National Grid share price: Group updates market on full-year performance

on May 18, 2017
Updated: Oct 21, 2019

National Grid (LON:NG) has updated investors on its full-year performance this morning, posting a drop in operating profit.

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**Highlights from the company statement:**
Credit metrics remain strong, maintain A- rating
Our overall Group credit rating remains at A-/A3 (S&P/Moody’s). Group gearing, measured as net debt as a proportion of total regulatory value, was 65% at 31 March 2017 (after adjusting for the £4 billion return of capital), compared with 65%, at constant currency, at 31 March 2016 and remains at a comfortable level for the current credit rating.

Retained cash flow (RCF)/adjusted net debt was 15.8%, or around 14.9% after deducting share buyback costs. Metrics for the current year are boosted by the lower level of net debt at 31 March 2017, reflecting the receipt of proceeds from the sale of 61% of NGGD. After adjusting for the sale of NGGD these measures remain comfortably above the 9% level currently indicated by Moody’s as consistent with an A3 rating. From 2017/18 onwards RCF/adjusted net debt will benefit from the dividend income from our ongoing 39% investment in NGGD.

The scrip dividend programme remains on offer for the final dividend, The Board believes the scrip is an efficient means to provide balance sheet support during periods of higher asset growth.

During 2016/17 we repurchased 20.1 million shares, reducing the dilution associated with the scrip programme whilst still retaining an appropriately financed balance sheet.

Dividend increase of 2.1% recommended for 2016/17
Our dividend policy aims to grow the ordinary dividend per share at least in line with the rate of RPI inflation each year for the foreseeable future.

The Board has recommended an increase in the final dividend to 29.10p per ordinary share ($1.8924 per American Depositary Share) which will be paid to shareholders on the register as at 1 June 2017, after the expected share consolidation has completed. If approved, this will bring the full year dividend to 44.27p per ordinary share, an increase of 2.1% over the 43.34p per ordinary share in respect of the financial year ending 31 March 2016. This 2.1% rise is in line with the increase in UK RPI for the twelve months to 31 March 2017 as set out in the policy announcement of 28 March 2013.

Following the agreement of a number of regulatory filings, the financial performance of the US business is expected to improve, with 2017/18 benefiting from a full year of new rates in our downstate New York gas and Massachusetts Electric businesses. In UK Transmission, totex performance is expected to remain consistent although incentive performance and legacy allowances are expected to decline. The overall contribution from Other activities and National Grid Ventures is expected to be higher.

Continuing capital investment for our continuing business is expected to increase to over £4 billion driven by increased workload agreed under the new rate agreements in the US, together with higher asset health investment and new connections in our UK Transmission businesses and further investment in National Grid Ventures. Looking further ahead we expect to maintain significant levels of capital investment over the medium term, reflecting growing investment in the US and continued high levels of investment in the UK.

The Board believes that National Grid is in a strong position to continue to deliver a safe and reliable service to customers, while sustaining a strong balance sheet, delivering attractive asset growth and continuing the Group’s commitment to the existing dividend policy for the foreseeable future.
As of 07:32 BST, Thursday, 18 May, National Grid plc share price is 1,051.21p.


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