National Grid Stock

Good morning, everyone, and welcome to National Grid's Half Year 2027 Results Presentation. Six months ago, I set a clear direction for National Grid to build on our strong foundations, sharpen performance, and advance us as a world-class business. Since then, we simplified the organization, enhanced accountability, accelerated delivery of our capital program, and increasingly deployed technology to improve our business.

Today, I'd like to bring to life how the initiatives we're driving are already having an impact through improving performance and underpinning our confidence in growth. I'll then hand over to Andy for our financial performance and outlook before we take questions.

Let me start with the key messages from the first half. In May, I introduced our new strategic framework with the brilliant basics designed to drive better performance across the business through competitive benchmarking and continuous improvement. And the big shifts, focusing our attention on the few transformations necessary to respond to the ever-changing external market. We've made strong progress, and I'm pleased to say that the execution of the brilliant basics is already translating into sharpened delivery.

There are 3 key messages I'd like to highlight. First, capital investment increased by 1/3 in the first half with important project milestones completed. As a result, we've upgraded our capital investment guidance for the year. Our progress, together with some one-off fair value gains within National Grid Partners supported strong first half EPS growth and means we're also slightly upgrading our full year EPS growth guidance.

Second, we're changing how National Grid operates as we drive the big shifts. Some highlights include simplifying the organization to create clearer accountability and better quality decision-making, scaling practical technology and AI tools to improve productivity and delivery and shaping policy outcomes that support affordability and resilience.

Third, we continue to build momentum in our disciplined growth. Here, we're focused primarily on our core regulated businesses as we continue to help shape the long-term regulatory environment with ED3 and our upcoming U.S. rate cases as examples, while at the same time, exploring adjacencies that will support longer-term growth, where there's a strong portfolio fit and opportunity to earn attractive returns with our investment in Joulent as an example. I'm pleased with the increased pace of execution across our strategic framework in the past 6 months.

Taken together, this strengthens our confidence in delivering our 5-year growth targets. And in turn, this will support customer affordability, deliver better outcomes for our wider stakeholders and underpins our compelling investor proposition with double-digit investor returns. Our capital delivery, combined with our focus on sharpening performance is translating into strong financial outcomes.

Capital investment increased 32% to GBP 6.7 billion, a new record for the first half. We now expect full year investment of GBP 13.5 billion, putting us firmly on the run rate required to deliver at least GBP 70 billion by the end of FY '31. This is supported by continued supply chain progress in the past 6 months as we've secured over GBP 3 billion of further delivery mechanisms, taking the total to over 80%. Underlying EPS increased by 22% to 36.5p, reflecting stronger performance across the business and gains from 2 successful capital market transactions within National Grid Partners. We're, therefore, slightly upgrading our full year EPS growth guidance to 15% to 16%. The Board has also declared an interim dividend of 16.97p per share, a year-on-year increase of 3.8%. This is in line with our policy that aims to deliver an inflation-protected progressive dividend. Andy will come back to the financials in more detail later.

For now, let me turn to how we're delivering our strategy. The external environment continues to evolve rapidly with many of the energy market drivers of change supporting growth in our business. Geopolitics and the macroeconomic environment remain complex with the Middle East conflict putting direct pressure on consumer energy bills. Energy security and affordability are therefore, amongst the most critical topics for governments, regulators and our customers.

Meanwhile, the pace of change in technology and customer needs is accelerating, presenting both an opportunity to evolve how we run our business and creating a large demand runway. This is accentuated by the scale of electrification needed to support the energy transition. We must, therefore, get more capacity from our existing networks through leveraging technology at scale, while at the same time, investing to build network capacity needed for the future.

Our strategic framework is designed to navigate this complex environment and leverage the structural growth it presents. Importantly, we've now fully aligned the organization behind this framework through a simplified operating model while reducing the group executive committee from 13 members to 8. This gives clear regional accountability to our newly formed U.K. and U.S. businesses, supported by enterprise-wide capabilities across capital, technology and innovation and our functions. And by delivering our framework, we'll build a business that makes better quality decisions at pace, drive stronger execution and solidifies a superior growth trajectory.

Let me start with capital and the delivery of our largest ever investment program. Starting in the U.K., capital investment increased strongly across both electricity transmission and distribution. The structural drivers of our investments are diverse. Importantly, our investment will support lower consumer bills through reducing system constraint costs and is expected to create over 60,000 U.K. jobs.

In electricity transmission, investment rose by 71% to GBP 2.9 billion. This primarily reflects the ramp-up of ASTI investment to GBP 1.5 billion, along with other major projects to reinforce the network and connect new generation. We're also using technology to improve our capital delivery. For instance, we're using Sensat's infrastructure visualization mapping technology to test different construction options against real-world constraints before we get to site, reducing in-person visits, enabling earlier decisions and reducing overheads.

We also connected 2.5 gigawatts of generation in the first half, including the Sofia Wind Farm and the U.K.'s fourth largest battery project in Newport. This is more than double the generation connected in the whole of FY '26 and demonstrates our significant momentum. We also see strong growth in electricity distribution, where our investment increased by 10% to GBP 834 million in the first half as we continue to invest in asset health to enhance our resilience and support connections.

We're currently finalizing our ED3 business plan, which is reaffirming our planned investment of GBP 9 billion over the coming 5 years. This is 40% higher than the previous period and will support vital economic development in our Midlands, Southwestern Wales service areas, consistent with the government's devolution agenda.

Let me give some additional detail on ASTI, which accounts for around GBP 17 billion of investment over the next 5 years and underpins much of our U.K. growth. Our timetable remains on schedule with 100% of the critical primary supply chain already secured and GBP 500 million of additional non-primary supply chain contracts signed in the first half. All 6 of our Wave 1 ASTI projects are now in construction, with the majority of these projects due to complete by March 2031.

Of course, across a portfolio of this scale, not every project will go exactly to plan. For instance, we've learned from our experience of the ASTI framework and the EGL 1 delay event, and we're applying those lessons to drive better performance across the program. That includes identifying a 100-day schedule improvement on EGL 1 through generative scheduling as we work to get back on track, while Yorkshire Green and EGL 2 are tracking ahead of schedule.

On Wave 2, our first 2 projects at Pentir to Trawsfynydd are now in construction, with the remaining 9 Wave 2 ASTI projects also progressing through the planning and consenting processes. For instance, we secured the development consent order for Sea Link last week, enabling us to move the project into its next phase and the outcome on Norwich to Tilbury is due early next year.

Last week, we also made our DCO submissions for EGL 3 and 4 and expect to submit all remaining ASTI project planning submissions by the end of March 2027. ASTI is therefore moving steadily from development into construction. As you can see on the slide, we remain on track for our key delivery schedule dates and the ASTI-related RIIO-T3 investment with 15% of Wave 1 and 5% of Wave 2 deployed in the first half. Recent project milestones bring the progress to life.

At Grain to Tilbury, we've deployed a tunnel boring machine to create a cable route under the Thames River, replacing and upgrading infrastructure installed in the 1960s. The team completed the 2.2 kilometer Thames Crossing in September, 49 days ahead of schedule. Caroline, as the tunnel boring machine is known, was named by local schools in honor of Dame Caroline Haslett, who is a pioneer for women in the electrical engineering industry. And this was a pioneering piece of equipment as well with its vast scale requiring us to build a shaft at Tilbury using Europe's largest vertical shaft sinking machine.

Elsewhere, our Yorkshire Green project is progressing well and is expected to be the first of our ASTI portfolio to go live on the system. And we also energized a 1.4 gigawatt offshore wind farm. Cordi and Carl will provide more detail on our progress at the U.K. Transmission Investor Deep Dive event, which is planned for December.

Turning now to the U.S., where we've successfully grown our rate base by over 70% since 2020. This growth is underpinned by multiple drivers, including ongoing network resilience, accelerating industrial and consumer demand and the need for additional system capacity. Importantly, we're seeing that demand directly within our service territories as we progress discussions with large load customers in areas, including advanced manufacturing and data centers.

As a result, first half investment grew across both New York and New England. New York investment increased by 11% to GBP 1.8 billion, including around GBP 800 million in gas maintenance, principally through our decades-long leak-prone pipe replacement program as well as GBP 800 million across electric transmission and distribution.

In New England, investment increased by 14% to GBP 1.1 billion, underpinned by similar drivers across both gas and electricity with local regulators supporting the need for modernization. During the first half of the year, work commenced on the first phase of the electricity connection for Micron's semiconductor chip manufacturing site in Upstate New York, supporting an initial 480 megawatts of demand. At full build, it's expected to account for around 2 gigawatts of demand, equivalent to almost 1/3 of NiMo Electric's current peak demand, and Micron will become our largest single electric customer in New York.

Our connections will allow Micron to invest more than $100 billion in Central New York and create approximately 9,000 direct jobs in addition to almost 50,000 jobs across the broader regional economy and supply chain, with the state now attracting a significant and growing semiconductor manufacturing ecosystem. We also completed our SmartPath Connect transmission project and began refurbishing a major century-old transmission line in Massachusetts. These projects show the significant growth in our regions and how investment is translating into additional capacity, reliability and economic growth.

To this point, I focused on capital delivery and how strong project management is enabling us to deliver to schedule and budget, a brilliant basic. But a world-class network operator must also maximize the value of its existing infrastructure and enhance the customer experience. That's why we're also focused on sharpening performance across our existing assets, our customer service, and our corporate functions.

Our investment in asset health in the U.K. is supporting world-class transmission reliability, strong distribution performance and improved interconnector availability. In the U.S., we've rolled out the Lighthouse frontline productivity pilot that I spoke about in May across our 15 downstate New York gas business operations. In some of our early locations, this is helping us to get crews to their first jobs 15% faster, reduce travel time between jobs by 25% and complete up to 1/3 more valve inspections each day. It's also cut unplanned overtime on Long Island by 75%. We're now rolling it out across our locations in Upstate New York Gas.

Our focus on assets is designed to help us maintain and enhance our strong reliability and safety KPIs. These are the key performance indicators of our progress supported by a suite of operational metrics that we track closely to ensure we're driving the leading indicators of our asset health. For customers, in the U.K., we're redesigning our processes to achieve best-in-class customer journeys. And in the U.S., we're deploying tools that make interactions simpler, increase self-service and provide a better customer experience.

For instance, we have improved first-time billing accuracy in our U.S. businesses with New England now over 96%, up 2 percentage points on last year, while delivering a tenfold increase in AMI meter deployment over the same period, all of which is driving improved customer satisfaction scores across both the U.K. and the U.S. And in our functions, common data and new digital tools are improving productivity. By sharpening performance across all of the brilliant basics, we expect to deliver efficiencies, which can support customer affordability, provide capacity to absorb downside risks and position us as a world-class operator with our regulators. It will also help support us in delivering a regulated controllable cost growth CAGR that's below U.K. CPIH over the 5-year period to FY '31.

Let me bring that together through a lens that's deeply important to us, our customers. We have 3 priorities here. First, supporting affordability. That means getting more from our existing assets to avoid unnecessary investment, sharing value where our assets outperform, going beyond the regulatory framework where it matters and providing targeted support for vulnerable customers. Examples of this include using AI tools such as GridCare to unlock network capacity and our focus on affordability, helping to enroll over 65,000 more of our U.S. customers on to low-income discount rates over the past year.

In the U.K., our interconnectors both support increased energy security and directly benefit consumers when they outperform with GBP 400 million in payments to consumers over the past 3.5 years and a further GBP 300 million forecast to be paid over the next 2.5 years, subject to Ofgem approval.

Second, we want to improve the customer experience, which is a journey of better technology tools and a change in culture about what good looks like. We're already well on the way to digitizing and simplifying our customer interactions and are redesigning journeys end-to-end. We're also strengthening our storm and winter response for what is already turning out to be another challenging winter period.

Third, we want to enable faster connections to the grid. Connections reform is creating a clearer route for viable projects, but it's been a challenging and frustrating process for some of our customers. We're doing all that we can to support our customers through the process, and we're leveraging innovation to move faster where we can in a complex ecosystem.

However, the long-term solution does require a whole system change. We're, therefore, actively advocating for the steps needed to deliver connections and reduce costs for our customers. Fortunately, the government's recent budget announcements offered some clear policy directions that we embrace. Together, these initiatives turn investment and operational improvement into more affordable, reliable outcomes for customers and ultimately translate into stronger performance for our investors.

It's also part of what will differentiate National Grid as a world-class operator. The big shifts help us scale these improvements across National Grid. The first is leadership, people and performance led by Emma, where we're targeting clearer accountability and better quality decisions at pace while building stronger capabilities and attracting talent.

During the first half, we've simplified our operating model and hired more than 3,600 people with 90% recruited into our operational businesses as we scale our delivery, including over 400 graduates and apprentices. We've also committed GBP 5 million to support practical training and qualifications for 5,000 young people in the U.K.

The second is technology and innovation, where we're scaling proven tools to strengthen cyber defenses, accelerate capital delivery, unlock capacity, optimize asset reliability, and enhance the customer experience. Alice is now bringing this together in her new role, leading the combined team. Examples in the first half include Exodigo's underground mapping technology, which has reduced change orders on several major projects and Envelio's mapping analytics, which are helping us identify areas where capacity exists on our network to assist developers with site selection and speed up customer connections.

For customers, we're beginning to roll out the market-leading Kraken platform across our 6.5 million U.S. customers and have already deployed Amazon Connect in the U.K. to support our 8 million distribution customers, replacing legacy systems with more resilient, scalable, and insight-led platforms.

Our third big shift is external positioning, where we're shaping policy and regulatory outcomes that support affordability, resilience, and growth, led by Cordi in the U.K. and Sally in the U.S. As you'd expect, we've been progressing our price controls and rate cases in both the U.K. and the U.S. This includes the 1-year rate stabilization submitted for KEDNY and KEDLI in Downstate New York, keeping customer bills flat for 1 year in the current affordability environment.

Cordi has also led on the recently published U.K. electricity network sector growth plan, and we've made our own supply chain commitment on the back of it with a new long-term ambition for 70% of the value of our future U.K. supply chain spend to be delivered in the U.K., supporting domestic jobs in manufacturing and services. In the U.S., we've supported a range of policy initiatives, including the bipartisan effort that has led to a new Senate bill aimed at speeding up permitting and reducing the cost of delivering energy infrastructure. These are targeted shifts. Each one is intended to help us move faster, raise productivity and deliver stronger outcomes for all of our stakeholders.

The third element of our framework is disciplined growth, growing our core while building future optionality. Our priority remains sustainable long-term growth in our regulated networks, which means continuing to shape the future policy and regulatory frameworks that enable this growth.

For instance, we're finalizing our ED3 business plan, responding to Ofgem scenarios, which point to further growth in capital investment across the next 5-year price control. We also expect to submit multiyear rate cases over the coming months in Downstate New York Gas, KEDNY and KEDLI and our Upstate NiMo businesses.

At the same time, the changing energy landscape is creating opportunities to use our capabilities beyond our existing footprint through National Grid Ventures. As I outlined in May, we'll pursue these selectively, focusing on areas where we've got a competitive advantage that deliver long-duration cash flows, and can earn attractive risk-adjusted returns. In the U.K., this could include interconnectors and offshore hybrid assets and in the U.S., competitive transmission and innovative solutions for large load customers.

Joulent is a good example. It gives us exposure to growing data center power demand beyond the U.S. Northeast, while offering the potential for attractive risk-adjusted returns above our regulated business. The majority of our $1.75 billion investment will support the development of Project Kilby, a 2.7 gigawatt co-located data center power facility in West Texas. The project is already at an advanced stage. A 50-50 joint venture with Chevron has been established. EPC contracts are being finalized and all the turbines and other critical equipment have been secured, with delivery expected over the next 12 months.

Importantly, a 20-year power purchase agreement has been signed with Microsoft, providing long-term predictable cash flows with a AAA-rated customer. The remaining development milestones are being progressed with first power targeted for 2028. And as you can see from this simplified view of the site, we bring more than capital. Kilby involves kilometers of wires and substations to create a multi-gigawatt islanded mini grid. We bring deep power system expertise, including energy management and high-voltage substation development as well as strong supply chain relationships for critical electrical equipment.

And through our U.S. GENCO business on Long Island, we also have long-standing experience operating gas turbines. So Joulent is an exciting growth opportunity where we can put capabilities we already have to work in a new and growing market while building new capabilities along the way.

So to conclude before the financials, we set a clear direction in May, and the first half shows we're following through. Capital investment is accelerating, major projects are progressing, and the changes we're making to the organization are sharpening performance. And I'm pleased to have been able to share a number of examples that evidence our execution to date and how we're delivering for our customers. There's always more to do, and you have my commitment to maintain this delivery focus and improvement. This progress strengthens our confidence in the 5-year plan and in the outcomes we can deliver for customers, shareholders and our wider stakeholders.

I'll now hand you over to Andy, who will take you through our financial performance and outlook.

Thank you, Zoe, and good morning, everyone. I'd like to highlight that, as usual, we're presenting our results on an underlying basis and at constant currency. So starting with our overall performance in the first half. We've delivered strong results with growth in underlying operating profit to GBP 2.6 billion, a 13% increase on the prior year, primarily driven by higher regulated revenues in U.K. Electricity Transmission, reflecting a step-up in the scale of delivery under T3, higher revenues in our U.S. regulated businesses, reflecting the growing asset base and 2 one-off fair value gains from successful capital markets transactions in our National Grid Partners investment portfolio.

