REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
R
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 31 March 2026
OR
£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
£
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
For the transition period from to
Commission file number: 001-14958
NATIONAL GRID PLC
(Exact name of Registrant as specified in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
1-3 Strand, LondonWC2N 5EH, England
(Address of principal executive offices)
Justine Campbell
0114420 7004 3000
Facsimile No. 011 44 20 7004 3004
Group General Counsel and Company Secretary
National Grid plc
1-3 StrandLondonWC2N 5EH, England
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Ordinary Shares of 12 204/473 pence each
NG
The New York Stock Exchange*
American Depositary Shares, each representing five
NGG
The New York Stock Exchange
5.602% Notes due 2028
NGG28
The New York Stock Exchange
5.809% Notes due 2033
NGG33
The New York Stock Exchange
5.418% Notes due 2034
NGG34
The New York Stock Exchange
____________
* Not for trading, but only in connection with the registration of American Depositary Shares representing Ordinary Shares pursuant to the requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: None.
Securities for which there is a reporting obligation pursuant to Section15(d) of the Securities Exchange Act of 1934: None.
The number of outstanding shares of each of the issuer’s classes of capital or common stock as of 31 March 2026 was 5,198,968,690
Ordinary Shares of 12 204/473 pence each
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: YesR No £
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes £NoR
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YesR No £
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).: YesR No £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerR
Non-accelerated filer £
Accelerated filer £
Emerging growth company £
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. R
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP £
International Financial Reporting Standards as issued by the International Financial Reporting StandardsR
Other £
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 £ Item 18 £
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £NoR
This constitutes the annual report on Form 20-F of National Grid plc (the “Company”) in accordance with the requirements of the US Securities and Exchange Commission (the “SEC”) for the year ended 31 March 2026 and is dated 3 June 2026. Details of events occurring subsequent to the approval of the annual report on 13 May 2026 are summarised in section “Further Information” which forms a part of this Form 20-F. The content of the Group’s website (www.nationalgrid.com/uk) should not be considered to form part of this annual report on Form 20-F.
Form 20-F Cross Reference Table
Item
Form 20-F caption
Location in the document
Pages(s)
1
Identity of directors, senior management and advisors
Not applicable
—
2
Offer statistics and expected timetable
Not applicable
—
3
Key Information
3A [Reserved]
—
3B Capitalization and indebtedness
Not applicable
3C Reasons for the offer and use of proceeds
Not applicable
—
3D Risk Factors
“Additional Information—Internal control and risk factors—Risk factors”
226-232
4
Information on the company
4A History and development of the company
“Strategic Report—National Grid at a glance”
4-5
“Strategic Report—Chief Executive’s review”
8-11
“Strategic Report—Our business environment”
14-15
“Strategic Report—Performance against our strategic priorities ”
16-17
“Strategic Report—Our key performance indicators”
26-29
“Strategic Report—Financial review—Capital Investment and asset growth ”
78
“Financial Statements—Notes to the consolidated financial statements—Note 2. Segmental analysis—(c) Capital investment”
148
“Financial Statements—Notes to the consolidated financial statements—Note 3. Revenue —(g) UK Electricity System Operator”
150
“Financial Statements—Notes to the consolidated financial statements—Note 5 Exceptional items and remeasurements —2026;—2025;—2024”
155-156
“Financial Statements—Notes to the consolidated financial statements—Note 10. Assets held for sale and discontinued operations”
164-165
“Additional Information—The business in detail—UK Regulation” and “—US Regulation”
220-225
“Additional Information—Shareholder information—Articles of Association”
251-252
“Additional Information—Shareholder Information— Documents on display”
252
“Additional Information—Other disclosures—Research, development and innovation activity”
Our stakeholder community continues to broaden and evolve, and engaging with them remains fundamental to our daily operations. We focus on timely, effective engagement on the issues and decisions that matter
most to them, with the right colleagues leading each interaction. This spans the full organisation – from our Board of Directors, who maintain regular dialogue with key stakeholders, to the working‑level teams who
support engagement on our day‑to‑day activities. The insights we gain through these interactions directly inform the decisions that shape and deliver our strategy. Structured reporting mechanisms ensure that
information flows seamlessly from stakeholders to the Board and its Committees, helping us understand what we are hearing and enabling us to act on it.
Customers
Why our customers are important to us
Customers are the heart of our business,
representing a diverse community that includes
residential customers and large and small
businesses. Regular and effective engagement with
them is essential to delivering what they need and
expect from us.
Interests
Our customer base, made up of longstanding
customers and an increasing number of new ones,
have wide ranging interests. However, they all
share an expectation that we will deliver efficient,
reliable and affordable service, with transparency
and fairness in how we work with them. We strive
to understand their needs and challenges, along
with how our activities impact their daily lives and
businesses.
Our engagement
–The Board and Group Executive Committee
actively engage on customer matters to better
understand their needs and perspectives and
leverage that feedback into improving customer
experience.
–Strategic account teams have gained
momentum in 2025/26, positioning themselves
as trusted advisors who bring innovative
strategic solutions that can deliver at speed to
accelerate customers’ expansion opportunities.
–We lead or participate in industry initiatives to
find solutions for: general business planning,
expedited grid connections, and affordability
challenges faced by our customers.
Investors
–The Board receives regular updates on customer
matters and undertook two customer deep dives
during the year, including updates on the
implementation of the Kraken programme which will
enhance US customer experience and an
operational visit of the UKED customer call centre.
–Teams across the business engage with
customers on a day-to-day basis – in one-to-one
meetings and community forums – regarding
connections, bill-related matters and social
obligations.
Outcomes
–Our customer engagement helps shape what we
do both operationally and strategically.
Understanding our customers means we can
better meet their needs for new connections and
ongoing account management, and informs
longer-term policy.
–As companies increasingly adopt advanced
technologies, resilient, high-quality power and the
ability to timely connect new loads have become
paramount.
–In the US, our work with consumer advocates
continues to make a difference to many of our
customers’ ability to meet the rising challenge of
cost of living.
–In 2025 we launched our BIG conversation –
engaging with thousands of customers and
stakeholders on the future of their local electricity
network. This engagement will continue
throughout 2026/27 and is key to shaping our
future business plan.
Why our investors are important to us
We engage with equity and debt investors on our
strategy and performance. Their involvement
supports the investment needed for a resilient,
future-ready network and provides important
accountability — ensuring we remain transparent,
disciplined, and aligned with our long‑term
commitments.
Interests
Investors look to our financial and operational
performance as indicators of our capacity to
generate attractive returns and uphold
creditworthiness. They are also interested in our
Responsible Business commitments and reporting
to ensure their investments are sustainable, ethical
and responsible.
Our engagement
–During the year, the Chair, Chief Executive and
CFO met with institutional investors in the UK
and overseas as part of our comprehensive
investor relations programme.
–The Group Treasurer and Deputy Group
Treasurer met with Debt and Fixed Income
investors in the UK and overseas as part of our
debt engagement programme.
–Meetings followed our full and half-year results
and the announcement of our updated five-year
financial framework and acceptance of Ofgem’s
RIIO-T3 price control in March 2026.
–The Board engaged with shareholders at our
2025 AGM, which was held as a hybrid meeting
to enable participation both in person and online.
Shareholders were able to put questions to the
Board in advance of, or during, the meeting.
–The Board receives regular monthly updates on
investor relations matters from the Director of
Investor Relations, including the outcome of an
investor sentiment exercise which affirmed our
investor relations approach.
–Debt investors received an overview of our US
regulated businesses from the Group Treasurer
along with the Presidents and CFOs of our US
businesses.
–Held an investor event in May 2025 that shared
full-year results with a focus on major projects in
UK ET and New York.
Outcomes
–Through our engagement, investors understand
our investment case and have visibility of our
strategy, performance and financial strength. This
engagement helped us to efficiently access new
debt and equity funding during the period,
including £4.2 billion of newly issued senior debt.
–The Remuneration Committee considered
feedback from its engagement with investors in
relation to the Directors’ Remuneration Policy,
with 98.38% of voting investors voting in favour of
the Policy at the AGM.
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Our stakeholders cont.
Colleagues
Why our colleagues are important to us
We listen to and engage extensively with our
colleagues and with the bodies that represent them
through several channels and processes. This
enables us to understand their needs and
requirements and build a culture that not only
drives our performance and shapes our plans, but
also empowers colleagues to take ownership for
delivering results. Through fostering an inclusive,
supportive and collaborative environment, we
create the conditions for a skilled and motivated
workforce where everyone feels valued and able to
contribute to our shared success.
Interests
Colleague interests are wide-ranging. They have an
interest in company performance and what this
means for them individually, but also want to
understand – and play a part in – shaping our role
in the industry, contributing to our social impact,
and supporting the delivery of our strategic
objectives.
Our engagement
We continued our extensive programme of
colleague engagement in 2025/26. This included:
–Twice yearly live webcasts to all employees
hosted by the Chief Executive.
–Regular Chief Executive posts and interaction on
social media platforms.
–Regular all-hands calls hosted by members of
the Group Executive and senior management.
–The Chair visited two training facilities during the
and assets, and safeguard the interests of our stakeholders.
Our Enterprise Risk Management (ERM) Framework
National Grid is exposed to a variety of uncertainties (threats and opportunities) that could have a
material effect on the Group’s financial position, our operations, our reputation and stakeholder
interests; represented by our Group Principal Risks. These uncertainties are managed through our
ERM Framework and system of internal control. We maintain and monitor the application of the
Framework throughout the year and formally assess its effectiveness annually. This ongoing
oversight, alongside continuous improvement, enables us to respond effectively to changes in the
internal and external environment and to inform our Group Principal Risks and related risk
management activities.
Our risk management and internal control activities are delivered via a “Three Lines” model:
Risk, Controls and Assurance Governance:
–Identify and monitor the Group Principal Risks and emerging risks across the Group
First Line:
Business units
Second Line:
Risk and Compliance functions
–Identify and assess risks
–Manage day-to-day operational risks
–Apply risk appetite, delegated authorities,
policies, procedures and codes of conduct
–Design and operate internal controls and
other mitigation measures
–Monitor and report risks through relevant
reporting and escalation processes
–Risk and compliance oversight
–Design and/or enable risk management
processes across the Group and
responsible for continuous improvement
–Provide risk expertise, advice and support
–Monitor and assure compliance with
policies, standards and the ERM process
–Report to the Board and Group Executive
Third Line:
Internal Audit
–Internal audit (supported by outsourcing or co-sourcing with external assurance providers)
–Review and evaluate risk management activity and provide assurance over the effectiveness of the
control environment
–Report to the Board and the Group Executive
Governance and oversight
The Board is accountable for the Group’s system of risk management and internal control, including the
amount of risk the Group is prepared to accept in delivering our strategic priorities (our risk appetite).
The Group Principal Risks are monitored throughout the year. Each Group Principal Risk is also subject to
a detailed review annually by the Group Ethics, Risk and Compliance Committee and the relevant Board
committees. A consolidated summary of the Group Principal Risks and how they are being managed is
then reviewed bi-annually by the Audit & Risk Committee. Reporting includes consideration of changes in
the internal and external context, a review of the effectiveness of mitigations and internal controls, and an
assessment of whether risks are being managed within risk appetite, together with any additional
actions required.
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Corporate Governance
Financial Statements
Additional Information
Our Group Principal Risks
Business context
The external context in which we operate has changed significantly in recent years, particularly in relation to the political
and regulatory environment, technological developments, affordability considerations, and how we deliver for customers.
We adapt our business and risk management activities and mitigations accordingly.
Group Principal Risks
Operational risks arise from our core
business practices, which rely on our
systems, equipment, processes and people.
–Catastrophic security incident
–Significant safety or environmental event
–Loss of supply*
–Major capital projects
Strategic risks, both internal and external,
are associated with the business model,
corporate strategy and long-term planning.
–Satisfactory regulatory outcomes
–Climate change mitigation
–Political and societal expectations
–People capability and capacity
Financial risks are risks associated with
National Grid’s ability to raise capital,
maintain access to capital, and deliver
profitable growth.
–Financing our business
Compliance risks relate to compliance with
laws and regulations, industry standards,
contract requirements and internal policy.
–Legal and regulatory compliance
frameworks operate at a jurisdictional level
(i.e. UK, US federal, New York and
Massachusetts) and therefore apply
across all relevant National Grid
businesses rather than being
amalgamated at Group.
Strategic Group Principal Risks
Operational Group Principal Risks
Financial Group Principal Risks
Compliance Group Principal Risks
*Significant disruption of energy was renamed to Loss of supply during 2025/26 to better reflect the nature of the risk. Upstream supply considerations are included as a key cause.
A summary of actions taken by management to manage our Group Principal Risks is provided on pages 32 — 36. The Board reviewed these risks as part of the bi-annual
Group Principal Risk review, which incorporates feedback and recommendations from relevant Board Committees. Further information can be found on pages 100 — 104.
Strategic priorities
Risk trend
Enable the energy
transition
Build the networks
of the future now
Deliver for
customers
Operate safely and
efficiently
Build tomorrow’s
workforce today
Increasing
Decreasing
No change
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Our Group Principal Risks cont.
Operational Group Principal Risks
Catastrophic security incident
Oversight: Board and
Audit & Risk Committee
Description
There is a risk that we are unable to adequately anticipate and
manage disruptive forces on our critical systems, facilities and
personnel, because of cyber attacks, physical attacks, malicious
internal or external actors, or inadequate recovery capabilities,
resulting in disruption of business operations, tampering or abuse of
assets, safety hazards, or loss of confidentiality, integrity, and/or
availability of systems and data.
Developments during 2025/26
The Board recognises that the risk of a catastrophic security
incident is being driven by an increasingly hostile and complex
threat environment, with potential for severe operational, financial,
and reputational consequences for critical national infrastructure
providers. Against these drivers, the Board’s focus is on whether
the Group has robust, layered defences and recovery capability to
prevent, detect and respond to catastrophic security events.
Actions taken by management
Management actions are focused on preparedness and rapid
recovery, recognising that the threat landscape is constantly
evolving. These actions include:
–Expansion of the risk to incorporate physical security incidents,
recognising the hybrid nature of threat, and reducing visibility
gaps to physical security controls and management.
–Employing technical, administrative, and physical/cyber security
controls for both IT and operational technology aligned to the
National Institute of Standards, and Technology Cybersecurity
Framework (NIST CSF) v2.0, as well as all applicable laws and
regulations.
–We consistently verify and validate our risk management through
internal and external audits and risk assessments, penetration
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Responsible Business review cont.
Our people
We are committed to
A workplace where all
colleagues can thrive
At National Grid, we believe that diversity of
thought drives innovation, enhances performance,
and strengthens our ability to deliver for our
customers and communities. We are committed to
fostering a workplace that is inclusive, respectful
and empowering, where every individual feels
welcome and supported.
Our focus is on our work environment, ensuring
colleagues are treated fairly, respecting the right to
differing opinions, and maintaining a safe work
environment. We will continue to adapt our
approach to meet the needs of our people, our
industry, and our stakeholders while staying true to
our values of doing the right thing and finding a
better way.
We are committed to
Creating an inclusive culture
Fostering a culture in which colleagues
feel safe to speak up and confident their
voices are heard by the Group Executive
Committee and Board remains a priority.
Our leaders play a central role in shaping this
culture, supported by a global learning curriculum
that provides inclusive leadership training for
people managers.
Our Employee Resource Groups (ERGs) play a vital
We are committed to
role at National Grid. Open to all colleagues, 33%
of our workforce are members of at least one ERG.
ERGs help build awareness of inclusion and
belonging by offering support and development
opportunities, enabling colleagues to bring their
true selves to work and reach their full potential.
We carry out two annual employee engagement
surveys to provide the Group Executive Committee
and Board with further insight and understanding
of our culture and engagement. In our 2025/26
survey, our employee engagement index was 81%
and our Safe-to-Say score was 73%,
demonstrating that our employees feel engaged in
their work and empowered to speak up.
Throughout the year we were recognised for
numerous industry awards, including being named
in Times Top 50 Employers for Gender Equality, a
Glassdoor 2026 Best Place to Work, 8th out of the
top 75 employers in the 2025 UK SMI, and The
Equality 100 Award: Leader in LGBTQ+ Workplace
Equality Distinction by the Human Rights
Campaign Foundation.
In 2025, we participated in the Workforce
Disclosure Initiative for the eighth consecutive year,
achieving a disclosure score of 88% compared to
the sector average of 67%.
We are committed to
Leading the industry on
employee health and wellbeing
Our employee wellbeing index is 77%.
We aim to empower our colleagues to prioritise
their health and wellbeing by promoting healthy
practices and by offering wellbeing resources
through multiple channels. By focusing on health
and wellbeing, we aim to foster an environment
where everyone can thrive together.
In 2025/26, we continued to deliver our Thriving
Together health and wellness ambition to support
our people in feeling engaged and empowered to
prioritise health, wellbeing, and performance. We
provide our colleagues with educational and
support resources, materials for managers to
promote health and wellbeing on their teams, a full
range of health and wellness benefits, support for
neurodiverse colleagues, and on-site health
professionals. We also provide digital health and
wellbeing apps and access to an Employee
Assistance Programme to our colleagues in the UK
and US.
Ensuring all colleagues receive
fair and equitable pay
We are continuing to focus on our
gender pay gap.
In the UK, we remain an accredited Living Wage
Foundation employer, which demonstrates that we
go beyond the Living Wage requirements,
voluntarily paying our trainees the Living Wage. We
undertake a Living Wage review each year to
ensure continued alignment. Our commitment to
the Living Wage for our direct workforce also
extends to our contractors. In the US, colleagues
are paid above the statutory minimums. We also
Gender demographic as at 31 March 20261
Our Board2
Senior management3
Whole company3
46%
44%
25%
Male 6
Female 5
Male 90
Female 72
Male 24,803
Female 8,214
Male
Male
Male
Female
Female
Female
1.Companies Act 2006 disclosure. We have included information relating to subsidiary directors, in accordance with the Companies Act 2006. Senior management is defined as those managers who are
at the same level as, or one level below, the Group Executive Committee. It also includes those who are Directors of subsidiaries where we have a majority interest, or who have responsibility for
planning, directing or controlling the activities of the Group, or a strategically significant part of the Group, and are employees of the Group.
2.Board refers to Directors of National Grid plc as defined on page 256 of this document.
3.In scope are active, permanent employees. Out of scope are non-employees, temporary staff and interns.
provide a range of competitive benefits to our
colleagues that go beyond statutory minimums.
When making remuneration decisions for our
Executive Directors and other senior leaders, our
People & Remuneration Committee takes account
of the remuneration arrangements and outcomes
for the wider workforce.
We review gender and ethnicity pay gaps annually
and our UK gender pay gap is reported one year in
arrears in accordance with UK legal requirements
on gender pay gap reporting. Our UK base gender
pay gap continues to be minimal.
Our gender pay gap disclosure
can be found on our website
Further information on Board workforce engagement can be found on page95
Further details on our culture can be found on our website.
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Additional Information
Responsible Business review cont.
Our Responsible Business Fundamentals
We are committed to
Safely, reliably and efficiently
connecting millions of people
to the energy they use
Health and safety
The health and safety of all our colleagues and
contractors is paramount. We require our people
to demonstrate our company-wide safety
principles of:
–Safe to Say: open and honest conversations
–Safe Choices: make smart decisions
Responsible
Business
Fundamentals
Every day, we safely, securely and reliably
connect millions of people to energy,
prioritise resilience and operate responsibly.
Our Responsible Business Fundamentals are the foundation of the pillars of our
Responsible Business Charter. We aim to continue to deliver on what is expected
of us and to be a compliant and ethical business in everything we do. We seek to
do this by ensuring safe and reliable operations and living our values, while
influencing our partners and supply chain and holding them to the same standards.
We invest in technology and governance, monitor security and risks, and advocate
for responsible business practices.
–Safe to Stop: stop the job whenever there is a
safety concern
–Safe to Learn: learn from every experience
We endeavour to mitigate risks and eradicate
injuries to our workforce, supported by our safety
management processes and Group safety
reporting system. To promote safe practices, we
maintain a full range of internal safety policies and
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Financial Statements
Additional Information
Task Force on Climate-related Financial Disclosures (TCFD) cont.
Governance
Board
Responsible Business
Committee
Audit & Risk
Committee
Safety & Operations
Committee
People & Remuneration
Committee
Nomination
Committee
Responsible for Board
oversight of climate‑related
matters, including
sustainability strategy,
climate transition planning,
resilience considerations
and identification of
climate‑related risks and
opportunities, in line with the
TCFD framework.
Oversees the identification,
assessment and
management of risks,
including internal controls
and review of TCFD‑aligned
disclosures. Considers
climate‑related financial
impacts, capital allocation,
financing decisions and
metrics, and alignment of
financial planning with the
Group’s transition plan.
Monitors operational safety
and resilience, including
management of physical
climate‑related risks and
adaptation measures
impacting assets and
operations.
Establishes executive
remuneration, incentives,
skills and succession
planning, including LTPP
oversight of controllable
Scope 1 emissions
reductions and energy
transformation measures.
Ensures the Board
collectively has appropriate
skills and experience,
covering climate, energy
transition and sustainability
expertise.
Group Executive Committee
Responsible
Business Committee
Oversees Group-wide RBC
matters, including political,
societal, sustainability and
regulatory issues.
Audit, Risk &
Finance Committee
Manages and coordinates
development and delivery of
audit, risk and financial
activities across the Group,
including climate-related
principal risks.
Safety & Operations
Committee
Oversight of safety, heath and
wellbeing, asset management
and capital projects.
People & Remuneration
Committee
Sets remuneration and
oversees talent, culture, and
people risks to support Group
strategy.
Group Investment
Committee
Has delegated authority to
approve investment, acquisition
and divestment decisions,
including ASTI and NY Upstate
Upgrade.
Management forums
Sustainability Delivery
Steering Group
Drives RBC integration,
including climate strategy and
targets. Chaired by CSO with
attendance from business unit
and function senior leaders.
ESG Strategic
Steering Group
Guides and steers on ESG
strategy. Comprised of senior
leaders from Sustainability,
Finance, Legal and Corporate
Affairs.
Sustainability
Implementation Group
Implements RBC
commitments and principles.
Monitors climate progress and
shares best practice among
business peer groups.
Green Financing
Committee
Chaired by the Group
Treasurer, overseeing
governance of the
programme, including project
evaluation for green financing.
Group Sustainability
and Finance ESG teams
Responsible for the Group’s
sustainability strategy and
reporting deliverables, ensuring
credible and reliable data,
including TCFD disclosures.
Business unit level
Business units are responsible for delivering the Group’s RBC and CTP. Targets are embedded in performance contracts and progress tracked through our Enterprise
Performance Management (EPM) framework. Climate change risks and opportunities are evaluated via the Enterprise Risk Management (ERM) process (see page 30).
Management’s role
The Board delegates responsibility to management for
asset management and maintenance planning,
implementation of the net zero strategy and delivering
climate commitments and targets. This is then
considered at the relevant Group Executive Sub-
Committee. These Sub-Committees were revised in
the year to reflect the Board Committees and enable
more streamlined reporting and clearer accountability
of topics, including sustainability and climate change.
Management is also responsible on a day-to-day
basis for managing climate-related risks and
opportunities, and for reporting on progress to the
Board and its Committees.
Sustainability roles are integrated across the Group
6, 7 and 11. Categories not listed are excluded as not material.
2.Includes Scope 2 location-based emissions only as line losses
make up the vast majority of these emissions and we have
limited renewable electricity certificates and other contractual
instruments in place. 2024/25 excludes National Grid ESO.
3.Near-term target approved by Science Based Targets initiative
(SBTi) and aligned to the Paris Agreement and a 1.5°C pathway.
GHG targets are against a financial year 2018/19 baseline.
4.Near-term target approved by SBTi and aligned to a well below
2°C pathway. GHG targets are against a financial year 2018/19
baseline.
5.Third-Party Sold Gas, a US-only emission, are downstream
emissions associated with the combustion of natural gas
delivered through our network but sold by a company other than
National Grid. This differs from Scope 3 Cat. 11 GHG Protocol
guidance, which otherwise advises to consider only the end use
of goods sold by the reporting company itself.
Note: The above data together with our Climate change – Scope 1,
2 and 3 emissions KPIs on page 27 and “Absolute energy
consumption in our flagship offices” on page 42 is responsive to the
UK Government’s Streamlined Energy and Carbon Reporting (SECR)
requirements. We have split out our Group energy consumption into
constituent parts for greater transparency. Fuels consumed for
power generation on behalf of LIPA, the contracting body is shown
separately because energy consumption related to power generation
can vary greatly year-on-year and is determined by LIPA. Amounts
are presented in GWh, with 1 GWh=1,000,000 kWh.
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Additional Information
Financial review
A solid financial return
Making the connection – delivering outputs efficiently and earning a solid financial return.
Revenue
Profit and cash flows
Investment
The vast majority of our revenues are set in accordance with our
regulatory agreements (see pages 220 – 225) and are calculated
based on a number of factors, including investment in network assets,
performance on incentives, allowed returns on equity and cost of
debt, and customer satisfaction.
Our ability to convert revenue to profit and cash is important. By managing
our operations efficiently, safely and for the long term, we generate substantial
operating cash flows. Coupled with long-term debt financing, as well as
additional capital generated through the Rights Issue and take-up of the
shareholder scrip dividend option during periods of higher investment,
we are able to invest in growing our asset base and fund our dividends.
We invest efficiently in our networks to achieve strong and sustainable
growth in our regulated asset base over the long term. We also invest
in assets in our non-regulated businesses. We continually assess, monitor
and challenge investment decisions so we can continue to run safe, reliable
and cost-effective networks.
