are automatically additive. And as I said in answer to the earlier question on U.S. tax over time, we would expect that broadly to be neutral from an underlying earnings perspective with albeit sort of one-off changes in deferred tax flowing through earlier. So no I think we're very clear that the 6% to 8% remains our guidance today. And we will of course if it does change we will update that down the track but that's very clear in terms of where we stand today.

Okay. Thanks Andy. So let's go to Rob at Morgan Stanley. And after Rob will do Ahmed at Jefferies. So, Rob can we take your question?

Thanks. Good morning everyone. Just one question and following up on the theme of supply chain. Way back at full year results though when we sat around the table you indicated there was a £59 billion framework agreement for the supply chain on which HVDC was the topic of the moment. Correct me if I'm wrong but I don't think we've seen an update on that. Is that still expected to be closed in terms of signing before the end of calendar 2024? And could you give a bit of a comment around the HVDC side given you've already covered the transformers? Thank you.

Yes. Thanks Rob. So I did mention it in the speech but just giving you a bit more flavor on it. So we launched the procurement process for the Framework agreement early this year. As I said, it was a major Framework agreement that will cover not just the CapEx that we need and the supply of HVDC cables between now and 2029 but actually take us well into the 30s as well. We've been really pleased with the response that we've had from all the major cable manufacturers in the world. And we are hopeful that that framework agreement will be in place either by the end of the calendar but certainly. by the end of the fiscal year. So we've had really good progress and a very strong response and we feel very confident about it. In terms of -- just again, just going down a level. So in terms of the first wave of ASTI projects, the contracts are in place for giga 1 and 2, which are the major HVDC contracts that we needed as part of Wave 1. So again, we're in good shape on that. Those contracts have already been let. As I said earlier, we're already in the construction phase on those. Okay. I'm going to go to Ahmed at Jefferies, and then I'll go to Marcin at Bank of America.

Yes. Thank you for taking my questions. Can I just kind of go back to ED3? You clearly discussed and given us quite a lot of color on your confidence and visibility that you have and talked a lot about supply chain and procurement. Could you also give us some perspective on the consenting and planning visibility do you have on ED3 and put some numbers around it, is there sort of a Phase 1 does that already all consented and you have all the approvals in place to deliver that? That would be helpful. And maybe tie it into that the spatial energy plan, how critical that is to the delivery of the plan? And what do you need to see and the timing of that that would be super helpful. And just finally I'll be interested in your perspective on 2030 Clean Power Plan. Anything particularly notable within that, how does that compare to your CapEx plan that you set out to us earlier in the year? Thank you.