Strong operating profit growth led to a 22% increase in earnings per share to 36.5p. We've continued to make good progress with our capital program, including the ongoing ramp-up in ASTI project delivery and continued growth across our U.S. businesses. As a result, capital investment was 32% higher at GBP 6.7 billion, a record level for the first half. In line with our progressive dividend policy, the Board has declared an interim dividend of 16.97p per share, representing 35% of last year's full year dividend.

Moving now to our business segments and starting in the U.K. with Electricity Transmission. We are now into the first year of execution under the RIIO-T3 framework, which will see us invest GBP 31 billion over the next 5 years to double the network capacity across England and Wales, connect 35 gigawatts of supply and 19 gigawatts of demand and help avoid significant constraint costs for consumers. In the first half, capital investment was GBP 2.9 billion, 71% higher than the prior period as we deploy a higher level of capital from the step-up into the RIIO-T3 framework enabled by the strong ASTI project delivery progress Zoe highlighted earlier as well as ongoing investment across our asset health programs.

Reflecting this faster pace of delivery, underlying operating profit was GBP 1.2 billion, up 45% compared with the prior period, with higher allowed revenues partially offset by higher depreciation from the increased capital investment. In our electricity distribution business, underlying operating profit was GBP 550 million, broadly in line with the prior year, reflecting higher revenues from indexation, offset by higher depreciation and additional maintenance costs driven by the extreme heat over the summer. Capital investment was GBP 834 million in the first half, an increase of 10% compared to the prior period, primarily driven by increased asset health and connections investment, and higher load-related network reinforcement.

Turning now to the U.S., where, as usual, profitability in both businesses is weighted to the second half, reflecting the typical seasonality. Underlying operating profit for New York was GBP 487 million, 9% higher than the prior year from higher net revenue driven by asset base growth and the recovery of previously unremunerated costs. This was partially offset by an increase in depreciation, reflecting our ongoing investment program and higher costs, including property taxes.

Capital investment was GBP 1.8 billion, 11% higher than the prior year, driven by increased investment in our upstate transmission upgrade projects and reinforcement of our distribution networks. In New England, underlying operating profit was GBP 266 million, 10% lower than the prior period. Higher net revenues in the period were driven by asset base growth and our capital tracker mechanisms. These were more than offset by higher costs, including a one-off provision alongside higher depreciation and other investment-related costs from the increasing capital program. Capital investment was GBP 1.1 billion, 14% higher than the prior year, driven by increased asset condition and system capacity investments and our ongoing gas mains replacement activity.

Moving to National Grid Ventures, where the underlying contribution was GBP 174 million, including joint ventures. The year-on-year decrease of GBP 53 million was primarily due to the disposal of Grain LNG in the prior year, partially offset by stronger interconnector performance. Capital investment across National Grid Ventures was GBP 100 million, reflecting ongoing maintenance expenditure, including refurbishment of the IFA1 interconnector.

In addition, we have invested GBP 941 million into the Joulent joint venture during the first half and expect the remainder of the full GBP 1.3 billion to be deployed in the coming months as we work towards a final investment decision on Project Kilby. Other activities, including joint ventures, reported a loss of GBP 24 million. Centrally held corporate costs were partially offset by GBP 84 million of one-off fair value gains within our National Grid Partners investment portfolio.

As a reminder, National Grid Partners is our corporate venture capital and innovation arm, investing in emerging technologies that can create strategic and financial value for the group. Zoe has already mentioned a number of the portfolio businesses we are working with to accelerate and scale innovation across our businesses. We also recognized one-off fair value gains in the period related to 2 successful portfolio company capital market transactions with the cash sale of Dragos, a critical infrastructure-focused cybersecurity company to Accenture, and fair value gains arising from the IPO of ERock, which builds and operates modular power systems for industrial businesses.

Turning to cash flow and the balance sheet. Cash generated from operations was GBP 4.1 billion, up 14% compared to the prior year. This increase is driven by improved group cash generation. Net debt increased by GBP 4.5 billion in the period to GBP 48.6 billion, with cash inflows from operations being more than offset by strong capital investment, our investment in Joulent, interest and dividend payments. For the full year, we now expect net debt to increase by a further GBP 4 billion, including the remaining Joulent funding.

Net finance costs were GBP 722 million, an increase of 6% compared to the prior year due to higher average net debt partially offset by higher capitalized interest as our investment program ramps up. I presented this slide in May, and I'm repeating it because I think it's important to reiterate just how resilient our regulated business model is given the volatile macroeconomic environment.

In the U.K., inflation protection across our regulated asset base supports real equity returns. In the U.S., revenue indexation, cost recovery and the ability to pace investment help us manage inflation. We also have limited exposure to the current volatility in wholesale energy costs with full recovery of energy procured for U.S. customers. And we manage currency risk deliberately, hedging around 70% of our U.S. assets with dollar-denominated debt. Together, these protections limit volatility and reinforce the visibility of our long-term growth, supporting our differentiated investment case.

Moving specifically to interest rates, given their focus across the wider market and where our business has limited exposure. Around 75% of our debt book is covered by operating company level recovery mechanisms. In the U.K., the RAV-weighted trailing debt tracker closely matches our actual issuance profile, and we have a strong track record of financing outperformance.

In the U.S., actual debt costs are reflected in rates as well as a forecast of debt costs in New York, while the regular rate case cycle provides opportunities to reset the allowed cost of debt. We carefully manage the interest rate exposure on the remaining portion of the debt book with only around 10% of our net debt being rate sensitive.

And in the U.K., indexation of allowed equity returns to real gilt yields provides a further partial hedge against higher rates. In terms of our holding company debt, our average issuance tenor is 7 years to 10 years with maturities extending well into the 2030s. We can also access a range of global funding markets and currencies to issue efficiently.

Importantly, our 5-year framework was based on the forward curves back in March, which had assumed a degree of rising rates. Given the strong protections, even a sustained increase in rates of 100 basis points across the 5-year framework would only impact FY '31 EPS by around 1p, including the benefit of capitalized interest. Against that resilient backdrop, we remain firmly on track to deliver our 5-year financial framework to FY '31.

The upgrades to our FY '27 guidance provide clear evidence of that progress. Capital investment is now expected to be higher at around GBP 13.5 billion, reflecting a slightly faster pace of supply chain delivery and underlying EPS growth is now expected to be 15% to 16%. As mentioned earlier, net debt will be around GBP 4 billion higher, including the remaining Joulent funding. That near-term delivery strengthens our confidence in the 5-year framework with our capital investment program of at least GBP 70 billion, underpinning around 10% annual asset growth and underlying EPS growth of 8% to 10% per annum from the FY '26 baseline.

Alongside that growth, we continue to offer a progressive inflation-protected dividend policy and expect to maintain credit metrics above our current thresholds to at least FY '31. Let me finish with what this means for investors. Our investment program is underpinned by multiple investment drivers, providing high visibility growth alongside a business model that is resilient to macroeconomic volatility, which provides a unique stability. That combination supports our 5-year framework, which is designed to deliver a compelling investor proposition with attractive and consistent double-digit investor returns.

So thank you for listening, and we will now go to the audio Q&A. Andrew, over to you.

Thank you, Andy, and good morning, everyone. My name is Andrew Downey. I'm Interim Director of Investor Relations at National Grid. I'm joined by Zoe and Andy in the room, and we're now going to take questions. [Operator Instructions]

So with that, we're going to go to questions. We'll start with the conference call, and then we'll go to any on the webcast. We'll start with Pavan first, and then we'll go to Mark and Rob Pulleyn as the first 3 questions.

Pavan, if you're online.

Yes. I'd like to ask 2, please. Firstly, in the U.K., can you talk about your conversations with the Energy Ministry about your execution, how that's tying into affordability? And just maybe higher-level comments on your U.K. plans and how you see the political backdrop? And maybe a couple of words on GB Grid would be helpful as well.

And then secondly, we had the midterm election results this week, and I wondered, Zoe, if you have any comments on potential impacts to your investment in Joulent Project Kilby, if you expect any changes to the time line there or any update you can give?

Super. Thanks, Pavan. Very helpful. I think the conversations we've had broadly across government, both with the Energy Secretary, but also with Number 10 have been very constructive. As you'd expect, they've been very focused on execution. We see that the conversation, and we saw this reinforced in the budget that was delivered is very much focused on affordability, and you see some measures that the government has taken around trying to provide relief for customers.

I think what's always been clear for us but has been reinforced is the importance of us delivering against the capital plans that we have. We know that if we deliver our capital plans, it helps us. Of course, we've talked before about constraint costs. But -- and that's, therefore, a help for customers, but it's also about getting more out of the grid. And we talked before in our presentation about the work we're doing to also unlock capacity out of our existing assets.

In terms of Great British Grid, we support the ambition that sits behind that. We've been told that it's unlikely to have any impact in the near term, certainly probably under the existing rate cases that we have. However, we are very much supportive of the focus that the government is bringing around pace and driving the right outcomes for customers. And we are completely willing to work with Great British Grid. We do have a site visit that we're planning to do with them in the near future to understand a little bit more as their plans start to evolve.

I think the other question perhaps then to move to just around the U.S. election. Indeed, you didn't mention the Northeast, but in large part, that's because, of course, we see stability in our Northeast area. There is a change in Texas. I think the key thing that we have been focusing on for Joulent is it's -- the conversations that have been evolving in the U.S. around data centers have been very much around who pays and is there any repercussions around data centers being on the grid.

I think in this regard, we see our investment in Joulent and the first project, Kilby, is a model example of how data center development, I think, can be very constructive. It is, of course, located in a very remote part of Texas. It's in West Texas. And it is also behind the meter. So there isn't congestion that gets added to the grid. And indeed, the conversation around who pays is quite clear because the generation sits within the boundary of the Kilby development. And so I think most of the things that we hear, whether that be around either noise, water, impact to grid, who pays are well accounted for. And of course, we're working so in a very strong partnership, the 50-50 JV with Chevron and under the long-term PPA with Microsoft. So I think some important partners that have longevity as well. Hopefully, Pavan, that gives you the response to your 2 questions.

Great. We're going to head to Mark Freshney at UBS, next. Mark, please go ahead.

Apologies in advance for the tone of these questions. But firstly, on Community Wind, you only got, I think, GBP 75 million write-back, but you had written off GBP 400 million. And my understanding is that RWE recognized the capital gain on money that you'd put in or the write-back, so to speak. So can you talk more about what's going on there?

And further on Joulent, it's a lot of cash that you put into this entity. What protections do you have in the contract with Engine No. 1 and Joulent so that if for whatever reason this project doesn't go ahead, you would be able to recover the funds that you have invested.

And I'm going to take the liberty of asking a third question. It seems to me like you're progressing pretty heavily on interconnectors. I mean these interconnectors are a lot, lot more expensive than they used to be and the returns are still quite lucrative. Can you talk about the time line of when you might be able to take an investment decision on one of those projects and when you may be -- how you would expect to be able to fund that?

I might say, Mark, I'll ask Andy to address your first question just on Community Wind. And then I might provide some strategic remarks because I think that gives me the chance to cover both Joulent and interconnectors and then ask Andy to provide some of the details around whether it be the protections or some of our hurdle rates or risk-adjusted returns.

Yes. Thanks, Mark, and thanks for the questions. Yes, just on Community Offshore Wind, people may remember, we took the decision about a couple of years ago now, given the legislative changes with the Trump administration that it was appropriate for us to impair our investment. As we've worked through with our partner, as you say, we've chosen to exit the arrangement with a view to redeploying those -- the funds into opportunities elsewhere.

I think our decision was based on the certainty of the agreement that we were able to reach rather than risking going into further uncertainty in terms of being potentially, sort of, elongated further legal activity within the U.S. So that was what behind that decision to redeploy those funds. So, do you want to pick up the strategic point?

Yes. I think the first thing I think it's important to reinforce, Mark, is that our priority remains focused on the regulated core organic growth that we have. That said, we did talk about selectively looking beyond our existing footprint, but there were some significant criteria which would need to be met in order for us to be comfortable. The interconnectors and any adjacencies in, sort of, innovation around data center development were 2 examples we gave on some potential adjacents through our National Grid Ventures vehicle.

And we were still looking in our investment thesis for long-duration cash flows and confidence that we could have attractive earnings on a risk-adjusted basis. We did feel that Joulent meets that criteria because we can provide a solution to one of the significant problems that you see around data center development around speed to power and the expertise that we can bring around things like power systems, procurement relationships and operating that mini grid, given it's behind the meter and such a substantial 2.7 gigawatts is important.

We believe we've got very strong protections in the contract in the event that there isn't development related to either the first project or further subsequent projects. I don't think we've given substantial detail. And I think as we come into more maturity around some of the projects, we can provide more clarity, but certainly, we were very clear given the possible volatility around projects that we needed to be confident around the downside protections that we had in the Joulent negotiations. I think in interconnectors, maybe I'll ask Andy to say a few words, but it does still fit into that strategic bucket of needing to be delivering project economics, which we're comfortable with.

Yes. Thanks, Zoe. And maybe just one more comment on Joulent, actually, Mark, given your concern. And you may have seen in the detail this morning that actually, as we look for how we account for that investment in Joulent, we actually account for it as a financial asset, and that's actually reflecting some of the very strong protections we do have around preferred distributions as well as obviously things you'd expect around the joint venture having right to the equipment if there are problems with any particular contract.

So I believe we have very strong protections around any downside case there. On interconnectors, I think a few things on the financial side. Firstly, all of these projects, we work very closely, firstly, with our partners, but also with regulators and other stakeholders to ensure that, as you said, costs are more expensive. We've seen that across our supply chain, but to make sure that the cost benefit analysis remains very strong. And we've seen that with our existing interconnector fleet as well.

Over the last few years, the strength of that performance has enabled us to return over GBP 400 million to consumers, and we'd expect to return a further GBP 300 million subject to Ofgem approval over the next few years. So when these assets operate well, they benefit consumers because of the regulatory arrangements that Ofgem put in place. So I'd push back slightly on your term lucrative. I think the returns are set appropriately by the regulator. We perform as strong as we can against that, and we share those benefits back with consumers. So in terms of timing, obviously, that will be very dependent on the projects themselves when we get to the point with our partners and regulators of believing that we're at an appropriate point.

Thanks, Mark. We're going to head to Rob Pulleyn at Morgan Stanley next.

Also taking 2 questions from me. So firstly, actually both on the U.S., but coming back to the U.S. data center topic and the Joulent JV. Are we to understand that you remain positive that more projects can be undertaken in due course if they fulfill the criteria you mentioned, Zoe, on Kilby, i.e., in remote areas behind the meter, limited impact to customers? And if so, when could we hear on future projects? Or is everything just going to take longer given the political changes in Texas?

And secondly, this one to Andy, staying with the U.S. on the rate cases mentioned for coming months, may we ask whether higher nominal ROEs are possible in these rate cases to reflect, obviously, the bond market environment's very different to in the past. You mentioned other mitigations in your comments earlier. Could we see more of this instead of nominal ROE? It would be great to just explore, sort of, how these rate filings may go.

Thanks, Rob. Yes, to the first question, I think everything we see in the demand funnel, either in our regulated jurisdictions or indeed as we focus in the market around possible adjacencies like in the demand for Joulent, we do see substantial queues, and that's in the U.K., in the U.S. as well.

Maybe there's a point just to reinforce that we haven't covered, but we mentioned it in our opening remarks. I think it's really positive to see in our New York business that we start to see some of the fabrication of semiconductors in our Central New York region, which is covered under our NiMo footprint because I think it starts to bring demand that has the potential to grow to 2 gigawatts that's outside of the typical data center conversations that are being held across the U.S.

That said, we do see that whilst not all data centers should be developed, there still is a significant number of data centers, which we expect to go into construction. But I do think it's important that we look at these things through 2 lenses. No doubt, it has to meet the financial lens, and we've talked about the criteria that we have there. But increasingly, we've always believed this is important. It's the consultation with the local communities about making sure that the way in which we engage satisfies the local community requirements.

And that will vary depending on the community that we're operating in, no different to the consultation that we do across the U.K. And similarly, it will be the case as we look to data center developments in the U.S. So in Joulent, there is a real pipeline that sits behind Kilby. It's at various levels of maturity. And until we actually have confidence that it meets those criteria on social license and the financial hurdles that we're seeking, those won't be matured. When they hit those hurdles, we'll make sure that we come back with more information.

Okay. Thanks, Zoe. And good morning, Rob. Yes, on U.S. rate cases, as you've alluded to, a busy time in the coming months. We're expecting the outcome on our Massachusetts Gas rate case within the next month or so. And then we will follow that with filings across New York with our KEDNY/KEDLI downstate gas rate cases and our upstate Niagara Mohawk rate cases as well across both our electric and gas businesses.

So in terms of ROEs, I think if I step back, what we have seen over the medium to long term is actually despite going through a period of very low risk-free rates, actually nominal returns have held up very well. So as a corollary to that, I'm not sat here expecting a sudden rebound off the back of higher interest rates.

