National Grid Plc Q4 FY2022 earnings call

• National Grid is positioned as an energy transition company with £24 billion or over 70% of its five-year framework investment in decarbonization aligned with EU Taxonomy. - Completed acquisition of WPD with integration underway; sold U.K. Gas Transmission and Metering stake, sale of Rhode Island business progressing. - Financial performance: Operating profit £4 billion, 11% above prior year; underlying earnings per share up 10%; capital investment £6.7 billion, 19% above prior year. - Safety: Lost time injury frequency rate increased slightly due to minor incidents. - Reliability: Over 99.9% availability across regulated networks. - Operational highlights: New York delivered $2.6 billion capital investment; Massachusetts Gas had a new five-year rate plan; U.K. Electricity Transmission started RIIO-T2 with increased investment.

Underlying operating profits from continuing operations were £4 billion, an 11% increase. The U.K. Electricity Transmission business had a strong first year under RIIO-T2, contributing to the growth. U.K. Electricity Distribution (WPD) delivered a return on equity of 13.6%, with capital investment of £899 million driven by asset replacement and connecting renewables. In the U.S., New York achieved an 8.8% return on equity, while New England (Massachusetts Gas) had an 8.3% return on equity. National Grid Ventures had capital expenditure of £913 million, with interconnectors like North Sea Link and IFA2 performing well. The U.K. Gas Transmission business, treated as a discontinued operation, had a return on equity of 7.8%.

• Between 2022 and 2026, expect to invest £30 billion to £35 billion in critical infrastructure, with asset growth 6%-8% per annum and underlying earnings share growth 5%-7% per annum. - Forward guidance: Underlying operating profit growth across businesses, but nearly £150 million will be returned to customers due to Western Link construction delays, expecting a broadly flat EPS profile for the year ahead.

• Supply chain challenges with higher costs and lengthening lead times for certain parts. - Regulatory uncertainties in various jurisdictions regarding rate cases and the separation of the Electricity System Operator. - Impact of global events like Russia's war on Ukraine and economic slowdown on business operations.

Q: Regarding the five-year plan CapEx and asset growth, is there upward pressure?

A: John Pettigrew and Andy Agg stated they remain comfortable with the £30 billion to £35 billion CapEx range and 6%-8% asset growth target, expecting inflation to moderate.

Q: Can you provide more details on the New York Bight joint venture with RWE, including timeline and investment costs?

A: John Pettigrew said the joint venture with RWE won a seabed lease in New York with a $300 million share, solicitation for energy procurement is ongoing, and investment is likely in the '27-'29 period.

Q: How do you view the net debt-to-asset base given inflation impact?

A: Andy Agg explained net debt-to-regulated asset value is expected to settle slightly above 70% despite inflation, considering RPI-linked debt and strong cash performance.