Statutory revenue (%)
Statutory operating profit (%)
Capital investment (%)
Underlying net revenue1 (%)
Underlying operating profit1 (%)
Total assets (used for asset growth) (%)
ò
UK Electricity Transmission (UK ET)
16%
ò
UK Electricity Distribution (UK ED)
11%
ò
New York
43%
ò
New England
23%
ò
National Grid Ventures (NGV)
6%
ò
Other activities
1%
ò
UK Electricity Transmission (UK ET)
30%
ò
UK Electricity Distribution (UK ED)
21%
ò
New York
22%
ò
New England
17%
ò
National Grid Ventures (NGV)
13%
ò
Other activities
(3)%
ò
UK Electricity Transmission (UK ET)
38%
ò
UK Electricity Distribution (UK ED)
14%
ò
New York
30%
ò
New England
17%
ò
National Grid Ventures (NGV)
1%
ò
Other activities
—%
£17.7bn
£5.4bn
£11.6bn
ò
UK Electricity Transmission (UK ET)
20%
ò
UK Electricity Distribution (UK ED)
14%
ò
New York
38%
ò
New England
20%
ò
National Grid Ventures (NGV)
8%
ò
Other activities
—%
ò
UK Electricity Transmission (UK ET)
30%
ò
UK Electricity Distribution (UK ED)
22%
ò
New York
30%
ò
New England
15%
ò
National Grid Ventures (NGV)
6%
ò
Other activities
(3)%
ò
UK Electricity Transmission (UK ET)
34%
ò
UK Electricity Distribution (UK ED)
18%
ò
New York
27%
ò
New England
14%
ò
National Grid Ventures (NGV)
4%
ò
Other activities
3%
£13.2bn
£5.7bn
£72.0bn
1.Non-GAAP alternative performance measures (APMs). For further details and reconciliation to equivalent GAAP measures see Other unaudited financial information on pages 236 – 247.
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Financial review cont.
Summary of Group financial
performance for the year
ended 31 March 2026
Statutory EPS1
65.5p
2024/25
2023/24
Underlying EPS1
78.0p
2024/25
2023/24
Group RoE
9.8%
2024/25
2023/24
Asset growth
10.9%
2024/25
2023/24
1.From continuing operations.
Financial summary for continuing operations
£m
2025/26
2024/25
Change
Accounting profit
Gross revenue
17,687
18,378
(4)%
Other operating income
489
—
n/m
Operating costs
(12,745)
(13,444)
5%
Statutory operating profit
5,431
4,934
10%
Net finance costs
(1,325)
(1,357)
2%
Share of joint ventures and associates
76
73
4%
Tax
(939)
(821)
(14)%
Non-controlling interest
(2)
(3)
33%
Statutory earnings
3,241
2,826
15%
Exceptional items and remeasurements1
(333)
(171)
n/m
Tax on exceptional items and remeasurements1
(16)
(40)
60%
Adjusted earnings1
2,892
2,615
11%
Timing and major storm costs1
636
592
n/m
Tax on timing and major storm costs1
(168)
(156)
n/m
Deferred tax on underlying profits in NGET and NGED1
499
401
24%
Underlying earnings1
3,859
3,452
12%
Statutory EPS
65.5p
60.0p
9%
Adjusted EPS1
58.5p
55.6p
5%
Underlying EPS1
78.0p
73.3p
6%
Dividend per share1
48.49p
46.72p
3.8%
Dividend cover – underlying1
1.6x
1.6x
3%
Economic profit
Group financial performance after interest and tax (Group RoE numerator)1
2,866
2,602
10%
Group RoE1
9.8%
9.0%
80bps
Capital investment and asset growth
Capital investment
11,576
9,847
18%
Regulated asset growth1
11.7%
10.5%
120bps
Asset growth1
10.9%
9.0%
190bps
Balance sheet strength
FFO/adjusted net debt1
13.0%
13.7%
-70bps
RCF/adjusted net debt1
9.3%
9.8%
-50bps
Net debt (note 29 to the financial statements)
44,160
41,371
7%
Add: held for sale net debt
—
(55)
n/m
Net debt (including held for sale)1
44,160
41,316
7%
Group regulatory gearing1
61%
61%
0bps
1.Non-GAAP alternative performance
measures (APMs) and/or regulatory
performance measures (RPMs).
For further details see Other
unaudited financial information
on pages 236 – 247.
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Additional Information
Financial review cont.
Performance management framework
In managing the business, we focus on various non-IFRS alternative performance measures (APMs) and
regulatory performance measures (RPMs) which provide meaningful comparisons of performance between
years, monitor the strength of the Group’s balance sheet and ensure profitability reflects the Group’s
regulatory economic arrangements. Such APMs and RPMs are supplementary to, and should not be
regarded as a substitute for IFRS measures, which we refer to as statutory results.
Our business performance as set out in our regulatory agreements can differ from accounting under
IFRS, principally because our regulators allow for regulatory deferral accounting. Our allowed revenues
are set in accordance with our regulatory price controls or rate plans. Statutory IFRS does not allow us
to recognise regulatory assets or liabilities (for the difference between collected and allowed regulatory
revenues). As a result we use a suite of APMs (defined by us) to help measure and monitor our underlying
regulated business performance. We explain the basis of these measures and, where practicable,
reconcile these to statutory IFRS results (i.e. GAAP) in Other unaudited financial information on pages
236 – 247. Our RPMs have been calculated for the total Group (or individual entities where relevant)
and these are not based on IFRS measures. Specifically, we measure the financial performance of the
Group from different perspectives:
–Accounting profit: In addition to statutory IFRS measures we report adjusted results (i.e. before
exceptional items and remeasurements), and underlying results, which further take account of:
i) volumetric and other revenue timing differences arising from our regulatory contracts; (ii) major storm
costs (net of in-year allowances and deductibles) which are recoverable in future periods when they
exceed a $100 million threshold; and (iii) deferred tax in our UK regulated businesses (NGET and
NGED). In doing so, we intend to make the impact of such items clear to users of the financial
information in this Annual Report.
–Economic profit: Group Return on Equity (RoE) takes account of the regulated value of our assets
and of our regulatory economic arrangements to show the returns on shareholder equity.
–Capital investment and asset growth: Capital investment comprises our additions to PP&E and
intangible assets (excluding acquisitions), equity investments in joint ventures and associates, along
with net movements in capex prepayments. Asset growth represents the year-on-year increase in
RAV and US rate base in our regulated businesses (referred to as ‘regulated asset growth’), plus
the increase in net assets (excluding certain balances such as pensions, net debt and deferred taxes)
in our non-regulated businesses, but excluding the impact of currency movements.
–Balance sheet strength: Maintaining a strong investment grade credit rating allows us to finance
our growth ambitions at a competitive rate. Hence, we monitor credit metrics used by the major rating
agencies to ensure we are generating sufficient cash flow to service our debts. Group regulatory
gearing measures our Group net debt as a proportion of the Group’s assets that are used to measure
asset growth. This includes balances for businesses classified as held for sale under IFRS.
This balanced range of measures of financial wellbeing informs our dividend policy which aims to grow
annual DPS in line with UK CPIH, thus maintaining the DPS in real terms.
Financial summary for continuing operations
Accounting profit: Statutory IFRS earnings were £3,241 million in 2025/26, £415 million (15%)
higher than the prior year. Statutory earnings benefited from pre-tax net exceptional gains of £376 million
related to the sale of our two businesses (Grain LNG and National Grid Renewables) in 2025/26; and pre-
tax remeasurement losses of £43 million(2025: pre-tax net exceptional credits of £42 million and pre-tax
remeasurement gains of £129 million). For details on exceptional items, refer to note 5 to the financial
statements. Timing swings were £131 million adverse year-on-year, with a £636 million net under-
recovery in 2025/26 (2025: £505 million net under-recovery). These factors, the net impact of tax on these
items and an improvement in underlying business performance meant that statutory EPS for continuing
operations of 65.5p was 5.5p higher than the prior year.
Our ‘adjusted’ results exclude the impacts from exceptional items and remeasurements as explained
on page 155. In 2025/26, adjusted earnings from continuing operations were £2,892 million, up
£277 million (11%) from the prior year. Adjusted earnings in 2025/26 included a timing net under-recovery
after tax of £468 million(2025: £372 million net under-recovery). As a result, adjusted operating profit of
£5,044 million was up £279 million (2025: £4,765 million). Adjusted net finance costs of £1,271 million
were £90 million lower, as a result of higher average net debt and higher interest rates being more than
offset by higher capitalised interest and other interest income. Share of profits from joint ventures and
associates of £76 million were broadly flat year-on-year. Adjusted tax of £955 million was £94 million
higher, driven by the increase in profits, but resulted in a stable effective tax rate of 25.3% (2025: 25.3%).
Our policy is to exclude deferrable storm costs (net of allowances and deductibles) from underlying results if
these exceed a $100 million aggregate pre-tax threshold. In 2024/25, we included $110 million (£87 million)
of storm costs in our adjusted results, but excluded these from underlying results. In 2025/26, our
allowanceswere higher and deferrable storm costs were below this threshold, so $52 million (£39 million)
of deferrable storm costs that are recoverable in future periods are included in our underlying results.
Underlying operating profit was up 6% driven by improved performance in New York (from updated rates
and the collection of unremunerated costs in prior periods) along with higher allowed revenues in UK
Electricity Transmission (RAV growth and increased ASTI-related ‘fast money’). New England was lower
with updated rates and capital trackers being more than offset by a FERC order on Transmission Owner
RoEs across New England (mostly related to historical years). National Grid Ventures was lower mainly
as a result of the sale of two businesses in the year (Grain LNG and National Grid Renewables). Other
activities and the contribution from joint ventures and associates were broadly flat year-on-year. Regulated
controllable costs were 2% higher (at constant currency), with inflation and workload increases being
partly offset by efficiency savings. Depreciation and amortisation were higher than the prior year due to
our growing asset base. Net debt-related financing costs were higher, driven by our ongoing investment
programme. Other interest was favourable year-on-year driven by higher levels of capitalised interest.
After accounting for non-controlling interests, underlying earnings increased by 12% and resulted in
a 6% increase in underlying EPS to 78.0p.
Economic profit: Our Group RoE for 2025/26 was 9.8%, 80bps higher than the 9.0% achieved in the
prior year, with the numerator increasing by £264 million, (up 10% year-on-year), primarily driven by higher
regulatory business performance, compared with an increase in the denominator of £49 million (up 0.2%
year-on-year), which includes the beneficial impact of asset growth being partly funded by higher gearing.
Capital investment and asset growth: Capital investment of £11,576 million was £1,729 million
(18%) higher than 2024/25, driven by a step up in investment across our regulated businesses, partly
offset by lower investment in National Grid Ventures. Higher capital investment and the impact of RAV
indexation have helped deliver asset growth of 10.9% (2025: 9.0%).
Balance sheet strength: Net debt increased from £41.4 billion at March 2025 to £44.2 billion at
March 2026. Operating cash inflows of £7.8 billion (2025: £6.8 billion) along with disposal proceeds
from the sales of NG Renewables £1.5 billion and Grain LNG £1.3 billion helped to fund £10.6 billion
(2025: £9.7 billion) of investing cash outflows. Regulatory gearing was maintained at 61% (2025: 61%)
and our calculation of RCF/adjusted net debt credit metric was 9.3%, a decrease of -50bpscompared
with 2024/25 and remains above the current rating threshold of 7.0%.
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Financial review cont.
Dividend
The recommended full-year dividend per ordinary share of 48.49p is in line with our policy of increasing the prior year dividend in line with UK CPIH inflation and is covered 1.6 times by underlying EPS.
Profitability and earnings
In calculating adjusted profit measures, where we consider it is in the interests of users of the financial statements to do so, we exclude certain discrete items of income or expense that we consider to be exceptional
in nature. The table below reconciles our statutory profit measures for continuing operations, at actual exchange rates, to adjusted and underlying versions. Further information on exceptional items and remeasurements
is provided in notes 2, 5 and 6 to the financial statements.
Reconciliation of profit and earnings from continuing operations
Operating profit
Profit after tax
Earnings per share
£m
2025/26
2024/25
Change
2025/26
2024/25
Change
2025/26
2024/25
Change
Statutory results
5,431
4,934
10%
3,243
2,829
15%
65.5p
60.0p
9%
Exceptional items
(376)
(42)
n/m
(384)
(118)
n/m
(7.7p)
(2.4p)
n/m
Remeasurements
(11)
(127)
n/m
35
(93)
n/m
0.7p
(2.0p)
n/m
Adjusted results
5,044
4,765
6%
2,894
2,618
11%
58.5p
55.6p
5%
Timing
636
505
n/m
468
372
n/m
9.5p
7.9p
n/m
Major storm costs
—
87
(100)%
—
64
(100)%
—p
1.3p
(96)%
Deferred tax in NGET and NGED
—
—
—%
499
401
24%
10.0p
8.5p
17%
Underlying results
5,680
5,357
6%
3,861
3,455
12%
78.0p
73.3p
6%
Timing over/(under)-recoveries
In calculating underlying profit, we exclude regulatory revenue timing over- and under-recoveries,
major storm costs (defined below) and deferred tax on underlying results of our UK regulated business
(NGET and NGED), also defined below. Under the Group’s regulatory frameworks, most of the revenues
we are allowed to collect each year are governed by regulatory price controls in the UK and rate plans
in the US. If more than this allowed level of revenue is collected, an adjustment will be made to future
prices to reflect this over-recovery; likewise, if less than this level of revenue is collected, an adjustment
will be made to future prices in respect of the under‑recovery. These variances between allowed and
collected revenues and timing of revenue collections for pass-through costs give rise to ‘timing’ over-
and under-recoveries.
The following table summarises management’s estimates of such amounts for the two years ended
31 March 2026 and 31 March 2025 for continuing operations. All amounts are shown on a pre-tax basis
and, where appropriate, opening balances are restated for exchange adjustments and to correspond with
subsequent regulatory filings and calculations, and are translated at the 2025/26 average exchange rate
of $1.343:£1.
£m
2025/26
2024/251
Balance at start of year (restated)
60
1,018
UK Electricity Transmission
(77)
(151)
UK Electricity Distribution
(116)
407
UK Electricity System Operator (sold in 2024/25)
—
(479)
New England
94
57
New York
(537)
(323)
In-year under-recovery
(636)
(489)
Disposal of UK Electricity System Operator
—
(462)
Balance at end of year
(576)
67
1.March 2025 balances restated to correspond with 2024/25 regulatory filings and calculations.
In relation to timing under-recoveries, the estimated closing net under-recovered balance at 31 March
2026 (at an average exchange rate of $1.34) was £576 million, comprising: a net £68 million asset
to be recovered in UK Electricity Transmission; a net £2 million liability to be returned in UK Electricity
Distribution; a net £274 million asset to be recovered in New England; and a net £236 million asset to
be recovered in New York (for further details see page 240). In calculating the post-tax effect of these
in‑year timing recoveries, we impute a tax rate based on the regional marginal tax rates, consistent with
the relative mix of UK and US balances.
National Grid plc Annual Report and Accounts 2025/26
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Financial review cont.
Major storm costs (US)
We exclude the impact of major storm costs in the US where the aggregate amount is sufficiently
material in any given year. Such costs (net of in-year allowances and deductibles) are recoverable under
our rate plans but are expensed as incurred under IFRS. Accordingly, where the aggregate total US
major storm costs incurred (net of in-year allowances and deductibles) exceeds $100 million in any given
year, we exclude the net costs from underlying earnings. In 2025/26, we incurred deferrable storm costs
(net of allowances) which are eligible for future recovery of $52 million, but this did not exceed our pre-set
$100 million threshold to be excluded from underlying results. In the prior year, we incurred $110 million
(£87 million) of deferrable storm costs (net of allowances) before tax, or £64 million post-tax and
consequently these were all excluded from our reported underlying results.
Deferred tax in UK regulated businesses
We exclude deferred tax in our UK regulated businesses (NGET and NGED) in our underlying earnings
measure. Tax is generally considered to be a pass-through cost by our UK regulator, with revenue tax
allowances linked to the level of cash tax expected to be paid in the year. In 2025/26, we excluded
£499 million (2025: £401 million) of deferred tax charges from our underlying results.
Segmental operating profit
The tables below set out operating profit on statutory, adjusted, and underlying bases.
Statutory operating profit
£m
2025/26
2024/25
Change
UK Electricity Transmission
1,605
1,277
26%
UK Electricity Distribution
1,122
1,598
(30)%
UK Electricity System Operator
—
(213)
100%
New England
947
1,008
(6)%
New York
1,184
1,269
(7)%
National Grid Ventures
715
5
n/m
Other activities
(142)
(10)
n/m
Total
5,431
4,934
10%
The notation ‘n/m’ is used throughout this section where the year-on-year percentage change is deemed
to be ‘not meaningful’.
Statutory operating profit increased in the year, primarily as a result of exceptional net gains of
£376 million in 2025/26 compared with net gains of £42 million in the prior year. For details on
exceptional items, refer to note 5 to the financial statements. This was largely offset by £131 million
adverse year-on-year movements in timing, £116 million adverse year‑on-year movements in commodity
derivative remeasurements and the impact of a weaker exchange rate. Statutory operating profit was
also supported by an improved underlying performance in our UK Electricity Transmission, UK Electricity
Distribution and New York businesses, partially offset by the prior year including a contribution from the
UK Electricity System Operator prior to its disposal, along with lower underlying profits in New England,
adversely impacted by the FERC order (mainly related to historical periods) and lower underlying profits
in National Grid Ventures, with the latter being driven by the sales of National Grid Renewables and
Grain LNG in 2025/26.
Adjusted operating profit (a non-GAAP measure)
£m
2025/26
2024/25
Change
UK Electricity Transmission
1,605
1,277
26%
UK Electricity Distribution
1,122
1,610
(30)%
UK Electricity System Operator
—
(364)
100%
New England
960
982
(2)%
New York
1,172
1,023
15%
National Grid Ventures
327
380
(14)%
Other activities
(142)
(143)
1%
Continuing operations
5,044
4,765
6%
Underlying operating profit (a non-GAAP measure)
£m
2025/26
2024/25
Change
UK Electricity Transmission
1,682
1,428
18%
UK Electricity Distribution
1,238
1,203
3%
UK Electricity System Operator
—
115
(100)%
New England
866
924
(6)%
New York
1,709
1,450
18%
National Grid Ventures
327
380
(14)%
Other activities
(142)
(143)
1%
Continuing operations
5,680
5,357
6%
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Financial Statements
Additional Information
Financial review cont.
The following segmental commentaries describe the reasons for the movements in statutory, adjusted
and underlying operating profit compared with the prior year. Unless otherwise stated, the discussion
of performance in the remainder of this Financial review focuses on underlying results.
UK Electricity Transmission
£m
2025/26
2024/25
Change
Revenue
2,898
2,619
11%
Operating costs
(1,293)
(1,342)
4%
Statutory operating profit
1,605
1,277
26%
Exceptional items
—
—
—%
Adjusted operating profit
1,605
1,277
26%
Timing
77
151
n/m
Underlying operating profit
1,682
1,428
18%
Analysed as follows:
Net revenue
2,507
2,164
16%
Regulated controllable costs (including pensions)
(290)
(293)
(1)%
Other operating costs
(62)
(54)
(15)%
Depreciation and amortisation
(550)
(540)
(2)%
Adjusted operating profit
1,605
1,277
26%
Timing
77
151
n/m
Underlying operating profit
1,682
1,428
18%
UK Electricity Transmission statutory operating profit was £328 million higher in the year. Timing under-
recoveries were £77 million in 2025/26 compared with an under-recovery of £151 million in 2024/25.
This year-on-year less adverse under-recovery is mainly the impact of the return in 2024/25 of prior
period balances (primarily tax allowances), a lower inflation true-up and a lower in-year recovery on
volumes and pass-through costs than 2024/25.
UK Electricity Transmission underlying operating profit increased by 18%. Underlying net revenues were
£269 million (12%) higher principally from higher totex allowances (including fast money on ASTI spend)
but also the impact of inflationary increases linked to RAV growth.
Regulated controllable costs including pensions were £3 million lower with the impact of inflationary
and workload increases, due to a larger workforce to support the growing asset base, being more than
offset by efficiency savings, non-recurring benefits related to IT and support service recharges and the
reclassifications of insurance recharges. Other costs were slightly higher than the prior year at £62 million,
including cost reclassifications, but this was partly offset by lower customer-funded diversions and
favourable gains on disposals of assets compared with 2024/25.
The higher depreciation and amortisation principally reflects a higher asset base as a result of continued
investment.
UK Electricity Distribution
£m
2025/26
2024/25
Change
Revenue
1,937
2,424
(20)%
Operating costs
(815)
(826)
1%
Statutory operating profit
1,122
1,598
(30)%
Exceptional items
—
12
(100)%
Adjusted operating profit
1,122
1,610
(30)%
Timing
116
(407)
n/m
Underlying operating profit
1,238
1,203
3%
Analysed as follows:
Net revenue
1,753
2,239
(22)%
Regulated controllable costs (including pensions)
(311)
(302)
3%
Other operating costs
(49)
(78)
37%
Depreciation and amortisation
(271)
(249)
(9)%
Adjusted operating profit
1,122
1,610
(30)%
Timing
116
(407)
n/m
Underlying operating profit
1,238
1,203
3%
UK Electricity Distribution statutory operating profit was £476 million lower in the year, reflecting the
impact of £523 million adverse year-on-year timing movements. Timing under-recoveries of £116 million
in 2025/26 were mainly due to the return of prior period balances, principally driven by an over-collection
in K‑factor (i.e. volumes/prices) in 2024/25 which was effectively returned in 2025/26, partly offset by true-
ups for pass-through costs and inflation. This compares with a timing over-recovery of £407 million in the
prior year, which was favourably driven by an over-collection of K-factor.
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Financial review cont.
In 2025/26 there were no exceptional costs compared with £12 million of exceptional costs in 2024/25
related to our major transformation programme.
UK Electricity Distribution underlying operating profit increased by £35 million (3%). Underlying net
revenues were £37 million higher than the prior year due to the impact of higher inflation, higher
totex allowances and improved DSO incentives performance partly offset by lower engineering
recharge income.
Regulated controllable costs including pensions were £9 million (3%) higher than the prior year from the
impact of increased inspection and maintenance work, combined with investment in capability build and
inflation impacts, partly offset by efficiencies achieved. Other costs were £29 million lower, reflecting costs
incurred in the prior year associated with Storm Darragh and lower engineering recharges.
Depreciation and amortisation increased by £22 million compared with the prior year due to the increasing
asset base.
UK Electricity System Operator
£m
2025/26
2024/25
Change
Revenue
—
1,029
(100)%
Operating costs
—
(1,242)
100%
Statutory operating loss
—
(213)
100%
Exceptional items
—
(151)
n/m
Adjusted operating loss
—
(364)
100%
Timing
—
479
n/m
Underlying operating profit
—
115
(100)%
Analysed as follows:
Net revenue
—
(188)
100%
Controllable costs
—
(159)
100%
Post-retirement benefits
—
(10)
100%
Other operating costs
—
(7)
100%
Depreciation and amortisation
—
—
—%
Adjusted operating loss
—
(364)
100%
Timing
—
479
n/m
Underlying operating profit
—
115
(100)%
UK Electricity System Operator was purchased by the UK Government on 1 October 2024 and had been
classified as ‘held for sale’ since October 2023. Based on the scale and pass-through nature of the
UK Electricity System Operator, it was not considered to be a separate major line of business and hence,
did not meet the definition of a discontinued operation under IFRS 5.
UK Electricity System Operator had a statutory operating loss of £213 million in 2024/25 as a
result of adverse timing (net of provisions for regulatory liabilities recognised under IFRS). In 2023/24
a £498 million exceptional provision was made for the return of the estimated remaining balance of
over‑collected revenues at the expected date of disposal (at that time, expected to be June 2024).
This provision was partially reversed in 2024/25 generating an exceptional credit of £151 million. Under
IFRS, a regulatory liability is not usually recognised on balance sheet for the return of such over-
recoveries, however due to the intended disposal of this business during 2024/25, a liability was
recognised given these amounts were expected to be settled through the planned sale process as
opposed to reduced future revenues. The remaining £347 million exceptional provision at the disposal
date was reflected in the reported gain on disposal of this business.
During 2024/25, UK Electricity System Operator had a timing under-recovery of £479 million arising from
the return of prior period over-recovered balances. The over-recovery was the result of higher revenues
collected through the BSUoS fixed price charges compared with total system balancing costs incurred.
At the disposal date, the impact of the residual net over-recovered position was assessed when
calculating the overall net disposal proceeds.
UK Electricity System Operator underlying operating profit in 2024/25 was £115 million. No depreciation
and amortisation was charged while the business was classified as ‘held for sale’.
New England
£m
2025/26
2024/25
Change
Revenue
4,174
4,306
(3)%
Operating costs
(3,227)
(3,298)
2%
Statutory operating profit
947
1,008
(6)%
Exceptional items
—
3
n/m
Remeasurements
13
(29)
n/m
Adjusted operating profit
960
982
(2)%
Timing
(94)
(61)
n/m
Major storm costs
—
3
(100)%
Underlying operating profit
866
924
(6)%
Analysed as follows:
Net revenue
2,723
2,648
3%
Regulated controllable costs
(668)
(706)
5%
Post-retirement benefits
(9)
(21)
57%
Bad debt expense
(84)
(62)
(35)%
Other operating costs
(509)
(408)
(25)%
Depreciation and amortisation
(493)
(469)
(5)%
Adjusted operating profit
960
982
(2)%
Timing
(94)
(61)
n/m
Major storm costs
—
3
(100)%
Underlying operating profit
866
924
(6)%
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Financial review cont.