So we will file asking for an incremental step, as you might expect, reflecting that rate environment. But I think as we've said in our remarks this morning, we also recognize the need to balance the funding of the required investment with the need to work with our regulators to address the affordability challenges. And I think you'll see that in the rate cases we file as we ask for what we believe is an appropriate return. So overall, I think we're at, sort of, the mid-9s at the moment. I think that's a reasonable proxy going forward. But everything at the moment I see is in line with the 5-year guidance that we've given.

Thanks, Rob. We're going to head to Marcin at Bank of America, next. Marcin?

The first one is on the numbers. I believe you are now guiding for growth in operating cash flow of 15% year-on-year. But previously, there was a guidance for growth of 20%. So could you explain what has changed?

My question number two is broader relates to your review for U.K. distribution with Ofgem. Are you perhaps concerned at all that there could be a greater focus on affordability given the political developments in the U.K. and that could perhaps have an impact on the financial parameters of RIIO-T3 for distribution compared to what we saw for transmission.

Okay. I'm just trying to check. So the first question, perhaps, Andy, on the growth in operating cash flow to 15% to the 20%. And then I'll come to your question on U.K. distribution, how that mirrors T3.

Okay. Yes. Thanks, and morning, Marcin. Yes, I think our updated guidance on cash flow, and I'll come back to what we've guided to in terms of where we see net debt heading as a result, is all reflecting just the updates that we've given both around some of our working capital movements, but in particular, the slightly higher interest charges that we expect and the levels of CapEx.

As you've seen, we've obviously increased our CapEx expectations for the full year and some of that will flow through to cash as well. What you'll see is we've guided our net debt to increase by a further GBP 4 billion for the second half of the year. So that's all consistent. So that's what's behind that slight tick down in operating cash. It's the CapEx and interest rather than any deterioration in underlying operating performance.

And I think on ED3, firstly, I'd say it's shaping up very constructively with Ofgem. Ofgem indicated that they would be using the T3 methodology as a starting point. And we will submit the ED3 business plan at the end of November using the sector-specific methodology that they released earlier as the basis. The similarity to T3 is important, but the investment drivers are quite different. T3, of course, is very much driven by the large transmission and strong visibility that we have around the powerful delivery incentives.

For ED3, we do expect CapEx to grow, but there'll need to be a little bit more flexibility because the pace of electrification may change. And we've been working very heavily with Ofgem as the way in which we look at affordability to make sure that we have the right incentives and therefore, investments, particularly for the secondary low-voltage system is more linked to the uptake that we have on things like heat pumps or EV vehicle penetration. So I think perhaps at the high level, I take reassurance that the framework will look quite similar to T3, but we are working quite closely with Ofgem around how we manage that flex versus build component and that we make sure that the incentives are appropriately rewarding those outcomes.

Great. Thanks, Marcin.

We will go to Peter Crampton at Barclays next. Peter, if you can go ahead when you're online.

Peter Crampton here from Barclays. Two questions, if I may. One relates to you reiterating your long-term 8% to 10% EPS CAGR guidance to full year '31. Just a little bit of a question on whether the earnings impact of RIIO-T3, you expect that to be, kind of, rather front-end, kind of, loaded? And then maybe a little bit of questions around just, kind of, the U.K., kind of, budget. We did have some comments there around the importance of, kind of, network CapEx, but maybe some of your, kind of, thoughts on this.

Super. Why don't I ask Andy to take the first and then I'll take the second.

Sure. Good morning, Peter. Thanks for the question. Yes, I think we've always said when we set out the 5-year frame that we wouldn't necessarily expect the year-on-year to be entirely linear. And I think expecting the first year of T3 to see more of a step-up, a number of reasons. I think, firstly, obviously, the step-up in investment, and you've seen that coming through in our numbers this morning, but also recognizing some of the other mechanisms that Ofgem put in place around things like the semi-nominal cost of debt acceleration and some of the other, sort of, fast money aspects.

So yes, we did anticipate a higher level, and you saw that in our original guidance for FY '27, which was the 13% to 15%. Obviously, we've slightly upgraded. So overall, no change in our overall 5-year projections. We still believe that the 8% to 10% remains our best view over the 5 years from that FY '26 jump-off point.

And Peter, I think to the U.K. budget, I don't think there's anything that we have heard from the government that has changed our view on the GBP 40 billion U.K. investment outlook over the next 5-year period. I think we see the government perhaps putting even stronger emphasis on affordability and faster grid development. But we've always said that the build-out that we have, including to the offshore wind has had, of course, an energy transition benefit, but it's equally been very powerful around affordability given the reduction in constraint costs.

We, of course, are supplementing that focus around getting more out of the grid today, and we touched on a number of the technology investments that we're doing. That, of course, helps us to speed connections, but it also helps us to try and give customers benefits earlier as well. And then, of course, just reinforcing Andy's point around making sure that the interconnector value that we bring, which is shared with consumers is equally something that I think is a story that hasn't been told as well as we perhaps need to do. So I think they're the primary focus areas, very much for us about execution and making sure that we deliver the program as we promised.

Fantastic. Thanks, Peter. [Operator Instructions]

We've got 2 questions remaining. The first is from Jenny at Citi. So Jenny, please go ahead.

Three, please. Just going back to the portfolio of nonregulated businesses that you're building up. I just wanted to understand, Zoe, how you're thinking about portfolio construction. Obviously, to some of the previous questions, you talked about the potential for further investments in that business. How should we think about that portfolio as a percentage of the group? How sizable do you want to build that business?

And Andy, just on the back of that, I don't think, and apologies if I missed it, but I don't think you gave an equity -- risk-adjusted equity return number in way of a hurdle rate. So if you have -- if you can repeat, please?

And then the third one I have, just very interested in the Micron details that you gave for NiMo. How much of network investment do you think is required from you on the back of that project assuming a build-out in full scale? And if you can give some commentary in terms of who you expect to pay for that investment, please?

Excellent. Thanks, Jenny. So let me start by -- we've mentioned this a number of times. So firstly, I think it's important we continue to reiterate that the focus is very much on our organic delivery of our GBP 70 billion program. And then as we look to adjacencies, we do look to make sure that we deliver on those long-duration cash flows and that we make sure that the returns are properly commensurate to the additional risk that we may be taking.

I think we do not have a target size for that today other than to say it will remain small relative to our regulated core. I think today, we see our NGV portfolio sits at around the 5% mark. And I think that, that's potentially could change a little bit, but our lion's share will remain in the regulated core.

I think we're -- just on the hurdle rates, I think it's important to say that there isn't one number that will be in our mind. It will need to be risk adjusted. And so that will, of course, depend on how we articulate the risks project by project. So I think there's no particular number in mind. It's the reason why we want it to make sure it's above that of our regulated business. But then on a risk-adjusted basis, we would expect that to be higher.

Is there anything further, Andy, you'd like to mention on that?

No. I think just to confirm, Jenny, we -- as Zoe said, we haven't put out any, sort of, specific numbers on that. So I'd echo exactly what Zoe said that we'd expect those returns to be higher than our regulated business, but they will vary depending on the particular nature of the proposed investment.

Super. And then I think in Micron, that falls within our Niagara Mohawk territory. And so we don't have a specific capital number yet. We're currently in the middle of preparing our rate case submission for NiMo. However, we are already under the prior NiMo case, allocated capital to deliver against some of the early phases of the Micron development, and that's to deliver the first 480 megawatts. I think the -- I'm not sure, do you have the specific capital numbers associated with that?

No, we don't. Because some of the spend is specific connections. Some of it is general reinforcement work, and therefore, you wouldn't necessarily specifically allocate the costs. So it's included within our guidance for the U.S. business and for New York in total.

But I think the key message that I think is really important is that I think there may be some perceptions that the New York demand is much more driven by replacement or refurbishments. And I think that whilst there is some significant growth in our CapEx related to some of the reliability activity, we do still also see some structural demand, particularly as we see some of these fabrication facilities in the semiconductor industry pick up. And it's not just Micron. There's been a number of public announcements issued by a number of others, which is why we see that broader ecosystem that's being developed around the Micron facility as having quite significant growth beyond even the 2 gigawatts that Micron has put out.

But effectively, that's being paid for by consumers as we stand?

Some will be specifically recovered through what's called a CIAC, a connection charge levied on the Micron, and as we would with any big connection. If there's upstream reinforcement, then that would -- at the moment, that would be put through the normal recovery mechanisms. But that's the, sort of, thing that if you look at New York, like in many other states, is going through a process of considering how best to structure rates or recovery mechanisms, not just for data centers, but I think that will be equally applicable for potentially other large loads as well. So that's the mechanism at the moment, but that may evolve as we go forward.

Yes. I mean, I think the only thing I'd say is it links into this exactly to Andy's point, is that there are a number of incentives that are being offered for reshoring of semiconductors. And I think Micron, of course, is taking advantage of some of those, both at the federal and at the state level. And that's because, as we mentioned in the presentation a moment ago, the potential for that to link into a much bigger $100 billion broader capital investment for the region obviously has substantial benefits in economic development and prosperity for the region.

Great. Thanks, Jenny.

So we're going to our final question from Ahmed at Jefferies.

Just 2 quick ones from my side. The first one, you talked about a little bit of accelerated CapEx for this year due to, sort of, I think, better supply chain delivery. I'm a little bit interested in what parts of the supply chain are -- is that, sort of, coming through? And is there a broader point here about just more accelerated or front-loaded CapEx delivery across the plan vis-a-vis your previous assumptions? So that's my first question.

Then my second question is just, sort of, more interested in your thoughts on how you're managing the impact of inflation within the context of your GBP 70 billion CapEx program. I mean, obviously, you highlighted you have a lot of, sort of, supply chain locked in, but I still assume there would be unit price pressure. So just helpful to understand how you're mitigating those effects.

Thanks, Ahmed. Let me take the first question. I'll pass you to Andy for the second. Yes, the uplift in our guidance for this year is largely related to faster supply chain derisking on our EGL 2 project, where we've secured the cables on an accelerated basis. And I think that the key point there is that we are getting better visibility of derisking the projects as they go from planning to securing. We've got 100% of the primary supply chain for the ASTI projects now in place.

And we've got 80% of the supply chain that underpins the broader GBP 70 billion investment program also in place. And so as we go through these various derisking activities, it further strengthens our confidence in the 5-year frame. I'd be careful to extrapolate that, that, therefore, means that we'll be issuing new guidance. It's a bit early to do so, but it certainly is encouraging that the derisking continues, but I wouldn't yet translate that into a higher 5-year guidance.

Thanks, Ahmed. And then on the inflation question, yes, as we set the 5-year frame, obviously, we recognize both the environment we're in, in terms of supply chain, but also expectations that, that will continue to put pressure. So of course, we made allowances for future expected price increases as we flowed through that time line. As we've -- as you've seen this morning, we've now got 80% of the GBP 70 billion under mechanisms and the procurement mechanism. So that's giving us really good visibility over the life of the 5 years.

There will inevitably be some areas where there are further cost pressure emerges. But I think, again, as Zoe touched on in elements of her presentation this morning, that's one of the reasons we continue to focus on how we deliver our capital program as efficiently as possible, partly to ensure that we can offset cost headwinds as and when they do emerge. Nothing I've seen today would indicate that we need to move away from the GBP 70 billion. So I think we've got a sensible level of cost inflation assumed within it.

Great. Thank you. That's all for the questions for today. So thanks very much, everyone, for your questions. If anybody has got further queries, please do reach out to the Investor Relations team. We'd be happy to engage. We'll end the call there now. Thanks.

Good morning, everyone, and welcome to the 2026 AGM of National Grid. I'm Paula Reynolds, Chair of the Board. And since we have a quorum present, I now declare the meeting open.

Thank you all for joining us today here at King's High School in Warwick. It's a new venue for us, which we've chosen principally because it's close to our Warwick campus, which is just down the road and which is the home of our U.K. electricity transmission business and also our National Grid Ventures business.

The venue for those of you who've been with us in the past, you'll note that this is a bit smaller than ones we've used previously, which I think is more appropriately sized to the number of shareholders who do wish to be with us in person rather than online. So we thank those of you who travel to be with us and those of you who are actually listening to this call -- listening to this meeting online.

One of the things about being here in Warwick is that this gives us an opportunity for our employees to join us in person and also for our Board to visit some of our various operations. And just this morning, the Board members have just been to a briefing around our cybersecurity, which obviously is something that's very much top of mind in this day and age.

As set out in the notice of the meeting, the AGM is being held in a hybrid format. So shareholders have the option to participate in person or online. And we'll cover details on how everyone can participate momentarily. First, I want to introduce you to our Board members who are an extremely hard-working group of individuals.

And first, I want to start with our CEO, who is here on stage. Zoe Yujnovich joined us last year as the CEO designate. So she was in the shareholder audience last year, while our prior CEO, John Pettigrew, fielded your questions. Zoe officially took up the role last November 17. And with several months of advanced preparation, she didn't miss a beat at the time of the transition.

And I would say it was a pleasure to be the Board Chair when I watch 2 marvelous executives work so cooperatively on that handoff. So it's a great pleasure to have her on stage with us today in her official capacity. And I think you'll quickly understand why she was selected by the Board as our next CEO. Also joined by our long-standing CFO, Andy Agg; and Julian Baddeley, who you might remember from previous years as our Group Company Secretary.

So now I want to go to the directors who are seated upfront. I'm going to ask them to stand and turn so you can see them. And as I introduce each one. First, Jacqui Ferguson; and then Ian Livingston, our Senior Independent Director; Ian Mackay, our Chair of the Audit and Risk Committee; Earl Shipp, Chair of our Safety and Operations Committee, which is a reformulated committee because of the nature of the amount of construction that we're doing.

Tony Wood, who is Chair of a new committee called our Responsible Business Committee because of all the challenges of sustainability, media and reputation that we have to manage every day. And then Martha Wyrsch, Chair of our People and Remuneration Committee, and again, a bit of a renamed committee, which is very much on top of talent and our people. Unfortunately, we have one director who was not able to be with us, Anne Robinson, due to some unforeseen and unfortunate circumstances, she sends her apologies. Last, there is a director who will be standing down because he's not sought a reelection by shareholders this year, and that's Jonathan Silver. Jonathan has served for 7 years as a Board member, a very creative thinker who brought really unique perspectives to the Board, and he's standing down because of other commitments. And obviously, we wish him well in his endeavors, which are very much in the energy space.

Now on to the order of business. First, I'm going to pass the podium to Zoe, who will share a brief overview about the business in the last 12 months. Then Zoe, Andy and I will take your questions, specifically on the resolutions or matters pertaining to the business. If there are preregistered questions, actually, there are a couple, we'll alternate those with live questions so that we get all questions and make sure we get all themes.

And please note, if you have any specific questions about your shareholding, those should go to Equiniti because they're here present at the meeting to handle any individual matters. So with that, I'll turn to Zoe for her update on strategy and performance.

Thank you, Paula. Good morning to those of you joining here in Warwick and for those of you who are also joining us online. I'm really pleased to be speaking to you today, my first AGM as the National Grid Chief Executive and to provide you with an update of our company's performance over the past year.

As Chief Executive, my ambition is really clear, to build on National Grid's strong foundations, strengthen our execution and position the company for sustained long-term success as a best-in-class business. To help us to deliver on that ambition, we've introduced a clear strategic framework. It's not a change in strategy. Our purpose, priorities and growth opportunity remain the same.

But what this framework does is it sharpens how we execute and how we hold ourselves accountable for delivery. Brilliant Basics are about leading on performance through consistent delivery, covering asset reliability, capital efficiency, customer centricity and functional excellence.

And the big shifts are about recognizing how our markets and our stakeholder expectations are changing and how we must step up to respond to this challenge. We're concentrating on 3 key areas here: people, leadership and performance, external positioning and policy advocacy and technology and innovation.

And disciplined growth is about building on delivery credibility to create long-term value and support the energy systems of the future. National Grid is a company with a very clear purpose. We bring energy to power possibilities. Every day, millions of people and businesses depend on the networks we own and operate. They depend on us to connect new sources of energy that are needed for the future. But our role goes beyond delivering energy. The availability of reliable energy influences where businesses can invest, where industries can expand and where jobs are created.

By expanding and modernizing our network, we help create the conditions for economic growth and prosperity in the communities that we serve. Our role is to get the most out of our networks today and invest to enhance reliability and support the changing energy mix like the connections of renewables to make sure our networks can meet the evolving needs of our customers.

The responsibility that we carry is significant. Delivering well requires operational excellence, prudent investment and financial discipline. This year, we delivered a strong performance, investing a record GBP 11.6 billion in our networks and other energy infrastructure. That's 20% higher than last year, growing our asset base by 10.9%. Underlying operating profit has increased to GBP 5.7 billion, with earnings per share up by 8% at constant currency, in line with our guidance. And we increased our dividend by 3.8%, in line with U.K. CPIH inflation. This performance shows that we are delivering today while investing in a stronger future.

Since becoming Chief Executive last autumn, I spent a great deal of time across both our U.K. and our U.S. operations. I've also spent time with regulators, governments, customers, suppliers and investors. These conversations have reinforced my confidence in our foundations and the scale of the opportunity ahead, while reminding me that sustained success depends upon a relentless focus on continuous improvement.

