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Good morning and welcome to National Grid's half-year results presentation. Thank you for joining us this morning. I'm Nick Ashworth, Director of Investor Relations, and I'm joined this morning by our CEO, John Pettigrew, and CFO, Andy Ag. As usual, there'll be time for questions after the presentation, but given the investor day later, please focus your questions on the first six months' performance. So with that, I'd just like to draw your attention to the cautionary statement that you'll find at the front of the presentation, and I'll now hand over to John to begin.

Thank you, Nick. Good morning and welcome to the call. As usual, I'm joined by Adyag, our CFO, and after the call, we'll both be happy to take your questions. Looking across the group, I'm delighted with the progress we've made over the past six months. So let me start with the key takeaways. Following the transactions we announced in March, we were pleased to complete the purchase of WPD in June, a little ahead of expectations as we advanced our strategic pivot that places National Grid at the heart of delivering Net Zero. The sale of our Rhode Island business continues on track, with completion expected by the end of the financial year. And we've recently launched the sale of the majority stake in our UK gas transmission business, and expect to complete sometime next summer. Alongside these transactions, we've now moved to a new operating model, with seven business units across the group, as we look to deliver the financial, customer and regulatory outcomes that will be required on the journey to net zero. This has led to the creation of US business units for New York and New England, and UK business units for transmission and distribution. Management layers have been removed, with each unit having P&L accountability and clear responsibility for delivering the innovation and efficiencies specific to their area. And as we've announced this morning, it will help us deliver a new £400 million cost efficiency programme, maintaining a flat, controllable cost base, even whilst assets grow by over 20%. This focus on our cost base will in turn help us to deliver at least 95% of our log returns across our US businesses as we achieve these efficiencies and support our ability to reach our targeted 100 basis points for annual log performance through Rio T2 period alongside our continued focus on efficient capital delivery. I'm really excited to be able to talk about all of these areas and more at our investor event this afternoon where I hope to see many of you in person. Alongside these key takeaways, I've also been really pleased with the strong financial and operational performance that we've delivered in the first half. On an underlying basis, that is excluding the impact of timing, exceptional items, and the contribution from gas transmission and metering, which are now classified as discontinued businesses, operating profit of £1.4 billion was 52% above last year at constant currency. This was helped by a first-time contribution from WPD. But even excluding this, operating profit increased by 24% compared to the prior year, as we saw a first-time contribution from the new IFA II interconnector to France, part of our £2 billion investment programme to deliver four new interconnectors by 2024, an incremental £250 million of EBITDA, and a higher revenue contribution from UK electricity transmission as we start the new Rio T2 period. where we'll be investing on average over 50% more per annum than in Rio T1 to accelerate the energy transition. Consequently, underlying earnings per share was up 66% compared with the first half of last year. Given this strong start, we now expect to deliver full-year underlying EPS significantly above the top end of our 5% to 7% range. This is primarily driven by early commissioning of our new NSL interconnector coupled with higher auction prices across our interconnected portfolio, which is expected to deliver around £100 million higher operating profit. Andy will, as usual, cover the performance of each of our segments in more detail shortly. Moving now to our investment in critical infrastructure. Capital expenditure for our continuing operations was in line with guidance for £2.8 billion 22% above the prior year, reflecting our investment in enabling the energy transition across our market, including higher UK electricity transmission investment on large projects such as the connection of the new Hinkley Power Station at Hinkley Point in the southwest, the investment of £315 million by WPD, and increased US network investments in reducing emissions from our gas pipelines and storm hardening for our electricity distribution network. And in line with our policy, the Board has proposed an interim dividend of 17.21 pence per share, reflecting 35% of last year's full-year dividend. Turning next to our safety and reliability performance. Safety is at the heart of delivery across our businesses. I'm pleased to say that in the first half of FY22, we saw our lost time injury frequency rate maintained at the level of 0.11, the same as last year. turning to reliability, which has also remained excellent across our UK and US networks. In the US, we responded well to a number of storms, including tropical storms Elsa and Henry, where we saw significant disruption across our Massachusetts jurisdiction. However, despite this disruption, I'm proud to say that we were able to restore over 90% of our customers within 19 hours. And in the UK, we've managed well through the summer despite low levels of wind generation demonstrating the effectiveness of the new tools the electricity system operator is using as the energy transition progresses. And looking forward, the electricity system operator has published its winter outlook, forecasting an electricity capacity margin of 6.6%, slightly lower than last year, although well within the required reliability standards. And with regards to the UK gas network, whilst there has been heightened awareness of gas prices in the past few months, like electricity, We're forecasting sufficient capacity this coming winter, with available peak capacity of over 600 million cubic metres per day, compared to a cold day demand forecast of around 500. In the US, falling in the north-easter seen at the end of last month, and given the ever-present possibility of further storms, we've again reviewed our procedures and are well prepared for the coming period. In our National Red Ventures business, the fire at our Selinge interconnector station has led to the loss of half the capacity of I41. Following our internal investigation, we now expect 500 MW to be back online by next October, and I'm pleased we were recently able to announce that the remaining 500 MW will be back in service earlier than we anticipated by December 2022. So moving now to the operating performance across the business in the first half. And starting with our new business, WPD, where we're following our purchase on the 14th of June, we're now reporting its contribution as our UK electricity distribution business. As I've said before, I'm incredibly excited about the opportunities WPD adds to the group, its long-term, highly visible growth, and the transformation it brings to National Grid's shape and positioning at a time of significant change across the energy sector. The first few months tells me there are lots of opportunities for National Grid, learning from WPD's low-cost, customer-centric business model, and for WPD to learn from our track record of engineering excellence. You'll hear more about this from Phil Swift, the WPD President, later this afternoon. And so, in our first three and a half months of ownership, WPD's capital programme delivered £350 million of investment, mainly resulting from demand-related reinforcement, asset replacement, network faults and IT upgrades. Our focus is now on finalising the business plan for the up-and-coming Rio ED2 regulatory review, which will be submitted in early December. As with the Rio T2 process, we've taken on board significant amounts of stakeholder and customer feedback and reflected this in the plans. whilst also taking into account the lessons learned from the recent Rio T2 review. These plans will address the investment opportunity to deliver a step up in the capacity to support wider rollout of electric vehicles, greater adoption of electric home heating and more renewable generation connecting to the distribution network. Moving on to our UK electricity transmission business, the first six months of Rio T2 marked a successful start to the new regulatory period. We continued our capital programme with £587 million of investment, 17% higher than the first half of last year. This investment was driven by a further step up in our asset maintenance activity, such as network refurbishment and substation replacement. Continued progress on the Hinkley-Seambank connection, where we're utilising the new T-pylon for the first time. and higher spend on the tunnel boring phase of our £1 billion London Power Tunnels project. The last half has also seen our technical appeal reviewed by the CMA. Its final determination was published at the end of October, where it confirmed the removal of the outperformance wedge. Having spent time recently at COP26, listening to and engaging with politicians and policymakers to encourage acceleration of green investment, it's never been a more critical time to have a regulatory framework that can enable its delivery at pace, if we are to meet the challenges and opportunities of net zero. You'll hear more about this from me this afternoon. Finally in the UK, with the sale process now launched, gas transmission is reported as a discontinued operation. However, I'm really pleased with the performance in the first half of the year, as it begins this new Rio Tito period. Capital investment of £131 million was up 38%, reflecting higher spend on acid health. And like electricity transmission, it's targeting 100 basis points of outperformance through this price control period. Moving now to our US jurisdictional businesses, starting with New York. In the period, we invested £851 million, up 10% of constant currency, mainly driven by COVID restrictions in the prior period. Our biggest programme of work is the replacement of leak-prone pipes where we've delivered 171 miles in the first half, which is an increase of 80 miles in the prior period, as we further reduce methane emissions across our network. On the electric side, you'll hear later about the progress we're making with transmission opportunities in upstate New York, such as the two gigawatt New York Energy Solutions project, which will help bring more renewable energy into the state. This project will replace eight-year-old transmission lines and is due for completion by FY23. Turning to regulation, I'm pleased with the significant progress we've made where we're targeting returns of at least 95% of the allowed level each year. We've reached a joint proposal with the New York Public Service Commission staff for NEMO in upstate New York. The three-year settlement, which includes an allowable ROE of 9%, will see us invest $3.3 billion in electric and gas infrastructure, fund over 300 new positions supporting measures such as new gas safety initiatives and energy efficiency programs, and adopt innovative new features such as performance-based incentives, giving us the ability to earn incremental returns up to an additional 86 basis points in our electric business. Moving across to New England, in the period we invested £700 million flat on the prior year. Whilst we saw higher levels of investment in Massachusetts, lower spend in Rhode Island due to COVID offset this increase. Like New York, we've made strong progress with leak-prone pipe replacement and have delivered 85 miles of new pipe in the first half. On the electric side, we've continued investing to strengthen our networks against increased storm activity and to respond to customer requests, primarily in new urban residential areas. Turning to regulation, we've agreed a new rate case for Massachusetts Gas, effective from October. This follows the same formula as our performance-based rates we agreed for Massachusetts Electric last year. The rate case will allow will further allow an ROE of 9.7%, incremental operating expenses of $65 million, and over 130 new positions to support CapEx of around $3.5 billion over five years. These Massachusetts rate cases, combined with the inflation forecasts we incorporate in our New York rate plans, means we have businesses that are in a strong position to mitigate our inflation exposure. Looking now at National Grid Ventures, where we now include U.S. generation following our reorganization. Investment of £282 million was marginally up on the prior period. It was primarily focused on delivery of our interconnectors, and we're pleased that the North Sea Link, our subsea connection with Norway, came online ahead of schedule in October this year. And our Viking link with Denmark remains on track to be operational in 2024. Moving to the US, our onshore renewables business has completed the 200 megawatt Prairie Wolf solar project in Illinois, which will be commissioned by year end and will bring our capacity under operation to just over 600 megawatts. So let me now hand over to Andy to take you through the detailed financials before I come back and briefly summarize our first half year achievements. Andy.