New England’s statutory operating profit was £61 million lower (or £3 million lower on a constant
currency basis). This included commodity derivative remeasurement losses of £13 million (£42 million
adverse year-on-year), partially offset by £33 million favourable year‑on-year timing movements. Timing
over-recoveries of £94 million in 2025/26 are mainly due to the recognition of a receivable for FERC RoE
refunds in Mass Electric from New England Transmission Owners (which will be returned to customers
in future periods). In 2024/25, timing was over-recovered by £61 million mainly due to phasing of energy
efficiency programme spend and commodity costs. In 2024/25, there were £3 million of exceptional
items related to £7 million of charges for our major transformation progress and a £4 million gain related
to environmental provision movements.
New England’s underlying operating profit decreased by £58 million (6%) or £5 million (1%) on a constant
currency basis. Underlying net revenue was £42 million higher (£190 million higher at constant currency)
driven by updated rates, higher revenues from capital trackers and storm recoveries, partly offset by the
adverse impact of the FERC order. New England controllable costs were lower by £38 million (£3 million
higher at constant currency) as a result of additional workload and inflation, which were offset by efficiency
savings. Bad debt expense increased by £22 million (£25 million at constant currency) as a result of higher
accounts receivables and higher reserve rates. Depreciation and amortisation increased by £24 million
(£51 million at constant currency) as a result of higher investment. Other costs (on an underlying basis)
were £101 million higher (£124 million higher at constant currency) due to higher investment-related
expenses and higher property taxes, both driven by the growth in asset base along with higher funded
programme costs.
New York
£m
2025/26
2024/25
Change
Revenue
7,618
6,689
14%
Operating costs
(6,434)
(5,420)
(19)%
Statutory operating profit
1,184
1,269
(7)%
Exceptional items
—
(133)
n/m
Remeasurements
(12)
(113)
n/m
Adjusted operating profit
1,172
1,023
15%
Timing
537
343
n/m
Major storm costs
—
84
(100)%
Underlying operating profit
1,709
1,450
18%
Analysed as follows:
Net revenue
4,505
4,202
7%
Regulated controllable costs
(1,032)
(1,049)
2%
Post-retirement benefits
(19)
(33)
n/m
Bad debt expense
(156)
(141)
(11)%
Other operating costs
(1,357)
(1,225)
(11)%
Depreciation and amortisation
(769)
(731)
(5)%
Adjusted operating profit
1,172
1,023
15%
Timing
537
343
n/m
Major storm costs
—
84
(100)%
Underlying operating profit
1,709
1,450
18%
New York statutory operating profit was lower by £85 million (or £12 million lower at constant currency).
In the prior year New York incurred £133 million of net exceptional credits (a £142 million credit on
environmental provision movements, partly offset by a £9 million charge on our major transformation
programme). Timing under-recoveries in 2025/26 were £537 million (principally related to revenue
decoupling in KEDNY/KEDLI and the impact of levelisation of new rate increases in NIMO, along
with lower auction sale prices on transmission wheeling). In 2024/25, timing under-recoveries were
£343 million (driven by transmission wheeling and commodity under-recoveries due to colder weather
and KEDNY/KEDLI rate levelisation under-recoveries). This resulted in a £194 million adverse year-on-
year timing swing (£214 million adverse at constant currency).
New York underlying operating profit increased by £259 million (18%), or £342 million (25% at constant
currency). This was driven by higher net underlying revenues which increased by £497 million (11%),
or £757 million at constant currency, principally driven by updated rates including higher storm cost
allowances and the recovery of previously unremunerated costs (e.g. environmental and property taxes).
Regulated controllable costs were £17 million lower (£43 million higher at constant currency) year-on-
year, primarily as a result of increased workload (gas safety and reliability initiatives, CLCPA and increased
IT spend on new digital platforms) plus the impact of inflation, partly offset by efficiency savings. Bad debt
expense increased by £15 million (£23 million at constant currency) driven by increased customer billings.
Depreciation and amortisation increased due to the growth in assets. Other costs (on an underlying basis)
increased due to higher storm costs (partly offset by increased storm cost allowances in revenues), higher
property taxes, inflation-related environmental costs and investment-related costs.
National Grid Ventures
£m
2025/26
2024/25
Change
Revenue
1,098
1,397
(21)%
Operating costs
(232)
(1,220)
81%
Depreciation and amortisation
(151)
(173)
13%
Statutory operating profit
715
5
n/m
Exceptional items
(376)
360
n/m
Remeasurements
(12)
15
n/a
Adjusted/underlying operating profit
327
380
(14)%
National Grid Ventures’ statutory operating profit improved by £710 million, principally as a result of
a £489 million exceptional gain on sale on the disposal of Grain LNG in November 2025, partly offset
by a £96 million exceptional loss on disposal of National Grid Renewables sold in May 2025 (mainly
driven by the recycling of cumulative exchange rate adjustments since 2019/20 when this business was
originally acquired). This compared with exceptional charges in 2024/25 of £303 million (impairment of
our Community Offshore Wind investment), along with £57 million of transaction and separation costs for
the planned disposal of National Grid Renewables. Commodity remeasurements were gains of £12 million
in 2025/26 compared with losses of £15 million in 2024/25.
National Grid Ventures’ underlying operating profit was £53 million lower than 2024/25. On 29 May 2025
the sale of National Grid Renewables was completed, and on 28 November 2025 the sale of Grain LNG
was completed. The sale of Grain LNG in 2025/26 reduced underlying operating profit by £35 million year-
on-year. In the UK, interconnector profits decreased versus the prior year primarily as a result of lower
interconnector revenues as market spreads remained low. In the US, profit was lower, due to a £24 million
Revolution Wind gain on sale recognised in 2024/25, partly offset by lower development expenditure.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Financial review cont.
Other activities
£m
2025/26
2024/25
Change
Statutory operating loss
(142)
(10)
(1,330)%
Exceptional items
—
(133)
n/m
Adjusted/underlying operating loss
(142)
(143)
1%
Analysed as follows:
Property
46
54
(15)%
Corporate and Other activities
(188)
(197)
5%
Adjusted/underlying operating loss
(142)
(143)
1%
Other activities incurred a statutory operating loss of £142 million (2025: £10 million loss, which included
a £187 million exceptional gain on disposal of UK Electricity System Operator, £46 million of exceptional
charges related to our major transformation programme and £8 million of exceptional transaction and
separation costs incurred by our corporate function related to the planned disposal of our Grain LNG
business). Following a review of strategic priorities in 2025/26, the major transformation programme
launched in 2024 has been reshaped and the associated programme costs in the current year no longer
meet the quantitative threshold to be treated as exceptional.
Other activities’ underlying operating loss was £142 million (including corporate costs) in 2025/26
compared with £143 million loss in 2024/25. This improvement was driven by favourable year-on-year
fair value movements in our NG Partners investment portfolio and higher insurance captive profits,
mostly offset by increases in central costs to help deliver our overall group efficiency programme and
other corporate centre cost increases along with lower UK property sales in 2025/26 compared with
the prior year.
Exceptional items and remeasurements in operating profit – continuing
In 2025/26, we classified a number of items as exceptional, which has the net impact of increasing
our statutory operating profit by £376 million (2025: £42 million increase) compared with our adjusted
and underlying operating profit measures. These items comprise an exceptional gain of £489 million
on the sale of Grain LNG; an exceptional loss of £96 million on the sale of National Grid Renewables;
transaction, separation and integration costs of £17 million (2025: £65 million). The prior year included
a £146 million credit related to changes in environmental provisions; a £151 million provision release and
a £187 million gain on sale (both linked to UK Electricity System Operator); and a £303 million impairment
of an investment in National Grid Ventures. For further details see note 5 to the financial statements.
In 2024/25, we embarked on a new four-year major transformation programme designed to implement
our ‘pureplay networks business’ strategy, incurring £74 millionof exceptional costs. In 2025/26, it was
determined that this programme no longer met the exceptional items criteria and current year costs have
not been treated as exceptional.
We also exclude certain unrealised gains and losses on mark-to-market financial instruments
(‘remeasurements’) from adjusted and underlying profit. In 2025/26, net remeasurement gains
on commodity contract derivatives (i.e. ‘mark-to-market’ movements on derivatives used to hedge
the cost of buying wholesale gas and electricity on behalf of US customers and derivatives in our
UK interconnectors business) were £11 million, compared with net remeasurement gains of
£127 million in 2024/25.
Financing costs and taxation – continuing
Net finance costs
Statutory net finance costs of £1,325 million were down from £1,357 million in 2024/25 and included
derivative remeasurement net losses of £54 million (2025: £4 million net gains). Underlying net finance costs
of £1,271 million for 2025/26 were £90 million or 7% lower (£37 million or 3% lower at constant currency)
than 2024/25. Net debt related finance costs were £89 million higher (£146 million higher at constant
currency), driven by higher levels of average net debt (to fund our capex programme) and slightly higher
interest rates, partly offset by gains on favourable debt buy-backs. The effective interest rate for continuing
operations of 4.3% is 20bps higher than the prior year rate. Other interest was favourable year-on-year
reflecting £122 million higher capitalised interest, principally attributable to the step up in ASTI investment
in UK Electricity Transmission, along with favourable pension and OPEB interest income, lower discount
unwind on provisions and higher other interest income.
Joint ventures and associates
The Group’s share of net profits from joint ventures and associates on a statutory basis increased to
£76 million (2025: £73 million). Due to the sale of our Emerald joint venture on 29 May 2025, there are no
derivative remeasurements in the current year (2025: £2 million of losses). On an adjusted basis, the share
of net profits from joint ventures and associates increased by £1 million compared with 2024/25, mostly
reflecting higher BritNed revenues driven by higher auction prices, offset by a shorter ownership period
of our Emerald joint venture, which was sold as part of the National Grid Renewables disposal.
Tax
The statutory tax charge for continuing operations was £939 million (2025: £821 million) including the
impact of tax on exceptional items and remeasurements of £16 million credit (2025: £40 million credit).
The adjusted tax charge for continuing operations was £955 million (2025: £861 million), resulting in an
adjusted effective tax rate for continuing operations (excluding profits from joint ventures and associates)
of 25.3% (2025: 25.3%).
The underlying tax charge for the year (a non-GAAP measure) was £624 million (2025: £616 million).
The underlying effective tax rate (excluding joint ventures and associates) of 14.2% was 120bps lower
than last year (2025: 15.4%). This is mainly due to profit mix within the Group being more weighted
towards NGET and higher levels of capital investment in NGED leading to a lower underlying tax charge.
Our definition of underlying tax excludes deferred tax for NGET and NGED (as these entities do not
receive a regulatory revenue allowance for tax that has not yet been paid i.e. current tax is effectively
a pass-through from a regulatory perspective). The Group’s tax strategy is detailed later in this review.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Financial review cont.
Capital investment and asset growth
Capital investment
Capital investment comprises capital expenditure in critical energy infrastructure, equity investments,
equity funding contributions to joint ventures and associates, and net movements in capital expenditure-
related prepayments to secure delivery of future capital investment projects.
At actual exchange rates
At constant currency
£m
2025/26
2024/25
Change
2025/26
2024/25
Change
UK Electricity Transmission
4,372
2,999
46%
4,372
2,999
46%
UK Electricity Distribution
1,617
1,426
13%
1,617
1,426
13%
New England
2,043
1,751
17%
2,043
1,650
24%
New York
3,428
3,289
4%
3,428
3,101
11%
National Grid Ventures
109
378
(71)%
109
362
(70)%
Other activities
7
4
75%
7
4
75%
Total Group
11,576
9,847
18%
11,576
9,542
21%
UK Electricity Transmission investment was £1,373 million higher than 2024/25 with this 46% increase
primarily driven by expenditure on strategic investment (both Wave 1 and Wave 2 projects) including
offshore spend on EGL4 and Sea Link capacity reserve advance payments, and increased onshore spend
including North London Reinforcement, Yorkshire Green, Tilbury-Grain and Norwich-Tilbury along with
other smaller projects. In addition, investment was higher from progress on projects such as Uxbridge
Moor, Wallend and Margam and also increased for IT and cyber including a new state-of-the-art control
room and Supervisory Control and Data Acquisition (SCADA) system. Capitalised interest and interest
on prepayments of £229 million was £86 million higher than the prior year due to higher levels of assets
under construction.
UK Electricity Distribution increased by £191 million primarily due to increased asset replacement
and refurbishment, higher reinforcement works (in line with the scale up under RIIO-ED2), along with
higher non‑load capex driven by higher volumes across overhead lines and diversions and increased
investment in IT and telecoms.
In New England capital investment increased by £292 million (up £393 million at constant currency)
compared with the prior year. This was driven by spend on electric distribution including increases
in asset condition and system capacity, as well as grid modernisation through Advanced Metering
Infrastructure and Fault Location Isolation and Service Restoration (FLISR), higher electric transmission
investment primarily from asset condition and system capacity work, along with an increase in IT
investment. Investment in gas distribution remained relatively stable, with lower Gas System Enhancement
Plan activity being partly offset by increased enhanced safety regulation compliance investment.
Capital investment in New York was £139 million higher (up £327 million at constant currency) compared
with the prior year. The principal driver of this was higher electric investment, driven by system reinforcement
and increasing capacity to fulfil clean energy investment commitments (Upstate Upgrade and Climate
Leadership and Community Protection Act programmes) but also higher from an increase in the level
of IT system development. Investment in our gas networks was lower than in the prior year, with reduced
investment on our mains replacement programme, partly offset by higher spend on city state construction
and other mandated programme spend.
Capital investment in National Grid Ventures was £269 million lower (£253 million lower at constant
currency) with £210 million of this decrease attributable to the disposals of NG Renewables and
Grain LNG, and £53 million reflects the completion of construction of Viking Link interconnector
during 2024/25.
UK Electricity System Operator reported no capital investment since being classified as held for sale
during 2023/24.
Asset growth and regulated asset growth (non‑GAAP measures)
A key part of our investor proposition is growth in our regulated asset base. The regulated asset base is
a regulatory construct, representing the invested capital on which we are authorised to earn a cash return.
By investing efficiently in our networks, we add to our regulatory asset base over the long term and this in
turn contributes to delivering shareholder value. Our regulated asset base comprises our regulatory asset
value (RAV) in the UK, plus our rate base in the US (these are used to measure our ‘regulated asset
growth’). We also invest in related activities that are not subject to network regulation and this further
contributes to ‘asset growth’.
In total, asset growth in 2025/26 was 10.9% (2025: 9.0%). Asset growth tracks the overall increase in
assets (excluding foreign exchange movements and the impact of significant increases or decreases
from business acquisition or disposal transactions) using a combination of UK RAV and US rate base
for our regulated businesses, and IFRS balances for our non-regulated businesses. Asset growth
excludes the impact of the reduction in assets in our National Grid Ventures businesses as a result of
the disposal of our Grain LNG and National Grid Renewables businesses during 2025/26. A detailed
calculation of asset growth is provided on page 247.
In terms of asset growth by business sector, UK RAV growth was 12.8% (2025: 9.8%) driven by
increased ‘slow money’ additions and RAV indexation, along with higher RAV depreciation. US rate base
grew strongly by 10.3% (2025: 11.5%), with continued high levels of capital expenditure (as measured
under US GAAP) and more assets coming into service during the year resulting in increased rate base
at 31 March 2026. On a combined basis, the increase in our UK RAV and US rate base (at constant
currency) produced ‘regulated asset growth’ of 11.7% (2025: 10.5%).
Non-regulated businesses’ growth was 4.3% (2025: (2.1)%) primarily as a result of ongoing investment
in our US Servco on IT, which will support our US regulated businesses, partly offset by lower assets
held in our UK Property business.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Financial review cont.
Cash flow, net debt and funding
Net debt is the aggregate of cash and cash equivalents, borrowings, current financial and other
investments and derivatives (excluding commodity contract derivatives) as disclosed in note 29 to the
financial statements. ‘Adjusted net debt’ used for the RCF/adjusted net debt calculation is principally
adjusted for pension deficits and hybrid debt instruments. For a full reconciliation, see page 242.
The following table summarises the Group’s cash flow for the year, reconciling this to the change
in net debt.
Summary cash flow statement
£m
2025/26
2024/25
Change
Cash generated from continuing operations
7,861
6,991
12%
Purchase of intangibles, PP&E, investments in JVs and
acquisition of financial investments (net of disposals)
(10,601)
(9,713)
(9)%
Dividends from JVs and associates
105
126
(17)%
Business net cash outflow from continuing operations
(2,635)
(2,596)
(2)%
Net interest paid
(1,701)
(1,588)
(7)%
Net tax paid
(32)
(183)
83%
Cash dividends paid
(1,623)
(1,529)
(6)%
Other cash movements
39
11
255%
Net cash outflow (continuing)
(5,952)
(5,885)
(1)%
Disposals of subsidiaries and associates1
2,809
1,263
122%
Discontinued operations
—
22
(100)%
Rights Issue (net of costs)
—
6,839
(100)%
Other, including net financing raised/(repaid) in year
2,195
(1,474)
n/m
(Decrease)/increase in cash and cash equivalents
(948)
765
n/m
Reconciliation to movement in net debt
(Decrease)/increase in cash and cash equivalents
(948)
765
n/m
Less: other net cash flows from investing and financing
transactions
(2,195)
1,474
n/m
Net debt reclassified to held for sale
—
(55)
100%
Impact of foreign exchange movements on opening net debt
624
528
18%
Other non-cash movements
(270)
(476)
43%
(Increase)/decrease in net debt
(2,789)
2,236
n/m
Net debt at start of year
(41,371)
(43,607)
5%
Net debt at end of year
(44,160)
(41,371)
(7)%
1.Cash proceeds of £1,499 million for Grain LNG (less £163 million balance of cash and cash equivalents disposed) and £1,531 million
for National Grid Renewables (less £58 million balance of cash and cash equivalents disposed) (2025: cash proceeds of £628 million
for ESO (less £51 million balance of cash and cash equivalents disposed) and £686 million for the disposal of 20% retained interest
in National Gas Transmission).
Cash flow generated from continuing operations was £7.9 billion, £870 million higher than last year,
mainly due to higher net revenues (i.e. after deducting pass-through costs) increasing operating profit
and favourable working capital inflows. Cash expended on investment activities increased as a result of
continued growth in our regulated businesses including a significant step-up of cash capital investment in
UK Electricity Transmission, which was £1.1 billion higher than the prior year, along with higher investment
in New York, New England and UK Electricity Distribution. This includes ongoing cash investment in Grain
LNG and National Grid Renewables, subsequent to these businesses being reclassified as held for sale.
Net interest paid increased mainly as a result of lower interest income following Rights Issue proceeds
being utilised to fund the capital investment programme across the Group, along with the impact of the
timing of cash interest payments (accrued interest movements), partly offset by a higher average level of
net debt. The Group made net tax payments of £32 million (2025: £183 million) during 2025/26. This
decrease mainly related to lower cash tax payable in our US business as a result of offsetting losses and
lower cash tax payable in the UK as a result of our expanding capital programme.
The higher cash dividend reflected a lower weighted average scrip uptake of 28% in the current year
(2025: 31%) along with the annual inflationary increase and a higher share count.
In 2025/26, we completed the sale of our National Grid Renewables business for net cash proceeds of
£1,473 million and also sold our UK Grain LNG business for net cash proceeds of £1,336 million. These
net cash proceeds exclude cash balances sold with these businesses and exclude a provision for estimated
post closing capital expenditure obligations (see note 10 of the financial statements). In 2024/25, we had
cash inflows of £628 million from the sale of our UK Electricity System Operator business to the UK. We
also sold our final 20% interest in National Gas Transmission for proceeds of £686 million.
During the year, we raised £4.2 billion of new long-term senior debt to refinance maturing debt and
to fund a portion of our significant capital programme. In addition, we signed £2.4 billion of new loan
facilities, undrawn as at 31 March 2026, which we expect to draw in the future, including £1.7 billion
across two loan facilities that are guaranteed by European Export Credit Agencies and which are aligned
with our Green Financing Framework. Finally, on 13 April 2026, National Grid North America Inc. signed
a new £0.7 billion equivalent term loan.
Other cash movements principally relate to net financing inflows or outflows to maintain our cash balances
at an appropriate level in accordance with the Group liquidity policy, but do not have an impact on the
Group’s net debt. Other non-cash movements which do impact net debt, primarily reflect changes in the
sterling–dollar exchange rate, accretions on index-linked debt, lease additions and other derivative fair
value movements, offset by the amortisation of fair value adjustments on acquired debt.
As at 13 May 2026, we have £8.0 billion of undrawn committed facilities available for general corporate
purposes, all of which have expiry dates no earlier than May 2027. National Grid’s balance sheet remains
robust, with strong overall investment grade ratings from Moody’s, Standard & Poor’s (S&P) and Fitch.
The Board has considered the Group’s ability to finance normal operations as well as funding a significant
capital programme. This includes stress testing of the Group’s finances under a ‘reasonable worst-case’
scenario, assessing the timing of the sale of businesses held for sale and the further levers at the Board’s
discretion to ensure our businesses are adequately financed. As a result, the Board has concluded that
the Group will have adequate resources to do so.
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Financial Statements
Additional Information
Financial review cont.
Financial position
The following table sets out a condensed version of the Group’s IFRS balance sheet.
Summary balance sheet
£m
31 March 2026
31 March 2025
Change
Goodwill and intangibles
13,296
13,096
2%
Property, plant and equipment
81,520
74,091
10%
Assets and liabilities held for sale
—
2,194
(100)%
Other net liabilities
(1,663)
(805)
(107)%
Tax balances
(9,049)
(8,246)
(10)%
Net pension assets
2,147
1,916
12%
Provisions
(2,761)
(3,049)
9%
Net debt
(44,160)
(41,371)
(7)%
Net assets
39,330
37,826
4%
Goodwill and intangibles increased mainly as a result of additional investment in IT systems, partly offset
by amortisation and exchange rate movements. Property, plant and equipment increased mainly as a result
of the continuing capital investment programme offset by depreciation and exchange rate movements.
Assets and liabilities held for sale at 31 March 2025 comprised our UK Grain LNG business and our
US National Grid Renewables business, both of which were sold during 2025/26. Tax balancesincreased
principally from accelerated tax depreciation due to ongoing capital investment and movements in othernet
temporary differences, partly offset by exchange rate movements. Net pension assets increased mainly
as aresult of returns on investments and actuarial gains on scheme net assets. Provisions were reduced
principally asa result of utilisation of US environmental and UK interconnector revenue provisions, exchange
rate movements, partly offset by the impact of the discount unwind. Other movements are largely explained
by net working capital inflows and changes in the sterling–dollar exchange rate.
Regulatory gearing was maintained at 61% as at 31 March 2026 (2025: 61%). Regulatory gearing is a
non-GAAP measure and is calculated as net debt as a proportion of total regulatory asset value and other
business invested capital. Beneficial inflows from the proceeds for the sales of businesses (National Grid
Renewables and Grain LNG) were offset by financing outflows for net interest and dividend payments.
Taking into account the benefit of our hybrid debt, adjusted gearing as at 31 March 2026 was 61% (2025:
60%), with the current overall Group credit rating of BBB+/Baa1 (S&P/Moody’s).
Retained cash flow as a proportion of adjusted net debt was 9.3%, 50bps lower than 2024/25 but well
above the long-term average level of 7.0% indicated by Moody’s, as consistent with maintaining our
current Group rating.
Off-balance sheet items
There were no significant off-balance sheet items other than the commitments and contingencies detailed
in note 30 to the financial statements. In accordance with IFRS, regulatory assets and regulatory liabilities
are not recognised on the balance sheet. Further information in respect of certain of the Group’s energy
purchase contracts and commodity price risk is disclosed in note 32(f) to the financial statements.
Economic returns (non-GAAP measures)
A principal way in which we measure our performance in generating value for shareholders is to divide
regulated financial performance by regulatory equity, to produce RoE.
As explained on page 242, regulated financial performance adjusts reported operating profit to reflect
the impact of the Group’s various regulatory economic arrangements in the UK and US. In order to show
underlying performance, we calculate RoE measures excluding exceptional items of income or expenditure.
Group RoE is used to measure our performance in generating value for our shareholders by dividing
regulated and non-regulated financial performance, after interest and tax, by our measure of equity
investment in all our businesses, including the regulated businesses, NGV and other activities and
joint ventures. For further details, please see page 244.
Regulated businesses’ RoEs are measures of how the businesses are performing compared with
the assumptions and allowances set by our regulators. US jurisdictional and UK entity regulated returns
are calculated using the capital structure assumed within their respective regulatory arrangements
and, in the case of the UK, assuming long-run inflation of 2% CPIH under RIIO-2. As these assumptions
differ between the UK and the US, RoE measures are not directly comparable between the two
geographies. In our performance measures, we compare achieved RoEs to the level assumed when
setting base rate and revenue allowances in each jurisdiction.
Return on Equity ‘RoE’ (non-GAAP measures)
%
2025/26
2024/25
Change
UK Electricity Transmission
8.2%
8.3%
-10bps
UK Electricity Distribution
8.1%
7.9%
20bps
New England
9.2%
9.1%
10bps
New York
9.0%
8.7%
30bps
Group RoE
9.8%
9.0%
90bps
In 2025/26, UK Electricity Transmission achieved operational returns of 8.2%, delivering 100bps of
outperformance under RIIO-T2, mainly from totex performance related to savings on capital delivery
(2025: 8.3% achieved return, or 100bps above the allowed base return). UK Electricity Distribution
achieved an operational return of 8.1% in 2025/26, including 50bps outperformance, mostly consisting
of non‑totex DSO performance incentives (2025: 7.9% achieved return, or 20bps above the allowed
base return).