In the U.K., over the next 5 years, we expect to connect up to 35 gigawatts of new generation to our transmission network. We also expect to connect 19 gigawatts of new demand. That includes demand from homes, businesses, transport, data centers and industrial customers. These are large numbers. But put simply, the U.K. needs more network capacity and National Grid has a central role in delivering it.

Our task is not just to build new infrastructure, but to get more from the assets we already have, using technology and innovation to unlock capacity as efficiently as possible. In the U.S., we serve customers in New York and New England, where continued investment is essential to maintain safe, reliable and resilient networks.

Demand is also growing, supported by economic development and manufacturing, electrification and data centers. As power demand continues to evolve, we're also exploring new ways to support large energy users with reliable and integrated solutions. That's why National Grid Ventures recently agreed to invest $1.75 billion for a 35% stake in Joulent, forming a strategic partnership focused on serving this growing market demand.

Our gas networks continue to play an important role in resilience and affordability, particularly at times of peak demand. Across both the U.K. and the U.S., the same broad themes apply, including reliability, affordability, energy security and economic growth. Our job is to balance these needs responsibly, delivering consistently, continuing to transform the business and investing for the future.

How we do this is just as important. Our values are not separate from the strategy. They're how we deliver it. We continue to do the right thing, find a better way and make it happen. And everything we do starts with safety. On leadership and performance, we're sharpening accountabilities and making sure objectives are clear from the group level through to individual teams.

A company of our scale needs clarity, discipline and a strong performance mindset. On technology and innovation, we're changing the way we build, run and operate our networks by standardizing designs and working at scale with our supply chain to using digital platforms to improve productivity, we're reducing cost and complexity. And at the same time, data automation and AI are helping us unlock more capacity, get ahead of risks and deliver a better service for customers every day.

On external positioning and policy advocacy, we'll continue to engage constructively with governments, regulators and other stakeholders. The energy transition requires investment, but it also requires frameworks that support affordability, resilience and timely delivery. Energy affordability is at the heart of discussions on both sides of the Atlantic. It matters deeply to households and businesses.

Network investment has a cost, but done well, it reduces costs over time by connecting lower-cost generation, reducing congestion, improving reliability and avoiding more expensive solutions later. In the U.K., we will be engaging with the new administration on this and other topics. Given the strength of our role and impact, we are well placed to support the government's ambitions.

Now let me briefly bring our delivery to life by covering our 5-year plans. In March, we set out our updated 5-year financial framework. We plan to invest at least GBP 70 billion over the next 5 years, the largest capital investment program in our history. We have strong visibility over this program.

Around 2/3 of the GBP 70 billion investment is already covered by regulatory agreements with delivery mechanisms secured for around 3/4 of it, giving us confidence whilst recognizing the scale of the delivery ahead. This investment is not just about energy infrastructure. It supports jobs, skills and economic growth with around 6,000 new jobs in the U.K. over the next 5 years, including around 2,000 graduates and apprentices. There are also wider benefits through our contractors, suppliers and the communities in which we operate.

Delivery is the key to turning this opportunity into value. We have a strong track record, but we're not complacent. We are continuing to strengthen project assurance, improve supply chain coordination, standardize designs where it makes sense and use technology to help plan and manage delivery more effectively. We're also investing in better customer service for our customers. And innovation is a core part of how we deliver that. Through National Grid Partners, we invest in technologies that can improve efficiency, unlock capacity and support faster connections.

Let me now turn to our financial resilience. National Grid's investment case is built on visible growth and a resilient business model with predictable cash flows from regulated assets and frameworks that support efficient investment and appropriate returns. That does not mean there's no risk. We operate in complex environments, and we must manage factors like inflation, supply chain pressures, interest rates alongside operational challenges. But our business model is designed to be resilient.

In the U.K., inflation-protected returns across our regulated asset base provides a natural hedge. In the U.S., a high proportion of our supply chain is domestically sourced, which reduces exposure to some global pricing pressures. We also manage financing and currency exposure carefully. Cash generated from continuing operations was at GBP 7.9 billion last year, up 15% compared with the prior year at constant currency, supported by operational performance across our regulated businesses.

Net debt increased to GBP 44.2 billion at constant currency, reflecting the scale of our capital investment program and partly offset by proceeds from disposals. Our balance sheet remains an important part of how we create long-term value. We're committed to maintaining a strong overall investment-grade credit rating. And we also retain flexibility in how we fund the business, including through debt markets and other funding options where appropriate.

For shareholders, the financial framework is clear. Over the next 5 years, we expect asset growth of around 10% per year, underlying earnings per share growth CAGR of 8% to 10% per year and continued growth in the dividend per share in line with CPIH inflation. For the current financial year, we expect capital investment to grow by around 10% to nearly GBP 13 billion, and we expect underlying earnings per share growth of 13% to 15% from our '25 to '26 baseline. These are ambitious commitments and delivery will require discipline, but they're underpinned by strong visibility, the critical infrastructure nature of our assets and the central role that networks play in the energy system. So let me close now with 3 key messages.

First, National Grid has delivered strong results and has strong foundations. Second, we are sharpening how we operate, innovate and deliver so that we're ready for a rapidly changing world. Third, the growth opportunity ahead is clear and significant, and we're investing with discipline to capture it.

I'm excited to be leading National Grid at this important time. I'm also grateful to our 33,000 colleagues, their commitment and expertise and dedication. Thank you for your continued support as shareholders of National Grid. And as I hand back to Paula, I'd like to share a short film showing how we're delivering innovation at scale and building the energy system the U.K. needs for the future. Let's take a look.

[Presentation]

Thank you, Zoe. Hope you enjoy that little picture of some of the technology that is in the end, going to profoundly change the nature of our business. So the notice of meeting, which includes an explanation of each resolution being proposed today was published on June 3.

For those joining online, the notice of meeting is available under a documents tab on the Lumi platform in case you want to refer to it during this meeting. Resolutions 1 through 17 inclusive are proposed as ordinary resolutions, and 18 to 22 inclusive are proposed as special resolutions. The Board is unanimously in favor of each resolution proposed and recommends you vote in favor of all of the resolutions. We trust you've all had an opportunity to read it.

And with your permission, we're going to take that notice as read. A poll will be taken on all resolutions. Each ordinary shareholder is entitled to 1 vote for each ordinary share registered in his or her name and each proxy holder or individual representing a corporate shareholder is entitled to one vote for each ordinary share, which he or she represents.

For shareholders attending in person, you can use your paper poll card to vote. I had a lovely talk with one shareholder beforehand saying, I might just ask if anybody is using the polling card because nobody was using the polling card, I could skip all of the explanation of how to use the card. But in fact, this gentleman had picked up a polling card because he had reregistered his shares. So for those of you who are not using it, you're going to have to bear with me because we are legally required to do this.

So anyone who is present was given a poll card at registration. It details the resolutions. and I've appointed Equiniti, which they tell me I can call EQ for simplicity, which is the company's registrar to act as the scrutineers. So I'm going to pass the program over to Julian to take us through the voting process and how to ask questions.

Thank you, Paula, and good morning, everyone. As indicated by the Chair, voting today will be by a poll. If you're attending in person, please complete your poll card clearly, marking your votes and place it in one of the ballot boxes as you leave.

If you need any assistance, the Equiniti team is available at the shareholder inquiries desk in the foyer. If you're attending online, you can vote using the electronic system on the Lumi platform. The full list of resolutions will appear on your screen with for, against and withheld options. Once you've made your selection, a vote received message will appear. You can return to the list of resolutions at any time by clicking on the voting icon.

If you've already submitted a proxy form and do not wish to change your vote, no further action is needed. However, if you would like to change your vote, please resubmit it using either the poll form or the Lumi platform. In either case, please ensure you cast a vote for every resolution. If you need any further guidance on how to cast your vote via the platform, then please refer to the instructions on the homepage or the user guide available on the documents tab.

May I remind you that a vote withheld is not a vote in law and will therefore not be counted. The poll will remain open for 15 minutes following the conclusion of the meeting. I'll now move on to the process for asking questions.

For shareholders attending online, you can submit questions in relation to the business of the meeting through the Lumi platform. Click the messaging icon and type your question in the chat box at the top of the screen, then press the send button on the right-hand side to submit. We will try to group questions by topic and alternate between questions in the room and any registered online so that we can answer as many of your questions as possible today.

If you're attending in person and have preregistered your question an usher will bring a microphone to you at the appropriate time. If you haven't registered a question but still wish to ask one, simply raise your hand and a representative will assist you.

To ensure we cover as many topics as possible, please keep your questions concise and relevant to the business of the meeting. When speaking, kindly state your name and whether you're attending as a shareholder, proxy or corporate representative, and please direct all questions to Paula in the first instance.

If you have other general questions about the company, but not related to the business of the meeting, I'll ask you to kindly hold those questions until after the meeting business has formally adjourned. If you are participating online and you have general questions unrelated to the meeting, we will reply to those questions by e-mail after the meeting closes.

Great. Thank you, Julian. So the poll is now open for voting. And so we're going to move on to the Q&A of today's agenda. And Julian will help us coordinate this because he's got some preregistered and questions coming in online.

And if you'll forgive me, I'm going to go sit down because I think what we're really trying to do is have a good conversation, and I don't really need to stand here in direct traffic. I don't think so.

Thank you, Paula. So starting with a pre-submitted question from Alan Mundy. So there are 2 questions here. So I'll start with the first.

Given the arrival of a new labor Prime Minister who has championed more public ownership of essential services, will you change the way you work with the government as a crucial part of U.K.'s infrastructure?

Maybe I'll start that and turn it to you, Zoe. I think Zoe captured it actually in her prepared remarks of we work with every government, we work with every regulator. And the fact that there's a change in government that's pending here in the U.K., we'll work with the new government as well as we have to try to be as close as is appropriately possible. But Zoe, your thoughts?

Yes. I think I'd just echo that, of course, we will continue to work closely with government, along with other stakeholders and regulators. It's a core part of our business and something for which we deeply value.

I think the one thing I would say, however, is what we understand as the Prime Minister's policies emerge is that we actually have a lot in common on the trajectory that we are seeing. We can see the need for a broader resilience to the energy network that requires different sources of supply to be connected. but we also see a critical importance to drive the economic growth engine behind the U.K. and of course, also in the U.S., but focusing on the administration here, how can we continue to ensure that energy policy helps to inform economic opportunity.

And I think the grid has a substantial role to play there. The other thing I would say is, of course, National Grid is, in essence, across many parts of the U.K. And so I think we have a real opportunity to really lean into every post code finding ways to prosper under the investment program that we are delivering and how we can deliver that energy resilience. So we look forward to continuing to work closely as the new government's policies are formed.

And the second part of Mr. Mundy's question, there are 2 parts, and Mr. Mundy is in the audience, thank you for being here. Given the concerns of people around the world about the threats of global warming, in your U.S. operations, can you lobby Secretary Wright on our behalf, who has rolled back measures to combat climate change and has criticized the U.K.'s commitment to Net Zero targets.

And the additional point made today, can National Grid lobby the U.S. Secretary of State on his policies as he has reversed sensible environmental policies?

Maybe I'll start with that one since I'm the American on the stage here. And I think the first thing is that we have to be respectful in our various jurisdictions on the policies that are prevailing in those jurisdictions. And in the U.S., we do have a country at the national level and even at the state levels that takes a different view on, in particular, the use of natural gas for energy generation. It's interesting because this afternoon in our Board meeting, we have some data on what's the composition of our rates in our U.S. jurisdictions.

And that goes to the issue of what the generation sources are on the electric side and also our sources of natural gas on the gas side. And the fact is, is we operate in regions that are heavily dependent on natural gas for both heating and power generation. So we have a bit of a delicate balance here.

While on the one hand, I think all of us hope for a more [indiscernible] world where we are taking steps to do our part around climate change. We also have to be sensitive to the fact that we operate in places where the alternatives to, for example, fossil fuels are less obvious. So Zoe does meet with Secretary Wright from time to time. I don't think you've met with the U.S. Secretary of State.

And probably given his other responsibilities right now, he might not be high on his agenda of meetings he would take. But I'd like to think that we do try to be extremely thoughtful in the way we approach the fact that we do want to be responsible stewards of the environment, but that we also have to be respectful of the differences in the business between the 2 countries in which we operate. So with that, if you want to.

The only thing I would add is, of course, our regulated business in the U.S. is predominantly regulated by the states. And so whilst we do, of course, have interactions at the federal level across some of our interconnectors, the majority of our conversations on regulated approaches is in the state of Massachusetts and New York.

And I think you'll also see the governors of those respective states have shifted to what's called an all-of-the-above strategy, which I think echoes Paula's comments around the criticality of understanding how to balance affordability in the regions with the security of supply and the sustainability objectives. And that is indeed a trilemma as we describe it in constantly iterating for the optimum outcome.

We move to a question in the room from Mercy Ross. Thank you for your question. We've been asked to pose this to the panel. National Grid is involved in the Philippines. What capacity is National Grid involved in this country?

Shareholder explained -- Mr. Ross, sorry, explained that family is suffering in that jurisdiction, and we need to justify questions to her family.

Yes. It's actually my understanding that there is a registered company in the Philippines, which is called National Grid Philippines. It is of no connection to National Grid that we are here representing. And so I'm sorry to hear that your family is suffering. Unfortunately, it is not part of our company accountability. It is a separate company entity.

I'll now move to a question from the floor from Mr. James Hewitt.

I've already spoke to the Chief Executive about the first question. I've got 2. The risk of drone attacks is critical to national infrastructure and, of course, to our company's infrastructure, transmission lines and transformer substations. The threat seems to be increasing. Does the company plan to respond to this? And because it jeopardizes the capital value of our company's assets and the related flow of revenues. And if so, how?

Zoe, I know you've met with government on this very issue. So I'll just turn that to you.

Thank you, Mr. Hewitt, for the question. I think right now, I can certainly share that we are not complacent in any way with respect to both the physical and cyber risks that are exposed to our assets. Paula mentioned that our Board has been this morning to our cybersecurity center.

Under the principal risk that you see in our annual report under physical and cybersecurity, any threats, including things like drone attacks are embraced under that holistic risk. We regularly do coordinate with intergovernmental agencies to understand intel.

We have a number of barriers in which we engage in to make sure that the health of our system is very strong. And we regularly also conduct crisis exercises where we role play in the event that some of these attacks happen, how we would go about responding to ensure the resilience around emergency planning. So super question. We don't at all remain complacent. Lots of work to continue because it is, of course, an evolving threat landscape.

Indeed. Second question, partly covered as well about data centers and Joulent . In the announcement of the recent investment in Joulent, our company mentioned its aim to connect more than 5 gigawatts of data center demand over the next 5 years, both in the U.S. and the U.K. How is this compatible with the climate emergency?

By how much would that demand increase electricity prices, worsen fuel poverty and jeopardize the shift from fossil fuel towards electricity as a direct source of energy? And the third one, does our company plan to indemnify itself against complicity in harms which both this and those use data centers may cause?

Wow, there are a lot of questions in that, Mr. Hewitt. And maybe we'll parse it out a little bit. And so one of the overlays that exists around this question of data centers is the tension between growth prosperity and the needs of an advanced society because, I mean, these data centers are -- at the end of the day, they're for all of us in our progressed way of life through advanced computing. And the fact that all of these data centers are not going to end up being fueled by renewables. So it is an area of great consideration on the part of all the parties.

I mean, you do see the great technology companies that always said they would try to be 100% renewables, recognizing that the speed of advanced computing requires data centers and that renewables are not the only answer. So back to Zoe's comment that she made with respect to our U.S. governors, there is much more of an all-of-the-above type of consideration going on.

Nobody wants to see renewables not used in this environment, nor do we expect that it can all be done with renewables. I'm going to take a little bit of a detour and then I'm going to ask Zoe to go and maybe add to some of the specifics here. But one of the challenges that we have in operating these grids today is the fact that we have high aspirations in all the jurisdictions to try to be as close to 100% renewable as we can be. But when we're talking about renewables, nuclear is very far down the road still in terms of new nuclear, even in this country as we have nuclear coming on.

And so we really are dependent -- when we talk about renewables, it's wind, solar and then batteries to store some of the patterning. And what we really see as we look at these grids is even though we have many hours of the year where we can rely much more on renewables, we can't rely on them 24 hours a day. And so the fact is the data centers tend to be more 24 hours a day because we compute 24 hours a day.

Now in that video, you saw a thing called Emerald AI. And Emerald AI is a tool to use with data centers to try to figure out how to optimize their demand so that they can take advantage of this patterning that reduces cost to everybody by exploiting the use of what is available at certain times of day. So what we see is even as the grid struggles in the aggregate around renewables versus non-renewables, there are tools coming into effect to try to mitigate some of that.

And so we are great believers as a company in the fact that actually computing will help us find some of the answers to this. But I think to Zoe's point is we don't live in a perfect world, and we do see the necessity of advanced computing in the U.K. and the U.S. I mean we are free societies and a lot of our issues around security are tied up in our ability to have advanced computing. So we believe in it from that perspective.

We believe in it from the perspective of ultimately job growth and prosperity in our economies. And what we believe is that technology will be part of the mitigant of the complexity that comes from the fact that we don't live in a perfect world, and we can't simply rely on 100% renewables. Zoe?