Thank you, John. And good morning, everyone. I'd like to highlight that as usual, we're presenting our underlying results excluding timing and that all results are provided at constant exchange rates. The changes to our portfolio provide a bit of complexity this year and I'll shortly talk through the moving parts before turning to the group's half-year performance. However, the overall changes to our reporting lines, as John mentioned earlier, should enable a clearer understanding of our business performance going forward. With the acquisition of the UK's largest electricity distribution network, Western Power Distribution, completed on the 14th of June 2021, its contribution is now included from that date. Our UK gas transmission business, including our legacy gas metering business, is now held as a discontinued operation following the launch of the process for a majority stake sale in this business. As such, all earnings from this segment have been excluded from the underlying earnings of the continuing group. Rhode Island was classified as held for sale on the 31st of March this year and so depreciation ceased. However, since it does not meet the size criteria of discontinued operations under IFRS, we continue to include its operating profit contribution within underlying earnings until the sale to PPL is complete. This remains on track for the end of our financial year. Finally, as we move to business unit reporting, our US regulated operations will be separately reported under New England and New York. Consequently, our US generation business will now report through the National Grid Ventures portfolio. And we are now reporting a UK electricity system operator separately from electricity transmission. For comparability, prior year numbers are shown adjusted for these changes. Before I turn to our half-year performance, I just want to say a few words on the new £400 million cost efficiency programme. that we've announced this morning. The programme builds on the UK and US efficiency initiatives that we've run over the last two years that have already delivered over £150 million of savings. The move to a new organisational structure along business unit lines, as John mentioned earlier, has provided the opportunity for us to identify further efficiency savings, both in the core businesses and across the shared corporate functions. In total, we are targeting over £400 million of savings across the group over three years, with the aim to keep controllable operating costs flat whilst growing our asset base around 20%. Across our US businesses we expect the efficiencies to be over £300 million and in the UK, electricity transmission together with National Grid Ventures are targeting around £100 million of savings. These efficiencies will come through a number of areas such as the increasing use of technology and digital solutions that will deliver greater working practice productivity as well as standardizing our working practices and retaining more of this knowledge within the business. These programs fit alongside the continuing work we are doing on driving capital efficiency across the group, particularly in our large asset delivery programs, such as for Rio T2 in our UK electricity transmission business. You'll hear about some of the many areas where we are innovating and driving efficiencies across the business units later at our investor event. Now, turning to our half-year performance. Underlying operating profits on a continuing basis increased by £483 million to £1.4 billion. As John said, removing a first-time contribution from WPD, operating profits still increased 24% year-over-year, driven by the first-time contribution from the IFA II interconnector as our interconnector programme moves from construction into the operational phase, and a higher contribution from UK Electricity Transmission as we move into Rio T2, and begin to deliver a capital programme that will be over 50% greater per annum than in Rio T1. Higher operating profit, as well as a lower than anticipated increase in financing costs, given some one-off benefits in other interests, resulted in underlying earnings per share increasing by 66% to 22.8 pence. Capital investment from continuing operations was £2.8 billion, 22% higher than the prior year. This reflects the first-time inclusion of WPD capital investment this period, the impact of COVID restrictions in the US in the prior period, and progress on major electricity projects such as London Power Tunnels 2 and Hinkley Seabank in our UK electricity transmission business, all partly offset by lower interconnector spend. In line with our policy, the Board has proposed an interim dividend of 17.21 pence per share Scrip uptake in the summer on the full year dividend was 49% and will again be offering the Scrip option at the half year. Now let me take you through the performance of each of our business segments. Starting with our new business. On 14th June 2021 we acquired WPD for a total cash consideration of £7.9 billion. The deal was financed by an £8.2 billion bridge loan. which is expected to be largely repaid using the proceeds of the planned disposal of our Rhode Island business to PPL and the majority stake sale of our UK gas transmission and metering businesses. On consolidation, we made a number of accounting adjustments as required by IFRS, which have ultimately had a net positive impact on the income statement. Firstly, PP&E has been fair valued and brought onto the balance sheet at £10 billion, below the value in the WPD accounts. With only marginal changes to asset lives, this results in a lower depreciation charge going forward. This has been broadly offset by the removal of custom contributions previously recognised by WPD on the balance sheet, removing the benefit operating profit going forward. Net debt has been fair valued upwards by £1.6 billion to £8.2 billion to reflect credit spreads, interest and inflation rates at the time of acquisition. This results in a lower annual interest charge. We will recognise an intangible asset of £1.7 billion, representing WPD's regulatory licence, as well as goodwill of £4.7 billion. Both of these balances will be subject to annual impairment testing. Consequently, for the half-year, we include a contribution of £257 million within underlying operating profits and capital investments in the period of £315 million. Underlying operating profit for the UK electricity transmission business was £552 million, up £65 million compared with the last half year. This primarily reflects the move to CPIH inflation indexation and higher base revenues as we enter the first year of Rio T2. We invested £587 million on system resilience, asset health and new connections. This was £86 million higher reflecting progress on multiple large projects such as London Power Tunnels 2 and Hinkley Seabank, partly offset by lower investments in smart wires as these projects near completion. We've now had time to work through the Rio T2 final determinations in more detail since their publication. Whilst the price control will be challenging, we believe we'll be able to find ways to innovate and deliver efficiently for our customers. As we complete projects started in Rio T1, and move into Rio T2, we are targeting to deliver 100 basis points of operational outperformance on average through the five-year period. And given this profile, we also expect to deliver this level of performance in the first full year of this price control. And on the electricity system operator, underlying operating profit was up £12 million in the period to £49 million, with higher revenues at the start of the new price control more than offsetting higher costs. Moving now to the US, where underlying operating profit for New York was £141 million, £29 million lower than the prior year. This reflects higher revenues through our rate cash settlements, as well as the non-recurrence of COVID costs from the prior period, more than offset by higher storm costs in the period, increased depreciation from higher levels of investment, as well as a reassessment of recoverable environmental reserves, mainly due to inflation. Captain investment was £851 million, £76 million higher than prior year at constant currency. Increasing capex was driven by the impact of COVID restrictions in the prior year. Overall, we expect full-year ROE to increase to at least 95% of our allowed level, improving on the 2020-21 performance. Turning to New England, underlying operating profit was £247 million, £67 million higher than the prior year. This reflects higher rates in our Massachusetts electric business under its new rate settlement, lower bad debts due to the resumption of collections, as well as lower COVID costs, and the cessation