New England’s achieved return of 9.2% was 96% of the allowed return in 2025/26 compared with an
achieved return of 9.1% in 2024/25. New York’s achieved return of 9.0% was 96% of the allowed return
in 2025/26 compared with an achieved return of 8.7% in 2024/25. The quoted returns for New England
and New York represent the weighted average return across operating companies within each jurisdiction.
Overall Group RoE, which incorporates NGV, property, corporate and other activities, and financing and
tax performance, was 9.8% in 2025/26 compared with 9.0% achieved in 2024/25.
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Financial review cont.
Tax transparency
As a responsible taxpayer, we have voluntarily included additional tax disclosures, which we believe are
of interest to our stakeholders. For information on the Company’s activities, please see page 4, and for
a definition of discontinued operations, please see note 10 to the financial statements.
Tax strategy
National Grid is a responsible taxpayer. Our approach to tax is consistent with the Group’s broader
commitments to doing business responsibly and upholding the highest ethical standards. This includes
managing our tax affairs, as we recognise not only that our tax contribution supports public services but
also that responsible tax practices are part of our social licence and are a key enabler of stakeholder trust,
especially for customers, regulators and tax authorities. We endeavour to manage our tax affairs so that
we pay and collect the right amount of tax, at the right time, in accordance with the tax laws in all the
territories in which we operate. We will claim valid tax reliefs and incentives where these are applicable
to our business operations, but only where they are widely accepted through the relevant tax legislation
such as those established by government to promote investment, employment and economic growth.
We do not have operations in tax havens or low-tax jurisdictions without commercial purpose.
We have a strong governance framework and our internal control and risk management framework helps
us manage risks, including tax risk, appropriately. We take a conservative approach to tax risk. While
there is no prescribed limit to the amount of acceptable tax risk, any material tax judgements are subject
to review and monitoring under our risk management framework with escalation to the Audit & Risk
Committee as appropriate.
Our financial statements have been audited. The figures in the tax transparency disclosures in the
Annual Report and Accounts have been taken from our financial systems, which are subject to our
internal control framework.
We act with openness and honesty when engaging with relevant tax authorities and seek to work with
tax authorities on a real-time basis. We engage proactively in developments of external tax policy and
engage with relevant bodies where appropriate. Ultimate responsibility and oversight of our tax strategy
and governance rests with the Audit & Risk Committee, with executive management delegated to our
Chief Financial Officer who oversees and approves the tax strategy on an annual basis. For more detailed
information, please refer to our published tax strategy on our website.
Country-by-country reporting summary
We have disclosed in the table below data showing the scale of our activities in each of the countries
we operate in. This allows our stakeholders to see the profits earned, taxes paid and the context of those
payments. The Group’s entities are tax resident in their jurisdiction of incorporation other than where
indicated in the footnotes to note 34 to the financial statements.
2025/26
Revenue
Profit/
(loss) before
income tax3
£m
Income tax
accrued –
current year4
£m
Tangible
assets/(liabilities)
other than cash
and cash
equivalents5
£m
Tax jurisdiction
Unrelated
party1
£m
Related
party2
£m
Total
£m
United Kingdom
5,472
197
5,669
3,014
9
39,155
United States
12,215
51
12,266
1,104
—
42,365
Isle of Man
—
62
62
64
9
—
Luxembourg
—
—
—
—
—
—
Belgium
—
—
—
—
—
—
Total
17,687
310
17,997
4,182
18
81,520
2024/25
Revenue
Profit/
(loss) before
income tax3
£m
Income tax
accrued –
current year4
£m
Tangible
assets/(liabilities)
other than cash
and cash
equivalents5
£m
Tax jurisdiction
Unrelated
party1
£m
Related
party2
£m
Total
£m
United Kingdom
6,707
241
6,948
2,703
67
34,680
United States
11,671
58
11,729
947
47
39,411
Isle of Man
—
51
51
51
—
—
Luxembourg
—
—
—
—
—
—
Belgium
—
—
—
1
—
—
Total
18,378
350
18,728
3,702
114
74,091
1.Unrelated party revenue comprises revenue from continuing operations of £17,687 million (2025: £18,378 million) (see note 2 to
the financial statements) and revenue from discontinued operations of £nil (2025: £nil) (see note 10 to the financial statements).
2.Related party revenue only includes cross-border transactions and comprises related party revenue from continuing operations
of £310 million (2025: £350 million) and related party revenue from discontinued operations of £nil (2025: £nil).
3.Profit/(loss) before income tax (PBT) from operations after exceptionals comprises continuing operations PBT of £4,182 million
(2025: £3,650 million) (see consolidated income statement) and discontinued operations PBT of £nil million (2025: £52 million)
(see note 10 to the financial statements).
4.Current year income tax accrued comprises current year income tax from continuing operations of £18 million (2025: £113 million)
(see note 7 to the financial statements) and current year income tax from discontinued operations of £nil million (2025: £1 million).
See the tax charge to tax paid reconciliation below for further information.
5.Tangible assets comprises property, plant and equipment (see consolidated statement of financial position) and excludes tangible fixed
assets for businesses classified as ‘held for sale’ or disposed of during the year of £962 million (Grain LNG £962 million) (2025: £1,359
million UK Electricity System Operator (ESO) £121 million, National Grid Renewables £340 million, Grain LNG £898 million) (see note 10
to the financial statements).
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Financial Statements
Additional Information
Financial review cont.
Our Isle of Man company is a captive insurance company and pays taxes in the Isle of Man as applicable.
The company is treated as a controlled foreign company for UK tax purposes and, as such, additional
UK corporation tax is paid on its profits under the UK controlled foreign company rules.
Our presence in Luxembourg is to address a nationalisation risk which arose from a Labour Party
proposal in 2019 to nationalise nearly all of National Grid’s UK assets.
Transfer pricing is not a significant issue for the Group given the nature of our core businesses and the
number of jurisdictions we operate in. Where there are related party transactions, these are taxed on an
arm’s length basis in accordance with the Organisation for Economic Co-operation and Development
(OECD) principles.
Group’s total tax charge to tax paid
The total tax charge for the year disclosed in the financial statements in accordance with accounting
standards and the equivalent total corporate income tax paid during the year will differ.
The principal differences between these two measures are as follows:
Reconciliation of Group’s total tax charge to tax paid
£m
2025/26
2024/25
Total Group tax charge1
939
822
Adjustment for Group non-cash deferred tax
(1,093)
(783)
Adjustments for Group current tax (charge)/credit in respect of prior years
172
75
Group current tax charge
18
114
Group tax charge not payable in the current year
(9)
(46)
Group tax instalment payments (repayable)/payable in respect of the prior year
—
25
Tax instalment payments over/(under) paid in the current year
3
(27)
Tax recoverable offset against current tax payments due
—
—
Tax instalment payments over/(under) paid due in the following year
—
—
Group tax payment/(refunds) in respect of prior years paid in the current year
22
—
Tax charge/(credit) included elsewhere in the accounts2
(2)
117
Group tax paid
32
183
Profit before income tax3
4,182
3,702
%
%
Effective cash tax rate
0.8
4.9
Effective tax rate4
22.5
22.2
1.Total Group tax charge from operations after exceptionals is comprised of tax charge of continuing operations of £939 million
(2025: £821 million) and discontinued operations of £nil (2025: £1 million).
2.Relates to amounts charged through OCI (2025: relates to amounts charges in other liabilities in note 10).
3.Profit/(loss) before income tax (PBT) from continuing operations after exceptionals is comprised of continuing operations
PBT of £4,182 million (2025: £3,651 million) and discontinued operations PBT of £nil (2025: £52 million).
4.Effective tax rate for continuing operations after exceptionals is 22.5% (2025: 22.5%) and discontinued operations is nil% (2025: 2.1%).
Effective cash tax rate
The effective cash tax rate for the total Group is 0.8%. The difference between this and the accounting
effective rate of 22.5% is primarily due to the following factors.
National Grid is a capital-intensive business, across both the UK and the US, and invests significant
sums each year in its networks. In 2025/26, the Group’s total capital expenditure was £11,549 million
(excluding JV investment). To promote investment, tax legislation allows a deduction for qualifying capital
expenditure at a faster rate than the associated depreciation in the statutory accounts. The impact of this
is to defer cash tax payments into future years.
Within the UK, tax relief for capital expenditure on property, plant and machinery is given in law via capital
allowances. From 1 April 2023, HM Treasury have increased the rates of capital allowances on in year
capital expenditure spend to 100%/50% (previously 18%/6%). This accelerated tax relief, combined with
the increased capital expenditure in the UK, significantly reduces the Group’s UK cash tax liability and as
a consequence reduces the effective cash tax rate for the year. This trend is expected to continue while
UK capital expenditure remains at current levels and capital allowance rates remain as they are.
The sale of Grain LNG in the year gave rise to a non-taxable gain as it met the conditions of the
UK Substantial Shareholding Exemption. This also reduced the effective cash tax rate for the year.
The Group continued to make payments into the UK defined benefit pension schemes, National Grid
Electricity Group section of the Electricity Supply Pension Scheme and the Western Power Pension
Scheme during the course of the year. These payments have further reduced the overall cash tax paid
in the UK.
Group’s total tax contribution
The total amount of taxes we pay and collect globally year-on-year is significantly more than just the tax
which we pay on our global profits. To provide a full picture, we have disclosed the Group’s global total
tax contribution which includes contributions from both continuing and discontinued businesses.
Group’s total tax contribution 2025/26
Taxes borneTaxes collected
£1.9bn
£1.3bn
Key:
£m
ò
People
305
ò
Product
224
ò
Profit
32
ò
Property
1,306
ò
Miscellaneous
31
Total
1,898
Key:
£m
ò
People
911
ò
Product
359
ò
Miscellaneous
1
Total
1,271
National Grid plc Annual Report and Accounts 2025/26
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Strategic Report
Corporate Governance
Financial Statements
Additional Information
Financial review cont.
Taxes borne are a cost to the Group. Taxes collected are taxes generated by the operations of the Group
which we are obliged to administer on behalf of the government (e.g. income tax under PAYE, employees’
national insurance contributions).
2025/26
Tax contribution
Tax jurisdiction
Income
tax paid/
(repaid) on
cash basis1
£m
Property
taxes
£m
Other
taxes
borne2
£m
Taxes
collected
£m
Total tax
contribution
£m
Number of
employees3 as at
31 March 2026
United Kingdom
36
247
162
428
873
14,554
United States
(4)
1,060
397
843
2,296
18,472
Ireland
—
—
—
—
—
—
Isle of Man
—
—
—
—
—
—
Luxembourg
—
—
—
—
—
—
Netherlands
—
—
—
—
—
—
Total
32
1,307
559
1,271
3,169
33,026
2024/25
Tax contribution
Tax jurisdiction
Income
tax paid/
(repaid)
on cash
basis1
£m
Property
taxes
£m
Other
taxes
borne2
£m
Taxes
collected
£m
Total tax
contribution
£m
Number of
employees3 as at
31 March 2025
United Kingdom
156
247
140
858
1,401
13,477
United States
27
990
382
788
2,187
18,177
Ireland
—
—
—
—
—
—
Isle of Man
—
—
—
—
—
—
Luxembourg
—
—
—
—
—
—
Netherlands
—
—
—
—
—
—
Total
183
1,237
522
1,646
3,588
31,654
1.See the tax charge to tax paid reconciliation above for further information.
2.Other taxes borne is made up of People, Product and Miscellaneous taxes.
3.Number of employees is calculated as the total National Grid workforce across all parts of the business, including Non-executive Directors
and Executive Directors and employees of the discontinued operations. All are active, permanent employees as well as both full-time and
part-time employees.
For 2025/26, our total tax contribution was £3,169 million (2024/25: £3,588 million), taxes borne were
£1,898 million (2024/25: £1,942 million) and taxes collected were £1,271 million (2024/25: £1,646 million).
The reduction in taxes borne is primarily the result of reduced income taxes paid because of increased
capital spend and an increase in UK capital allowance rates. This reduction is partially offset by an increase
in US property taxes which is paid to over 1,200 cities and towns in Massachusetts, New Hampshire,
New York, Rhode Island and Vermont to help fund local services.
The reduction in taxes collected is primarily the result of a reduction in our net VAT position because
of higher input VAT on our increased capital spend.
In the UK, we participate in the 100 Group’s Total Tax Contribution Survey. The survey ranks the
UK’s biggest listed companies in terms of their contribution to the total UK Government’s tax receipts.
The most recent result of the survey for 2024/25 ranks National Grid as the 20th highest contributor
of UK taxes (2023/24: 15th), the 18th highest in respect of taxes borne (2023/24: 12th) and 2nd
(2022/23: 2nd) in respect of capital expenditure of £3,947 million (2022/23: £3,052 million) on fixed
assets. Our ranking in the survey is proportionate to the size of our business and capitalisation relative
to the other contributors to the survey.
However, National Grid’s contribution to the UK and US economies is broader than just the taxes
it pays over to and collects on behalf of the tax authorities.
Both in the UK and the US, we employ thousands of individuals directly. We also support jobs in the
construction industry through our capital expenditure, which in 2025/26 was £11,549 million (excluding
JV investment), as well as supporting a significant number of jobs in our supply chain. Furthermore,
as a utility we provide a core essential service which allows the infrastructure of the country/states
we operate in to run smoothly. This enables individuals and businesses to flourish and contribute
to the economy and society.
Development of future tax policy
We believe that the continued development of a coherent and transparent tax policy across the
Group is critical to help drive growth in the economy.
We continue to engage on consultations with policymakers where the subject matter impacts taxes
borne or collected by our business, with the aim of openly contributing to the debate and development
of tax legislation for the benefit of all our stakeholders.
To ensure that the needs of our stakeholders are considered in the development of tax policy, we are
a member of a number of industry groups which participate in the development of future tax policy,
such as the Electricity Tax Forum, together with the 100 Group in the UK, which represents the views of
Finance Directors of FTSE 100 companies and several other large UK companies. We undertake similar
activities in the US, where the Group is an active member in the Edison Electric Institute, the American
Gas Association, the Global Business Alliance, the American Clean Power Association, the Business
Council for Sustainable Energy and the Solar Energy Industries Association.
Feedback from these groups, such as the results of the 100 Group Total Tax Contribution survey, helps
to ensure that we consider the needs of our stakeholders and are engaged at the earliest opportunity
on tax issues which affect our business.
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Financial review cont.
Pensions
In 2025/26, defined contribution pensions, defined benefit pensions and other post-employment benefit
operating costs were slightly lower than prior year at £279 million (2025: £305 million).
During the year, our pensions and other post-retirement benefit plans increased from a net surplus position
of £1,916 million at 31 March 2025 to a net surplus of £2,147 million at 31 March 2026.
This was principally the result of actuarial gains on plan assets of £72 million (higher investment returns)
and actuarial gains on plan liabilities of £215 million (including changes in US post-retirement demographic
assumptions). Employer contributions during the year were £120 million (2025: £282 million), including
£4 million (2025: £12 million) of deficit contributions. As at 31 March 2026, the total UK and US
assets and liabilities and the overall net IAS 19 (revised) accounting surplus (2025: surplus) is shown
below. Further information can be found in note 25 to the financial statements.
We continue to actively manage our defined benefit pension obligations, including by transferring defined
benefit pensions risk to insurers where appropriate. During the year, £0.9 billion of UK pension liabilities
and £0.5 billion of US pension liabilities were secured with insurers via bulk annuity transactions.
Net defined benefit asset
UK pensions
US pensions
US other
post-retirement
benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Liabilities
(51)
(51)
(186)
(196)
(123)
(326)
(360)
(573)
Assets
1,122
1,179
599
672
786
638
2,507
2,489
Net defined
benefit asset
1,071
1,128
413
476
663
312
2,147
1,916
Dividend
The Board has recommended a final dividend of 32.14p per ordinary share ($2.1738 per American
Depository Share), which will be paid on 23 July 2026 to shareholders on the register of members as at
29 May 2026. If approved, this will bring the full-year dividend to 48.49p per ordinary share, representing
an increase of 3.8% to the dividend per share for 2024/25. This is in line with the increase in average
UK CPIH inflation for the year ended 31 March 2026 as set out in our dividend policy.
The Board aims to grow annual dividend per share (DPS) in line with UK CPIH, thus maintaining the DPS
in real terms. The Board will review this policy regularly, taking into account a range of factors including
expected business performance and regulatory developments.
At 31 March 2026, National Grid plc had £17.0 billion of distributable reserves, which is sufficient to cover
more than five years of forecast Group dividends. If approved, the final dividend will absorb approximately
£1,598 million of shareholders’ funds. The 2025/26 full dividend is covered approximately 1.6xby
underlying earnings.
The Directors consider the Group’s capital structure at least twice a year when proposing an interim and
final dividend and aim to maintain distributable reserves that provide adequate cover for dividend payments.
A scrip dividend alternative will again be offered in respect of the 2025/26 final dividend.
New accounting standards
We did not adopt any new accounting standards in 2025/26. Amendments to certain existing accounting
standards were adopted during the year, but these had no material impact on the Group’s results or
financial statement disclosures.
Post balance sheet events
For further details, see note 36 to the financial statements.
National Grid plc Annual Report and Accounts 2025/26
85
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Corporate Governance
Financial Statements
Additional Information
Section 172 Statement and Non-financial and sustainability information statement
Section 172(1) Statement
The Board recognises its responsibilities to the Group’s stakeholders and to wider society, and the
importance of effective engagement in delivering the Group’s long‑term strategy. The Directors have
regard to the interests and perspectives of stakeholders when making decisions and are responsible for
setting and overseeing the Group’s culture and values, which underpin those decisions. In balancing the
often competing priorities of stakeholders, the Board seeks to support the long‑term, sustainable success
of the Group and maintain high standards of conduct consistent with its purpose and values.
Throughout the year, the Directors have acted in the way they considered, in good faith, was most likely
to promote the long-term success of the Company for the benefit of its members as a whole, and have
had regard to the matters set out in section 172 of the Companies Act 2006. Further information on how
the Board has had regard to each of these matters is set out below.
Details on information required for our US Securities and
Exchange Commission (SEC) filing and the Form 20-F can be
found on page 252.
Board composition and roles
As at the date of this report, the Board comprises a Non-executive Chair (independent on appointment), two Executive Directors (Chief
Executive and Chief Financial Officer) and eight independent Non-Executive Directors. There is a clear division of responsibilities between the
Chair, the Chief Executive and the Senior Independent Director. The key responsibilities of each role are set out in our Board Governance
document which can be found on our website.
Meeting attendance
The table below sets out Directors’ attendance at scheduled Board and Committee meetings held during the year ended 31 March 2026.
Three ad hoc Board meetings were also held during the year.
Directors
Committee
Chair
Board
People &
Governance
Committee1
Nomination
Committee2
Audit & Risk
Committee
Finance
Committee3
Safety &
Sustainability
Committee4
Safety &
Operations
Committee5
Responsible
Business
Committee6
Remuneration
Committee7
People &
Remuneration
Committee8
Paula Rosput
Reynolds
7/7
1/1
1/1
–
–
–
–
–
–
–
Zoë Yujnovich9
4/4
–
–
–
–
–
–
–
–
–
Andy Agg
7/7
–
–
–
1/1
–
–
–
–
–
Ian Livingston
7/7
–
1/1
5/5
1/1
–
–
3/3
1/1
3/3
Jacqui Ferguson
7/7
–
1/1
5/5
–
2/2
2/2
–
–
–
Iain Mackay
7/7
–
1/1
5/5
1/1
–
–
–
1/1
3/3
Anne Robinson
7/7
–
1/1
–
–
2/2
–
3/3
1/1
3/3
Earl Shipp
7/7
1/1
1/1
–
–
2/2
2/2
3/3
–
–
Jonathan Silver
7/7
1/1
1/1
–
1/1
–
–
3/3
–
3/3
Tony Wood
7/7
1/1
1/1
–
–
2/2
2/2
3/3
–
–
Martha Wyrsch
7/7
–
1/1
–
–
2/2
2/2
–
1/1
3/3
John Pettigrew10
5/5
–
–
–
1/1
–
–
–
–
–
1.Reflects attendance for the People & Governance Committee prior to the restructure of the Board Committees.
2.Reflects attendance at the Nomination Committee following the restructure of the Board Committees.
3.Reflects attendance at the Finance Committee prior to the restructure of the Board Committees. Following the restructure, matters considered by the Finance Committee were transferred
to the Audit & Risk Committee.
4.Reflects attendance for the Safety & Sustainability Committee prior to the restructure of the Board Committees. Following the restructure, safety matters were transferred to the Safety &
Operations Committee and sustainability matters transferred to the Responsible Business Committee.
5.Reflects attendance at the Safety & Operations Committee following the restructure.
6.Reflects attendance at the Responsible Business Committee following the restructure.
7.Reflects attendance for the Remuneration Committee prior to the restructure.
8.Reflects attendance at the People & Remuneration Committee following the restructure.
9.Zoë Yujnovich was appointed to the Board on 1 September 2025.
10. John Pettigrew retired from the Board effective 16 November 2025.
Committees
Audit & Risk Committee
People & Remuneration Committee
Safety & Operations Committee
Nomination Committee
Responsible Business Committee
Group Executive Committee
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Additional Information
Our Board
Paula Rosput
Reynolds
Zoë Yujnovich
Andy Agg
Ian Livingston
Chair
Chief Executive
Chief Financial Officer
Senior Independent
Non-executive Director
Appointed:
Appointed:
Appointed:
Appointed:
Chair on 31 May 2021
Independent Non-executive Director on 1 January 2021
Chief Executive on 17 November 2025
Chief Executive Designate on 1 September 2025
1 January 2019
1 August 2021
Age: 69
Age: 51
Age: 56
Age: 61
Skills and competencies:
Skills and competencies:
Skills and competencies:
Skills and competencies:
Paula brings a wealth of board-level experience to National
Grid, having led global companies in the energy and
financial sectors. She has over 20 years’ experience as a
Non-executive Director in both the UK and US across
multiple sectors and businesses and has brought a
strategic and regulatory lens on issues to the Board.
During her career, Paula has played a vital role with several
company-wide transformations and mergers. She is
recognised for having transformed AGL Resources from a
local utility into a multi-state energy and
telecommunications company and for materially
enhancing the operating and financial performance of
Safeco Corp, a US insurance company that was ultimately
acquired by Liberty Mutual.
Zoë is an international energy executive with extensive
experience in large-scale operations, capital delivery, and
performance transformation across complex, global
markets.
She has held senior leadership roles at Rio Tinto and Shell
plc, working across Australia, the United States, the
United Kingdom, the Netherlands, Brazil, and Canada.
She has a strong track record of leading diverse teams
and improving operational and cultural performance. At
Shell, she led major infrastructure projects and large
integrated businesses, including serving as Director of
Integrated Gas and Upstream and as a member of the
Executive Committee.
Zoë brings deep expertise in capital discipline, operational
excellence, stakeholder engagement, and navigating
complex energy systems.
Andy trained and qualified as a chartered accountant with
PricewaterhouseCoopers and is a member of the Institute
of Chartered Accountants in England and Wales. Joining
National Grid in 2008, Andy has significant financial
experience and commercial acumen, having held a
number of senior finance leadership roles across the
Group, including Group Financial Controller, UK Chief
Financial Officer and Group Tax and Treasury Director.
Andy has in-depth knowledge of National Grid, in both
the UK and the US, and has broad experience across
operational and corporate finance roles, including a proven
track record of leading and delivering value-creating
strategies, significant transformation programmes, and
significant transactional experience. Andy is also a member
of the 100 Group Main Committee contributing to
domestic and international finance and regulatory matters.
Ian brings a wealth of experience to National Grid, having
been both CEO and CFO of BT Group plc, and CFO of
Dixons Group. In addition to a highly successful executive
career, he has also had extensive non-executive
experience in large UK and US public companies as
board, audit and remuneration committee chair. Ian also
has significant experience of large, regulated companies
operating in both the UK and internationally. He is
a member of the House of Lords and has also previously
served in the UK Government as Minister of State for
Trade and Investment. He is a qualified Chartered
Accountant.
External appointments:
External appointments:
External appointments:
External appointments:
–Non-executive Director and Chair of the Safety &
Sustainability Committee of GE Vernova
–Non-executive Director of Linde plc
–Non-executive Director of Unilever PLC
–Non-executive Director of The Weir Group plc
–Chair of S&P Global Inc.
–Chair of BGF Group plc
–Member of the House of Lords
Audit & Risk Committee
Nomination Committee
People & Remuneration Committee
Responsible Business Committee
Safety & Operations Committee
Group Executive Committee
Committee Chair
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Our Board cont.
Jacqui Ferguson
Iain Mackay
Anne Robinson
Earl Shipp
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Appointed:
Appointed:
Appointed:
Appointed:
1 January 2024
11 July 2022
19 January 2022
1 January 2019
Age: 55
Age: 64
Age: 55
Age: 68
Skills and competencies:
Skills and competencies:
Skills and competencies:
Skills and competencies:
Jacqui has significant non-executive experience in
complex science and technology-centric businesses and
in her executive career as a divisional CEO in the
technology industry. She has global broad business
experience, including in mergers and acquisitions, and has
worked across numerous international and emerging
markets. Jacqui has expertise in leading technology-
In January 2026, the Board held its annual Strategy
offsite, the first led by Zoë Yujnovich in role as Chief
Executive, which provided dedicated time for in‑depth
engagement with senior management and Business
Unit Presidents. The Board reviewed performance
against the five‑year framework, assessed progress
made during the year, and discussed investment
priorities and transformation opportunities to support
the Group’s growth agenda. These discussions were
informed by detailed management presentations and
a series of deep‑dive sessions focused on Capital,
Assets and Customers, alongside People and
performance culture.