I think that was really well explained. I think the only thing maybe to add to your second part of your question around who pays. The PPA with Microsoft has been configured as an islanded configuration, which essentially means 100% of the infrastructure costs associated with that generation is paid for by the offtaker. It is not transferred across the broader rate base.

And therefore, there is not an impact to the rate base related to affordability. In fact, over time, they will be connected into the grid, but that will enable more resilience for the broader rate base for which those investments weren't paid for by the rate base. So it can offer some opportunity for resilience over time.

I think the other thing to say, which I think Paula has mentioned really well is there's a lot of opportunities that come with AI as well as risks. And so I think we're seeking to try and find that right balance as we understand how the world evolves so quickly. And mainly finally, I'd say that there's a criticality around pace and delivery here. And so the opportunity to deliver something quickly that enables the data centers to get up and running is what provides that compute power and energy that enables us to deliver all of those technology optimizations back to the grid. So a super question. So thank you very much, Mr. Hewitt.

Next, we have 2 linked pre-submitted questions from Ian Crawther, So number one is how many times in the last year in the U.K. have National Grid been fined for working without a permit? And secondly, how much of those fines cost National Grid?

I'm going to pass that one directly to you, Zoe.

As it turns out, I'm pretty sure Andy would like this one.

I'll get Andy. Yes.

We will get Andy voice in there.

Thank you, Mr. Crawther. This question, I think, relates to our electricity distribution business in the U.K., which is the main business where we're out working in the streets in this country and therefore, subject to sort of these fixed penalty notices.

The reality is, yes, we do experience this a number of times through the year. The vast majority of those times, probably more than 90% of the occasions is when we're responding to emergencies or to res faults on the network, where ultimately it's just more of a timing thing that our crews need to get out as quickly as possible. And sometimes that happens before the permits are made available and official to us. Financially, it's a very small exposure for us. So it's not significant in terms of our results. What I would say, of course, is that as an organization, we will continue to look to be as compliant as possible. And if there are areas we can continue to improve the permitting process so that we can reduce the number, we will continue to do that.

Okay. Now we go to the room to Mr. Adrian Barry.

I live here in Warwickshire and out in the countryside, and we have lots of farmer friends. Many of these farmers have nonproductive land and lots of barn areas where they can fit solar panels.

And some of them have tried to do this, but have been told that they are too far from a connection point to be able to be connected. So the question is what technology is being developed to allow the sort of moderate-sized solar farm to be connected in because you multiply that by a couple of hundred farmers and suddenly, you've got a lot of capacity coming online.

You want to go ahead?

Yes, I can have the first go. Thank you very much, Mr. Barry. A great question. And certainly, it's on our minds as we look through the discussions on our ED3, which is the next update to our distribution rate case. There's a lot of conversations around how we can navigate solar, both at the residential level, but also I think as you get into that kind of small to medium scale, it's an opportunity that we embrace because we see that flexibility that comes on to the grid as being a way to which we can optimize and perhaps reduce the overall capital investment.

But as you point out, it still does require some infrastructure to be built to enable the connections to come forward. The way we manage connections is very much in consultation with both Ofgem and the government. And so we ensure that the connection queue is very visible, and then we go through a process supported by NISO as the primary connection arbitrage that makes a decision on the pace for which each connection then comes to life.

And so I think the pace of connection is always something that we're working to improve. But that is something that's done by NISO in consultation with government and with the regulator.

If I might add one comment. One of the things that is going on within the context of this case ED3 is the issue of what's the trade-off between enabling individual customers to either have more electrified end uses or send generation into the grid versus the need of the distribution grid to be upgraded for all customers for all time.

And that's a very difficult trade-off because to go from maybe your example of somebody who is trying to sell power into the grid, you could generalize that to anybody who also wants to take more power off of the grid because they're creating an electrified end use. Well, the connection queue issue in some ways is the same. You have to figure out if there's enough capacity in the distribution system to accept that.

And the fact is, is the distribution system was never designed for that. It was designed at lower voltages for homes and businesses that use far less power than, in fact, most homes and businesses are using today. And so part of the -- what government is looking at in concert with all of the distribution companies is this issue of how much capital should be allocated to beefing up the whole system versus how much should be devoted to individual connections.

And so I can't speak to your local area. I mean, Zoe would certainly be glad to get with you afterwards to hear a little bit more in detail. But it's farmers and it's solar and it's customers and EVs and heat pumps all saying, individually, this would be a good thing for me, but the system has, at some point, have to be upgraded to be making this available not just for next year or the year after, but for decades to come.

And I think that it could be unfortunate in your area if, in fact, you're precluded at the moment, but there is a larger landscape here across the country that the distribution systems, the lower voltage systems were not designed for what the future is, and we do have to grip that in terms of our planning and the approach that's taken.

Thank you, Paula. So we have a final submitted question in the meeting. And then I think there are 2 other questions from the room. So if you could raise your hands and we can make sure a microphone is with you.

But from Christopher National Grid has been harshly criticized, including by the inspectorate for failing to consult meaningfully on the Norwich to Tilbury transmission project. Is the Board curious in such circumstances? What steps does the Board take to ensure consultation is not just performative?

Will the Board independently engage with communities that say the National Grid executive is not serious about going beyond the statutory minimum?

I guess I will take that one since it's really about the Board's engagement. And the Board has been very engaged about engagement, I will say. And I think it manifests itself in several ways.

First of all, we're not impervious to the criticisms that can be leveled against the company at times of consultation. And that there is -- in parts of the country, there is really an antipathy towards seeing infrastructure built in areas. So we're very aware of that. Actually, the Board sees daily clippings, so we see what the temperament of the public is at all times. So of course, as an active Board, as I said, this is a hard-working Board, questions are asked periodically of exactly what's going on with consultations, and we have tracking mechanisms on how they're going. But even at that, that's still a step removed.

The Board has done trips out with the team in strategic investments led by our head of that organization. And we've gone out into the field. We've met with customers. We've met with the people that we have doing engagement, and we've gripped what the controversies can be. So we are very, very aware.

Now I will say this issue of whether consultation is, I mean, performative to use the term, is we do 2 layers of consultation. We do a nonstatutory process. And that's where a lot of community input is gathered before we even come up with defining route options. And that's not required per se.

It's the statutory one that's the one that ultimately leads to the permitting process. So we take a first stab at it to see if we can get the kind of community engagement and support. The second thing that we do that is perhaps not unique to us, but it is, in a sense, highly unusual across the industry is we do use automated tools. We use 3D modeling where we can actually show anyone who's going to be affected or any member of the public what the placement of our infrastructure is going to look like, including from their living room window. In other words, the tool is that good.

And so we -- when we show this to people, I think it does end up building more understanding of the fact that we are trying to exercise a standard of care here that is not the utility just barreling through, but in fact, really trying to customize a solution within the constraints of engineering to try to make the placement as benign as possible.

But I will go on to say that there are parts of the country that have hosted infrastructure for very long periods of time. And there has been a broad understanding in these communities about the fact that this infrastructure is in service of the entire country. And we realize that when we come into new areas that have not hosted infrastructure that there is more sensitivity and there's not the same acceptance and understanding. So we try to come in with empathy to how it feels when you are being asked for the first time to have our infrastructure come through your area.

And I think we have satisfied ourselves as a Board in meeting with our people and meeting with individual stakeholders that the standard of care that we are exhibiting is appropriate to what is otherwise quite a great national initiative. The fact that all of our permitting that we've submitted so far that has been through the process has been granted, I think, speaks to the fact that government has satisfied itself that we've met not only the statutory requirements, but in fact, that we have met the requirements in terms of what society expects of us in terms of quality engagement.

Obviously, I think I feel rather strongly about the fact that as a Board, we have really leaned in on this issue. But Zoe, do you want to add?

No, I think you have done that very well. Thank you...

Okay. So 3 final questions. So Mr. Perry first, then we'll go to Peter Tore and then there's a final question in the room. So Mr. Perry.

My name is Rodney Perry. I'm a small shareholder. And it follows on really from your answer to the last question is that I'm really rather critical of National Grid being so far behind the curve in connecting up these offshore wind farms. We are all paying for that in our bills and that the developers of wind farm have got a tremendous lead time. They have to get a license. They have to buy the equipment. They have to get it installed in offshore, very difficult locations.

And yet in that time, you still haven't got a grid connection for them. You will obviously say it's a planning problems -- but this is not unknown in this country. We live in an area of HS2 here. They took years to get planning consent, and they did it in time. You have to start early on planning consents because you know you're going to get a problem.

This is not something that comes out of the blue, but you seem to be very much behind the curve on this. And we are paying for it by the developers having their wind farms ready and they can't switch them on because you've got no connection. And we are having to pay for them to have the farm ready and not in use.

I'd like to try to reframe with you, Mr. Perry, on this one because your characterization is very much the characterization in general media. And this is an opportunity, I think, for us to maybe try to expand the record of what's really going on here. And I would love for you to be an ambassador for our story when I'm done answering this question. And I will give Zoe a chance. But it has been a bit of a source of frustration to the Board that the narrative is we must be behind.

The planning for offshore wind started well into the previous decade. By 2012, 2013, we were already planning what the grid would look -- need to look like in order to accept offshore wind. Now at the time we started that planning, the numbers associated with offshore wind were significantly lower than the ambition that the country has today. So everything we started planning in 2013, '14, '15 was probably not fit for purpose.

But at that time, there was not that much wind and the regulator had concerns that we would be effectively overbuilding or prematurely building a lot of that infrastructure. So we submitted -- we started to submit proposals 2016, 2017, and there was a reluctance on the part of the regulator to approve those. So we knew that we had to wait.

But at the same time, we did start a lot of the engagement around route selection as early as that period of time. Finally, as we came into the 2020, 2021 period, it was well recognized that this could be the very problem that you've described, a mismatch between how much developers would have developed and be ready versus how much the grid could accept. And so we entered into an agreement with the Ofgem for an accelerated strategic investment program. And that's what is, in fact, proceeding today and much of the GBP 70 billion that was described by Zoe is part of that program.

And so starting really 5, 6 years ago, much of that permitting started. So yes, we were structurally going to be a bit behind because the regulator said that's going to be okay. But then something else intervened, which was government doubled down on its commitment to how much offshore wind it would acquire.

And of course, it holds auction rounds every year. And so these auction rounds became larger, which would accommodate larger wind farms, larger projects and projects that would also involve us and the Scotts in terms of trying to create an overall infrastructure. So as a practical matter, you had something else going on, which was government said more. So what we were designing and starting was not going to be sufficient and more had to be designed.

And so we live in -- I just have to say it again, we live in an imperfect world, which is we are accelerated to try to meet a 2030 deadline that government has imposed. -- everything will probably not deliver in that period. But government also made a decision that said, if you can -- if your farm can begin to produce, you can send into a grid on an as-available basis, you might not have firm capacity. So this idea that there are wind farms that are spinning every -- that could spin and they're not getting into the grid is a little bit of a false narrative because, in fact, they can deliver, they just can't deliver all the time because the system gets congested.

And so part of what is going on with our program now is the relieving of these congestion costs. So yes, you pay a bit for -- we pay a little bit for congestion now. But over the course of this multiyear period, that congestion is all being relieved. And so I think if we all had perfect foresight in 2013 as to what would happen, we would not have these circumstances today.

But I think it's harsh to suggest that we are behind when we have exercised, I think, an extraordinary amount of due diligence against a changing appetite of the country to have more of the resource. And I think per the earlier conversation, yes, it's true. We're very well aware of permitting, but the total scope of what we've had to build and where it had to be built has definitely evolved over time as the sheer amount of wind and the location of the wind has taken place.

Last point I would make is, government has decided that in the future, it's going to have a spatial plan, so that it designates where you can develop relative to where the infrastructure is rather than you get to go anywhere and the infrastructure has to meet you.

And so in the back half of this decade, I think we will not have a repeat performance of what appears to be the case. But I just want to assure you, this company has bent over backwards to plan well in advance, but there has been a shifting picture about what we would have to connect.

I think that's very well explained.

The last point you made was something that I was going to ask is, what influence do you have on the position of these loads. I know you've got congestion in various parts of the network. What authority do you have to suggest that these big data centers are built near the point of generation rather than in the middle of the cities where there is a lot of demand already. And what influence on government do you have over this?

Yes. Well, we've submitted a map to the government, which is showing where data centers could best be located, where we have infrastructure already. And as you would expect, it's not in these cities.

It's much more around, for example, former power plant sites that have been decommissioned where the transmission infrastructure is still in place. And we have urged government that to the extent that they want to expedite some of these connections, these locations would be better. So I'd like to think that we are influencers of that, but obviously not our decision to make.

I mean the only thing to add, I think, Mr. Perry, is we've got 4 AI growth zones in our jurisdictions. These are areas that we've been able to identify has capacity to sort of Paula's comments. We've been working with government related to that. And now we're working with the suppliers of data centers to actually enable or to facilitate the growth in those locations for faster connections.

And we've had many examples. We shared one, I think, on the video of how we see that actually accelerating the opportunity for that connection. And we see that as really beneficial because the data center capacity that's connected also helps us to reduce bill pressures and enables an affordability opportunity as well. So it's a win-win.

So we just move to our 2 final questions in the room. So the first is from Mr. Tore. If you could just raise your hand. Thank you.

Good afternoon, Board, my fellow shareholders, Peter Tore from Hendon. If anyone doesn't know where Hendon is shame on you. Individual shareholder from the outset. I've listened to the conversations going on here. It's interesting.

First of all, thank you for the venue. I went to came on the bus, the coach from Victoria Coach Station at 7:00 this morning, thinking getting off a Parkway, I'm in the middle of nowhere. Any I've used my initiative because I've got gray hair. I found my way here by jogging, [indiscernible] walking, actually, a bus gave me a lift halfway here and somebody else told me how to get here. And I know how to get back into Warwick apparently to see us to believe.

A couple of comments on what's been said. Yes, interesting venue, much more convenient in London, of course, living in London. Well, you never please all the people all the time, like I've never seen Coronation Street. I've never seen Deadenders, and I've never had a credit card in my life, and I build in the poll by using a pen and paper. I've still got eyes and I've still got a brain.

Let me get to my point. Something was mentioned earlier about the future and planning. A marvelous film made in 1977, Ms. Paula, you will know this person, the younger ones haven't got a clue what I'm talking about was with Edward G. Robinson and Charlton Heston and it's made in 1970 something, and it's in the future, 2023. It's called Soylent green, S-O-Y-L-E-N-T. Please write this down. I'm back on. I never thought I would see the year 2023. It's been and gone.

Please, ladies and gentlemen, do watch it. It's very, very sobering. S-O-Y-L-E-N-T. Edward G. Robinson was actually dying and filming when they finished 3 weeks later, he died. It really is quite frightening and sobering. This is the future. It's like in the film, the fly, 1958 Vincent Price.

Sorry, do you have a question.

Yes, it mentioned about a flat screen. Look, what we got now. What I'm just saying is we've got to be cautious about the future. The technology mustn't overrun us. All I'm saying is it has its good points, it has its bad points. For me, I can live quite comfortably without the technology.

But in conclusion, slightly humorous, please arrange the next meeting when there's racing on it with Warwick race course. I like horse racing. I want to say thank you on behalf of my fellow shareholders to express again our appreciation for what National Grid does. We do take it for granted. I'm not saying the same thing every year. We come home, we put the switch, the light comes on. We flush the toilet, it goes down a hole in the ground. We do take it for granted.

And when there is the occasional power failure, everybody goes crazy. If you go to Bakersfield in America, you look at the wind farms going around, not hundreds, I believe there's thousands of them. It's very, very impressive. They're way ahead of the game. So that's -- if we're going to take the future -- let's get on with it and do it ASAP. Thank you very much. I appreciate your time to listen to me. Thank you.

Thank you very much. And I will say that Zoe and I were in a meeting a while back with an elected official. And he -- Julian, may I use your phone here as a prop. Thank you. And he said that people stopped him on the streets because he was well recognized. And they'd say to him, how do you feel about these data centers?

And he said, and I would do this. He said, I take my phone out of my pocket. And I say, we need data centers because of you and me. But I think what we can say is we need data centers because of everybody, but you don't need it for this because you are managing to navigate in the society with all of the technology. But as you say, we need to be cautious about the future, but we need to provide for the future. And so thank you for your remarks.

And the final question, I believe, question point number one. Thank you very much.

Richard Crum, a small shareholder from Warwickshire. Apologies if this has been asked or something similar has been asked previously, but I've only recently arrived. What would the Board strategy be if in a couple of years, Farage gets in and appends or destroys everything we've all been working towards for the last 15 years in terms of climate. Have you begun thinking about that possibility yet?

Well, I kind of go with Zoe's question, which is we work with every government that is -- that comes to power. And yes, we've given consideration to the fact that if a reform government came in, it could be some rather material changes in energy policy. So we are not without scenarios that we consider as a Board.

Yes. I mean the only thing to add is that we do have a number of our staff who attend all of the various political conferences. Of course, once you're in government, you get access to a lot of information and briefings, but we do think it's important to make sure that all of the political parties as they evolve, have access to important information.

So as they start to develop their campaigns and they develop their public policy, they are well informed with the same information that may otherwise be available to government. So we do make sure that we engage prior to elected officials coming into place.

So you have the ability to nudge.