of depreciation following the reclassification of Rhode Island as held for sale. Captain investment was £700 million, £7 million lower than prior year at constant currency. Massachusetts has seen higher levels of investment, primarily driven by the impact of COVID restrictions in the prior year. However, this has been more than offset by permit delays due to COVID in the Rhode Island business. Overall, full-year ROE is expected to increase compared to 2020-21, which was adversely affected by storms, and we expect to achieve over 80% of our allowed level. Looking forward, given the combination of new Massachusetts gas rates from 1 October, together with the new efficiency programme we have announced this morning, we expect to make significant progress towards our target, of at least 95% of our ROE allowances. National Grid Ventures continues to perform well, with underlying operating profit up £66 million to £147 million in the half year. This primarily affected first-time contributions from the IFA II interconnector, which commissioned earlier this year, and growth in our US renewables business. Our 50% ownership in the NEMO interconnector to Belgium also benefited from higher auction prices helping the performance of our joint ventures. However, performance was partially offset by a fire at the two gigawatts IPHA-1 converter station in Stelling, Kent in September. The fire caused significant damage to infrastructure on site with one gigawatt of capacity currently offline. We now expect 500 megawatts to be back online by October 2022 with the remaining 500 megawatts to be back in service in December 2022. We are working on ways to bring the asset back online as quickly as possible and will update on the expected cost of repairs when we have more detail. With insurance in place to largely cover business interruption and rebuild costs, we don't anticipate a material financial impact on the group. Capital investment across National Good Ventures increased from £272 million to £282 million in the period. This reflects investments in additional capacity at our LNG terminal on the Isle of Grain and renewable generation in the US. largely offset by lower capex on the Interconnector programme following last month's successful commissioning of the NSVL Interconnector to Norway. The operating profit for other activities for the half year was £14 million, £45 million higher than last year. This principally reflects fair value gains on investments held by National Grid partners, our portfolio of start-up companies, innovating and investing in new technologies that will drive a smarter energy future including Dragos, a cyber security company for critical infrastructure. Captain investment was £40 million, £15 million higher than last year. With the launch of the sales process, we are now reporting our UK gas transmission business, including the legacy gas metering business, as discontinued. For the period, operating profit excluding timing was £332 million. This was £144 million higher than the prior year. following a change in revenue charging methodology, which has removed volume linkage and will lead to lower levels of seasonality going forward. Capital investment was £131 million, £36 million higher than the prior year. This primarily reflects higher spend on asset health and emissions work. Having now assessed the final determination for Rio T2, gas transmission is targeting to deliver 100 basis points of operational outperformance on average through the five-year period Net finance costs were £475 million, up £73 million, reflecting higher financing costs following the first-time inclusion of WPD debt and funding of the inquisition bridge facility, partly offset by lower pension interest costs, as well as interest on favourable property tax settlements. Our effective interest rate was around 20 basis points lower than the prior year. at 3.1%. A constant currency, net finance costs are now expected to be around £200 million higher for the full year as a result of higher inflation, higher average net debt following the acquisition of WPD and our ongoing capital investment programme, partly offset by one-off benefits in other interests. The underlying effective tax rate before joint ventures was 19%, 330 basis points higher than the prior year due to a change in the profit mix and a reduced impact of prior year adjustments. For the full year, the underlying effective tax rate, excluding the share of joint venture post-tax profits, is expected to be around 21 cents. Underlying earnings were £8.12 million, with EVF of £2.8 million, up 66 cents over the prior year. Finally, given the strong start to the year, we now expect to live a full year under underlying EVF, significantly above the top end of our 5.77 cent range. This is primarily driven by early commissioning by the new NS Connect connector, coupled with higher auction prices across our NS Connect portfolio, which reflects they deliver around £100 million higher operating profit. Moving now to cash flow. Cash has generated from congenial operations of £2 trillion, up 27% compared to the prior year. This reflects our first firm contribution, WWDD. Net gas sales in the earlier period amounted to £1.6 billion, down 24% from the prior period, with higher capital investment, part-class debt, and lower pensioners' dividends, given the split uptake. Net debt debt increased by £12.9 billion to £41.5 billion. Reflecting the consideration of the WDD and its existing debt, part-class debt found a return on HHF debt and national gas as health sales. For the full year, net debt at expected annual rate assisted within the level of 30 October at around £41.5 billion, excluding the main payout at FX. This includes the expected daily benefit of the road island and exposed road resources. I've said previously that our net debt per hour at expected annual rate is stable above £0.077, once we have completed our announced portfolio resubmissioning, and at that level it is to be comfortably within the range required by our credit rating agencies. As a reminder, our target ratings are 7.7% Moody's Aussie debt to debt and about 10% S&P FFO debt to debt ratio. Before handing back to John and give a mark to legislation around high level legislation and interest rate rates, I just want to touch on some things that I see across our businesses. Looking across the group and the regular regulations that we have in place, Moderately higher inflation is a positive over the long term, with a perspective of real returns across the proportion of our regulatory assets, whilst moderately higher interest costs should be truly neutral over time. As an example, on inflation, in the UK, higher inflation is a positive for £23.3 billion regulated assets, given inflation. This is partly offset by £4 billion of inflation in debt, So, a one-year increase in inflation represents around £199 million, an incremental economic value. Across our income statement, whilst our inflation needs to retire interest costs from the interim term of our inflation debt, our regulation rates mean we have good inflation expectations in the long term, so our revenues catch up. In our UK regulation sentences, revenues are linked CPIEIH. And we also get an extension of specific reasons in labor and materials costs under real-time inflation mechanisms. In the U.S., our mass institutions and regulated businesses have added value increases. And in New York, we were able to include all of the prices in our rate plans. Moving to interest, the cost of debt allowance in the UK is up 10% annually, and even if we're funding debt, higher interest costs will be neutral to P&L, as we will receive revenue allowance for it over time. And in the US, regulators take into account the cost of debt, and provide for the cost of these cost customers, which is why most of this is fixed rate and long term in nature. So, to summarise our half year, We've delivered a strong financial performance and now see full-year underlying UPS significantly ahead of our 5% to 7% growth rate. We now include UK electricity to cruise business, WPD, for the first time following our strategic pivot to electricity. And are starting our InetConnect program moving to its operational phase with a first-time inclusion of I-52 and commissioning of our NHL welding. Capital investment levels are up, driven by new regulatory settlements, with a greater focus on energy transition, whilst our balance sheet remains strong, allowing us to fund our investments efficiently. And we have moved to a new operating model and announced a new £400 million cost efficiency programme, as we continue to focus on delivering a fair and affordable clean energy future for all. With that, I'll hand you back to John.