March
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Culture and workforce engagement
Through a combination of direct engagement, reporting and committee oversight, the Board monitors how the Company’s values are reflected in day-to-day
practice. During the year, the Board continued the ‘Full Board Employee Voice’ approach to workforce engagement, supported by the four key pillars of
engagement outlined below. Following the refreshment of the Board Committees, these pillars were considered in greater depth. In particular, the creation of
the People & Remuneration Committee has consolidated oversight of talent, engagement and wider people matters within a single committee and under one
Non-executive Director, providing a more coherent and consistent forum for discussion and challenge. Similarly, the Safety & Operations Committee enables
site visits and workforce interactions to be aligned more closely to emerging operational and safety themes, where appropriate.
The Board receives regular insight into workforce sentiment, these insights inform the Board’s oversight of workforce culture, engagement and wellbeing and
support ongoing discussion of people strategy and organisational priorities. Health, safety and wellbeing remain fundamental Board considerations. Through the
Safety & Operations Committee, the Board reviews performance trends, serious incidents and management actions, alongside broader wellbeing initiatives.
Understanding workforce
culture, engagement and
wellbeing is fundamental
to effective oversight and
long-term performance.
Talent engagement
Provides engagement with key talent cohorts and
strengthens Board familiarity with succession
candidates.
Review of effectiveness
–The Chair of the People & Remuneration
Committee hosted talent engagement
sessions in the UK and US, enabling
participants from Group talent programmes
to engage directly with Board members on
talent management, strengths and areas for
further development.
Impact and outcomes
–Board‑led talent engagement enhanced the
Board’s understanding of leadership
capability and succession depth, informing
more effective challenge on talent
development and long‑term succession
planning.
–The sessions provided first‑hand insight into
emerging leaders, leadership behaviours and
talent management across the Group,
highlighting both strengths and areas for
improvement, while also increasing Board
familiarity with the succession pipeline.
Site visits
Provides the Board with direct exposure to
colleagues at key sites and real‑time workforce
insight.
Review of effectiveness
–Board members undertook site visits across
UK and US. Visits included operational and
project locations such as the Network
Design Centre in Bristol, Yorkshire Green
project sites, and the Northport Power
Station on Long Island.
–The visits provided direct engagement with
colleagues on the ground and insight into
culture, safety and workforce experience
across different parts of the business.
Impact and outcomes
–The site visits enhanced the Board’s
understanding of workforce culture,
engagement and the lived experience of
colleagues across diverse operational
settings. These insights informed Board
challenge and assurance on health and
safety, operational resilience and wellbeing.
–Direct engagement informed Board
challenge and discussion, reinforced the
importance of visible leadership and open
dialogue, and fed into Safety & Operations
Committee consideration of safety reporting,
contractor management and on‑site safety
behaviours.
Wider workforce engagement
Ensures the Board hears from a wide cross-
section of the workforce, including those
colleagues not reached through other pillars of
the Board’s engagement programme.
Review of effectiveness
–Board members engaged with the workforce
through the receipt of Company‑wide
webcasts, values‑led events, participation in
the Annual Corporate Audit Conference in
the US, and direct engagement with
business unit Presidents and senior leaders
at the January 2026 strategy offsite, as well
as attendance at engineering dinners, to
gain insight into employee views and
experiences across the Group.
–In February 2026, the Chair visited our
training facility in Eakring.
Impact and outcomes
–Direct engagement enabled the Board to
hear directly from a broad cross‑section of
colleagues, strengthening its understanding
of workforce culture, values and lived
experience beyond formal reporting.
–Insights from the annual Grid:Voice survey
and interim pulse surveys supported
effective oversight of workforce culture,
engagement and wellbeing, informing Board
discussion on people strategy and
organisational priorities. Employee feedback,
including identified improvement
opportunities, was considered by the Board
and will inform the ongoing development of
workforce engagement arrangements.
Board and Committee reporting
Provides the Board and its Committees with the
data to support the other engagement pillars.
Review of effectiveness
–The Board and Committees received regular
reporting throughout the year to support and
refine the key engagement priorities. This
included updates from the annual Grid:Voice
employee survey, a mid‑year snapshot,
succession planning and people strategy
updates, and gender and ethnicity pay gap
reporting.
–The Safety & Operations Committee
oversees health, safety and wellbeing, with
the Board overseeing performance trends,
serious incidents, management actions and
wider wellbeing initiatives.
Impact and outcomes
–The structured flow of information through
the People & Remuneration Committee and
the Board enabled more targeted workforce
engagement and better-informed discussion
of people and culture matters.
–Ongoing focus through the Safety &
Operations Committee reinforced a strong
safety culture, supported continuous
improvement in health, safety and wellbeing
and ensured timely Board scrutiny of serious
incidents and workforce risks.
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Board evaluation
Our annual evaluation process provides the Board and its Committees with an opportunity to consider and reflect
on the quality and effectiveness of decision-making and the contribution and performance of individual members.
The 2025 Board evaluation was internally facilitated and focused on the effectiveness of Board processes,
the operation of the Board and its Committees, and the quality of discussion and decision‑making.
This built on the views and feedback received from the previous year’s evaluation, in particular in relation
to succession and committee structure. Each action has progressed, supported by the arrival of a new
Chief Executive and Chief People Officer in the year who have brought a refreshed lens on talent and
succession and how this feeds into Board discussion. The evaluation actions were approved at the
May 2025 Board meeting and included in last year’s annual report for information. In addition, and mindful
of the Chief Executive Succession process, the evaluation highlighted the importance of maintaining focus
on safe and reliable operations, disciplined capital allocation and effective delivery of our strategy, all of
which were factored into the transition planning. Progress against the actions is outlined below.
External evaluation
In line with the three‑year evaluation cycle, the 2026 evaluation was externally facilitated. Christopher Saul
was appointed as the independent evaluator, and the Chair and Group Company Secretary agreed the
scope and approach for the evaluation, ensuring alignment with the Company’s governance framework
and the 2024 Code. He attended the March Board and Committee meetings as an observer, and met
with Board members and members of the Group Executive Committee for their input. His report, with
recommendations, was presented to the Board at its May 2026 meeting and an update on the actions
will be provided in next year’s annual report. Christopher Saul has no other connection to the Company or
individual Directors.
Progress against our 2025 evaluation actions
Actions
Progress
Talent and
Succession
–Focus on senior leadership succession
and the Board’s exposure to senior
management.
–With the creation of the People & Remuneration Committee, all non-Board people‑related matters have been consolidated under one
Committee. This provides consistency and wider context around people discussions. This also provides clearer accountability around
Board talent engagement, which is now led by the Chair of the Committee with the support of the Chief People Officer and Group
Company Secretary.
–As part of an induction for Directors into the new Committee, a focused deep‑dive session on people and culture was undertaken to
support the expanded remit of the revised Committee led by senior management from the respective teams.
–Across the year, a series of roundtable engagement sessions were held with participants from the talent leadership programme,
increasing the Board’s exposure to senior management and the wider talent pipeline.
–The appointment of Zoë Yujnovich as Chief Executive and Emma Hardaker-Jones as Chief People Officer in the year has demonstrated
senior leadership succession in action and brought a refreshed approach to how talent exposure to the Board is managed.
Governance
framework
–Review the Committee structure
particularly in respect of risk,
sustainability, reputation, operational
and financing matters.
–Assess if the continued ownership of
all the Company’s Group Principal
Risks by the Audit & Risk Committee
remains the most optimal and time
efficient oversight model.
–Building on the prior year action around committee structure and external benchmarking, a revised committee framework was
implemented to better reflect the fast moving external environment that the Company operates in, while continuing to give appropriate
focus to key elements of risk, safety and operational performance. This also included the re-allocation of Group Principal Risks.
–Sustainability and reputation oversight: A Responsible Business Committee was established to provide focused oversight of sustainability
and the environment.
–Safety and capital delivery: A Safety & Operations Committee was established with responsibility for safety oversight and the capital
delivery programme.
–Risk management: Each committee now assumes responsibility for Group Principal Risks within its remit, enabling more focused and
specialised risk reviews. The Audit & Risk Committee retains overall ownership of the risk framework, ensuring cohesive oversight across
the organisation.
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Directors’ induction, development and training
The Board is committed to ensuring that
Directors receive appropriate induction and
ongoing development and training to support
effective decision‑making and oversight.
Ongoing development is tailored to individual
needs and is aligned with the Group’s
strategy, operations and external
environment.
Director induction and training
The Group Company Secretary supports the Chair in ensuring that
each Non‑executive Director receives a tailored and comprehensive
induction on appointment. The induction programme is aligned to the
Director’s role, experience and Committee responsibilities and
includes meetings with fellow Board members, briefings from
business unit Presidents and other management, site visits and
discussions with key functions across the Group.
Ongoing Board development is supported through a programme of
enrichment sessions held throughout the year, designed to deepen
the Board’s understanding of the business and to complement, or
provide further insight into, matters considered as part of the Board
agenda. The Board is kept informed of relevant corporate
governance and regulatory developments through regular briefings
from the Group Company Secretary. As the Board has evolved, the
Board’s training and development programme has developed to
place greater emphasis on macroeconomic context and ensure
deep‑dive sessions are aligned to the Group’s strategic priorities and
risk profile.
The Board benefited from different external perspectives during the
year, with a number of external speakers attending Board meetings
and dinners to provide insights on political, regulatory, market and
industry developments, as well as energy sector trends, supporting
informed challenge and strategic oversight by the Board.
Time commitment
The Board considers potential conflicts of interest and Directors’ time
commitments when approving appointments to the Board, including
any subsequent external appointments. On appointment, Directors
confirm that they are able to devote sufficient time to discharge their
duties effectively, including attending and preparing for Board and
Committee meetings, and undertaking site and office visits. Directors
are required to obtain prior Board approval before accepting any
additional external appointments.
During the year, the Board approved new external appointments only
where it was satisfied that these would not impair the relevant
Director’s ability to perform their role.
Re-election of Directors
The Nomination Committee considers each Director’s skills,
experience, time commitment and tenure when making
recommendations to the Board on the election or re‑election of
Directors. In recommending Directors for re‑election at the 2026
AGM, the Board concluded that each continues to make an effective
and valuable contribution, brings significant knowledge and
experience to the Board, and demonstrates ongoing commitment to
their role. The Board also reviewed the independence of all
Non‑executive Directors and considers each to be independent in
accordance with the UK Corporate Governance Code.
Chief Executive appointment and induction
During the year, the Board devoted considerable attention to Chief
Executive succession and the leadership transition, recognising the
importance of ensuring a stable, well‑planned handover. Following a
robust process, as discussed in the People & Governance
Committee report last year, on 1 May 2025 the Board announced the
appointment of Zoë Yujnovich as the next Chief Executive,
succeeding John Pettigrew, who announced his retirement from the
Board after almost ten years in the role.
Consistent with the Board’s commitment to long‑term leadership
planning, the Board conducted a rigorous, multi‑stage succession
process. This ensured that leadership requirements were considered
against the Group’s strategic priorities, operational requirements and
the evolving external environment.
As part of this process, the Board undertook a search to identify the
individual best suited to lead the Company through its next phase of
strategic delivery. In order to support the Chief Executive succession
process the Board appointed Egon Zehnder, who have no other link
to the Company. In assessing candidates, the Board prioritised
identifying a leader with:
–a proven track record in delivering complex, large‑scale capital
programmes;
–extensive operational experience across global energy markets;
–international stakeholder management; and
–the capability to guide the Company through the continuing
complexities of the energy transition.
Following detailed evaluation and robust Board scrutiny, the Board
concluded that Zoë Yujnovich brought the right balance of strategic
insight, operational expertise and industry experience to lead National
Grid into its next phase. She joined the Board as Chief Executive
Designate on 1 September 2025 and succeeded John Pettigrew as
Chief Executive on 17 November 2025, enabling a planned and
orderly transition.
To support an effective transition, a comprehensive and tailored
induction and transition programme was implemented during the
period in which Zoë Yujnovich served as Chief Executive Designate.
This programme was designed to provide comprehensive insight into
the Group’s strategy, governance framework, risk profile and
stakeholder landscape, and to enable effective engagement with the
Board, executive leadership team, investors and key internal and
external stakeholders. The induction was tailored to the Chief
Executive role by covering strategy and external affairs, operational
and safety priorities, regulatory and investor perspectives,
governance and legal responsibilities, and people and culture
matters.
As part of this programme, Zoë Yujnovich undertook direct
engagement with frontline teams and senior operational leaders
across the Group’s operations, including site visits to deepen her
understanding of the Group’s operational footprint, safety culture
and capital delivery activities. These visits included exposure to
operational and training facilities, major assets and operations in both
the UK and the US.
Such site visits form a core component of the Board’s wider
engagement programme and are used to bring to life the Group’s
Principal Risks, safety priorities and workforce capability,
supporting effective oversight and continuity of leadership
during executive transitions.
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Nomination Committee report
Paula Rosput Reynolds
Chair of the Nomination Committee
Role of the Committee
–Oversees succession planning for Non-executive and
Executive Directors.
–Considers and makes recommendations to the Board
in respect of Board appointments.
–Ensured effective plans are maintained to result in a
diverse pipeline of succession to the Board.
–Assists the Board in discharging its responsibilities
around year-end governance disclosures.
Composition
Membership
The Committee comprises all
independent Non-executive
Directors and the Chair of the
Board who is appointed as Chair
of the Committee.
–Paula Rosput Reynolds (C)
–Ian Livingston
–Jacqui Ferguson
–Iain Mackay
–Anne Robinson
–Earl Shipp
–Jonathan Silver
–Tony Wood
–Martha Wyrsch
The Terms of Reference of the Nomination Committee are
available on our website nationalgrid.com/about-us/corporate-
information/corporate-governance.
–Oversight of Board composition.
–Succession planning for Executive and Non‑executive
Directors.
–Support to the Board in relation to the Chief Executive
transition.
–Prior to the Committee restructure, the People & Governance
Committee considered people strategy and strategic
workforce planning.
Following the Board’s committee restructure, as set out on page 89,
the Nomination Committee was redefined as a dedicated committee
responsible for Board succession planning for both Executive and
Non‑executive Directors (NEDs). Our reasoning was that since we
were transitioning from one Chief Executive to another, we should
recognise that both Board and management composition will
naturally evolve. As such, we decided that all Non-executive Directors
be members of this committee at this juncture. Wider workforce
people‑related matters are overseen by the People & Remuneration
Committee.
The Committee ensures that appointments to the Board are made
following a formal, rigorous and transparent process, in line with the
2024 Code. As such, although nine years is generally viewed as a
maximum, all our Non‑executive Directors have to offer themselves
for annual re-election by shareholders.
Year-end governance and reporting
The Committee supports the Board in overseeing the Company’s
Director related governance disclosures for inclusion in the Annual
Report and Accounts. The Committee reviewed and advised on
Board composition, succession planning, diversity and inclusion,
Board and Committee effectiveness, and related disclosures.
Board skills and experience
The composition, balance of skills, experience, independence and
diversity of the Board remain under active evaluation. Our annual survey
of board effectiveness is another helpful tool. The quality of engagement
NEDs bring to board service, the style in which the individual Directors
interact with fellow board members, as well as the Company’s
management, and the attitude of care about the Company’s purpose,
contribute importantly to overall NED effectiveness.
What is also key is that the Board recognises that the issues facing the
Company continue to change and that the leadership of the Company is
dynamic as well. Thus, we are mindful of our responsibility as a Board to
refresh ourselves. The Board skills and experience matrix has to evolve
with the environment in which the Company does business.
An overview of Board skills can be seen in the table to the right and
the expertise of Directors can be found detailed within Board
biographies on page 91. Our skills matrix highlights the broad skills
that are in addition to the domain specific expertise of each director.
The consideration given to this area supports the Board in satisfying
itself that the Board operates in compliance with the 2024 Code and
that the right level of skills and expertise can be found on the Board
to reflect the increasingly complex environment that the Company
operates in.
Key activities during the year
Board skills
Strategic oversight
10
Regulatory engagement oversight
9
Mergers, acquisitions, financing and
divestments oversight
8
Government and political engagement oversight
7
Accounting and financial reporting oversight
6
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Nomination Committee report cont.
Composition, time commitment and independence
Approach to collating diversity data
As required by UK regulation, we report on diversity data to the extent
that respondents voluntarily self-declare. For Non-executive Directors,
we ask that they submit relevant information at year-end as part of the
declaration process.
Board appointments are based on merit and objective criteria,
including an analysis of the match of a candidate to skills areas where
the Board determines particular expertise or depth is needed. In
accordance with the 2024 Code, we have a Board Composition
policy, which sets out the approach taken to appointments to the
Board and its Committees, including in relation to diversity. The policy
recognises the benefits of diversity in all its forms and seeks to ensure
a good balance of skills, business experience, knowledge,
perspectives and backgrounds is maintained, as per policy objective,
while having regard to the Board’s current and future needs and any
periods of change or refreshment.
In the year, our gender, nationality, ethnicity and tenure of service
percentages changed with the addition of Zoë Yujnovich to the Board
and the departure of John Pettigrew. Our data can be seen in the
adjacent section. As at 31 March 2026, we met the FCA’s targets on
Board diversity set out in UK Listing Rule 6.6.6R(9). We continue to
believe that it is the trends in these factors – and close examination of
the business qualifications of our Directors – that are the meaningful
way to determine how appropriately the Board is composed.
In accordance with UK Listing Rule 6.6.6R(10), as at 31 March 2026,
the numerical data on the gender and ethnic background of our
Board and Group Executive Committee is set out on the tables to
the right.
Board diversity as at 31 March 2026
Chair and Non-executive Directors’ tenure
Board nationality
0-3 years 1 (11%)
UK 5 (45.5%)
3-6 years 6 (67%)
UK/Australian 1 (9%)
6-9 years 2 (22%)
US 5 (45.5%)
Gender
Number of Board
members
Percentage
of the Board
Number
of senior positions
on the Board1
Number
in executive
management2
Percentage
of executive
management2
Men
6
54.5
2
6
42.9
Women
5
45.5
2
8
57.1
Not specified/prefer not
to say
–
–
–
–
–
Ethnicity
Number of Board
members
Percentage
of the Board
Number
of senior positions
on the Board1
Number
in executive
management2
Percentage
of executive
management2
White British or other White (including minority-white
groups)
9
81.8
4
12
85.7
Mixed/Multiple ethnic group
–
–
–
–
–
Asian/Asian British
–
–
–
–
–
Black/African/Caribbean/Black British
2
18.2
–
1
7.1
Other ethnic group
–
–
–
–
–
Not specified/prefer not to say
–
–
–
1
7.1
1.Senior positions on the Board refer to the Chair, Chief Executive, Chief Financial Officer and Senior Independent Director.
2.Executive management comprises the Group Executive Committee, including the Group Company Secretary. The gender balance of senior management and their direct reports can be
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People & Remuneration Committee report cont.
Statement of implementation of Policy in 2025/26
Content contained within a grey box indicates that all the information in the panel is audited
2025/26 remuneration implementation
Single total figure of remuneration – Executive Directors
The following table shows a single total figure of remuneration in respect of qualifying service for 2025/26, together with comparative figures for 2024/25. All figures shown to £’000:
Executive Directors
Former Executive Director
Zoë Yujnovich
Andy Agg
John Pettigrew
Chief Executive
Designate – 1
September ’25 to
16 November ’25
Chief Executive –
17 November ’25
to 31 March '26
2025/26 total
2024/25
2025/26
2024/25
2025/26
2024/25
Salary
325
433
758
–
811
773
768
1,175
Benefits
–
294
294
–
21
25
39
40
Pension
39
52
91
–
97
93
92
141
Total fixed pay
364
779
1,143
–
929
891
899
1,356
APP
–
1,126
1,126
–
1,131
874
1,094
1,349
Share awards (inc. LTPP)
4,200
–
4,200
–
2,799
2,134
–
3,783
Total variable pay
4,200
1,126
5,326
–
3,930
3,008
1,094
5,132
Total remuneration
4,564
1,905
6,469
–
4,859
3,899
1,993
6,488
Notes:
1.Zoë Yujnovich joined the National Grid plc Board as Chief Executive Designate on 1 September 2025 and was appointed Chief Executive on 17 November 2025.
2.John Pettigrew stood down from the Board on 16 November 2025. John’s 2025/26 APP was prorated to reflect his period of service as an Executive Director. The leaving arrangement for John can be found on page 118.
Salary: John Pettigrew’s and Andy Agg’s salaries increased by 5.0% to £1,246,665 and £820,575 as of 1 July 2025 respectively, aligned to the principles used for the wider workforce increases. Zoë Yujnovich was hired on a salary of £1,300,000.
Benefits: This includes private medical insurance, life assurance, allowance under the Group’s flexible benefits programme, travel and accommodation expenses, partner travel, a fully expensed car or cash alternative and the use of a car and a driver when required. Zoë Yujnovich
received £165,095 as a relocation allowance, £7,000 for her company car allowance, £6,870 for life assurance, £1,782 for private medical insurance, £48,023 for the use of a car and driver, £57,814 for taxable accommodation and travel expenses including partner travel for
2025/26. A Sharesave option award was granted to Zoë Yujnovich on 30 January 2026 and benefit (approximately £7,500) of this award is included. Andy Agg received £12,000 for his company car allowance, £6,926 for life assurance, £2,852 for private medical insurance and
£185 for taxable accommodation and travel expenses for 2025/26. John Pettigrew received £7,533 for his company car allowance, £1,665 for life assurance, £624 for private medical insurance, £20,000 for legal fees and £9,281 for the use of a car and driver for 2025/26. There
were no Sharesave options granted to either Andy Agg or John Pettigrew during 2025/26.
Pension: Pension contributions for Zoë Yujnovich, Andy Agg and John Pettigrew were 12% of salary for 2025/26.
Share awards (inc. LTPP): The 2023 LTPP is due to vest in July 2026. The average share price over the three months from 1 January 2026 to 31 March 2026 of 1,274.85 pence has been applied and estimated dividend equivalents are included. The value of the 2023 LTPP award
is driven in part by growth in share value over the period, with a share price change of 35.10% and Total Shareholder Return (TSR) growth of 53.61% from the date of grant to 31 March 2026, using one-month average figures. The 2022 LTPP figures (included in the 2024/25
column) have been restated to reflect the actual share price on vesting and all dividend equivalent shares. As the vesting share price of 1,077.92 pence was higher versus the estimate of 962.17 pence (and the reduced dividend equivalent shares added for the dividend with a record
date of 17 July 2025 with a dividend rate of 30.88 pence per share), the actual value at vesting was £391,057 higher than for the estimate published last year for John Pettigrew and £221,029 higher for Andy Agg. The share award value for Zoë Yujnovich relates to her buy-out
award and further information can be found on page 119.
Malus and clawback: The Committee operates malus and clawback arrangements to ensure that variable remuneration outcomes are appropriate and fully justified. Malus (to reduce or forfeit unpaid or unvested awards) and clawback (to recover awards already paid or vested)
may be applied in exceptional circumstances, including material misstatement of results, awards determined using inaccurate or misleading information, fraud or gross misconduct, regulatory censure or significant reputational damage attributable to the participant, or a material
failure of risk management and/or corporate failure. Where such circumstances arise, the Committee may reduce, forfeit or recover all or part of an award using methods it considers appropriate. Malus applies to APP cash awards up to payment with clawback for two years from
the end of the performance period; to APP deferred shares until two years after the financial year in which the bonus is earned with clawback for a further two years; and to LTPP awards up to vesting with clawback during the two‑year post‑vesting holding period. During the year,
the Committee considered whether any or all of an award should be forfeited, even if already paid, due to the exceptional circumstances outlined above and in the Directors’ Remuneration Policy, and determined that no action was required. The Committee considers these malus
and clawback periods to be appropriate having regard to the long‑term nature of the Group’s strategy, investment cycle and regulatory environment, and the timeframes over which risks and performance outcomes may crystallise.
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Total pension benefits
Zoë Yujnovich, Andy Agg and John Pettigrew received a cash allowance in lieu of participation in a pension arrangement. There are no additional benefits on early retirement. The values of pension contributions,
received during this year, are shown in the single total figure of remuneration table.
John Pettigrew has, in addition, accrued defined benefit (DB) entitlements. He opted out of the DB scheme on 31 March 2016 with a deferred pension and lump sum payable at his normal retirement date of 26
October 2031. At 31 March 2026, John Pettigrew’s accrued DB pension was £116,725 per annum and his accrued lump sum was £350,176. No additional DB entitlements have been earned over the financial
year, other than an increase for price inflation due under the pension scheme rules and legislation. Under the terms of the pension scheme, if he satisfies the ill-health requirements or he is made redundant, a
pension may be payable earlier than his normal retirement date. A lump sum death in service benefit is also provided in respect of these DB entitlements.
2025/26 APP
For 2025/26 APP, financial measures represented 70% of the award and operational measures and individual objectives represent 15% each of the award, similar to 2024/25. At least 50% of the award is
delivered in shares (after any sales to pay associated tax) which must be retained until the shareholding requirement is met. Once the shareholding requirement is met, at least 33% of the award is delivered in
shares (after any sales to pay associated tax) must be retained in shares for two years.
