National Grid’s statutory operating profit was up 82% for the 2021/22 financial year to £4.4 billion, boosted by the acquisition of Western Power Distribution (WPD).
On a pro forma basis, the company’s profits were up 11%, reflecting higher UK transmission net revenue due to funding higher investment as part of RIIO-T2, higher revenues from its Massachusetts Gas business, the first year of operation of the IFA2 and North Sea Link interconnectors, gains on investments in National Grid Partners and a lower adverse impact from COVID-19.
“The world has changed dramatically over the last year, with the tragic war in Ukraine, a global economic slowdown, and rapidly rising inflation,” said John Pettigrew, chief executive of National Grid.
“The UK and US communities we serve are facing significant cost of living challenges, at a time when further urgency is needed to address climate change. Against this backdrop, National Grid remains focused on positioning our business, through acquisitions and investment, to deliver net zero while continuing to safely ensure security of supply at the lowest possible cost to consumers. And our results today reflect the strength of this strategy.”
National Grid invested £6.7 billion in its continued operations, up 18% on a pro forma basis on the previous year. This includes over £300 million in interconnector investment across the year.
Amid the continued energy crisis in the UK, the company has also repaid £200 million in interconnector revenues ahead of schedule to help customers.
It is also on track to deliver cost efficiency targets of £400 million by the end of 2023/23 it said, with around £140 million delivered to date. This will help lower customer bills as well as growing its regulated assets by over 20%.
The company has continued to work to pivot towards a more electrified and decarbonised energy system, through its £7.9 billion acquisition of WPD and other moves such as the sale of a 60% equity interest in its UK gas transmission and metering business to Macquarie Asset Management and British Columbia Investment Management Corporation for a cash consideration of £2.2 billion. This sale – announced in March 2022 – is expected to be completed in the third quarter of 2022/23.
“Our purchase of WPD has pivoted our business to a much greater focus on electricity infrastructure, putting us at the heart of delivering the energy transition,” added Pettigrew.
“We’ve invested a record £6.7 billion in critical energy infrastructure, part of our five-year £30-35 billion investment programme. Over 70% of our five-year investment is aligned to EU taxonomy principles making us one of the FTSE's largest investors in the delivery of net zero.”
Additionally, National Grid sold its 50% stake in the St William Homes joint venture to The Berkeley Group for a cash consideration for £413 million.
The company’s profit before tax grew to £3,441 million, up 107% from £1,664 million in 2020/21. And its earnings per share were up to 60.6p from 37.0p, a jump of 64%. Its recommended final dividend is 50.97p, up 3.7% and in line with policy.
Its financial outlook for the next five years remains unchanged, with a total cumulative capex of £30-£35 billion and asset growth of 6-8%. Over two thirds of National Grid’s planned investments are already committed and visible through rate settlements and non-regulated businesses for the period till 2025/26.