Thank you, Andy. So to finish, we've had a strong start against our five-year financial framework of annual asset and EPS growth. This is enabling us to upgrade our four-year EPS guidance to be significantly ahead of our five to seven percent range. We're delighted to have completed the acquisition of WPD a little earlier than anticipated, having hit the ground running as we start to integrate and share best practice. We're confident our new operating model structure will deliver the most efficient outcomes for all our stakeholders as we progress the journey to net zero. And on the back of this, we've announced a new £400 million cost efficiency programme to be delivered over the next three years. We've made a strong start to the new Rio T2 price control in our UK electricity transmission business and have line of sight on operational and capital efficiency to deliver outperformance through the period. and we've successfully completed a full refresh of rates across our New York and New England businesses, giving us fantastic visibility and regulatory certainty. I'm also really pleased to see our Interconnector program heading from construction into operation, with a first-time contribution from IFA II in the period, as well as the commissioning of our Norwegian Interconnector last month. That just leaves the Viking link to come on in FY24. Finally, we're on track to deliver our five-year financial framework, of 6-8% asset growth, 5-7% EPS growth, and most importantly, to continue to deliver a sustainable CPIH-linked dividend. At our investor event later today, we're looking forward to giving you a lot more information on the medium and long-term drivers of growth, and how we're working with all our stakeholders to deliver a clean, fair, and affordable energy future. And hopefully, we'll see many of you there in person. Thank you for listening. Andy and I will now be happy to take questions on the first half performance. Dominic, why didn't you ask the first question?