For financial measures, threshold, target and stretch performance levels are set by the Committee for the performance period and pay out at 0%, 50% and 100% of the maximum calculated on a straight-line
basis. The capital delivery and effectiveness measure has been assessed primarily on quantitative metrics with a qualitative element to reflect a balanced assessment of progress and performance in our capital
investment ambitions. The ‘Leadership of change’ index measure was a quantitative assessment from our annual Group-wide employee engagement survey of colleagues. Target and stretch performance levels
for the individual objectives are also predetermined by the Committee for the performance period, and an assessment of the performance relative to the target and stretch performance levels is made at the end
of the performance year on each objective. Executive Directors have a maximum opportunity of 200% of salary for 2025/26. In reaching its overall decisions on the APP, the Committee considered the strong
performance and delivery throughout the year across financial, operational, and individual objectives. The Committee concluded that the outcomes are appropriate in the context of performance achieved and
determined that no discretion was required to the resultant APP formulaic outcome.
APP – Financial performance
The financial measures (70%) were weighted equally between two measures – Group Underlying EPS and Group RoE. Performance was delivered through clear management actions, including improved
Electricity Distribution and New England incentive outcomes, strong interconnector performance, and proactive financing activities, offsetting headwinds from the FERC regulatory order.
The financial performance outcomes of the 2025/26 APP award are summarised in the table below:
Measure
Weighting (% of APP)
Threshold
Target
Stretch
Outcome (% of max)
Group Underlying EPS (pence)
35%
72.6p
75.6p
78.6p
89.52%
Group RoE (%)
35%
9.4%
9.8%
10.2%
55.64%
Total financial outturn
70%
72.58%
78.0p
9.85%
Notes:
Group Underlying EPS: Technical adjustments have been made which reduce the performance range (including threshold, target and stretch) by 2.5 pence. This reflects the net effect of currency adjustments, scrip issuances, US pension assumptions, US/UK pension interest and
storms.
Group RoE: Technical adjustments have been made which decrease the performance range by 0.1% to reflect the impact of the final opening equity being higher than forecast.
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APP – Operational performance
The operational measures (15%) were weighted equally between two key measures:
–Group capital delivery and effectiveness; and
–Group “Leadership of change” index.
Measure
Details
Assessment
Outcome
Group capital delivery
and effectiveness
(7.5%)
–Progress in the investment
programme is a top priority for
investors, making this measure
essential for tracking performance.
–The capital delivery and effectiveness
measure is assessed primarily on
quantitative metrics with a qualitative
element to reflect a balanced
assessment of progress and
performance in our capital investment
ambitions.
Actual capital investment for the year was £11.6bn, delivering a small variance to target and representing a significant
increase compared with the prior year. In parallel, an assessment linked to the delivery of major projects was undertaken,
focusing on performance against key milestones, the management of delivery risks, and overall delivery quality.
Performance has been strong, with record levels of capital investment achieved and the majority of projects remaining on
track; this resulted in an overall outturn of 87.12% of maximum.
87.12%
‘Leadership of change’
index (7.5%)
–Index in our annual employee
engagement survey (Grid:Voice) that
assesses the ability of leaders to drive
and sustain high performance during
periods of significant change in our
business to achieve our organisational
goals.
Colleague feedback reflected a year of change, with engagement remaining generally positive but highlighting a continued
need for clearer and more consistent communication and practical support during periods of transition, resulting in an
overall outturn of 25% of maximum.
25.00%
Combined operational
outcome
56.06%
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Statement of implementation of Policy in 2025/26 cont.
APP – Individual objectives
In addition to the financial and operational goals outlined above, the Board approves annual individual performance for the Executive Directors in line with key operational and strategic priorities. As part of the process
for assessing individual performance, the Board is provided with a comprehensive review of company performance and individual contributions relative to the previously adopted goals. The following tables sets out
the 2025/26 individual objectives together with associated performance commentaries and the Committee’s assessment of the performance outcome for each of the Executive Directors:
Individual objectives and performance summary – Zoë Yujnovich1
Outcome – 100%
Deliver 2025/26 business plan
–Ensured continuity through leadership transition, maintaining strong delivery discipline, safety, and operational performance.
–Conducted extensive investor engagement to sustain confidence and built effective working relationships with the Board.
–Launched a strategic planning process with broad organisational engagement, preserving continuity while enabling forward-looking focus beyond 2025/26.
–Played an active role in final RIIO-T3 negotiations and supporting enhanced investor guidance.
Establish a performance‑focused leadership cadence
–Reset performance review cadence and content.
–Enhanced quality of leadership dialogue and demonstrated direct, hands-on leadership engagement.
–Refreshed executive team accountabilities.
–Embedded performance objectives deeper across the organisation, expanding metrics beyond financials to include asset health, capital delivery, and technology.
Deliver a high‑quality Board strategy session
–Board strategy session provided strong confidence in delivery, clarified key strategic shifts, and established a foundation for future refresh.
–Increased active management participation in strategy development to strengthen alignment and buy-in to ambitious delivery goals.
–Initiated first assessment of opportunities beyond 2031, identifying areas for further strategic development.
1Reflects seven months performance.
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Individual objectives and performance summary – Andy Agg
Outcome – 70%
Delivering the next steps of the financing strategy
–Played a leading role in the RIIO-T3 price control outcome, which supported market confidence in the Group’s financing strategy and outlook.
–Delivered the launch of a new Green Financing Framework and completed the first green issuance under the Framework, strengthening access to sustainable finance.
–Closed the National Grid Renewables and Grain sales.
Securing positive regulatory outcomes and supporting the delivery of our capital projects
–Successfully agreed the NiMo rate case and submitted other relevant regulatory cases.
–Drove continuous improvements in capex portfolio management, risk management and governance, with enhanced frameworks now embedded and informing a dedicated capital workstream.
–Total shareholder return (TSR) and share price performance were positive over the period, reflecting investor confidence in National Grid’s strategy and growth plans.
Developing our organisational capabilities and tools
–Exceeded efficiency targets for 2025/26, demonstrating continued cost discipline and productivity improvement.
–Progressed implementation of a new financial planning system, with deployment on track and expected to enhance forecasting and decision‑making through AI‑enabled capabilities.
–Continues to strengthen the internal control environment.
Driving the identification and development of talent into the right pipelines
–Continued to strengthen succession planning and confidence across key roles.
–Supported leadership continuity and succession pipelines through targeted role moves and development, strengthening breadth of experience and capability.
–Leveraged workstreams to enhance visibility of talent, access to senior leadership and cross‑functional development opportunities.
Individual objectives and performance summary – John Pettigrew
Outcome – 80%
Deliver RIIO-T3 and continue to deliver to expectations set at time of rights offering including digital transformation milestones
–Actively contributed to the RIIO-T3 outcome.
–Maintained regulatory and operational momentum to support delivery of the £60bn five‑year commitment.
–Delivered capital investment.
–Strengthened focus on Electricity Distribution, driving safety improvements, capturing synergies, and positioning for the ED3 regulatory cycle.
–Progressed divestment of non‑core assets.
–Scaled technologies including 3D printing, AMI/FLISR, and drone solutions.
–Identified new National Grid Partners opportunities, supporting an additional $100m AI investment.
Successful Chief Executive transition
–Succession planning.
–Engaged directly with high‑potential leaders through site visits across the organisation.
–Proactively communicated with investors following the leadership transition announcement.
–Agreed a clear division of responsibilities with the Chair and Chief Executive‑Designate during the transition period.
–Facilitated introductions between the successor and key stakeholders, and transferred key industry leadership responsibilities.
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Statement of implementation of Policy in 2025/26 cont.
2023 LTPP
Performance conditions
The 2023 LTPP will vest on 1 July 2026 and was based on two equally weighted financial measures, Group Underlying EPS (40%) and Group RoE (40%). The remaining 20% weighting was split equally between
two non-financial measures: Reduction of Scope 1 emissions (10%) and Enablement of energy transformation (10%). The targets and weightings of the 2023 LTPP below are the same for both Andy Agg and
John Pettigrew.
The outturns of the 2023 LTPP are reflective of the business’ performance over the period. During the performance period we have delivered record levels of capital expenditure, while maintaining a strong focus
on cost efficiencies. In addition, we successfully completed the strategic pivot with the sale of the remaining 40% stake of the UK Gas Transmission business and completed the disposals of both Grain LNG and
National Grid Renewables (NGR). The financial element achieved 80.80% of maximum with EPS achieving stretch driven by strong performance by the regulated businesses, within the interconnector portfolio in
NGV and through management of financing costs. The non-financial measures recognise our role in delivering critical and green investment to enable the decarbonisation of power, transport and heat, and lead a
clean, fair and affordable energy transition across our jurisdictions. Scope 1 emissions reductions outturn is 100% with emissions reductions through SF6 leakage reduction, methane emissions reductions
including leak prone pipe replacement, deploying electric vehicles in our fleet and energy efficiency improvements in our buildings. This measure excludes Scope 1 emissions from our Generation plant in New
York, as these emissions are deemed to be outside management control. This measure therefore makes up a relatively small proportion of our group Scope 1 and 2 target and reflects the elements where
management are deemed to have more control. For further information on our GHG emissions performance, please see the Responsible Business section of this report on page 40. Enablement of energy
transformation outturn was 79% of maximum and was based on progress in energy efficiency and generation, policy and regulatory engagement to support clean energy, and clean energy connections to our UK
transmission networks and UK and US electricity distribution networks.
Performance measure
Weighting
Threshold 20% vesting
Maximum 100% vesting
Outcome (% of max)
Cumulative three-year
Underlying Group EPS
40%
200p
218p
100%
223.4p
Group RoE
40%
9.15%
10.4%
9.8%
61.60%
National Grid Scope 1 emissions
10%
‘34ktCO2e
77ktCO2e
119ktCO2e
100%
Enablement of energy transformation:
Strategic initiatives (Scope 2 and 3)
10%
Four strategic initiatives assessed on a four-point scale
79%
79.00%
82.54%
Notes:As disclosed on p130 and p292 of the 2024/25 ARA, the financial performance targets were adjusted for the impact of the Rights Issue, exclude the impact of UK regulated Deferred Tax and reflect a change in the calculation methodology (approved by the Audit & Risk
Committee) to reflect amortisation of goodwill and other indefinite life intangible assets (ILIs) over 20 years. Scope 1 emissions targets have been adjusted to account for within-period emissions accounting methodology changes and the sale of our Grain LNG terminal in 2025.
Vesting
The performance period for the 2023 LTPP ended on 31 March 2026. Across the period, performance was based on financial measures (80%) and energy transformation measures (20%), as set out in the
2022/23 Annual Report and as detailed above.
The overall outcome of the 2023 LTPP was 82.54% of maximum, with 80.80% of the total award vesting linked to financial measures, driven by achievement of 100% of maximum for Group Underlying EPS and
61.60% of maximum for Group RoE, both weighted equally; 89.50% of the total LTPP award vested in relation to the energy transformation measures, driven by achievement of 100% of maximum for Scope 1
emissions and 79% of maximum for enablement of energy transformation, both weighted equally.
The amounts due to vest under the 2023 LTPP for the performance period that ended on 31 March 2026 are included in the 2025/26 single total figure table on page 111 and are shown in the table below.
Because awards are not yet vested, the figures in the table are based on the average share price over the three months from 1 January 2026 to 31 March 2026 of 1,274.85 pence and the proposed 2025/26
final dividend with record date of 29 May 2026, subject to shareholder approval, is included. The total number of shares subject to awards which vest (after any sales to pay associated income tax and social
security), including dividend equivalent shares are subject to a two-year holding period.
The Committee considered wider business factors, such as underlying financial performance, ESG considerations, potential windfall gains and shareholder experience, when determining the final outturn for the
2023 LTPP and were comfortable that no adjustments were required.
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Statement of implementation of Policy in 2025/26 cont.
Vesting continued
Shares awarded
Rights Issue
adjustment
Total number of
shares
Performance outcome
(% of maximum)
Vested share based
on performance
Face value of the
award at grant
(£’000)
Share price
appreciation
(£,000)
Dividend
equivalent shares
(£,000)
Total value
(£’000)
Andy Agg
214,445
22,945
237,390
82.54
195,941
2,050
448
301
2,799
John Pettigrew
380,130
40,673
420,803
82.54
347,330
3,634
794
534
4,962
Assessment of National Grid shareholder returns
National Grid plc’s 10-year annual TSR performance against the FTSE 100 Index since 31 March 2016 is shown below and illustrates the growth in value of a notional £100 holding invested in National Grid plc
on 31 March 2016, compared with the same invested in the FTSE 100 Index. The FTSE 100 Index has been chosen because it is a widely recognised performance benchmark for large companies in the UK and
it is a useful reference to assess relative value creation for National Grid plc shareholders. Over the last 10-year period, National Grid plc’s TSR is 145% versus the FTSE 100 Index at 143%, demonstrating
sustainable long-term value for our shareholders.
Total Shareholder Return (£)
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2025 LTPP
Performance conditions
For the 2025 LTPP, the performance measures comprise two equally weighted financial measures totalling 80% and two equally weighted energy transformation measures totalling 20% over the three-year
performance period, as outlined in the table below.
Performance measure
Weighting
Threshold 20% vesting
Maximum 100% vesting
Cumulative three-year Underlying Group EPS
40%
241p
259p
Group RoE
40%
9.35%
10.60%
Reduction of Scope 1 emissions
10%
4%
10%
Enablement of strategic growth initiative
10%
10.2 GW
13.3 GW
Notes: Vesting between threshold and maximum will be on a straight-line basis.
2025 LTPP awards made during the year
The face value of the awards is calculated using the volume weighted average share price at the date of grant. The date of grant for Andy Agg and John Pettigrew was 23 June 2025 and the share price was
1,065.79 pence. For Zoë Yujnovich the date of grant was 1 September 2025 and the share price was 1,027.49 pence. The 2025 LTPP will vest on 30 June 2028. The total number of shares subject to awards
which vest (after any sales to pay associated income tax and social security), including dividend equivalent shares, are subject to a two-year holding period following vesting.
Basis of award
(% of salary)
Number of
shares
Face value
(£’000)
Proportion vesting
threshold performance
Performance period
end date
Zoë Yujnovich
400%
506,086
5,200
20%
31 March 2028
Andy Agg
300%
230,975
2,462
20%
31 March 2028
John Pettigrew
350%
409,397
4,363
20%
31 March 2028
Payments to past Directors
The leaving arrangement for John Pettigrew is set out below. There were no payments to past Directors during 2025/26.
Leaving arrangement for John Pettigrew
On 1 May 2025 the Company announced that John Pettigrew would retire from the Board effective 16 November 2025. John remained available to the Group until 30 April 2026, being the end of his 12-month
notice period. In line with the approved Policy, he received salary (£464,036), benefits (£10,830) and a pension allowance (£55,684) until 31 March 2026.
In line with the Policy, due to his retirement, John will be treated as a good leaver for the purposes of his outstanding incentive awards. He received a prorated 2025/26 APP to reflect his period of service as an
Executive Director. Details of the outcome of his 2025/26 APP can be found on pages 112 to 115. His outstanding LTPP awards will be prorated to his date of leaving, and will vest at the normal dates subject to
the achievement of the relevant performance conditions and continue to be subject to the two-year post-vesting holding period and any relevant malus and clawback provisions. Details of the vesting of his 2023
the beneficial interests by 23 shares (11 in April and 12 in May) for Andy Agg. There have been no
other changes in Directors’ shareholdings between 1 April 2026 and 13 May 2026.
Directors
Share
ownership
requirements
(multiple of
salary)
Number of
shares owned
outright
(including
connected
persons and
SIP for
Executive
Directors)
Value of shares
held as a
multiple of
current salary
(including
connected
persons)
Number of
options
outstanding
under the
Sharesave Plan
Conditional
share awards
subject to
performance
conditions
(2023, 2024 and
2025 LTPP)
Share awards
subject to
time-based
vesting only
(buy-out
awards)
Executive Director
Zoë Yujnovich
500%
-
-
3,292
506,086
408,762
Andy Agg
400%
883,769
1,367%
4,777
715,558
-
Former Executive Director
John Pettigrew
500%
2,124,589
2,164%
4,219
1,268,341
-
Non-executive Directors
Paula Rosput
Reynolds
-
23,393
-
-
-
-
Anne Robinson
-
-
-
-
-
-
Earl Shipp
-
6,046
-
-
-
-
Iain Mackay
-
4,500
-
-
-
-
Ian Livingston
-
2,374
-
-
-
-
Jacqui Ferguson
-
-
-
-
-
-
Jonathan Silver
-
-
-
-
-
-
Martha Wyrsch
-
25,000
-
-
-
-
Tony Wood
-
2,583
-
-
-
-
Notes:
Zoë Yujnovich: On 31 March 2026, held 3,292 options under the Sharesave Plan with an exercise price of 928 pence per share (20% discounted
option price) which can, subject to their terms, be exercised between 1 April 2031 and 30 September 2031. The number of conditional share awards
subject to performance conditions is as follows: 2025 LTPP: 506,086. The number of shares awards subject to time-based vesting relates to the buy-
out award (408,762).
Andy Agg: On 31 March 2026, held 4,777 options granted under the Sharesave Plan with an exercise price of 628 pence per share (the 20%
discounted option price) and they can, subject to their terms, be exercised between 1 April 2026 and 30 September 2026. The number of conditional
share awards subject to performance conditions is as follows: 2023 LTPP: 237,390; 2024 LTPP: 247,193; and 2025 LTPP: 230,975.
John Pettigrew: On 31 March 2026, held 4,219 options granted under the Sharesave Plan with an exercise price of 743 pence per share (the 20%
discounted option price) which can, subject to their terms, be exercised between 1 April 2030 and 30 September 2030. The number of conditional
share awards subject to performance conditions is as follows: 2023 LTPP: 420,803; 2024 LTPP: 438,141 and 2025 LTPP: 409,397. During the year,
John exercised 4,670 share options granted under the Sharesave Plan at an option price of 642.30 pence per share.
Paula Rosput Reynolds, Earl Shipp and Martha Wyrsch: Hold American Depositary Shares (ADSs) and each ADS represents five ordinary shares,
as presented in the table above.
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Statement of implementation of Policy in 2025/26 cont.
Post-employment shareholding requirements
Past Executive Directors are required to continue to hold their vested shares post-employment for a
period of two years in line with our current Policy.
To enforce this, the Executive Directors have given permission for the Group to periodically check with its
third-party share scheme administrator whether the minimum shareholding requirement is being
maintained. The Executive Directors have acknowledged that if they breach their post-employment
shareholding requirement for any reason, the Group may enforce at its discretion one or more of the
following processes: to request they repay to the Group an amount equivalent in value to the shareholding
requirement that has not been met; the Group may withdraw/vary the vesting of any future shares granted
under the LTPP; the Company may publish a public statement in a form, as the Group may decide, that
the Director has failed to comply with the post-employment shareholding requirement. Executive Directors
are reminded annually and when employed, of the post-employment shareholding requirement. At
termination, the minimum shareholding requirement is confirmed to the Director and checks are made by
the Group at the 12-month and 24-month anniversary of leaving and at the relevant financial year end, 31
March, to ascertain if their post-employment shareholding requirement has been met.
John Pettigrew stood down from the Board on 16 November 2025 and remained subject to an in-
employment shareholding requirement until his final employment date of 30 April 2026, at which time he
was subject to a post-employment shareholding requirement of 200% of salary for a period of two years.
As of 13 May 2026, John Pettigrew continued to meet his shareholding requirement.
Shareholder dilution
All Company employees are encouraged to become shareholders through a number of all-employee
share plans and a significant proportion of our employees participate annually. These plans include
Sharesave and the SIP in the UK and the US Employee Stock Purchase Plan (ESPP) and US Incentive
Thrift Plan (commonly referred to as a 401(k) plan) in the US which are summarised on page 255 and in
our Policy.
Where shares may be issued or treasury shares reissued to satisfy incentives, dilution resulting from all
incentives, including all-employee incentives, will not exceed 10% in any 10-year period. The Committee
reviews dilution levels against this limit annually and under this limit the Company, as at 31 March 2026,
had a headroom of 8.18% respectively.
Unvested or unexercised awards under our all-employee and discretionary share plans that were
outstanding on 23 May 2024 have been adjusted to take account of the Rights Issue.
Chief Executive pay ratio
We have disclosed our Chief Executive pay ratios comparing the single total figure of remuneration of the
Chief Executive to the equivalent pay for the 25th percentile, median and 75th percentile UK employees
(calculated on a full-time equivalent basis), as well as the median Group-wide pay ratio.
The Chief Executive pay ratio has decreased from 85:1 to 52:1 at the UK median, primarily driven by the
Chief Executive leadership transition and the absence of share awards vesting during tenure. This has also
caused the Group median pay ratio to decrease when compared to last year. The Chief Executive
remuneration used in the pay ratio calculation reflects the combined single figure totals (as disclosed on
page 111) for Zoë Yujnovich and John Pettigrew during the periods in which they served as Chief
Executive.
UK
Group-wide
Year
Method
25th percentile
pay ratio
Median pay
ratio
75th percentile
pay ratio
Median pay
ratio
2025/26
Option A
69
52
40
39
2024/25
Option A
112
85
65
61
2023/24
Option A
117
90
69
65
2022/23
Option A
144
111
86
76
2021/22
Option A
135
105
81
76
2020/21
Option A
104
81
62
54
2019/20
Option A
111
86
66
53
2018/19 – voluntary
Option A
96
76
58
48
Notes: Salaries as at 31 March 2026 and estimated performance-based annual payments for 2025/26 have been annualised for part-time
employees to reflect full-time equivalents. Performance payments have not been further adjusted to compensate where new employees have
not completed a full performance year. The comparison with UK employees is specified by the 2018 amendment of The Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008. US employees represent approximately 56% of our total
employees. Our median pay ratio on a Group-wide basis is outlined above and calculated on the same basis as the UK pay ratios and at an
exchange rate of $1.34332:£1.
Changes in the Chief Executive pay ratio reflect the fact that a key feature of our executive and senior
leadership remuneration strategy is heavily weighted towards longer-term performance share-based
reward, resulting in larger swings year-on-year than the wider workforce. Across the wider workforce,
employee remuneration is largely focused on in-year annual delivery.
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Financial Statements
Additional Information
People & Remuneration Committee report cont.
Statement of implementation of Policy in 2025/26 cont.
The 2025/26 salary and total pay including benefits for the Chief Executive versus UK employees is shown below.
2025/26 salary and benefits – Chief Executive versus UK wider workforce
Chief Executive remuneration
UK employee 25th percentile
UK employee median
UK employee 75th percentile
Salary
£1,201,000
£45,495
£53,379
£68,321
Total pay and benefits
£3,897,000
£56,874
£74,663
£98,608
We have chosen to use Option A in calculating the ratios, which is a calculation based on the pay of all UK employees on a full-time equivalent basis, as this option is considered to be more statistically robust. The
ratios are based on total pay and benefits inclusive of short-term and long- term incentives applicable for the respective financial year (1 April – 31 March). The reference employees at the 25th, median and 75th
percentile have been determined by reference to pay and taxable benefits as at the last day of the respective financial year, 31 March, with estimates for the respective APP payouts and performance outcomes of the
LTPP and dividend equivalents.
We are satisfied that the median pay ratio reported this year is consistent with our wider pay, reward and progression policies for employees.
Relative importance of spend on pay
The chart below shows the relative importance of spend on pay compared with other costs and disbursements (dividends, tax, net interest and capital expenditure). Given the capital-intensive nature of our business
and the scale of our operations, these costs and disbursement were chosen as the most relevant measures for comparison purposes. All amounts exclude exceptional items and remeasurements.
18%
5%
-5%
-7%
11%
Notes:
1.Presented on a continuing basis only.
2. Percentage increase/decrease of the costs between years is shown.
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Additional Information
People & Remuneration Committee report cont.
Statement of implementation of Policy in 2025/26 cont.
Chief Executive’s pay in the last 10 financial years
Zoë Yujnovich became Chief Executive on 17 November 2025. John Pettigrew was Chief Executive from 1 April 2016 to 16 November 2025.
Zoë
Yujnovich
John
Pettigrew
2025/26
2025/26
2024/25
2023/24
2022/23
2021/22
2020/21
2019/20
2018/19
2017/18
2016/17
Single total figure of remuneration (£'000)
6,469
1,993
6,488
6,113
7,262
6,614
5,071
5,205
4,651
3,648
4,623
Single total figure of remuneration including only 2014 LTPP (£'000)
3,931
APP (proportion of maximum awarded)
74.22%
71.22%
91.92%
75.50%
82.62%
85.20%
80.43%
70.58%
84.20%
82.90%
73.86%
LTPP (proportion of maximum vesting)
–
–
76.31%
81.87%
100.00%
74.22%
68.00%
84.90%
84.20%
85.20%
90.41%
Notes:
Zoë Yujnovich: The single total figure of remuneration for 2025/26 is explained in the single total figure of remuneration table.
John Pettigrew: The single total figure of remuneration for 2025/26 is explained in the single total figure of remuneration table and the single total figure for 2024/25 has been restated to reflect actual share price for 2022 LTPP vesting in 2025 and dividend equivalent shares,
consistent with comparative figures shown in this year’s single total figure of remuneration table.
2014 LTPP: The 2016/17 single total figure of remuneration includes both the 2013 LTPP award and the 2014 LTPP award due to a change in the vesting period from four years (2013 LTPP) to three years (2014 LTPP).