Well, I wouldn't say it nudge. I think what we seek to do is ensure that we provide the right information, at least from the data sources that we have that help to inform, we believe, strong policy.

Paula, that concludes the questions unless anyone in the audience raised their hand.

All right. Well, I think we can bring this Q&A session to a close. I thank everybody for their questions and interest. If anybody hasn't registered their vote, please do so. Summary of the proxy votes cast in advance of this meeting is going to be on the screen in a second.

And of course, these figures are preliminary. They're going to be reviewed by the registrar after the meeting, including any votes cast today. All -- it would appear all resolutions have been passed, as shown on these slides by a very substantial percentage in all cases. So we're very grateful for the support of shareholders.

We will publish the final results on our website. We'll announce them in both the London and the New York Stock Exchanges as soon as the final tabulation is done. And this concludes the business of our meeting, and therefore, we are closed. There are lunch bags for those of you who have come to take away with you. Please return your wrist band on the way out. We recycle everything. That's one of the things in our control.

We appreciate your continued support and feedback. Again, we thank you for joining us. And Zoe and Andy and I will be around for a few minutes in the lobby. The rest of the Board is going to rush off to get started on the Board meeting, but we can be available if you have any other questions. Thank you so much for being with us today, and thanks for those who came in on the Lumi platform as well.

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 advances as a world-class business. Strong execution is the foundation of confidence for customers, regulators, governments and investors. And 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 capital investment 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 earnings per share 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 a 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 the 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 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 will derisk our plans to create the capacity to absorb uncertainties and to outperform where opportunities in urge. 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 am 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 5-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% to 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 to 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 gigawatts of new generation to our transmission network in the next 5 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 feed.

In the U.S., we have a different picture. Continued investment is vital for ensuring reliability across our networks, whilst 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 gigawatts of new demand over the next 5 years, representing a fourfold 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 2 decades.

So 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. So 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. And 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 2 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 nonnegotiable 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.

And for customers, it's about providing consistently strong experiences from reliability and service through to faster, more predictable connections and transparent, proactive communication. And 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 derisk 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 3 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. A system needs evolve existing policy and regulatory frameworks must to. 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 EDI as we seek to get the right blend of investment and flexibility to deliver affordable solutions. So put simply, the brilliant basics derisks 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 that exploring longer-term growth opportunities over time. But let me first bring our delivery to life by covering our 5-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 5 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 kilometers 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 5 years, we expect to recruit around 6,000 full-time employees in the U.K., in which 2,000 will be graduates and apprentices. And 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 5-year investment, including connecting up to 35 gigawatts of generation and 19 gigawatts of new demand. In distribution, we are 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 5 years to over GBP 60 billion, creating a strong platform for sustained earnings growth.

Alongside our onshore regulated networks, our 7.8 gigawatts 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 2-way flow of lower cost energy and supporting resilience. So 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 5 years. This reflects both the size of the opportunity and the regulatory construct we operate within. Our regular rate case cycle is typically every 3 to 5 years. This provides us clear visibility on our investment plans and allows us to adapt 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 5 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.

But 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. So 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 pay a critical role in system resilience, safety and in affordability which is supported by our ongoing investment in pipeline replacement and network modernization. And 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 5 years to more than GBP 45 billion. So 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. So 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 6 months, we've contracted GBP 2.5 billion for the Eastern Greenlink 3 and 4 cable and converters and a further GBP 1 billion on Phase 2 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 6 months, customers in Massachusetts had, 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 produce 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. And for the third consecutive year, we received awards from the Edison Electric Institute for our storm response. And 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 have consolidated millions of call interactions across fragmented systems into a single cloud platform. And 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. So 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. And there are 2 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 winning 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 U.K. 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 will 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 outfitters are increasingly difficult to secure and 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 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 is 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 crude travel time. And 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 are committed to improving our response and rapidly 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. So 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 2 million of our customers. By combining these with a market-leading digital customer platform will 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. And we are already seeing the results with an 18% increase in our aftercare 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. So 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. And 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, and I look forward to highlighting more of these in future updates. Now I want to spend some time on 1 of the 3 big shifts, technology and innovation. As I believe it's an overlooked strength of our business and 1 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.

But 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 start-ups at the intersection of energy and emerging tech. And we have many success stories across the 50-plus 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, Grid Care 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, Grid care identified 650 megawatts of connection capacity on our network in New York for large flexible bods. 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 their 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.

And line visions, 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 5 years. National Grid Partners back 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.

[Presentation]

So a clear demonstration of the innovation that is already happening at National Grid. But 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 5 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's 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. So 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.

So with that, let me hand it over to Andy, who will bring to life the outcome of our strategy through our full year results and talk through the 5-year framework and the resilience of our business model.

Thank you, Zoe, and good afternoon, everyone. I'd like to highlight that, as usual, we're presenting our results on an underlying basis and at constant currency. But 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 5 years, we've ramped up capital delivery driven by increased spend in each of our regulated networks, including U.K. electricity transmission, where our capital investment this year was almost 4x the level we delivered 5 years ago. The step-up in CapEx has been supported by regulatory outcomes across our group, which is 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.

Now turning to our financial performance and highlights across the business units. Starting with U.K. Electricity Transmission, where underlying operating profit was GBP 1.7 billion, GBP 254 million higher than last year. This was 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 Greenlink IV and SeaLink 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 5 years of RIIO-T2, our operational outperformance has delivered nearly GBP 1 billion in direct-to-consumer savings. In March, we accepted the RIIO-T3 price control, which will run to March 2031. The price control includes key improvements to derisking our capital delivery including agreeing allowances in parallel with supply chain engagement as well as adjustments to cost sharing mechanisms.

We're confident that T3 package enables delivery of an overall return on equity above 9% on average across the price control through a combination of operating 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-time delivery and innovation as well as reducing constrained costs.

ODI performance will be recognized as it's delivered, reflecting that the innovation incentive is awarded in years 2 and 4, 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 4 of our Wave 2 ASTI projects as well as submitting all remaining planning applications.

Moving to U.K. 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 6 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 of previously unremunerated costs alongside updated rates, reflecting growing investments in our networks. This was 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 SmartPath 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 2 million customers. And Downstate will 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 Flite 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% and 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 the disposal proceeds from the sale of National Grid Renewables and Grain LNG we saw an increase in net debt of GBP 2.8 billion to 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.

So then turning to the 5-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 5-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% to 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 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 5 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 then to FY '27, 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% to 15% and from our FY '26 baseline of [ GBP 0.78 ]. This reflects higher allowed revenue as we step up delivery from RIIO-T2 into T3.

Our 5-year frame an 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. is 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 framework to 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. And 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 1% impact on EPS, limiting volatility for shareholders. Together, all of this supports our confidence in delivering within the ranges set out in our 5-year financial framework. This underpins our differentiated investment case that supports our aim to deliver double-digit investor returns.

So thank you for listening, and I'll now hand you back to Zoe.

Thanks, Andy. So let me leave you with 3 key messages. First, National Grid has strong foundations and the visibility to deliver our upgraded capital investment program of at least GBP 70 billion. Second, we are sharpening performance across the business to derisk execution and drive efficiency. The brilliant basics are how we build credibility and deliver at scale and pace.

Third, we are 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. And 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% to 10% underlying earnings growth over the next 5 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 2 factors matters.

Visible asset-backed growth drives earnings and expansion, resilience, insurance, 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 going to help us to moderate the Q&A session.

All right. 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, while I'm out on maternity leave. Andrew, it is great to have you on the team, and you were 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, and so let me briefly introduce them. Justine Campbell, Emma Hardaker-Jones, Nicola Medalova, Cordi O'Hara, Steve Smith and Carl Trowell.

So let's get to your questions. If you could raise your hand in the room, and we'll bring a mic over to you. And 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. And 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 Zoe and Andy for the presentations. Pavan Mahbubani from JPMorgan. Zoe, my questions are both for you. Can I start with over the last 6 months, how you think about National Grid's portfolio mix. So 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?

And 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 technologies businesses? And would that be organic? Or would you consider M&A in that mix as well?

Thanks, Kevin, and I'll take both of the questions to kick us off. So yes, firstly, I -- as you know, there's been a lot of portfolio streamlining that's been done over recent years. And so the folio 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. So 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. And so 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. And so we've said that we would be open to considering in our NGB 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. And we also have continued to look at competitive transmission in the U.S. And 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.

Is Jenny Ping from Citi. Thank you for outlining the strategic framework and how you look at grid from an outside a new perspective. And all of the discussions around AI. I just wondered how that translates into numbers in terms of your 8% to 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. And yes, whether you can sort of help us to quantify some of the opportunities even although they're not -- further down the line, but obviously, an opportunity.

Yes. Thanks, Jenny. I think it's important to say that, firstly, we've got a really good history and track record of 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 derisks 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. And so they may get the benefit more so than we may see in our forward forecast but it's the right thing to do. And in an affordability context, we all know pleasing the customer pleases the regulators then pleases the political context, which helps us to sharpen and improve the next regulatory discussions that we have.

And then finally, there's the potential that some of the additional work that we're doing helps us to deliver upside. Now of course, Andy and I only just updated the 5-year frame in March. And so I think it's fair to say too early to say how that may play forward. But of course, 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.

Ajay Patel of Goldman Sachs, and thank you very much for the presentation today. I have 2. If you give that 8% to 10% growth rate, is there any chance you could put that in the context of the ROE that you look to achieve over this plan on average? And maybe frame some of these outperformance levers in the context of that's to help us understand the proposition on that side?

And then secondly, I noticed on the presentation you mentioned the word at least EUR 70 billion. So 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?

Yes. Thanks, Ajay. Why don't you take the first one, Andy, around the 8% to 10% growth rate, ROE and our performance levers and then I can come back to the second one around the at least EUR 70 billion in [indiscernible].

Sure. No. Thanks, and thanks, Ajay, for the question. Yes, I think when we think about the financial frame, we don't necessarily think about driving profitability and then think about returns separately, they're part and part sort of the overall outcome. But I think we can always look to challenge ourselves at ROE. We tend to measure that as an operating company basis because of 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, we've successfully maintained that again in New York. And 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. So that's obviously what we expect to be doing as we go forward over the 5 years.

In the U.K., as we did back in March, we've guided for the 5 years of T3 to be delivering north of 9%, including operating and financial performance. And of course, we've guided to the remaining 2 years of ED2, where we expect to be up towards 100 bps of outperformance by the last year. But obviously, too early to start talking about ED3. That will come as we work through and understand much more about how the ED3 framework will land. So that's sort of how we're thinking about returns.

And maybe on the 70 -- the question around the at least GBP 70 billion. In March, as Andy and I look to extend the forecast, we, of course, extended the frame to full year 2031. And we also had, at that point, that the visibility around what came in under the RIIO-T3 negotiations, the $31 billion that was put under the RIIO-T3 framework.

And 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. And so when you take those things in concert, we've got a lot of resilience around how we see that capital being deployed. And 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.

That's good.

Maybe, could we go to Alex next.

Alex Wheeler, RBC. Two questions from me, please, although given Andy just said too early to start talking about ED3. One of these may be slightly redundant, but I will ask it anyway. I guess just on ED3, I was just interested in whether there was anything specific that you may be pushing for, perhaps that either wasn't reflected in ED2 or is the learning from going through the T3 process?

And then 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.

Yes. Thank you. Why don't I just frame a little bit of ED3, but then it would be useful for you to talk through about 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 we've got [ Cody ], 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 ED3 frames and so 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.

And maybe talk about learnings and...

No, sure, and 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. But 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. So we'd be absolutely looking for a bit more clarity around things like will they roll forward, so the nominal cost of debt where the sort of framing around returns, we'd expect T3 returns to be the launch pad for that, but we'll have to wait and see.

I think where will they look for levers around speed of cash as they did in Q3, what will that look like in distribution. But I think if I broaden out from the pure financial frame, I think some of the other learnings from as you asked, we've seen things like the real price effects mechanism, and we've talked about that in previous years. That's clearly something we want to work with Ofgem try and improve and refocus 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.

And of course, 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 the company if we're successful in doing that. So that's just sort of the framing that we'll be looking for.

And 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 gigawatts of demand that comes onto the system in the next 5 years, of which about 10 gigawatts sits in the data centers or AI growth. So 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 gigawatts.

And so I think we've been quite prudent in our assessment of what we think is realistic that will come into the next sort of 5-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 4 AI growth zones in the U.K. that we're focusing on, where we've been able to identify 500 megawatts of capacity as a priority place for which data centers can connect and we've been doing a lot of work around what we call our Connection Accelerator scheme.

The best example probably to bring to life is in [indiscernible], where we've got a data center with Blackstone and QTS where we've been working through 8 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.

Maybe if we could go next to Charles.

Charles Swabey, HSBC. I have one on cost inflation, particularly for the key metals such as copper. And could you give us an indication how the current prices compared to the assumptions in the investment plan. And then an idea of percentage of investments, which are effectively locked in. And then the portion which isn't can you give us just a sort of a reminder on the cost recovery mechanisms there.

Do you want to take that, Andy?

Yes, sure. I think at the highest level, I'd start with 1 of the stats I think we covered this afternoon, which is effectively, if you look at our supply chain positioning, we're already 3/4 contracted across the 5-year frame and that includes obviously the commodities within that. That -- to that extent, the -- we recognize the challenges, given the situation in the Middle East, we recognize that there will be potential impacts on supply chain. But at this point, that remains our firm position on the 3 quarters.

And beyond that, maybe 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 when you -- if you start to see unusual or significant movements in some of those underlying costs. And 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.

Okay. Thanks. Let's go next to Mark.

I have 2 questions for -- actually, for Alice and Cole. So Alice, just on maintenance of the existing, I can't see her, maintenance of the existing assets. I mean, there was a big backlog and underspend in RIIO-T2, the Ofgem Express supplies that for the whole industry. Can you talk about the process to catch up there and deal with the existing assets?

And secondly, for Cole, I mean, you talk about framework agreements and securing supply chain, but contractors are notoriously badder equipment and people not showing up at the last minute. So 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 going to have a go taking these. And 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 -- and I keep thinking -- you can't say 5 9s because you might write that down as a 5 and then a 9 and you need to write that down as literally five 9s, there really is world-class benchmarks. So you have to start from a position of saying that the delivery of our system is exceptional.

And 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. And so 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 held 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. So I think, of course, 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, again, you'd be welcome to speak to Carl a little later. Yes, capital, of course. There's a lot of -- we've got 4 of our Wave 1 -- as projects currently in execution. And so 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 Green Point 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 to work, they're deployed to the right work front, and getting the right work done that we're expecting. And so 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 complex assets.

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

It's Harry Wyburd from BNP Pariba. So it's one question, but I'm sorry, it's quite a long one for Zoe. So I think that's the most mentions of performance I've heard in an earnings presentation for any company for a long time. And I guess we've always thought about National Grid as a return on capital company, which you've heavily emphasized as well today. But sitting here, we also makes you wonder whether is Natural Grid and operational outperformance company or an operational improvement company or a cost improvement company.

So given the amount of statements in the presentation about sharping performance, et cetera, what's your internal KPI for performance sharpening? So is it qualitative? Is it quantitative? Might we have a part of the earnings bridge each year, which is cost improvements like some of your peers do, which is quite significant. That's part one.

And then the other part to it is it's cut in a unique situation, you've come into the industry as an outsider at a very senior level, right? And you can bring some outside perspective into an industry which on the whole promotes internally. So if you come to an organization with that operational focus, what can you do to make sure you get paid not you personally, obviously, but the company gets paid for it.

Is this something you're going to 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? And if that's the case, then is that where you should be spending your time? Or is there an opportunity, you think, maybe through 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. And so it's across each of those that we really have to keep our focus. And the reason we have to do that is, of course, we have a huge capital program ahead of us. And 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.

And so 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 because we've recognized that, that actually helps you to deliver productivity. We've also talked about things like how do we improve the option ring. 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.

So 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'm 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.

And so 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. And 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.

So I think the 2 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 us great efficiency, both in our capital delivery and our operating performance. We share that benefit between consumers and shareholders. And as you say, that's the credibility then, which you have when you're negotiating the next regulatory price control or rate case.

I'm going to go to one from the web because it's a little bit related with our Ofgem relationship and then I'll go next to Deepa after that in the room.

So this question is from Sarah Lester at Morgan Stanley. She asked on U.K. regulation. Do you anticipate any impact on National Grid's business from the recent broadening of Ofgem's powers?

Yes. I think the -- thanks, Sarah, for the great question. Yes, I think that we see -- actually, it's very helpful to see Ofgem wrestling through. There are 3 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. And actually, we see that those 3 things are absolutely central to what we need to make sure that we're delivering.

So 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?

Deepa Venkateswaran from Bernstein. I have 2 questions. So Zoe, the first question to you. In 6 months, you seem to have done a lot. Could you highlight maybe the biggest change you've done internally in the company. And hopefully, we'll see the results of that in the coming years. So maybe one biggest thing.

And another question on ED3 again. If I look at the GBP 9 billion, yes, it is a step up, but it's a 12.5% increase over the last 5-year plan. some of your peers, including someone who's recently made an acquisition, they're talking about Totex increases of 30% to 40%. We've also recently seen solar panel sales in the U.K. going up, EV sales going up. So are you undercooking on 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 ED3 and our assumptions. You asked the one big thing, and I hope this isn't a cheat, but I'm going to tell you the one big thing is that basically asked everyone, 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.