Okay. So, quite a bit Ahmed. Let me work through with that. So in terms of planning, I mean first of all, as you know we've been advocating for planning reform for some time. And we've seen that issue being picked up by the new labor government. And our expectation is that there will be planning reform legislated for next year. National Grid has been advocating for a number of things within that. One is the streamlining of the process consistent really with what the Networks Commissioner, Nick Winser, recommended about a year ago. We've also been recommending that there should be an accelerated planning process for strategically -- strategic important infrastructure such as transmission and we've been advocating for that. But also, talking to the government about the need for resourcing planning authorities because there's such a massive increase in the amount of planning applications that resourcing is important as well. But we're hopeful that we'll see sort of positive progress in that through the legislation next year. In terms of where we are on our specific projects, as I said we've made excellent progress on the Phase 1 project at ASTI all in line with the time scales that we need to deliver these projects. So we've had DCO applications approved by the sector state for Bramford to Twinstead and Yorkshire Green. And we've had planning consents for filing of the for all of the other Phase 1 projects with the exception of Grain to Tilbury. which is due for planning consent at the end of this calendar year. So, good progress on that. Over the summer, I think we've had eight separate consultations running in preparation for Phase 2. Again they're all at different stages. Some are at the pre statutory consultation phase, Norwich to Tilbury, which is one of the major projects in Phase 2. We've just completed the statutory consultation on. So again, they're all moving through the process. These are multiyear projects and therefore, we only go to the planning authorities at the right time. And we do a huge amount of consultation with local communities to make sure they understand the options in what we call the pre-statutory consultation phase to make sure we understand the community's concerns and we can try and reflect that in our recommendations to the secretary state as well. In terms of the spatial energy plan. It's probably useful just to sort of link the three -- the sort of the different elements together. So, obviously, foundational block has been what's been announced this week by the National Energy System Operator, which is the Clean Power Plan for 2030. Obviously, that advice will now feed into government who are proposing that they'll come forward with what their action plan is at the end of this year. You may have seen a couple of weeks ago that the government also commissioned NESO to do the spatial energy plan and that is due to be complete by the end of 2026. And on the back of that we'll then see the centralized strategic network plan in 2027. So all of these things sort of interconnect, but the foundation block, I guess is the Clean Power Plan, what comes back from government at the end of this calendar year. From our perspective, obviously, we're working through the detail of it. As NESO said, it's a hugely ambitious plan. I think the words they use it at the limits of what is feasible and it will require everybody to play their part and for everybody to play their parts in executing it and doing it flawlessly. From our perspective looking at the networks reassuringly, what the plan says is the projects that were identified previously the 17 ASTI projects are the ones that are going to be required for Clean Power 2030. There is a recommendation in that report that two of the projects which is Nowrich to Tilbury and Sea Link. There's a request on whether they can be brought forward by one year from 2031 to 2030? Obviously, we'll spend some time now working both with our supply chain, but also with government regulator NESO. And what would be required and whether that's possible. And obviously that will feed in ultimately to the action plan that the government produces at the end of this calendar year. Okay. I'm going to go to Marcin next and then I'll go to Ingo at Kepler. So Marcin?

Thanks so much. Good morning. Two questions here. Firstly on the rate case for Massachusetts Electric how satisfied you are with the outcome of 9.35%? I believe you were actually requesting something closer to 10%. And how confident you are that you will actually achieve a return which is very close to the allowed return in that business? And my second question relates to potential asset divestments of US renewables and LNG grain. I believe both of these have been now reclassified to assets held for sale. So from the accounting perspective does it imply that you are confident that both of these assets will be sold within the next 12 months? Thank you.

Okay. Well I'll pick up the first and I'll ask Andy just to pick up the second. In terms of the Massachusetts rate case, I mean, it was a landmark rate case I think in my mind because the key elements, which are really important, to focus in on is that what we got an agreement from the regulator in Massachusetts is that, there can be a revenue adjustment for increasing capital investment. As you know, we've got significant capital investment in our Massachusetts business and the regulator effectively agreed that our revenues could increase year-on-year as our CapEx increases. At the same time, they also confirmed the performance-based mechanism for indexation of revenues for operational and maintenance costs. So when you put that together Massachusetts, as a rate case now looks a lot more similar to what we had in New York. And whereas in the past Massachusetts has always had higher allowed returns than New York. It's always been on a historical base case for costs. And therefore, it's always been harder to earn those allowed returns. I think the new framework that we have in place makes it much more akin to the framework we are familiar with in New York. And therefore, we are much more confident that we can achieve much closer to allowed return. And as you know, our objective in the US businesses is always to aim for at least 95% of allowed returns. So we're much more confident around that than we were in the previous region.

Yes, and thanks so on the divestments I think as John said earlier the first one is the National Grid Renewables business in the US, where that process is underway. And yes so we expect that, to press through into the beginning or the early part of next year. And then as we said, previously, on the Grain LNG sale, we would expect that process to commence when we're through the completion of the construction of the current Phase 4, the new tank which is expected around the end of the first quarter of next year. So yes to your precise question on the accounting our judgment is that we would expect both to be complete within 12 months from the 30th of September.

Thanks, Andy. Ingo, I think this is the last question. So if we can have your question please.

Yes. Good morning. I hope you didn't answer them already I had a brief connection issue. First, I would like to ask you on the data center comments in your slides. So you say that in the UK. Southeast the transmission scale data center connection request. Can you comment on how many 12 months that is and if that creates any relevant impact on the local system balance in your assessment? And my second question would be on the general affordability of the expanding network cycle, maybe both in the UK and the US. We have heard in some markets of rising supplier equipment prices which probably is not a surprise, given the rising demand from the network companies coming to the attention of regulators. Just wondering, if you can share similar experiences here? And finally maybe related to the German conservative party and the current situation has been talking about actually cutting grid fees quite materially it's not yet totally clear what they mean. We suspect that it's about transferring some of the network cost to the government budgets, but we don't really expect them to go at the returns. And maybe if you hear as well just from an overall affordability perspective what that cycle will do to you? Thank you.