Single total figure of remuneration – Non-executive Directors
The following table shows a single total figure in respect of qualifying service for 2025/26, together with comparative figures for 2024/25:
Fees (£’000)
Other emoluments (£’000)
Total (£’000)
2025/26
2024/25
2025/26
2024/25
2025/26
2024/25
Paula Rosput Reynolds
753
724
50
51
803
775
Anne Robinson
133
121
2
1
135
123
Earl Shipp
139
129
6
7
145
136
Iain Mackay
164
158
-
40
165
198
Ian Livingston
199
189
1
1
199
190
Jacqui Ferguson
136
123
2
3
138
126
Jonathan Silver
131
120
2
4
133
124
Martha Wyrsch
146
134
11
10
157
145
Tony Wood
133
118
5
6
137
124
Total
1,934
1,816
79
123
2,012
1,941
Notes:
Other emoluments: In accordance with the Group’s expenses policies, Non-executive Directors receive reimbursement for their reasonable expenses for attending Board meetings. In instances where these costs are treated by HMRC as taxable benefits, the Group also meets the
associated tax cost to the Non-executive Directors through a PAYE settlement agreement with HMRC and these costs are included in the table above.
The total emoluments paid to Executive and Non-executive Directors in the year were £15.4 million (2024/25: £12.3 million).
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Financial Statements
Additional Information
People & Remuneration Committee report cont.
Statement of implementation of Policy in 2025/26 cont.
We have included percentage change in salary/fee, benefits and bonus for each of the Directors compared with prior years. The regulations cover employees of the Parent Company only and not across the Group,
and given most employees, if not all, are employed by subsidiary undertakings, we have voluntarily chosen a comparator group of all employees in the UK and the US to provide a representative comparison. In line
with the regulations, we disclose this information to display a five-year history.
2025/26
2024/25
2023/24
2022/23
2021/22
Executive Directors
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Zoë Yujnovich1
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Andy Agg
4.9%
-15.2%
32.2%
4.4%
-14.3%
29.6%
4.6%
0.3%
-7.8%
6.5%
32.6%
2.1%
6.5%
-31.6%
15.9%
Former Executive Director
John Pettigrew2
-34.6%
-2.5%
-19.0%
4.4%
-54.0%
27.0%
3.9%
48.9%
-5.0%
3.4%
-42.0%
0.3%
1.7%
-8.8%
7.8%
Non-executive Directors
Paula Rosput Reynolds
4.1%
-2.1%
n/a
3.4%
-9.2%
n/a
-%
0.4%
n/a
16.9%
217.1%
n/a
2816.8%
n/a
n/a
Anne Robinson
9.4%
115.9%
n/a
4.3%
-89.4%
n/a
5.4%
-23.7%
n/a
474.0%
n/a
n/a
n/a
n/a
n/a
Earl Shipp
7.9%
-15.0%
n/a
4.4%
-31.1%
n/a
0.7%
-51.6%
n/a
9.0%
208.6%
n/a
8.6%
n/a
n/a
Iain Mackay
4.3%
-99.6%
n/a
10.2%
86.5%
n/a
60.7%
9695.4%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Ian Livingston
5.1%
-18.2%
n/a
16.9%
n/a
n/a
14.3%
-100.0%
n/a
113.2%
3.0%
n/a
n/a
n/a
n/a
Jacqui Ferguson
10.9%
-33.3%
n/a
362.3%
166.7%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Jonathan Silver
8.8%
-38.6%
n/a
-0.9%
-66.2%
n/a
-1.7%
-74.2%
n/a
24.5%
383.6%
n/a
-4.2%
n/a
n/a
Martha Wyrsch
9.0%
0.8%
n/a
9.6%
27.7%
n/a
4.5%
-30.6%
n/a
111.0%
280.3%
n/a
n/a
n/a
n/a
Tony Wood
12.1%
-21.2%
n/a
4.3%
-60.0%
n/a
-3.1%
-19.0%
n/a
144.2%
857.5%
n/a
n/a
n/a
n/a
Employee median3
-0.4%
-5.8%
-1.5%
2.3%
3.6%
-8.0%
5.0%
6.6%
-3.8%
12.4%
36.4%
-23.0%
2.8%
6.1%
40.0%
1.Zoë Yujnovich was appointed to the Board on 1 September 2025, therefore percentage change is not applicable for 2025/26.
2.John Pettigrew retired from the Board effective 16 November 2025, his leaving arrangement is set out on page 118.
3.The reduction in employee median values during 2025/26 primarily reflects the impact of exchange rate movements.
4.Benefits/other emoluments: For Executive Directors, benefits include private medical insurance, life assurance, allowance under the Group’s flexible benefits programme, travel and accommodation expenses, a fully expensed car or cash alternative and the use of a car and a driver
when required. For Non-executive Directors, the equivalent of benefits is emoluments. In accordance with the Group’s expenses policies, Non-executive Directors receive reimbursement for their reasonable expenses for attending Board meetings. In instances where these costs are
treated by HMRC as taxable benefits, the Group also meets the associated tax cost to the Non-executive Directors through a PAYE settlement agreement with HMRC and these costs are included in the table above.
Service contracts/letters of appointment
In line with our Policy, all Executive Directors have service contracts which are terminable by either party with 12 months’ notice commencing immediately after announcement. Non-executive Directors are subject to
letters of appointment. The Board Chair’s appointment is subject to six months’ notice by either party; for other Non-executive Directors, notice is one month. All Directors are required to be elected at each AGM.
There have been no changes made to Directors’ service contracts and letters of appointment. Copies of service contracts and letters of appointment are available for inspection at the Company’s registered office.
External appointments and retention of fees
As per our Policy, Executive Directors may, with the approval of the Board, accept one external appointment as a Non-executive Director of another company and retain any fees received for the appointment.
Experience as a board member of another company is considered to be valuable personal development, which in turn is of benefit to the Company. The table below details the Executive Directors’ appointments as
Non-executive Directors in other companies during the year ended 31 March 2026.
Company
Zoë Yujnovich
Unilever plc
Andy Agg
The Weir Group plc
John Pettigrew
Rentokil Initial plc
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Additional Information
People & Remuneration Committee report cont.
Statement of implementation of Policy in 2025/26 cont.
The Committee’s activities in 2025/26
Meeting/circulations
Main areas of discussion
April 2025
Remuneration arrangements as part of Chief Executive succession plan
May 2025
AGM update
Approval of 2024/25 APP and 2022 LTPP outcomes for the Group Executive
Committee
Approval of the 2025/26 APP financial, operational and individual objectives and
2025 LTPP targets for the Group Executive Committee
Discussion on a number of governance updates, including share dilution limits and
shareholding for the Group Executive Committee
November 2025
External market update and evolving governance
Update on the provisional incentive plan outcomes (2025/26 APP and outstanding
LTPP) for the Group Executive Committee
Discussion on the results of the half-year Group-wide employee engagement
survey
January 2026
Discussion on the 2026/27 APP financial, operational and individual objectives and
2026 LTPP targets for the Group Executive Committee.
Review of broader workforce remuneration and approval of the Gender Pay Gap
calculation.
March 2026
Discussion on the provisional incentive plan outcomes (2025/26 APP and
outstanding LTPP) for the Group Executive Committee
Discussion on the 2026/27 APP financial, operational and individual objectives and
2026 LTPP award for the Group Executive Committee
Market data review, salary increase proposals, in context of wider workforce
increases, for the Group Executive Committee
Review of Chair fees
Discussion on the results of the full-year Group-wide employee engagement
survey
Advisors to the People & Remuneration Committee
PricewaterhouseCoopers LLP (PwC) was selected by the Committee to become its independent advisor
from 3 August 2020 and provided advice and counsel to the Committee throughout 2025/26. PwC is a
member of the Remuneration Consultants Group (RCG) and has signed up to RCG’s code of conduct.
The Committee is satisfied that any potential conflicts were appropriately managed. Work undertaken by
PwC in its role as independent advisor to the Committee has incurred fees of £235,751 during the
2025/26 on the basis of time charged to perform services and deliverables.
The Committee reviews the objectivity and independence of the advice it receives from its advisors each
year. It is satisfied that PwC provided credible and professional advice. PwC has provided general and
technical remuneration services in relation to employees below Board and Group Executive Committee
level that include broad-based employee reward support and data assurance services. In addition, WTW
provided benchmarking support to the Committee in the year and incurred fees of £25,200.
The Committee considers the views of the Chair on the performance and remuneration of the Chief
Executive, and of the Chief Executive on the performance and remuneration of the other members of the
Group Executive Committee. The Committee is also supported by the Group Company Secretary, and
either he or his delegate acts as Secretary to the Committee; the Chief People Officer; the Group Head of
Reward; and, as required, the Chief Financial Officer and the Group Financial Controller.
Voting on the Policy and the Directors’ Remuneration Report at the 2025 AGM
2025 Policy
Directors’ Remuneration Report 2024/25
Notes:
1.The Directors’ Remuneration Policy voting figures shown refer to votes cast at the 2025 AGM and represent 76.43% of the issued share
capital. In addition, shareholders holding 3.9 million shares abstained.
2.The Directors’ Remuneration Report voting figures shown refer to votes cast at the 2025 AGM and represent 76.44% of the issued
share capital. In addition, shareholders holding 3.4 million shares abstained.
For 98%
Against 2%
For 99%
Against 1%
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Additional Information
People & Remuneration Committee report cont.
Implementation of the Policy for 2026/27
The 2025 Policy will be implemented in 2026/27 as detailed below.
Salary and pensions
Salary increases for the Executive Directors will be on par with the wider UK and US workforce principles
(4.5%). The wider workforce (non-union) salary budget increase is set at 3.5% plus 1% for compression
and market adjustment. Zoë Yujnovich and Andy Agg will each receive salary increases of 4.5% and 3.5%
respectively, effective from 1 July 2026, with both increases aligned with the principles applied in
determining increases across the wider workforce.
The Committee considers that the Chief Executive’s starting remuneration appropriately reflects that Zoë
is new to the role and deliberately positioned towards the lower end of the market. Since appointment,
Zoë has delivered exceptional performance, reinforcing the Committee’s performance‑first philosophy.
Subject to continued strong company and individual performance, the Committee expects to review salary
at the Chief Executive’s work anniversary, with a view to moving towards a more competitive level over
time. Any increase would be non‑automatic, consistent with the shareholder‑approved Policy, aligned with
relevant peer benchmarks, and reflective of the experience of shareholders.
John Pettigrew was Chief Executive to 16 November 2025 and continued to be available to the Group
through to the end of his 12-month notice period, which expired on 30 April 2026. His departure will be
treated in accordance with the Directors' Remuneration Policy and his service contract. Accordingly, he
continued to receive his current level of salary and benefits up to the cessation of his employment.
From 1 July 2026
From 1 July 2025
% increase
Zoë Yujnovich
£1,359,000
£1,300,000
4.5%
Andy Agg
£849,000
£820,575
3.5%
The pension contribution rate for both Executive Directors is in line with that for the UK wider workforce
and new joiners at 12%.
2026/27 APP
The 2026/27 APP measures will be split across financial measures, operational measures and individual
objectives, weighted 70%, 15% and 15% respectively. The maximum APP award for both Executive
Directors for 2026/27 is 200% of salary.
Measure
Weighting
Financial measure
Underlying Group EPS
35%
Group RoE
35%
Operational measure
Performance delivery
15%
Individual objectives
15%
Financial measures
For 2026/27, the Committee opted to retain Underlying Group EPS and Group RoE as financial measures.
Group RoE continues to be a relevant and important measure of performance as a primarily regulated
asset-based company and targets are set to ensure strong in-year returns and operational results. In
respect of earnings measures, Underlying Group EPS remains the most appropriate measure under the
APP from the perspective of the business, and the targets are set in a manner which considers specific
challenges and opportunities in the year ahead and are flexed accordingly while remaining consistent with
our longer-term performance goals.
Financial APP targets are considered commercially sensitive and consequently will be disclosed
retrospectively in the 2026/27 Directors’ Remuneration Report.
Operational measures
The Committee is introducing a “performance delivery” measure focusing on capital, asset, customer and
functional effectiveness. Performance will be assessed on delivering our capital programme on time and
on budget; improving asset reliability, safety and productivity through stronger asset management;
providing consistent, high‑quality customer experiences through clear communication and proactive
engagement; and enabling the business through efficient, responsive corporate functions and IT services.
Individual objectives
The Committee has approved individual objectives for the Executive Directors in line with key strategic and
operational priorities for the year ahead. Zoë Yujnovich’s individual objectives for 2026/27 are focused on:
(1) aligning the Board on strategic direction and enhancing strategic optionality; (2) driving big shifts by
developing talent and a high‑performance culture, building external influence and credibility, scaling
technology and innovation; and (3) delivering the brilliant basics. Andy Agg’s individual objectives are
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Additional Information
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and Accounts,
including the Group financial statements and the Parent Company financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that
law, the Directors are required to prepare the Group financial statements in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act 2006 and International
Financial Reporting Standards (IFRS) as adopted by the UK. The financial statements also comply with
IFRS as issued by the IASB. In addition, the Directors have elected to prepare the Parent Company
financial statements in accordance with UK Generally Accepted Accounting Practice (UK Accounting
Standards and applicable law), including FRS 101 ‘Reduced Disclosure Framework’. Under company
law, the Directors must not approve the accounts unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and
Parent Company for that period.
In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:
–properly select and apply accounting policies;
–present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
–provide additional disclosures when compliance with the specific requirements in IFRS are insufficient
to enable users to understand the impact of particular transactions, other events and conditions on
the entity’s financial position and financial performance; and
–make an assessment of the Group’s ability to continue as a going concern.
In preparing the Parent Company financial statements, the Directors are required to:
–select suitable accounting policies and then apply them consistently;
–make judgements and accounting estimates that are reasonable and prudent;
–state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
–prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group and Parent Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Parent Company on a consolidated and individual basis,
and to enable them to ensure that the Group financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Parent Company and its subsidiaries and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Having made the requisite enquiries, so far as the Directors in office at the date of the approval of this
Report are aware, there is no relevant audit information of which the auditors are unaware and each
Director has taken all reasonable steps to make themselves aware of any relevant audit information and
to establish that the auditors are aware of that information.
Each of the Directors, whose names and functions are listed on pages 91 – 93 confirms that:
–to the best of their knowledge, the Group financial statements and the Parent Company financial
statements, which have been prepared in accordance with IFRS as issued by the IASB and IFRS
as adopted by the UK and UK GAAP FRS 101 respectively, give a true and fair view of the assets,
liabilities, financial position and profit of the Company on a consolidated and individual basis;
–to the best of their knowledge, the Strategic Report contained in the Annual Report and Accounts
includes a fair review of the development and performance of the business and the position of the
Company on a consolidated and individual basis, together with a description of the principal risks
and uncertainties that it faces; and
–they consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
This Responsibilities Statement was approved by the Board and signed on its behalf.
Directors’ Report
The Directors’ Report, prepared in accordance with the requirements of the Companies Act 2006 and the
UK Listing Authority’s Listing Rules, and Disclosure Guidance and Transparency Rules, comprising pages
1 – 126 and 219 – 261, was approved by the Board and signed on its behalf.
Strategic Report
The Strategic Report, comprising pages 1 – 86, was approved by the Board and signed on its behalf.
By order of the Board
Julian Baddeley
Group Company Secretary
13 May 2026
Company number: 04031152
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Consolidated income statement
for the years ended 31 March
Notes
2026
£m
2025
£m
2024
£m
Continuing operations
Revenue
2(a),3
17,687
18,378
19,850
Impairment losses on financial assets
4
(243)
(200)
(179)
Other operating costs
4
(12,502)
(13,244)
(15,208)
Other operating income
489
—
12
Operating profit
2(b)
5,431
4,934
4,475
Finance income
6
380
450
248
Finance costs
6
(1,705)
(1,807)
(1,712)
Share of post-tax results of joint ventures and associates
16
76
73
37
Profit before tax
2(b)
4,182
3,650
3,048
Tax
7
(939)
(821)
(831)
Profit after tax from continuing operations
3,243
2,829
2,217
Profit after tax from discontinued operations
10
—
76
74
Total profit for the year
3,243
2,905
2,291
Attributable to:
Equity shareholders of the parent
3,241
2,902
2,290
Non-controlling interests
2
3
1
Earnings per share (pence)
Basic earnings per share (continuing)
8
65.5
60.0
55.5
Diluted earnings per share (continuing)
8
65.2
59.8
55.3
Basic earnings per share (continuing and discontinued)
8
65.5
61.6
57.4
Diluted earnings per share (continuing and discontinued)
8
65.2
61.4
57.1
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Corporate Governance
Financial Statements
Additional Information
Consolidated statement of comprehensive income
for the years ended 31 March
2026
2025
2024
Notes
£m
£m
£m
Profit after tax from continuing operations
3,243
2,829
2,217
Profit after tax from discontinued operations
—
76
74
Total profit for the year
3,243
2,905
2,291
Other comprehensive income from continuing operations
Items from continuing operations that will never be reclassified to profit or loss:
Remeasurement gains/(losses) on pension assets and post-retirement benefit obligations
25
132
(106)
(218)
Net gains/(losses) in respect of cash flow hedging of capital expenditure
22
(16)
(37)
Tax on items that will never be reclassified to profit or loss
7
(44)
27
59
Total items from continuing operations that will never be reclassified to profit or loss
110
(95)
(196)
Items from continuing operations that may be reclassified subsequently to profit or loss:
Retranslation of net assets offset by net investment hedge
(348)
(352)
(335)
Exchange differences reclassified to the consolidated income statement on disposal
10
76
—
—
Net (losses)/gains in respect of cash flow hedges
(120)
218
240
Net gains/(losses) in respect of cost of hedging
36
(52)
26
Net gains on investment in debt instruments measured at fair value through other comprehensive income
8
1
21
Tax on items that may be reclassified subsequently to profit or loss
7
21
(40)
(66)
Total items from continuing operations that may be reclassified subsequently to profit or loss
(327)
(225)
(114)
Other comprehensive loss
(217)
(320)
(310)
Other comprehensive (loss)/income for the year from discontinued operations, net of tax
10
—
(10)
10
Other comprehensive loss
(217)
(330)
(300)
Total comprehensive income for the year from continuing operations
3,026
2,509
1,907
Total comprehensive income for the year from discontinued operations
10
—
66
84
Total comprehensive income for the year
3,026
2,575
1,991
Attributable to:
Equity shareholders of the parent
From continuing operations
3,022
2,508
1,906
From discontinued operations
—
66
84
3,022
2,574
1,990
Non-controlling interests
From continuing operations
4
1
1
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Financial Statements
Additional Information
Consolidated statement of changes in equity
for the years ended 31 March
Notes
Share
capital
£m
Share
premium account
£m
Retained
earnings
£m
Other equity
reserves1
£m
Total shareholders’
equity
£m
Non-
controlling interests
£m
Total
equity
£m
At 31 March 2023
488
1,302
31,608
(3,860)
29,538
24
29,562
Profit for the year
—
—
2,290
—
2,290
1
2,291
Other comprehensive loss for the year
—
—
(168)
(132)
(300)
—
(300)
Total comprehensive income/(loss) for the year
—
—
2,122
(132)
1,990
1
1,991
Equity dividends
—
—
(1,718)
—
(1,718)
—
(1,718)
Scrip dividend-related share issue2
5
(6)
—
—
(1)
—
(1)
Issue of treasury shares
—
—
21
—
21
—
21
Transactions in own shares
—
2
(6)
—
(4)
—
(4)
Share-based payments
—
—
37
—
37
—
37
Tax on share-based payments
—
—
2
—
2
—
2
Cash flow hedges transferred to the statement of financial position, net of tax
—
—
—
2
2
—
2
At 1 April 2024
493
1,298
32,066
(3,990)
29,867
25
29,892
Profit for the year
—
—
2,902
—
2,902
3
2,905
Other comprehensive loss for the year
—
—
(80)
(248)
(328)
(2)
(330)
Total comprehensive income/(loss) for the year
—
—
2,822
(248)
2,574
1
2,575
Rights Issue
27
135
—
—
6,704
6,839
—
6,839
Transfer between reserves
27
—
—
6,704
(6,704)
—
—
—
Equity dividends
—
—
(1,529)
—
(1,529)
—
(1,529)
Scrip dividend-related share issue2
10
(10)
—
—
—
—
—
Issue of treasury shares
—
—
18
—
18
—
18
Transactions in own shares
—
4
(11)
—
(7)
—
(7)
Other movements in non-controlling interests
—
—
—
—
—
(3)
(3)
Share-based payments
—
—
37
—
37
—
37
Tax on share-based payments
—
—
(1)
—
(1)
—
(1)
Cash flow hedges transferred to the statement of financial position, net of tax
—
—
—
5
5
—
5
At 1 April 2025
638
1,292
40,106
(4,233)
37,803
23
37,826
Profit for the year
—
—
3,241
—
3,241
2
3,243
Other comprehensive income/(loss) for the year
—
—
93
(312)
(219)
2
(217)
Total comprehensive income/(loss) for the year
—
—
3,334
(312)
3,022
4
3,026
Equity dividends
—
—
(1,623)
—
(1,623)
—
(1,623)
Scrip dividend-related share issue2
9
(9)
—
—
—
—
—
Issue of treasury shares
—
—
40
—
40
—
40
Transactions in own shares
—
2
(3)
—
(1)
—
(1)
Other movements in non-controlling interests
—
—
—
—
—
4
4
Share-based payments
—
—
45
—
45
—
45
Tax on share-based payments
—
—
10
—
10
—
10
Cash flow hedges transferred to the statement of financial position, net of tax
—
—
—
3
3
—
3
At 31 March 2026
647
1,285
41,909
(4,542)
39,299
31
39,330
1.For further details of other equity reserves, see note 28.
2.Included within the share premium account are costs associated with scrip dividends.
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Corporate Governance
Financial Statements
Additional Information
Consolidated statement of financial position
as at 31 March
2026
2025
Notes
£m
£m
Non-current assets
Goodwill
11
9,417
9,532
Other intangible assets
12
3,879
3,564
Property, plant and equipment
13
81,520
74,091
Other non-current assets
14
1,384
959
Pensions and other post-retirement benefit assets
25
2,507
2,489
Financial and other investments
15
842
798
Investments in joint ventures and associates
16
624
608
Derivative financial assets
17
623
369
Total non-current assets
100,796
92,410
Current assets
Inventories
18
559
557
Trade and other receivables
19
3,867
4,092
Current tax assets
16
11
Financial and other investments
15
2,453
5,753
Derivative financial assets
17
215
113
Cash and cash equivalents
20
375
1,178
Assets held for sale
10
—
2,628
Total current assets
7,485
14,332
Total assets
108,281
106,742
2026
2025
Notes
£m
£m
Current liabilities
Borrowings
21
(3,900)
(4,662)
Derivative financial liabilities
17
(268)
(381)
Trade and other payables
22
(5,049)
(4,472)
Contract liabilities
23
(110)
(96)
Current tax liabilities
(45)
(219)
Provisions
26
(425)
(357)
Liabilities held for sale
10
—
(434)
Total current liabilities
(9,797)
(10,621)
Non-current liabilities
Borrowings
21
(42,855)
(42,877)
Derivative financial liabilities
17
(750)
(821)
Other non-current liabilities
24
(1,114)
(876)
Contract liabilities
23
(2,699)
(2,418)
Deferred tax liabilities
7
(9,040)
(8,038)
Pensions and other post-retirement benefit obligations
25
(360)
(573)
Provisions
26
(2,336)
(2,692)
Total non-current liabilities
(59,154)
(58,295)
Total liabilities
(68,951)
(68,916)
Net assets
39,330
37,826
Equity
Share capital
27
647
638
Share premium account
1,285
1,292
Retained earnings
41,909
40,106
Other equity reserves
28
(4,542)
(4,233)
Total shareholders’ equity
39,299
37,803
Non-controlling interests
31
23
Total equity
39,330
37,826
The consolidated financial statements set out on pages 137 – 211 were approved by the Board of
Directors on 13 May 2026 and were signed on its behalf by:
Zoë Yujnovich
Chief Executive
Andy Agg
Chief Financial Officer
National Grid plc
Registered number: 4031152
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Financial Statements
Additional Information
Consolidated cash flow statement
for the years ended 31 March
2026
2025
2024
Notes
£m
£m
£m
Cash flows from operating activities
Total operating profit from continuing operations
2(b)
5,431
4,934
4,475
Adjustments for:
Gain on sale of investments
(393)
(188)
—
Other fair value movements
(31)
66
(16)
Depreciation, amortisation and impairment
2,247
2,479
2,061
Share-based payments
45
37
37
Changes in working capital
720
40
(147)
Changes in provisions
(127)
(287)
840
Changes in pensions and other post-retirement
benefit obligations
(31)
(90)
31
Cash generated from operations – continuing operations
7,861
6,991
7,281
Tax paid
(32)
(183)
(342)
Net cash inflow from operating activities –
continuing operations
7,829
6,808
6,939
Cash flows from investing activities
Purchases of intangible assets
(586)
(526)
(549)
Purchases of property, plant and equipment
(9,989)
(8,780)
(6,904)
Disposals of property, plant and equipment
68
26
52
Investments in joint ventures and associates
(94)
(396)
(332)
Dividends received from joint ventures, associates
and other investments
105
126
176
Disposal of interest in National Grid Renewables1
10
1,473
—
—
Disposal of interest in Grain LNG1
10
1,336
—
—
Disposal of interest in the UK Electricity System Operator1
—
577
—
Disposal of interest in the UK Gas Transmission business1
10
—
686
681
Disposal of financial and other investments
67
85
102
Acquisition of financial investments
(67)
(122)
(81)
Contributions to National Grid Renewables and Emerald
Energy Venture LLC
—
—
(19)
Net movements in short-term financial investments
3,285
(2,606)
(1,141)
Interest received
29(b)
231
332
148
Cash inflows on derivatives
29(b)
20
11
123
Cash outflows on derivatives
29(b)
(6)
(6)
—
Insurance claim from loss of property, plant and equipment
—
—
143
Net cash flow used in investing activities –
continuing operations
(4,157)
(10,593)
(7,601)
Net cash inflow from investing activities –
discontinued operations
—
22
102
2026
2025
2024
Notes
£m
£m
£m
Cash flows from financing activities
Proceeds of Rights Issue
27
—
7,001
—
Transaction fees related to Rights Issue
27
—
(162)
—
Proceeds from issue of treasury shares
40
18
20
Transactions in own shares
(1)
(7)
(4)
Proceeds received from loans
29(b)
4,172
3,237
5,563
Repayment of loans
29(b)
(2,961)
(2,861)
(1,701)
Payments of lease liabilities
29(b)
(145)
(130)
(118)
Net movements in short-term borrowings
29(b)
(2,225)
925
544
Cash inflows on derivatives
29(b)
93
62
86
Cash outflows on derivatives
29(b)
(38)
(106)
(58)
Interest paid
29(b)
(1,932)
(1,920)
(1,627)
Dividends paid to shareholders
9
(1,623)
(1,529)
(1,718)
Net cash flow (used in)/from financing activities –
continuing operations
(4,620)
4,528
987
Net cash flow used in financing activities –
discontinued operations
—
—
—
Net (decrease)/increase in cash and cash
equivalents
29(b)
(948)
765
427
Reclassification to held for sale
10,29(b)
153
(123)
(30)
Exchange movements
29(b)
(8)
(23)
(1)
Cash and cash equivalents at start of year
1,178
559
163
Cash and cash equivalents at end of year
20
375
1,178
559
1.Balances consist of cash proceeds received, net of cash disposed.