Yeah, I mean, the questions I've got are two, actually. Well, they're saying that I think Beef has printed it up on the screen, which is about the £400 million of cost savings and how much of that is in. is it is in the US and in order for you to meet the regulatory targets and how much of that can go up. And the second one is on your offshore wind JV with RWE. I was hoping that you could probably give us some colours to what you think is going to happen to the BOEM later this year, beginning next year, and your scope for ambitions for expansion into the offshore wind industry.

Okay, thanks Dominic. Let's start with our savings. So 27th of this morning we announced that 5.4 million of our savings. That's broadly made up of three quarters of those savings will be in the US business, so 300 million and another 100 million in the UK. Effectively what we're trying to do here is that, you know, as we look forward over the next few years, we've got significant growth in our investment and we're looking to keep our cost base broadly flat whilst we're delivering that. So it's really a cost avoidance program. And we think through looking at things like digital innovation, technology and driving productivity and performance, we can deliver those cost savings. And those cost savings will then help to deliver the ROEs that we've set out previously in terms of getting above 95% in our US businesses and delivering, as you hear today, 100 basis points of our performance in our UK businesses. In terms of the offshore wind joint venture, so as you know, we entered into a joint venture with RWE last year to look at the opportunities off the northeast coast. And given National Grid's experience and world-class capability in offshore cabling, together with our knowledge of the northeast from a regulatory perspective, it seemed like a natural evolution for us given the capabilities we've built over the last few years. And we're looking at the opportunity that's in front of us, so in terms of bidding for the seabed access which is likely to be at the turn of the year. I think it's forecast to be around about January time. Our approach as always with investments that we do in National Grid Ventures is to take a very disciplined approach so we will look at the opportunity and if we think it's right for our shareholders then we will progress that but time will tell in terms of exactly what that looks like as we move forward. Okay, so thanks for that, Dominic. I can see Jenny, you've got your hand up, so why don't we go to Jenny.

Hi, thanks very much. Two questions. Just following on the 400 million cost savings, obviously 300 you said is in the US. Can you just confirm there is no expectations as part of the rate settlement, any cost savings to be returned or shared to consumers. So basically, that 300 is falling through to the shareholders' bottom line. And then I note there is no mention of WPD in the UK part within that 100. Is that – should we read that as there isn't any, or is this to come, I guess, after the regulatory review – And then secondly, just on net debt, at least my numbers, my net debt is much lower than the $41.5 billion that you have indicated for year-end. I was just wondering, maybe, Andy, if you can walk us through the building blocks of how we get from what it was last year and the various parts to get to that $41.5. Thanks.

Okay, thanks Jenny. Let me take the first two and then I'll hand over the third to Andy. So in terms of the efficiency targets that we're assessing today, then they're fundamentally about delivering on the returns that we set out, so getting to above 95%. There are some sharing mechanisms within our rate files in the US, but they tend to be when you're significantly above the allowed return. You can start to share that with customers, but this cost efficiency program, first and foremost, is about getting to above 95%. In terms of WPD, as you'd expect, you know, our focus at the moment is very much on making sure that we put the very best business plan that we can into Ofgem. Since WPD became part of Nashville in the middle of June, I've been hugely impressed just with the level of detail that's in their business plan. I think they're the only DNO that have published three versions. I think they've had more than 17,000 stakeholders comment on it. So I think I'm very confident that they've got a plan that is really going to deliver what their customers and stakeholders need. But that has been the focus. As I said, when we did the acquisitions back at the beginning of the year, I remain hugely excited with the opportunity to bring together the capabilities and track record that WPD has in terms of delivering on reliability and short-term incentives and customer service together with NashGrid's engineering and asset management capabilities. And I see that as a real opportunity going forward. But the focus to date has been very much on that business plan. Andy.

Yes. Thanks, Jenny, for the question. So hopefully you'll have seen in the presentation this morning the main move is to get to our half-year, 41.5, and that excludes now the held-for-sale elements relating to both gas transmission in the UK and also just over a billion related to the Rhode Island business. In terms of our guidance to that being flat net by the end of the year, that assumes that we will complete the Rhode Island transaction, so it means that the disposal proceeds will have come in. But as we've guided to and we've reaffirmed again this morning, we don't expect to complete the gas transaction or in the summer of 2022. So therefore, there's no expected proceeds and that held for sale amount will still be in the balance sheet as of 31st of March. And broadly, therefore, the Rhode Island proceeds net offset other normal working capital and cash movements that we expect through the second half.

Thanks, Vinnie. John, John Muskellink, you do have your hand up, so let's go back to John.

Yes, morning. Hopefully you can hear me now. Good, thank you. So part of the sort of beat, let's say, in the first half has been in the interconnectors, as you highlighted. Can you outline where you sit on those versus the regulatory caps that are in place on those interconnectors? And also, I think the mechanism is is a five-year average in terms of chlorine back any beats. So can you just confirm that? And then secondly, hopefully this is really an H1 and not a sort of CMD question, but with the strong guidance that you're giving today of low teens EPS and sticking to the five to seven on average, does that mean the back end is coming down a bit or am I reading too much into that?