And 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. So it was one process, but across 7 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 6 months.

ED3?

Yes. Thanks, Deepa. I think 2 things I'd say. One, Zoe touched on an answer to a previous question, actually, which is we're working very closely with Ofgem and what is the appropriate rate of capital investment into the distribution networks. I think, recognizing the need for primary reinforcement, the top end of the network. But recognizing that we need to stay ahead of the rollout of sort of low Karma technologies, but do it on an appropriately phased basis. And I think that's the dialogue we're having. And I think 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 5-year frame includes the last 2 years of ED2 as well as the first 3 years of ED3. So it's not quite like-for-like in terms of the way you might be doing the maths.

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

James Brand from Deutsche Bank. A couple of questions. So first on demand. You said you thought there could be 19 gigawatts as a kind of central case of actual U.K. demand over the next 5 years. That's pretty huge. And I don't recall while I'll admit in exactly what was factored into the last 4-year forward capacity auction, but I don't think the capacity auction was kind of set up for massive increases in demand like that.

So I guess the question is, do you think the U.K. market is set up for that kind of demand growth? And is it something that people should really be thinking very hard about to make sure that we start building your gas or whatever to prepare for it.

And then secondly, on demand, you mentioned the 10 gigawatts of data centers. It's very useful to have that estimate. Could you just flesh out a little bit more about maybe kind of if you think in next 5 years or 10 years, what kind of a reasonable range is and how you think about setting how -- what's likely to go ahead because there's kind of huge speculation around this in the markets and how much data centers we'd actually see being built. So it's very interesting. It would be interesting to just hear your thoughts on that.

And then second question was -- I guess, as a third question because that was kind of 2 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. And you also mentioned the ODIs, which my impression is they have been significantly strengthened as well.

So 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.

Okay. Well, how about James, I'll try and take the second question around the 10 gigawatts 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 gigawatts and I think the capacity auctions and how they've matched.

Sure.

So on the second one, I think it's fair to say that of the 19 gigawatts of demand that 10 gigawatts that we have in data centers, when you go out and talk to all of the data center companies or those that 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 5 years. And I think that was what I was trying to get at before where we've got data center demand, but the queue of the demand stands much closer to that 75 gigawatts.

Now you could debate how much of the 75 gigawatts 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 hard moment about just how much AI can do for you. And 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.

And now the big factor around that is going to 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. And 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, and 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.

So I think can there be more capacity 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 grid care, find 650 megawatts in our U.S. system. How do we continue to leverage that as Alice has done here to find 4 pockets of AI growth zones with 500 megawatts that can be delivered before 2030. Then I think what we'll start to do combined with the connection acceleration 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. And I think that then helps to create the right zones for which data centers will develop and deliver. Andy?

Yes. Thanks. Thanks, James. I mean, on T3, just I think as we said earlier, the way we're thinking about outperformance 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 out delivery date linked and so forth. And I think in total, we've said that we'd expect 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 question is a little bit linked actually in terms of is there really capacity for this? Because I think you have to take a step back 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 the other's -- people in the energy system. So the same investment that we'll be delivering over is also designed to increase generation capacity by 35 gigawatts as well.

So 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. And then as Zoe said, you're also looking at some of the areas where is the 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.

So it's slightly more complex. But I know as we said at the start, we've got other people in the room, including Alice that hunt from the 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?

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 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 a full U.S. listing at some point in the future.

And my second question is on the point that was made in the outlook statement regarding financial leverage. So 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 will be balance sheet strength extending beyond that. So 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. Yes. Well, thanks, Marcin. 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 total investor engagement program. And actually, we have a -- for a U.K.-listed business, a very high level of U.S. investments are in the stock. So of course, we need to continue to deliver on all the execution that we've talked about today. And -- but we've got a successful ADR program. And at this point, 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 5-year frame, we would expect leverage, which has been obviously reduced as a result of the equity raise 2 years ago to increment back up. And as you said, 61% today, we expect that to gradually move back up to the high 60s towards the end of the frame.

But my comment is 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 where we believe the level of comfort will be in those other metrics, RCF, FFO and so forth and signaling that based on our forecast today, we see ourselves with a good level of headroom even at the point we exit the 5-year frame.

And then 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 5-year frame. And therefore, by the end of '31, we will have significant levels of unused capacity.

Great. Thank you, Andy. It looks like we've got Ahmed in the room, and then we'll probably close on 1 question from the web.

Ahmed from Jefferies. A few questions from my side. I wanted to come back to ED3 next week. I was wondering if you could give us more context on the debate about the cash advancing measures. If there is sort of sort of give a sense of the debate of whether that debate is more focused on depreciation or capitalization allowances. And if you are expecting a much clearer position from Ofgem next week. So that's the first one.

The second one is on ED2 to the 50 basis points outperformance that you're or the next 2 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?

And just finally, you mentioned pacing investments as inflation, as I understand, is an inflation managing tool in the U.S. how easy or sort of how -- 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 to sort of use that tool to sort of use as a lever for inflation protection.

Do want to have a go at the first 2 and maybe on the third and then I can add.

Sure. Yes. Thanks, Ahmed. In terms of the ED 3 questions, I think I'm just going to go back to what I said briefly earlier on, which is it's -- 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 cash measures, some of the ones you listed, will they look to things like asset lives, will they look to capitalization rates as in transmission I think it's clear that our 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. But I think it's too early to say, will we get a very clear steer which direction will they still keep sort of all those options on the table. We'll have to wait and see.

I think hopefully, we've been very clear in our guidance on our performance opportunities in ED over the remaining years of 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 particularly in the distribution system operator side. We've guided to around 70 basis points next year, getting up to the 100 basis points by the last year of ED2.

So 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 going to go away until we get to look to solve that through ED3.

I mean in terms of the pacing of investment point in the U.S., I think it's something we've always looked to do, which is clearly, transparently with our regulators work about what's the appropriate level of investment. And I think whereas in the U.K., you have a firm 5-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. And that does give you just a little bit more discretion potentially around the pace at which you need to deploy that CapEx.

So I don't think there's anything new there. I think we're just reaffirming that, 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, and this 1 is sticking in the U.S.

So he says, you've been exiting gas in the U.K. but remain -- 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.

Yes. 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. Storm Fern as an example, where we really recognize 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 want to sort of, 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.

So 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 replacement, 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. And I think that is all of the questions that we've got. So Zoe, I'll hand it back to you to...

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 with him. I look forward to seeing many of you on the road in the coming weeks.

And 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. But 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 webcast. Thank you for joining us. I'm Angela Broad, Head of Investor Relations, and it's great to have so many of you on the call today.

Before we begin, please can I draw your attention to the cautionary statement. I'm here today with Chief Executive, Zoe Yujnovich; and our CFO, Andy Agg. We'll follow the presentation with a Q&A session. [Operator Instructions] All of today's materials will be available on our website shortly after the webcast. And, of course, if you have any further questions following the call, please do feel free to reach out to me or to a member of the Investor Relations team.

With that, I'll now hand over to Zoe.

Thank you, Angela, and good morning, everyone. It's great to be here with you for the first time as Chief Executive. Today is an important milestone for National Grid because it reflects our clear strategy about how we deliver and how we grow in a system that is changing fast. We've announced our plan to invest at least GBP 70 billion over the next 5 years to modernize and expand our networks across the U.K. and the U.S.

This investment reshapes the grid to sit at the center of the energy system we now need, one that is more electrified, more digital and under far greater demand than ever before. We're connecting more new diverse generation and greater demand load faster than ever in our history. We're building networks that underpin sectors such as data centers and AI, health care and defense, areas where reliability, resilience and speed of connection are now critical to competitiveness and economic growth.

And just as importantly, at a time when high energy costs are putting pressure on businesses and households on both sides of the Atlantic, our investments will support affordability over the longer term while delivering cleaner energy and strengthening energy security. The opportunities ahead are very exciting. We're delivering for our customers and simultaneously driving long-term value for shareholders.

In stepping into this role, my priority is simple: to sharpen performance, drive momentum and continue to deliver safely and responsibly at scale. That focus and discipline underpin the 2 announcements we've made today, both of which strengthen visibility, confidence and our ability to execute at pace. First, extending and strengthening our 5-year framework with a much stronger alignment between underlying earnings per share and asset growth. Second, reaching agreement on RIIO-T3, the regulatory contract for our U.K. electricity transmission business.

So starting with our extended and upgraded 5-year financial framework. Multiple investment drivers support our growth trajectory, from decarbonization and energy security to accelerating demand from data centers and AI alongside the electrification of all of our customers, whether that be industrial demand or residential.

The RIIO-T3 agreement, alongside recent constructive regulatory outcomes in the U.S. gives us increased visibility on required investment levels across the group. This, coupled with our delivery capability and strong balance sheet, gives us the confidence to scale investment without compromising performance or financial strength. It's on this basis that we've extended and upgraded our 5-year guidance, further reinforcing our attractive investment proposition of earnings growth alongside an inflation-protected dividend.

We now expect to invest at least GBP 70 billion between now and the end of 2031, a 70% increase relative to the prior 5-year period. This will be driven by twice the amount of investment into our U.K. businesses to expand and upgrade the U.K.'s electricity networks, including a near doubling of transmission capacity across England and Wales and an almost 50% increase in investments into our U.S. businesses, as we ramp up CapEx across our gas and electricity networks.

Together, this underpins a strong TSR proposition for shareholders with around 10% annual asset growth through the full year '31 and upgraded underlying earnings per share CAGR of 8% to 10% with earnings now more aligned with asset growth and continued growth in the dividend per share in line with the CPIH inflation. We have a strong balance sheet in place to deliver this and maintain our commitment to our investment-grade credit rating. Taken together, this positions National Grid to deliver with confidence, combining scale, resilience and long-term value creation.

Now, let me turn to RIIO-T3, where we're accepting Ofgem's price control, a framework that enables us to invest at the pace and scale the system now requires. And we've also made considerable progress in preparing to deliver against Ofgem's new incentive regime. The new T3 price control allows us to respond to rising electricity demand and connect significantly more new generation.

Our plans nearly double the amount of power that can flow across the country, avoiding constraint costs and ensuring a resilient, clean, future-proof network that underpins Britain's economic competitiveness and growth in the years ahead. It's been a pleasure to work closely with National Grid colleagues in collaboration with Ofgem and external stakeholders to deliver this landmark agreement.

In summary, we've strengthened the framework, secured regulatory visibility, and we're ready to deliver at scale.

Let me now hand over to Andy to take you through the detail.

Thank you, Zoe, and good morning, everyone. Let me start then with RIIO-T3, where Ofgem have made a number of changes to the incentive frameworks. Firstly, they have derisked totex delivery with improved protections over the recovery of project costs, including agreeing allowances in parallel with supply chain engagement and made adjustments to cost sharing mechanisms.

And secondly, they have introduced more powerful output delivery incentives or ODIs. These include new incentives for on-time delivery and innovation as well as the constraint cost incentive. This ODI performance will be recognized as it's delivered, reflecting that the innovation incentive is assessed and awarded in years 2 and 4, and the performance against the new on-time delivery incentive will be recognized as projects are delivered, ramping up over the price control and into the next regulatory period. We're confident that this price control enables delivery of an overall return on equity above 9% across the price control through a combination of operating and ongoing financing performance.

Turning to our 5-year framework, which assumes a pragmatic set of regulatory and performance assumptions, including updating to a $1.35 exchange rate and reflecting the latest inflation and interest rate expectations. 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 assets and earnings growth now more aligned, this will support shareholder returns and balance sheet capacity.

Looking beyond the next 5 years, we see continued balance sheet strength and retain the full suite of funding options, including significant levels of unused hybrid debt capacity should it be needed. This, combined with higher earnings growth, will allow us to confidently deliver the step-up in investment and provide the ability to deliver attractive levels of growth for shareholders over the long term.

As Zoe set out earlier, we anticipate that the increased investment of at least GBP 70 billion will drive group asset growth of around 10% per annum over the next 5 years and a strong underlying EPS CAGR of 8% to 10% from an FY '26 baseline. In FY '26, the group's performance remains in line with our expectations. Looking to FY '27, the first year of the new frame, we expect underlying EPS growth of between 13% and 15%, reflecting higher allowed revenue as we step up delivery from T2 into T3.

Our framework is underpinned by a supportive regulatory and policy backdrop, a significant level of certainty over our multiyear investment program, a track record of delivery, both operationally and financially and a strong balance sheet.

Looking ahead, with expected group assets of around GBP 115 billion by FY '31 and with funding clarity, we further enhanced our compelling investor proposition. It will underpin our ability to deliver a strong double-digit total shareholder return through continued strong asset growth, higher earnings per share growth and attractive dividend yield.

In May, we look forward to sharing more detail on how we'll execute our plans to deliver long-term value, how we'll continue to raise the bar on performance, harness innovation and work in true partnership with regulators, policymakers and stakeholders.

With that, we'd welcome your questions.

Thanks, Andy. Let's open up the Q&A line and start with Sarah Lester from Morgan Stanley, and then, we'll go to Dominic Nash at Barclays second. Sarah, go ahead.

Good morning, and thank you for the nice, albeit very straight, intuit start to the week. Nice, albeit very straight into start to the week. I've got 2 questions, please, and both are related to the drivers and the assumptions of the plan. Firstly, as you spoke to, there is now a better alignment between the asset base growth and the earnings growth. And even when you account for that EPS step-up in FY '27, the implied CAGR FY '27 to 31% is still an improvement on the prior 6% to 8% range. So is it regulatory DNA useful lives in the U.K., assumed fast and slow money for ED, semi-nominal WACC in ED? Just any further details you can please provide on how that better alignment is flowing through would be super helpful, please.

And then, secondly, on the U.S. power generation fleet, just wondering, please, what your assumption is there? Because from memory, I think there was something about contracts being up in 2028.

Thanks, Sarah. Let me pick up the first one on what we've assumed as we look forward. Yes, I think, as you'd expect, we've made a set of what I describe as pragmatic and balanced assumptions, as we look over the 5 years. I think on ED3 specifically, we've taken some input from what Ofgem have already said in the SSMC around using T3 as the jump-off point, and that's given us sort of a good degree of visibility in terms of the overall parameters of the financing framework that we're likely to be working with. So yes, I would expect that the things like the semi-nominal cost of debt, which they've signaled as part of that sort of starting gun, we would expect that to continue. Beyond that, I think it's too early to say. And I think overall, on ED3, we've included what we believe is a sensible, but pragmatic set of assumptions at this stage.

And I think maybe if I could answer, Sarah, your question on U.S. power generation, I think we are currently engaging in conversations with both the Long Island Power Authority and also working collectively with the government partners to understand how best to look at what the best longer-term strategy is for our generation suite.

Let's go to Dominic next, and then, Deepa Venkateswaran at Bernstein after that.

It's Dominic here from Barclays. Two questions from me, please. You've painted a positive picture of the RIIO-T3 incentives, and clearly, you've accepted it. But could you give us some color on where there were any sort of points of concern or debate that you had internally where you thought that the RIIO-T3 was maybe a little bit harsh or gave you a suboptimal sort of outturn?

And the second one is on financing. I guess that it's fair to say that there's been a material improvement in your sort of narrative. I think previously, you had said that you were financed until 2031. And now, you're saying you are -- you've got finance beyond 2031. And I believe there's a slight shift in tone on the hybrids now being on top of that. Could you just give us color on what debt to RCV ratio you're now looking at as we get to 2030 -- 2031, please?

Thanks, Dominic. How about I take the first and then Andy can take the second? I think in the first, we're pleased that Ofgem have addressed many of the critical points that we had raised in our due diligence response or our draft determination. We had 2 things that we were working closely with them on. One was around the clarity on incentives. And the second was in the improvements of what we described as workability because, of course, many of the projects are transitioning across the T2 to T3 plan.

We're now confident that this price control does enable delivery of an overall ROE above the 9% across the price control. And that is through a combination of both the operational and the financial outperformance. And I think we're also pleased to see that the outperformance is actually helping us to drive on-time delivery incentives. So there'll be a little bit of lumpiness related to some of the innovation incentives, which come out in years 2 and 4. But overall, I think we've got much better clarity around how we will ensure that those incentives pay out and are shared between our benefit and the customers' benefits as they manifest themselves.

And Dominic, thanks. On the financing question, yes, you're right that we've deliberately signaled this morning that we now expect the strength of the balance sheet to extend beyond the current 5-year period. And as you said, we've also signaled that we expect to exit FY '31 with a significant amount of unused hybrid capacity, and we don't now expect to be deploying hybrids within that period. And actually, today, we have a very -- only a very small amount left in the existing debt stack at this point in time as well. So that's all correct. And we think that, that clarity of the long-term strength of the balance sheet is a very strong element of our overall proposition.

In terms of your question, specifically, I think, on leverage, yes, we continue to expect leverage to grow over the 5 years, and we would continue to expect overall balance sheet leverage to be up to the high 60s towards the end of the 5-year frame.

Thanks, Dominic. We'll go to Deepa next, and after that, to James Brand at Deutsche.