Thanks for the question. I mean let me just paint a picture in terms of data centers. I think it's an evolving picture and therefore one that we're spending quite a bit of time focusing in at the moment. At the macro level, when you look forward over the next decade, we are certainly going to see increasing load growth on the networks both in the US and the UK. We've known that's coming because of electrification of transport and electrification of heat. But actually the volumes of electricity being consumed in terms of Generative AI and AI is an additive factor to that and we're just continuing to understand what that's going to look like. What we see today if I take the UK as an example is around about five terawatt hours of the load in the UK is taken by data centers. That represents about 1.8% of the total load in the UK. If you actually look at what's been happening over the last three years historically the data centers in the UK are sort of clustered around the M25 and the sort of [indiscernible] corridor. We've got the good sort of telecom networks. We had about 1.5 gigawatts there three years ago and we've seen about three gigawatts of connection applications on top of that. So it's a tripling of the size of data centers that we've seen in that region. And the vast majority have been in that region. And as a result we've --- we continue to invest in particularly expanding the substations and new substations in that area. More recently we are seeing more interest for the sort of hyperscalers so much larger data centers in other parts of the country including the Northwest. And if you look at the connections queue, there are about 10 gigawatts in terms of data center demand that's saying they potentially want to connect to the grid over the next sort of 15 years. As we know that doesn't always happen but that's an indication of the sort of scale of what we're seeing. And some of these data centers are getting to be very large sort of 200 megawatts type size. And just to put that into context 200 megawatts is larger than the load for households for every city in the country apart from Manchester, Birmingham and London. So when these data centers want to connect it is a significant increase in load. And the final point I'll probably make is that, when you see the business plan that we're submitting to Ofgem as part of RIIO-T3, you will see actually that probably the largest driver in terms of additional transformers over the five years of RIIO-T3 is actually being driven by data center demand as well in the UK. Picture in the US is slightly different because about 90% of all data centers are currently not in the Northeast. Generated land prices and energy prices are lower than the Northeast. Although we are starting to see increasing interest in New York. We've got about 1.5 gigawatts of potential data center demand about one-third of that's in our territory. Massachusetts is a little bit less. I think we've got three live connections at the moment the largest of which is a [indiscernible] data center demand request. So it's an evolving picture and one that we're very much focusing on at the moment. And as I said in T3, you'll see some of the load increases and some of the transformer investment we're doing has been driven by that. In terms of affordability, it's always worth just reminding people that if I start in the UK, the transmission element of the bill is a relatively modest part. That doesn't mean we don't focus on driving efficiency for our customers. But today transmission represents about £20 of the total annual bill that consumers pay around £1700 a year. So even with our £60 billion capital investment program which will increase the cost of infrastructure by a few pounds ultimately if you believe that it will have the benefit of reducing the commodity element of the bill then the affordability of customers should be manageable. The Clean Power Plan for 2030 that NESO just issued has got some detailed analysis on what costs might look like. We're currently having a look at that as well. In the US slightly different because we are the supplier as well as the network provider. We work very closely with our regulators when we do rate filings. You would have seen in the more recent rate cases that we've got significant increases in capital investment. And one of the ways we mitigate the affordability issues is by proposing programs to help vulnerable customers. And that's something that our regulators are really appreciating from National Grid when we work through different programs to reduce the cost for vulnerable customers during periods when affordability is an issue.

Okay. In which guys I'm going to say I don't see any other questions. So I'm going to say thank you everybody for joining us this morning. And I think my key messages really are good performance right across our regulated businesses in the first six months good progress in terms of the strategic priorities that we set out in May and a strong start to the delivery of our £60 billion capital program also we set out in May. So thank you for joining us and I'll see you all very soon.