Yeah, thanks, John. Let me take the first and I'll ask Andy to take the second. So in terms of the interconnectors, just so everybody's got the sort of picture. So the interconnectors, we drive our revenues through the arbitrage in terms of the difference in energy prices in the capacity that we sell. And then there are regulatory wrappers around that. So we have slightly different regulatory wrappers and approaches to each individual interconnectors. What you saw in the results today was, as we look forward, we are expecting to see strong interconnected performance in the second half, partly because we've got the new I-for-2 interconnector initiatives results. We've also brought on the Norwegian interconnector early, and we are expecting the arbitrage to remain attractive going forward. So in terms of those are the things that are driving the 100 million that we talk about in the results today. In terms of where we sit, it is a five-year process, John, so exactly where we are at the moment will be determined by what happens over a rolling five-year period. What I would say is that returns in the interconnectors continue to be in excess of what we see in our onshore transmission business. Thank you.

Yeah, thanks John. In terms of the guidance, you may remember back in May when we first set out the 5% to 7%, we positioned it as our five-year average CAGR in terms of EPS 3 to FY26. And that remains a good guide today. What we've explained this morning is given the performance that we now see with Norway coming online slightly earlier and with the arbitrage pricing that we were able to contract in, As you described, the 100 million puts us into the low to mid-teens in terms of growth this year. But our 5% to 7% over the five years was assuming sort of the long-run normalization of arbitrage rates. And therefore, the guidance is our best view for this year. But that's why over the five years, the 5% to 7% remains our valid guidance range.

Thanks, John. Mark, my question is, I see you've got your hand up.

Hi, yes, hello. Thanks for taking my question. So, Andy, a couple of questions for you. So, first on the acquisition bridges, the $8.2 billion, it seems your strategy is now to just let those run and pay them down with the NGG PLC proceeds. Can you confirm that and whether you'd be looking for an earlier refi? Secondly, on, and you cut out a little bit and I wasn't able to check quickly enough, but on the 1.6 billion fair value uplift for the WPD debt, presumably a large amount of your net debt is therefore, 1.6 billion of your net debt is non-cash. And if you were to undertake a buyback of those bonds, presumably there would not be a write-back through the income statement. Is that correct? And finally, a question for you, John, just on the cost inflation. I take what you say about RAB indexation and debt indexation and so forth, but I guess the risk is that construction inflation and the kind of goods and services that you deal in go up by more than consumer inflation. So can you talk about what you've seen as you've gone to market to tender for equipment and services recently, and what you're seeing from your supply chain on pricing. Thank you.

Yeah, thanks, Mark. Let me take the third, and then I'll hand over to Andrew to take the first two. So in terms of price inflation, you're right, let me just start to make sure everyone understands the sort of position for National Grid. So We have a pretty effective hedge on inflation. Obviously, we get the indexation of the RAB in the UK on our regulated businesses, and that will continue for WPD as well, of course. And then in the UK, increasingly with the new rate cases we put in place, we've got inflation protection on the revenues in Massachusetts Electric and Gas. And in New York, we've always had the ability to be able to put a forecast inflation into any forward multi-year rate case that we've done. So we feel that we got a pretty good hedge, and on top of that, of course, in the UK we got the real price effect adjustment for commodities and raw materials from Ofgen as part of the price controls. What we're seeing in the market, we are seeing some modest pressure, particularly on labour and raw materials. I would say it's modest at the moment, so I guess the most significant thing we're seeing and we're managing actually is from the supply chain is just time duration for ordering materials. So we've had to adjust the way that we deliver our projects to make sure that we're getting our strategic supplies in earlier and that we're committing to doing that on an earlier basis than we've done previously. It's not something I'm losing sleep over, but it's definitely something that needs to be managed at the moment. So I'd say we're seeing modest price increases at the moment, but we are in a fortunate position that we've got very good hedges through our regulatory agreements.

Andy? Yeah. Hi, Mark. So on the two, in terms of the 8.2 bridge loan, I think it's always been our intent to use the proceeds of Rhode Island and gas transmission and through metering to pay down the majority of that. And then any remaining balance, depending on how we deal with the gas transaction, that'll just be part of our normal refinancing plans as we go through next year. Remembering that we're continuing to fund the ongoing business on top of that as well. So we've also been in the market through the first half We did a green bond at a PLC level as well, for example. So we continue to fund our organic business on top of the plans around the bridge financing. In terms of the fair value adjustment, your question sort of implies that we might be doing something. I think, as I said back in May, we're inheriting the debt book and at this point we have no plans other than to continue to run that debt book through to its maturity. What will happen is that fair value accretion will effectively return back to the P&L over the remaining life of the bonds associated with the debt book as an acquisition. And that's back behind my comments in the presentation around we'll get a small pickup in the P&L with that accretion going back through the income statement. Thanks, Andy.

Deepa, I think you've got your hand up.

Thank you. So I had a couple of questions. Actually, just staying on WPD, and I didn't fully follow all the things, Andy, that you said because the audio quality was poor. So with reference to the published accounts of WPD, are you able to kind of quantify what are the different moving parts? So they had depreciation of $250 million. They had interest of close to $300 million. And so you said that these would be lower. Can you quantify how much? And you also mentioned something around customer earnings that goes away. Again, can you explain what that is and just quantify that? And then on the debt itself, the 1.6, you've shown that in your net debt. But obviously, from a cash flow modeling, you're still going to be paying the coupon. So I presume that's not going to be very different from the 300 million that you inherited. So please just correct me if the cash interest outflow is any different. And then on the cost cutting program, just wanted to double check that we shouldn't really be modeling all of that 400 million getting into the bottom line if you also assume, for example, that you're hitting 95% ROE, right? So I just wanted to check whether there was anything around, say, NGV Ventures or anything which would be additive and incremental. on top of what we should already consider for the regulated businesses.

Thank you.

Okay, thanks. Thanks, Deepa. Let me just take the third and give Andy the first too. So yes, you're absolutely right. In terms of the cost efficiency program, that's exactly how we're thinking about it. So it's there to help us to contribute to deliver that 100 basis points of performance operationally that we're committing to in electricity transmission and to get to the 95% of the live returns in the US. So that is absolutely how you should think about it.