Congratulations on this new plan. So I think my question, I just wanted to deep dive a bit more on the greater than 9% ROE that you're targeting for RIIO-T3. In the past, you've been very explicit about the operational performance. I think in Q2, you said 100 bps. Can you at least give us an idea of what you've assumed in this greater than 9%? How much is operational? How much is financing? And where this tax versus RIIO-T2? Yes, I think that's the key question.

Okay. Thanks, Deepa. Yes, I think we've looked to give a simple, all-in achieve return. I think that we believe that will be a helpful signal. In terms of how you get to that, clearly, you've got the base return, as you know, 5.7% out of the final determinations. We continue to assume long-run inflation of around 2%, just over 2%.

And then, I think in terms of the breakdown between operational and financing performance, I think we would continue to expect a similar level of operational performance. You probably heard from us before, we would expect that to be more evenly split between totex performance and ODI performance than it was in T2, where it was much more significantly coming out of totex performance. And then, we would expect continued financing opportunity on top of that. And all of that comfortably gets us above 9%, as we head into this next price control. So that's how we're thinking about it.

Thanks, Deepa. Let's go to James next at Deutsche, and then, Mark Freshney, UBS.

Congratulations on the plan. I also had -- I was also going to ask kind of similar -- 2 questions for me. The first one is going to be kind of similar to Deepa's question, but seeing as you kind of answered that a little bit already, I guess I'm particularly interested in -- see, there were some very strong incentives under the new plan for getting infrastructure built on time. And I guess my question is kind of how much of that have you factored in at this stage? And how optimistic are you about those incentives because they could be very high powered, but obviously very dependent on you actually getting the infrastructure built early or on time? And how much of those fall within this current period? Or do we start to kind of slip into the next 5-year regulatory period when you would be getting, I guess, a significant amount of the infrastructure constructed? That's kind of the first question. Maybe if you could just flesh out your expectations in that area a little bit more.

And then the second question is on the U.S., where obviously, affordability has been quite a big issue recently and potentially more of a constraint than it has been in the past. You don't appear to have pushed the CapEx plan too far in the U.S. Actually, it's a little bit below my expectations. Is that because you're thinking hard about the affordability constraints? Maybe you could just flesh out a little bit how that's influencing how you set your CapEx plan in the U.S.

Thanks, James. I think if I distill your first question, I'd sort of look at this more through our confidence around how we can execute against the plans that we have before us. I think it's worth describing, as we look to, particularly under the U.K. ET and both with our ASTI projects, but also across our electric transmission projects. I think we've got a significantly enhanced delivery engine that's now been created. Of course, we've got 6 of our ASTI projects in construction, 6 more that have been submitted this year and the remainder in the latter stages of public consultation with some planning reforms that, of course, are coming in as well to try and help to derisk the planning aspects.

You will have seen that we have announced quite some considerable progress around derisking the supply chain, whether that be things like the HVDC or converter station framework that we have in place. You will have seen Sumitomo now announced a factory in Scotland, which was done on the back of the confidence that we could provide for the forward-looking expenditures. And we've also got the Great Grid Partnership, where we have a substantial access to contractors and capabilities, things like Murphy's who have just announced a training facility in the Midlands around overhead lines. We've now got greater confidence that we've got access to the contractor capabilities that we're looking for.

And then perhaps I'd finally describe the internal capability in the establishment of our SI organization apprenticeships. And I think our continuous looking externally around best practices to challenge how we can deliver. And of course, I think we've got long established relationships, both with NESO that can help us to manage outages that might be required to do the investments, and of course, with Ofgem in helping ensure that the times that are selected for each of these projects is robust and well justified.

Maybe if I then pivot to the question around the U.S., there is perhaps just one subtle thing to draw your attention to, which is really around the FX that's been used, which sort of gives a sense that there's a little bit more of a reduction in the U.S. expenditure than I think is right. We have a number of rate cases that are live before us at the moment, both with Mass Gas across New England, but also KEDNY and KEDLI in the New York State.

And I think at the moment, we still see that there's quite some significant drivers of investments that's required. We've also had quite some strong recent rate cases that have landed. And so I wouldn't take this as a thematic concern around the capital that will still be required. Of course, we will make sure we're efficient in our deployment of that to make sure affordability is well navigated.

We'll go to Mark next, and then, to Pavan Mahbubani at JPMorgan.

Firstly, Andy, I know you've got -- it seems that broadly over the period, you'd have to be issuing new debt or refinancing existing debt to the tune of about GBP 10 billion per year. So my question is, what is the interest rate you've assumed on that issuance? Secondly, planning, I accept the bill is about to be passed by the House of Lords, but my understanding is on the ground, it is in the communities, very, very difficult to get some of these projects through. So can you talk about how certain you are with regard to that?

And further to that, I found it interesting that you -- in the results statement, you spoke about the GBP 115 billion group assets in 2031, but caveated it to regulatory approval, demand and similar factors. So I'm wondering if there's any sensitivity or scenarios around the GBP 115 billion that you would raise, i.e., would you expect it to be GBP 100 billion and GBP 130 billion, for instance?

Thanks, Mark. Let me pick up the first one, then I'll hand over to Zoe for the others. Yes, you're right. So just doing the math, absolutely, if you look at the level of new financing required plus the refinancing, then you get to sort of high single digits up to towards GBP 10 billion a year of debt raising. Since we -- given we've updated the 5-year frame, we have also updated our expectations around macro, including obviously inflation and interest rates. We have seen, therefore, a bit of a shift in the curves since we gave the frame a couple of years ago.

I think I'm not going to be specific on that, as you'd expect, because the curves do move over the time frame. But I can assure you we've absolutely looked to use the curves with a sensible assessment of spread performance, and of course, recognize that there might be some delta between OpCo and HoldCo financing. Although there has been a shift in the curves, as you'll be aware, those get reflected through our regulatory frameworks at operating company debt level so that the impact of those slightly higher rates will gradually feed through just on our Holdco debt element.

Just one quick, I'll pick up the GBP 115 billion as well. No, Mark, we weren't trying to signal anything specific with that language. I think we just recognize that a forecast 5 years out, there's an element of uncertainty in that. And I think we were just signaling that, like everything else in this world, things can change. But at this point, we believe GBP 115 billion is very much our best view of where we would expect group assets to rise to.

And then Mark, perhaps I can pick up on your question on planning. I think the way I would recommend we look at this is, of course, planning is one key component of ensuring that the projects are delivered. But what is most important for us is to make sure that we can deliver the projects at pace, which ultimately means navigating them through the entire chain from planning, supply chain contractors, and then, of course, execution. And the reason I say that is because, of course, one of the greatest important roles that we will now play is ensuring that, that -- the grid that we have in place, given the changes of generation and of course, the increasing demand growth that we're seeing from things like the data centers or hospitals like Royal Cornwall down in Truro requires that we make sure we deliver the electrification networks.

I think planning, of course, is one key component. I mentioned a moment ago that we are navigating those processes quite well at the moment with 6 in construction, 6 more will be submitted this year. And as I mentioned, the remainder are in the latter stages of public consultation. So any additional planning reforms would come on top of that in terms of accelerating our delivery. But I would like to just reinforce that one of the reasons why it's so important that we look at things like the early opportunities to secure supply chain is that's one of the things around advanced procurement that enables us to derisk what are some of the longer-term time frames of getting equipment on site.

And the way that we're structuring access to a broader group of contractors allows us to more flexibly deploy resources across different projects, as they may encounter various planning or implementation bottlenecks. And so there's a broader opportunity for us to look at this on a portfolio basis around how we make sure we deliver the entire suite of projects that we have.

Let's go next to Pavan at JPM, and then, we'll go to Harry at BNP Paribas.

I have 2, please. Zoe, I wanted to pick up on a comment you made around efficient deployment, particularly in the U.S. Can you give a bit more detail today about what you've assumed for any cost efficiencies or any sort of plans? Or would anything that comes out of that be additive to the guidance?

And then, my second question is on cost inflation. And can you talk about how you're seeing cost inflation in your CapEx, particularly in the U.K.? And it would be great if you could give that in terms of the context of the previous GBP 60 billion 5-year frame to FY '29 on a like-for-like basis? Would we have seen an increase there? Or would that guide still been -- is that guide -- does that guide still stand?

Thanks, Pavan. Perhaps I take the first, and then, I'll allow Andy to take the second. I think both in the U.S. and in the U.K., we are seeing opportunities that the regulator are, of course, encouraging for all efficiencies to be deployed for the projects that we're implementing in the T3 regulatory regime because, of course, we're announcing the acceptance of that today. There is in the incentives, opportunities for efficiencies that we deliver to be shared between our customers and ourselves, which I think helps to ensure the orientation around ensuring that we're delivering enhanced opportunities and efficiencies are well codified.

I think in the U.K., we see exactly that same mindset. The team typically work on a slightly different basis because, of course, they don't work with the same outperformance incentives, but the portfolio of projects that we're deploying are established on the basis of what we can efficiently deploy, and the teams have a very strong track record against that.

Thanks, Pavan. On the CapEx question and cost inflation, the reality is no, actually, when we set our original guidance a couple of years ago on the GBP 60 billion, we did work very hard to look forward and project where we saw the significant shifts in supply chain costs. So when we look at the move now from the GBP 60 billion to the GBP 70 billion, it's very much driven by the extra 2 years, the volume that's come in, in those 2 years, obviously, partly driven by the clarity we've got this morning from the T3 decision. And we've tweaked here and there for sort of supply chain adjustments, but it hasn't been a significant driver of the increase at this point.

Let's go next to Harry Wyburd, and then, looks like a final question from Marcin Wojtal at Bank of America.

It's Harry Wyburd from BNP Exane. So just one question, and it's on the cash components. If I've understood correctly and based on, Andy, the answer you just gave on CapEx, so a lot of, I think, the EPS kind of upgrade or bump has come from the cash component for semi-nominal WACC and the fast money. But I wonder if you could just help us understand how much of these cash component changes are sort of fully permanent forever? So obviously, semi-nominal WACC move, and you're kind of assuming that happens in ED3 as well, is it feels permanent, but the fast money and the capitalization rates could change in future regulatory periods. So is there any color you can give us on the sort of roughly 120p of EPS that you're effectively guiding to by FY '31? How much of that could be at risk if there's another change to fast money rates in FY '31? And can you give us any color on the breakup of the kind of implied EPS upgrade today into the different cash effects for semi-nominal WACC, fast money, et cetera, versus what you'd previously assumed in your previous frame?

Thanks, Harry. So you're right that if you look at sort of the impacts of the different regulatory levers that we've worked through with Ofgem as part of the T3 price control, there's elements flowing through. As you said, the semi-nominal adjustment, Ofgem have been keen to look at the fast-slow money split rather than maybe a sort of a fuller review of asset lives this time.

And then, as I said to the earlier question, yes, I think given what Ofgem have already signaled in SSMC about using T3 as the jump-off point, I think it's a reasonable planning assumption to assume that the sort of the semi-nominal debt will continue.

Beyond that, I think it's too early to get drawn into specifics about what ED3 will look like. I think it's very early days. As you'd expect, we've made what I would describe as pragmatic and prudent assumptions around where we expect that price control to outturn, as we have with the U.S. rate cases. Zoe mentioned, we've got Massachusetts Gas. We've got KEDNY, KEDLI coming. And obviously, there will be more rate cases towards the latter part of the frame as well.

So I think it's too early to try and sort of get into specifics or to try and break down the elements. But overall, I think we are comfortable, everything we see before us, the 8% to 10% EPS CAGR, is our best view. And we look forward to working hard, and as Zoe said, to deliver efficiently to make sure we can deliver that in the years to come.

And let's take the final question from Marcin at Bank of America.

The first one, you are providing obviously a fully updated funding plan to 2031, but I do not see any mention of incremental asset divestments. So should we assume that you have conducted a review of your portfolio, but at this stage, you have concluded that there aren't really any material assets that could be sold or should be sold or this is still perhaps an ongoing process?

Question number two, you are keen to highlight that the company retains balance sheet capacity under this funding plan. I believe on the last full-year results call, there was a mention that potentially National Grid could look into some new projects in the U.S., I believe, in transmission. So is there any update on that? Are you still open to potentially go into some new assets and new areas of operation?

And maybe question number three, very quickly, if I may, to go back on this review for RIIO-3 regarding fast money allowances, I mean, if you look at what was initially proposed by Ofgem in the draft determination versus the final determination and then like the very final iteration that they published, it looks like that there has been quite a significant downsizing of fast money allowances. So could you maybe just tell us why, in your opinion, let's say, that final iteration that is now in place is the right one for National Grid? And why the initial proposals were not what you were looking for?

Thanks, Marcin. Why don't I take, I think, what I would describe the first 2 conversations, which are a bit more related to sort of portfolio and funding and then perhaps leave the last question for Andy? I mean, I think, firstly, in the full-year '31, you're right, we haven't made assumptions around any significant asset disposals. You would expect us to remain prudent in forever looking at the portfolio so that we look to optimize as appropriate. But there is nothing in the funding plan at the moment to assume any further portfolio optimization.

And I think to your point around National Grid Ventures, that is an area where we have demonstrated strong competitive advantage in our interconnectors across Europe. And indeed, we're looking to extend the opportunity to apply that into the U.S. context, particularly around the federally regulated electricity transmission. And we have gone into a number of bids with partners to evaluate whether there are opportunities for us to pursue that.

Maybe to you, Andy, for the last question.

Sure. Thanks, Marcin. Yes, I think it's fair to say that we are -- we've always focused our guidance and our look forward on what we believe is likely to come out of the determinations and based on our CapEx projections. I know that in December, I think there was a PCFM model put out in draft, which was then amended, which is maybe what you're referring to. And I think we said at the time that we should be cautious about utilizing some of that. So for us, we're very clear, and we've been modeling based on what we expected to come out, and that's what we're very confident about including in our guidance this morning.

So I think with that, I think I'd like to sort of recap by saying, I think we offer a high-quality, low-risk growth that's ever more valuable in a volatile market. National Grid pairs long-life assets, which are the backbone of energy and economic growth, with the stable, predictable and attractive returns. We're in an era of extraordinary opportunity, reflected in our new 5-year framework, which is underpinned by a business that's already delivering with discipline and ambition. The growth we're delivering has purpose. It supports the policy goals of our regulators and governments by strengthening security of supply, delivering the backbone of industrial innovation and ultimately providing better outcomes for the customers and the communities that we serve.

Thank you all for listening this morning, and I look forward to seeing many of you again in May.

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 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 Blyth and Cobalt 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% 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 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 Hurst substation and Crayford. 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 EGL 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 EGL 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 effect 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 a 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.

John, I just wanted to congratulate you on the results you've delivered during your leadership, and 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 Sizewell, do you foresee upward pressure on the return on equity?

And then my second question is on net debt. Andy, 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 a sort of [Technical Difficulty] 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 Sizewell, I think that reinforces some of the arguments 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 scrip 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 for 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 for 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 ET process?

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 ED2. 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's very much aligned with our expectations. I think we were particularly pleased to see that Ofgem is set out 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 broadly, 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 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?

Thank you, Mark. So in terms of the 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, it 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?

Thank you, John, for your sort of decade as CEO, and I think 30-ish years at Grid and also 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 Select Committee last week brought up network windfalls again. And I think Ofgem are now made sort of a consultant on this by starting beginning of 2026. So maybe you could give us an update on whether this Select Committee recommendation will change Ofgem's point of view on network windfalls?

And secondly, on the GBP 35 billion of totex 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 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?

Thanks, Dominic. So in terms of the Select Committee last week, actually, it was an issue that has already been looked at. So just to be clear, the work that we've done demonstrates that we certainly not received any windfall profits. The analysis that they you 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 by sending they've already looked at it as well. So the consultation you mentioned up 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, 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 health 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 clusters 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?

Thank you from my side as well. A warm welcome to Zoe in her new role.

John, 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 and reopen the 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 AR7 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 sort of the transmission CapEx plan to sort of achieving offshore wind development targets in the U.K. either T3, OT or more medium term?

And then finally, just one for Andy. Andy, could you just give us a little bit more on the drivers for the upgrade, 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.

Thanks, Ahmed. So to start with the first question on the workability. So this was one 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 Ofgem agreeing 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 the draft determination 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 AR7 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 AR7.

And then finally, on question 3, I'll look to Andy.

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 two 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.

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

And I'll add my congratulations and all the best and also hello to Zoe. So I have two questions, please. The first one is on the U.S. Now you just had a slew of sort of Democrat election wins and the 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 National Grid, is when we look to do a rate case and we'll do this when we do KEDLI and KEDNY 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 NIMO 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, I think I'll reflect on what we've seen over the last 12 months, which is one 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. 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 originally 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 determination. And clearly, that will be the point that will 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, also one 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 curtailment costs quite substantially. But longer term, is this a bit of a risk for you?

And if you were to make any recommendations or ways to part 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?

Thanks, James. Let me start with the demand question. So a little bit of context 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, so 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 frames of connections 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 that 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 Marcin at BofA. So Deepa, should we take your question?

John, 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 one is on the RIIO-T3 draft. Where do you see the risk reward on the incentives? 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?

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 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 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 business 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 one 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 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 one that's specifically on the short-term horizon at the moment.

Just looking who is left. So Marcin, if we could go to you next, I think that's the last question that I've got.

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?

I think Andy can take those.

Thanks, Marcin. 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.