Thanks, Peter. In terms of the fair value adjustments and the impact going forward, I think there's three main elements that impact the income statement. Firstly, I mentioned the write-down to around £10 billion in terms of the fair value of the PP&E, so the fixed assets coming into the balance sheet. That of itself would lead to a slightly lower depreciation charge going forward. I made the comment as well that we have absolutely reviewed asset lives but have made only marginal changes to align with our own. The point I made earlier was that we'll be offset by derecognising around £2.7 billion of customer contributions that WPD have previously received, which would otherwise have been returned back to the income statement as well. So the combination of those two items broadly offsets itself in operating profit. So the net impact then comes from the fair value of debt point, as I mentioned in the previous question, that that $1.6 billion of non-cash accretion will effectively be amortised off through the income statement over the life of the bonds, and that will lead to a pick-up in terms of the post-acquisition income statement going forward. But you're absolutely right, it's non-cash, so the cash coupon will be as per the original debt instruments, no change there.

Martin Young, I think you've got a question.

Yeah, can you hear me?

Yeah, you might be.

Yeah, first question is around the 400 million cost reduction programme. Just wondered if there are any implementation costs of any significance in that respect and then please correct me if I'm wrong but I think at the time on the WPD debt I think the number of about six billion or 6.1 billion was mentioned the debt obviously with the 1.6 uplift that you've talked about today that would take us into the upper sevens am I am I wrong with that six billion debt acquired number did that move is that the uh the time between announcement and closing, I guess.

Okay, thanks, Martin. Again, I'll take the first, and I'll ask Andy to take the second on debt. So with regards to the $400 million in terms of the target we set today, yes, there are some costs associated with it. There are costs associated actually with the separation of Rhode Island and GT, and then there will be costs to achieve in terms of delivering those efficiencies. I mean, broadly, it's around about $400 million of costs to achieve across both the separation and those efficiency programs.

Martin, thanks. In terms of the debt question, so I don't have the 6.1 in front of me, but the 6.6 was effectively the book value in terms of WPD's account at the completion of the acquisition in June, and the 1.6 is the non-cash fair value, which gets into the 8.2. Those are the numbers as of the 14th of June.

Just looking, it looks like Mark, your hand, is that a new hand up? You've got another question?

Where's my other hand? Yeah, both hands up. Hey, can you talk about CCUS and the, well, I guess Project Cavendish is attached to grain, but the Humber cluster, clearly there's a big consultation going on there. Could you talk about select total spend returns requirements to the extent that you can and that you would remain committed to CCUS rather than let your gas transmission team take it on.

Yes, thanks Mark. So the work we're doing around CCUS actually fits with National Adventures, not within our gas transmission business, so it will stay there. I mean, at this stage, first of all, we were delighted that, as you're aware, the UK government selected two projects to take forward between now and 2025. Our project with BP and Equinor and others was one of the ones that's selected. So we're now taking it to the next stage, which is really understanding what is the investment that's going to be required, what are the costs associated with that, But probably most importantly at this stage is worth just emphasising that, you know, what is the business model on which that investment is going to be done? So that is still to be consulted on with the UK government. So, you know, I very much see it as an opportunity and a business development opportunity, but it's just too early to say, Mark, in terms of exactly what is going to be the cost and what are the returns and what, in fact, is the business model and therefore, you know, what are the risk-adjusted returns that would be appropriate. Well, I would say from our perspective, you know, Nash Ridge's role will be very much around the transport of the carbon onshore. You know, that is the expertise that we would bring to this joint venture. And other players in the market will bring their own expertise offshore and in the production of hydrogen. But it's early days, but really pleased that we were selected and we'll continue to work with our partners on exactly what that opportunity might look like. Okay, I'm going to go to Bartek, I think he's got a question.

Yes, good morning. Free, if I may, please. Firstly, on the CMA final decision, and actually the disappointing decision for you, do you think there's anything else you can do in order to improve the returns somehow and still challenge what Optum and CMA has decided upon? Secondly, on these 100 basis points outperformance you are expecting for NGET over Rio 2, do we understand it, should I understand it as TOTEX and incentives outperformance, or this is something on top of what you usually outperform? I mean, how should we understand this one? And thirdly, as interconnectors seems to be good assets. Do you have anything else in your pipeline to start construction of in the near future? Thanks.

Okay, so let me just take those in turn. So with regards to the CMA decision, so I guess we were delighted to see that the outperformance word was removed and really pleased in the final decision from the CMA that not only was it removed, they didn't refer it back to October, they absolutely removed it, so I think we're very clear on that. Yes, we would be disappointed with the cost of equity. You know, that was the reason we made the referral on a technical basis. We felt there were errors in the calculation, but the CMA have said that effectively it's within the realms of the judgment that Ofgem has. In terms of Short term, is there any route to appeal it? There is a route to appeal it, which is judicial review. I think, as I said to you today, I think that is incredibly unlikely that we would go down that route. The team is obviously going through the detail of the judgment. It's well over a thousand pages, but I think it's unlikely that there will be any judicial review from National Grid. I think more broadly, I've always said that I think there is an opportunity to think around the regulatory framework, the institutional arrangements, and the market mechanisms that we have in the UK as we think about delivering the energy transition over not just the next five years, but over the next 30 years. And that's certainly something that we'll be looking to discuss with Ofgem and others as we move forward. In terms of the 100 basis points for Rio T2, well, I'll use this as an opportunity to advertise our investment day this afternoon. So if you are able to make it, then you'll get the opportunity to spend some time with Chris Bennett and the ET team where they'll talk through in detail how they're approaching Rio T2. But at a high level, we'd expect to deliver that 100 basis points through operational outperformance both in CAPEX and OPEX. That 100 basis points outperformance is operational outperformance. It doesn't include any financial outperformance that we may be able to deliver. And then in terms of the interconnectors, as you know, we still have the work to do to complete the Danish interconnector, which should be complete by FY24. We're just in the middle of ratcheting up the Norwegian interconnectors, so 700 megawatts is already flowing, and we're aiming to increase that up to 1.4 gigawatts by hopefully the end of the fiscal year. And then beyond that, there's a lot of work going on as part of the sort of vision for the North Sea. And again, if you look at the investor data this afternoon, you'll get a chance to see how the team is thinking about our vision for the North Sea, both in terms of potential future interconnectors of which we think there are opportunities. The UK government recently set out that they feel there could be potentially up to 18 gigawatts of interconnection between mainland Europe and the UK, and we're a long way away from that. But also the team is looking at things called multi-purpose interconnectors where not only do you connect point to point between the UK and Europe, but actually you interconnect into that electrical connection offshore wind farms. And we've got a couple of projects running with system operators in mainland Europe on the potential for those types of sort of interconnectors, which we call multi-purpose interconnectors. So there's a lot of activity going on at the moment in that area. really thinking about what is the vision for the North Sea. So if you are there this afternoon, you'll get a chance to see some of that. Dominic, I think you've got your other hand up.

Hi there, yes, sorry about this. Can I have a couple of follow-up questions, please? Firstly, yesterday, FSC... announced a couple of things that were quite interesting. One, that they talked about dis-synergies. I think it was £95 million a year for splitting their business into two, and a £200 million one-off cost. You obviously are doing quite a lot of restructuring at the moment. Are those numbers kind of in line with what you think the synergies, stroke dis-synergies, are for WPD integration and gas transmission projects? And secondly, would you be interested in buying a 25% stake in a network or would control be something that's sort of paramount to your investment decision? And then the final question, just a quick one about the WPD, and apologies if you mentioned it. As I said, the sound quality was breaking out. But you had £10 billion of fair value. Could you just quickly tell us what were the accounting assumptions to get to that 10 billion and is that essentially sort of based on a RAB number or is it actually done on some form of BCF or how does it work if you could sort of give us some colour on that? Thank you.

Okay, so let me take the first two, Dominic and Andy take the third. In terms of synergies and what FTC said yesterday, I don't think it's for me to comment on FTC's business. I don't know their business well enough to know whether those numbers are the right numbers or not. What I would say is that undertaking a separation is a complex process and what we've set out in our numbers today, as you saw, is the cost of separation together with the 400 million of efficiencies that we're setting out. We set out, we think that's about 400 million pounds. We always aim, we've rotate our portfolio over the over the years many times as you know and we always aim to try and minimize any stranded costs but it is not a simple process I would say which is why it takes the time it does. In terms of our interest in SSE's announcement on 25% I think I'd say Tom given the significant strategic pivot that we announced at the beginning of this year with the acquisition of WPD, the sale of Rhode Island and the sale of Majority Stake in gas transmission I think we're going to focus very much on that and making sure that we do that very well. It positions us, as I said back in March, fantastically well. It makes us 70% electric, 30% gas, broadly balanced between the UK and the US, and very well positioned for the energy transition. So I think that will remain our focus as we move forward. In terms of the £10 billion fair value, Andy?

Yes. So, Dominic, you're right. So, the £10 billion is effectively the fair value attached to the existing PP&E of WPD. And while, obviously, that's recorded at historical cost, we're required to fair value that as at the acquisition date. And I distinguish that from the value. I also mentioned there's a £1.7 billion licence intangible, which relates to part of the future benefits of ownership together with the goodwill balance. So the approach to get technical for a moment is that you're required to look at the cash flows associated with the existing fixed assets. And then there's lots of precedent, as you can imagine, from other transactions that our advisors look at in terms of comparable fair values. And you end up with a, it ends up back sold into a small multiple of RAB, but you do look at the cash flows. But it's because you're only looking at the historically existing assets, not the future growth and future investments, obviously, which is one of the main focuses for us with that acquisition.

Okay, thanks. Chris, I think you've got your hand up.

Good morning, everyone. Just one question for me. John, earlier you mentioned in relation to inflation that you'd been adjusting the way that you manage projects and that you had seen some pressures come through, but they've been modest so far. You also mentioned some hedges through regulatory agreements or a comment like that, which unfortunately I didn't hear at all. I'm wondering whether you could repeat what you said and maybe expand on it just to give us an idea of how that regulatory framework may benefit you through this period.

Yeah, it's fine, Chris. Sorry, the line might not be great today. Yeah, so what I was saying was we sort of have a natural hedge to increase inflation through our regulatory contracts. So in the UK, obviously with re-regulation, we get indexation of the RAV. So as inflation increases, the increase in the value derived increases with that, and then that flows through to revenues in the UK. Over and above that in the UK, we have built into the regulatory framework what's called real price effects. So that effectively adjusts our revenues every year for increases in commodity prices and raw materials that's over and above inflation. So that's what I meant by the hedge. And then similarly in the U.S., as we've evolved the regulatory framework, we now have in Massachusetts five-year regulatory agreements, which are performance-based regulation, which is I minus X, where I is inflation. And the minus X at the moment is a positive number of 1.7 for electricity and 1.3 for gas. So again, our revenue is increased by more than inflation in our Massachusetts business. And then finally, I was saying in New York, we've always been able to include forecast inflation into any multi-year settlement that we've done. So to the extent that we get that forecast right, we've got some coverage. We do have some exposure in New York to the extent that we get that forecast wrong. So it's at the revenue line and at the asset baseline that we've got this national hedge. Thanks, Chris. Martin, I think you've got a question.

Yeah, can you hear me?

Yeah.

Yeah, it's only a very quick one. I'm following up on the £400 million sort of separation and cost reduction implementation costs. Will they be accounted for as non-underlying? So at some stage you will take a hit for that 400 million and keep it out of your underlying adjusted definition. Thanks.

Thanks, Martin. I'll give Andy the answer.

Yeah, so Martin, the answer is that that's what we expect. Obviously, we have to look at those costs each year, but our current expectation that you'll have seen a small amount going through this year's performance around 24 million which is you know the initial spend on some of that and yes so we'd expect to take the remaining portion through exceptional so outside of underlying as we incur them Dominic is that your hand new hand okay so it looks like there are no further questions so I'll just check to see that I haven't missed any okay

In which case, I'll just say thank you, everybody, for joining the call this morning. As you heard, I think our first half has been good operational and financial performance. I think we're very well positioned to deliver on our strategic operational and financial objectives for this year. And I'm very hopeful that we'll see some of you in person later on this afternoon at our investor events. So thank you very much, everybody, and hopefully see you later on.