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Financial Statements
Additional Information
Notes to the consolidated financial statements
1. Basis of preparation and recent accounting developments
Accounting policies describe our approach to recognising and measuring transactions
and balances in the year. The accounting policies applicable across the financial statements
are shown below, whereas accounting policies that are specific to a component of the
financial statements have been incorporated into the relevant note.
This section also shows areas of judgement and key sources of estimation uncertainty in
these financial statements. In addition, we have summarised new International Accounting
Standards Board (IASB) accounting standards, amendments and interpretations
and whether these are effective for this year end or in later years, explaining how
significant changes are expected to affect our reported results.
National Grid’s principal activities involve the transmission and distribution of electricity in Great Britain and
of electricity and gas in northeastern US. The Company is a public limited liability company incorporated
and domiciled in England and Wales, with its registered office at 1–3 Strand, London, WC2N 5EH.
The Company, National Grid plc, which is the ultimate parent of the Group, has its primary listing on
the London Stock Exchange and is also quoted on the New York Stock Exchange.
These consolidated financial statements were approved for issue by the Board on 13 May 2026.
These consolidated financial statements have been prepared in accordance with IFRS® Accounting
Standards (IFRSs) as issued by the IASB. They are prepared on the basis of all IFRSs that are
mandatory for the period ended 31 March 2026 and in accordance with the Companies Act 2006.
The comparative financial information has also been prepared on this basis.
The consolidated financial statements have been prepared on a historical cost basis, except for the
recording of pension assets and liabilities, the revaluation of derivative financial instruments and certain
commodity contracts and certain financial assets and liabilities measured at fair value.
These consolidated financial statements are presented in pounds sterling, which is also the functional
currency of the Company.
The notes to the financial statements have been prepared on a continuing basis unless otherwise stated.
A. Going concern
As part of the Directors’ consideration of the appropriateness of adopting the going concern basis
of accounting in preparing these financial statements, the Directors have assessed the Principal Risks
alongside potential downside business cash flow scenarios impacting the Group’s operations. The
Directors specifically considered both a base case and reasonable worst-case scenario for business
cash flows.
The main cash flow impacts identified in the reasonable worst-case scenario are:
–adverse impacts of higher spend on our capital expenditure programme;
–adverse impact from timing across the Group (i.e. a net under-recovery of allowed revenues
or reductions in over-collections) and slower collections of outstanding receivables;
–higher operating and financing costs than expected, including non‑delivery of planned efficiencies
across the Group; and
–the potential impact of further significant storms in the US.
As part of its analysis, the Board also considered the following potential levers at their discretion
to improve the position identified by the analysis if the debt capital markets are not accessible:
–the payment of dividends to shareholders;
–significant changes in the phasing of the Group’s capital expenditure programme, with elements
of non‑essential works and programmes delayed; and
–a number of further reductions in operating expenditure across the Group.
Having considered the reasonable worst-case scenario and the further levers at the Board’s discretion,
the Group continues to have headroom against the Group’s committed facilities identified in note 33 to
the financial statements.
In addition to the above, the ability to raise new and extend existing financing was separately included
in the analysis, and the Directors noted £4.2 billion of new long-term senior debt had been raised in the
year from 1 April 2025 to 31 March 2026 as evidence of the Group’s ability to continue to have access
to the debt capital markets if needed.
We have considered the impact of recent geopolitical developments, including the escalation of conflict in
the Middle East, which has contributed to increased market volatility and higher energy prices. While these
conditions could increase the cost of new debt and introduce short term execution volatility, we have
continued to observe access to funding and availability of committed liquidity during this period, consistent
with our recent issuance activity and funding plan; including a $0.7 billion bond issued in March 2026
and a $0.9 billion loan executed in April 2026. Consequently, we believe that, despite a more uncertain
external environment, the Group retains the ability to access debt capital markets as required to support
its financing needs over the going concern period.
Based on the above, the Directors have concluded the Group is well placed to manage its financing and
other business risks satisfactorily and have a reasonable expectation that the Group will have adequate
resources to continue in operation for at least 12 months from the signing date of these consolidated
financial statements. They therefore consider it appropriate to adopt the going concern basis of
accounting in preparing the financial statements.
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Additional Information
Notes to the consolidated financial statements cont.
1. Basis of preparation and recent accounting developments cont.
B. Basis of consolidation
The consolidated financial statements incorporate the results, assets and liabilities of the Company
and its subsidiaries, together with a share of the results, assets and liabilities of joint operations.
A subsidiary is defined as an entity controlled by the Group. Control is achieved where the Group is
exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity.
The Group accounts for joint ventures and associates using the equity method of accounting, where the
investment is carried at cost plus post‑acquisition changes in the share of net assets of the joint venture
or associate, less any provision for impairment. Losses in excess of the consolidated interest in joint
ventures and associates are not recognised, except where the Company or its subsidiaries have made
a commitment to make good those losses.
Where necessary, adjustments are made to bring the accounting policies used in the individual financial
statements of the Company, subsidiaries, joint operations, joint ventures and associates in line with
those used by the Group in its consolidated financial statements under IFRS. Intercompany transactions
are eliminated.
The results of subsidiaries, joint operations, joint ventures and associates acquired or disposed of during
the year are included in the consolidated income statement from the effective date of acquisition or up
to the effective date of disposal, as appropriate.
Acquisitions are accounted for using the acquisition method, where the purchase price is allocated to
the identifiable assets acquired and liabilities assumed on a fair value basis and the remainder recognised
as goodwill.
C. Foreign currencies
Transactions in currencies other than the functional currency of the Company or subsidiary concerned
are recorded at the rates of exchange prevailing on the date of the transactions. At each reporting date,
monetary assets and liabilities that are denominated in foreign currencies are retranslated at closing
exchange rates. Non-monetary assets are not retranslated unless they are carried at fair value.
Gains and losses arising on the retranslation of monetary assets and liabilities are included in the income
statement, except where the application of hedge accounting requires inclusion in other comprehensive
income (see note 32(e)).
On consolidation, the assets and liabilities of operations that have a functional currency different from the
Company’s functional currency of pounds sterling, principally our US operations that have a functional
currency of US dollars, are translated at exchange rates prevailing at the reporting date. Income and expense
items are translated at the average exchange rates for the period where these do not differ materially from
rates at the date of the transaction. Exchange differences arising are recognised in other comprehensive
income and transferred to the consolidated translation reserve within other equity reserves (see note 28).
D.Areas of judgement and key sources of estimation uncertainty
The preparation of financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and
the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from these estimates. Information about such judgements and estimations is in the notes to the financial
statements, and the key areas are summarised below.
An area of judgement that has the most significant effect on the amounts recognised in the financial
statements is:
–the judgement that, notwithstanding legislation enacted and targets committing the states of New York
and Massachusetts to achieving net zero greenhouse gas emissions by 2050, these do not shorten the
remaining useful economic lives (UELs) of our US gas network assets, which we consider will have an
expected use and utility beyond 2050 (see other areas of estimation uncertainty below and note 13).
Key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are:
–the future cash flows and real discount rates applied in determining the US environmental provisions,
in particular relating to two Superfund sites and certain other legacy Manufacturing Gas Plant (MGP)
sites (see note 26); and
–the valuation of liabilities for pensions and other post-retirement benefits (see note 25).
In order to illustrate the impact that changes in assumptions for the valuation of pension liabilities and
cash flows for environmental provisions could have on our results and financial position, we have included
sensitivity analysis in note 35.
Other areas of estimation uncertainty
A further area of estimation uncertainty pertains to the estimates made regarding the UELs of our
gas network assets due to uncertainty over the pace of delivery of the energy transition and the multiple
pathways by which it could be delivered. Our estimates consider anticipated changes in customer
behaviour and developments in new technology, the potential to decarbonise fuel through the use of
renewable natural gas and green hydrogen, and the feasibility and affordability of increased electrification
(see note 13 for details and sensitivity analysis).
E. Impact of climate change and the transition to net zero
In preparing these financial statements for the year ended 31 March 2026, management has taken into
account the Group’s commitments regarding its transition to net zero and the impact of climate change.
The Group has a published climate transition plan which sets out its targets to achieve this commitment
by 2050, in line with the Paris Agreement. Management has also identified a number of significant climate-
related risks and opportunities. Changes to the Group’s commitments and the impact of climate change
may have a material impact on the currently reported amounts of the Group’s assets and liabilities and on
similar assets and liabilities that may be recognised in future reporting periods, as set out above with
respect to the judgement and other areas of estimation uncertainty regarding the UELs of our US gas
network assets. Other climate and transition impacts are further detailed below.
Repairs to property, plant and equipment and climate adaptation activities
The Group’s network assets recorded within property, plant and equipment (PP&E) are at risk of physical
impacts from extreme weather events such as major storms which may be accentuated by increased
frequency of weather incidents and changing long-term climate trends, thereby leading to asset damage.
Major storm costs in the US, net of deductibles and disallowances, incurred by the Group are recoverable
as revenue in future periods under our rate plans but the associated repair costs are expensed as incurred
as other operating costs under IFRS.
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Additional Information
Notes to the consolidated financial statements cont.
1. Basis of preparation and recent accounting developments cont.
E. Impact of climate change and the transition to net zero cont.
Impairment of property, plant and equipment and goodwill
Included within the Group’s plant and machinery (see note 13) are £267 million of oil- and gas-fired
electricity generation units with approximately 3,800 MW of electric generation capacity located in
Long Island, New York. While the Group retains ownership of these assets, it sells all of the capacity,
energy in response to dispatch requests, and any related ancillary services provided by the generating
facilities to the Long Island Power Authority (LIPA) via a Power Supply Agreement running until 2028.
The maximum UEL for these units ends in 2040, which aligns to the target set by the state of New York
to achieve decarbonised power generation by 2040. However, there is a risk that the UEL of certain,
or all, of the units may be shortened, depending on the progress of decarbonisation activities in Long
Island. The Group believes there are no material accounting judgements in respect of the generation
assets and the UELs have not been accelerated in the year.
The UELs of our assets related to our commercial operations in LNG at Providence, Rhode Island are
informed by the recovery periods used for ratemaking purposes and the majority of the UELs are covered
by fixed price service contracts. The net book value of these assets will be immaterial by 2050. Accordingly,
the Group believes there are no material accounting judgements in respect of the UELs of the LNG assets
as of 31 March 2026.
The net zero pathway may also impact our US gas networks which in turn may affect the recoverable
amount of our New York and New England cash-generating units (CGUs). In assessing the recoverability
of our CGUs (see note 11), we calculate the value-in-use based on projections that incorporate our best
estimates of future cash flows and assumptions pertaining to the net zero plans of the jurisdictions that
we operate in. In respect of our New York and New England CGUs, our forecast cash flow duration used
in our impairment testing is five years. We apply a terminal growth rate informed by expected long-term
economic inflation and the discount rate used takes into consideration the potential impact of net zero
plans on our gas business. Accordingly, the impact of certain variables that will play out in the medium
to long term as a result of the anticipated transition to decarbonised power generation are not anticipated
to have an impact on the recoverable amount of our New York and New England CGUs.
Decommissioning provisions
Provisions to decommission significant portions of our regulated transmission and distribution assets
are not recognised where no legal obligations exist, and a realistic alternative exists to incurring costs
to decommission assets at the end of their life. Included within the Group’s decommissioning provisions
as at 31 March 2026 (see note 26) is £38 million relating to legal requirements to remove asbestos upon
major renovation or demolition of our oil- and gas-fired electricity generation structures and facilities
located in Long Island, New York. As noted above, the progress of decarbonisation activities in Long
Island may bring forward the decommissioning of these assets, thereby increasing the present value of
associated decommissioning provisions. In the current year, there have been no material changes to the
expected timing of decommissioning expenditures. Currently, the expected timing of decommissioning
expenditures has not materially been brought forward but management will continue to review the
facts and circumstances.
Sensitivity to commodity contract derivatives
The Group has contracts associated with the forward purchase of gas and enters into derivative financial
instruments linked to commodity prices, including gas options and swaps which are used to manage
market price volatility (see note 17(b)). As at 31 March 2026, the Group’s gas commodity contract
derivatives are primarily short-term and, accordingly, we do not anticipate a risk as a result of the
transition to net zero.
F. Accounting policy choices
IFRS provides certain options available within accounting standards. Choices we have made, and
continue to make, include the following:
–Presentational formats: we use the nature of expense method for our income statement and aggregate
our statement of financial position to net assets and total equity.
–Financial instruments: we normally opt to apply hedge accounting in most circumstances where this is
permitted (see note 32(e)).
G. New IFRS accounting standards and interpretations effective for the year ended 31 March 2026
The Group adopted the following amendments to standards which have had no material impact on the
Group’s results or financial statement disclosures:
–amendments to IAS 21 ‘Lack of exchangeability’.
H. New IFRS accounting standards and interpretations not yet adopted
The following new accounting standards and amendments to existing standards have been issued but
are not yet effective:
–IFRS 18 ‘Presentation and Disclosure in Financial Statements’;
–IFRS 9 and IFRS 7 ‘Amendments to the Classification and Measurement of Financial Instruments’;
–Amendments to IFRS 9 and IFRS 7 ‘Contracts Referencing Nature-dependent Electricity’;
–Annual Improvements to IFRS Accounting Standards – Volume 11; and
–IFRS 19 ‘Subsidiaries without Public Accountability: Disclosures’.
The Group is currently assessing the impact of the above standards, but they are not expected to have
a material impact other than in respect of IFRS 18.
IFRS 18 replaces IAS 1 and the Group will apply the new standard from 1 April 2027, with retrospective
application. The Group is in the process of assessing the impact of IFRS 18 and anticipates changes to
certain presentational and disclosure-related matters in its consolidated financial statements. The adoption
of IFRS 18 will not affect the Group’s profit after tax; however, it will result in changes to the presentation
of the primary financial statements and to certain disclosures. In particular, income and expenses will be
grouped into five categories in the Consolidated income statement, namely the operating, investing,
financing, discontinued operations and income tax categories. There will also be an additional mandatory
subtotal for ‘Profit before financing and income taxes’ and the ‘useful structured summary’ concept will
necessitate certain changes to line items presented in the Consolidated income statement, although the
overall impact is not expected to be significant. Management-defined performance measures will also
require disclosure in a single note. Preparatory work is currently underway to support adoption, including
updates to reporting systems and the chart of accounts.
The Group has not adopted any other standard, amendment or interpretation that has been issued but
is not yet effective.
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Notes to the consolidated financial statements cont.
2. Segmental analysis
This note sets out the financial performance for the year split into the different parts of the business (operating segments). The performance of these operating segments is monitored
and managed on a day-to-day basis. Revenue and the results of the business are analysed by operating segment, based on the information the Board of Directors uses internally for
the purposes of evaluating the performance of each operating segment and determining resource allocation between them. The Board is National Grid’s chief operating decision maker
(as defined by IFRS 8 ‘Operating Segments’) and as a matter of course, the Board considers multiple profitability measures by segment, being ‘adjusted profit’ and ‘underlying profit’.
Adjusted profit excludes exceptional items and remeasurements (as defined in note 5) and is used by management and the Board to monitor financial performance as it is considered that
it aids the comparability of our reported financial performance from year to year. Underlying profit, as presented in the Annual Report and Accounts, represents adjusted profit and also
excludes the effects of timing, major storm costs and deferred tax expenses in our UK Electricity Transmission and UK Electricity Distribution businesses. The measure of profit disclosed
in this note and the primary profitability benchmark considered by the chief operating decision maker is operating profit before exceptional items and remeasurements, adjusted profit,
as this is the measure that is most consistent with the IFRS results reported within these financial statements.
The results of our five principal businesses are reported to the Board of Directors and are accordingly treated as reportable operating segments. All other operating segments are reported to the Board of Directors
on an aggregated basis. The following table describes the main activities for each reportable operating segment:
UK Electricity Transmission
The high-voltage electricity transmission networks in England and Wales. This includes our Accelerated Strategic Transmission Investment projects to connect more clean,
low-carbon power to the transmission network in England and Wales.
UK Electricity Distribution
The electricity distribution networks of NGED in the East Midlands, West Midlands and South West of England and South Wales.
New England
Electricity distribution networks, high-voltage electricity transmission networks and gas distribution networks in New England.
New York
Electricity distribution networks, high-voltage electricity transmission networks and gas distribution networks in New York.
National Grid Ventures
Comprises our electricity interconnectors in the UK, our electricity generation business in the US, all commercial operations in LNG at Providence, Rhode Island in the US and
the Isle of Grain in the UK, and our investment in NG Renewables, our renewables business in the US. While NGV operates outside our regulated core business, the electricity
interconnectors in the UK are subject to indirect regulation by Ofgem regarding the level of returns they can earn. The Group sold its interest in NG Renewables on 29 May 2025
and in Grain LNG on 28 November 2025 (see note 10).
Included within the comparative years are the results of the UK Electricity System Operator which also represented a separate operating segment. The Group completed the disposal of the ESO to the UK
Government in the prior year.
Other activities that do not form part of any of the segments in the above table primarily relate to our UK property business together with insurance and corporate activities in the UK and US and the Group’s
investments in technology and innovation companies through National Grid Partners.
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Notes to the consolidated financial statements cont.
2. Segmental analysis cont.
(a) Revenue
Revenue primarily represents the sales value derived from the generation, transmission and distribution of energy, together with the sales value derived from the provision of other services to customers. Refer to note3
for further details.
Sales between operating segments are priced considering the regulatory and legal requirements to which the businesses are subject. The analysis of revenue by geographical area is on the basis of destination. There
are no material sales between the UK and US geographical areas.
2026
2025
2024
Total
sales
£m
Sales
between
segments
£m
Sales
to third
parties
£m
Total
sales
£m
Sales
between
segments
£m
Sales
to third
parties
£m
Total
sales
£m
Sales
between
segments
£m
Sales
to third
parties
£m
Operating segments – continuing operations:
UK Electricity Transmission
2,898
(87)
2,811
2,619
(135)
2,484
2,735
(40)
2,695
UK Electricity Distribution
1,937
—
1,937
2,424
(3)
2,421
1,795
(5)
1,790
UK Electricity System Operator
—
—
—
1,029
(17)
1,012
3,788
(35)
3,753
New England
4,174
—
4,174
4,306
—
4,306
3,948
—
3,948
New York
7,618
—
7,618
6,689
—
6,689
6,094
—
6,094
National Grid Ventures
1,098
(41)
1,057
1,397
(47)
1,350
1,389
(57)
1,332
Other
97
(7)
90
122
(6)
116
244
(6)
238
Total revenue from continuing operations
17,822
(135)
17,687
18,586
(208)
18,378
19,993
(143)
19,850
Split by geographical areas – continuing operations:
UK
5,472
6,707
9,063
US
12,215
11,671
10,787
Total revenue from continuing operations
17,687
18,378
19,850
The principal revenues of the UK Electricity Transmission segment arise from the provision of electricity transmission services and are invoiced to, and collected from, National Energy System Operator (NESO).
Amounts are invoiced and settled in equal monthly instalments throughout the financial year. No other single customer contributed 10% or more of the Group’s revenue in any of the years presented.
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Notes to the consolidated financial statements cont.
2. Segmental analysis cont.
(b) Operating profit
A reconciliation of the operating segments’ measure of profit to profit before tax from continuing operations
is provided below. Further details of the exceptional items and remeasurements are provided in note 5.
Total operating profit/(loss)
before exceptional items
and remeasurements
Exceptional items
and remeasurements
(see note 5)
Total operating profit/(loss)
after exceptional items
and remeasurements
2026
2025
2024
2026
2025
2024
2026
2025
2024
£m
£m
£m
£m
£m
£m
£m
£m
£m
Operating segments –
continuing operations:
UK Electricity
Transmission
1,605
1,277
1,677
—
—
(3)
1,605
1,277
1,674
UK Electricity
Distribution
1,122
1,610
993
—
(12)
(18)
1,122
1,598
975
UK Electricity
System Operator
—
(364)
880
—
151
(498)
—
(213)
382
New England
960
982
643
(13)
26
(2)
947
1,008
641
New York
1,172
1,023
860
12
246
(498)
1,184
1,269
362
National Grid
Ventures
327
380
469
388
(375)
89
715
5
558
Other
(142)
(143)
(60)
—
133
(57)
(142)
(10)
(117)
Total Group
5,044
4,765
5,462
387
169
(987)
5,431
4,934
4,475
Split by geographical
area – continuing
operations:
UK
2,948
2,775
3,923
484
257
(487)
3,432
3,032
3,436
US
2,096
1,990
1,539
(97)
(88)
(500)
1,999
1,902
1,039
Total Group
5,044
4,765
5,462
387
169
(987)
5,431
4,934
4,475
Profit/(loss) before tax
before exceptional items
and remeasurements
Exceptional items
and remeasurements
(see note 5)
Profit/(loss) before tax after
exceptional items
and remeasurements
2026
2025
2024
2026
2025
2024
2026
2025
2024
£m
£m
£m
£m
£m
£m
£m
£m
£m
Reconciliation to profit
before tax:
Operating profit
from continuing
operations
5,044
4,765
5,462
387
169
(987)
5,431
4,934
4,475
Share of post-tax
results of joint
ventures
and associates
76
75
101
—
(2)
(64)
76
73
37
Finance income
378
449
244
2
1
4
380
450
248
Finance costs
(1,649)
(1,810)
(1,723)
(56)
3
11
(1,705)
(1,807)
(1,712)
Total Group
3,849
3,479
4,084
333
171
(1,036)
4,182
3,650
3,048
The following items are included in the total operating profit by segment:
Depreciation, amortisation and impairment1
2026
2025
2024
£m
£m
£m
Operating segments:
UK Electricity Transmission
(550)
(540)
(521)
UK Electricity Distribution
(271)
(249)
(223)
UK Electricity System Operator
—
—
(61)
New England
(493)
(469)
(420)
New York
(769)
(731)
(658)
National Grid Ventures
(151)
(173)
(166)
Other
(13)
(13)
(12)
Total
(2,247)
(2,175)
(2,061)
Asset type:
Property, plant and equipment
(1,929)
(1,878)
(1,769)
Non-current intangible assets
(318)
(297)
(292)
Total
(2,247)
(2,175)
(2,061)
1.Depreciation, amortisation and impairment relates to property, plant and equipment and other intangible assets. The charge is stated net
of depreciation and amortisation capitalised.
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Notes to the consolidated financial statements cont.
2. Segmental analysis cont.
(c) Capital investment
Capital investment represents additions to property, plant and equipment, prepayments to suppliers to
secure production capacity in relation to our capital projects, non-current intangibles and additional equity
investments in joint ventures and associates. Capital investments exclude additions for assets or
businesses from the point they are classified as held for sale.
2026
2025
2024
£m
£m
£m
Operating segments:
UK Electricity Transmission
4,372
2,999
1,912
UK Electricity Distribution
1,617
1,426
1,247
UK Electricity System Operator
—
—
85
New England
2,043
1,751
1,673
New York
3,428
3,289
2,654
National Grid Ventures
109
378
662
Other
7
4
2
Total
11,576
9,847
8,235
Asset type:
Property, plant and equipment
9,924
8,894
7,124
Non-current intangible assets
693
478
481
Equity investments in joint ventures and associates
27
116
332
Capital expenditure prepayments
932
359
298
Total
11,576
9,847
8,235
(d) Geographical analysis of non-current assets
Non-current assets by geography comprise goodwill, other intangible assets, property, plant and
equipment, investments in joint ventures and associates and other non-current assets.
2026
2025
2024
£m
£m
£m
Split by geographical area:
UK
47,551
42,623
40,065
US
49,273
46,131
44,270
96,824
88,754
84,335
Reconciliation to total non-current assets:
Pension assets
2,507
2,489
2,407
Financial and other investments
842
798
880
Derivative financial assets
623
369
324
Non-current assets
100,796
92,410
87,946
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Notes to the consolidated financial statements cont.
3. Revenue
Revenue arises in the course of ordinary activities and principally comprises:
–transmission services;
–distribution services; and
–generation services.
Transmission services, distribution services and certain other services (excluding
rental income) fall within the scope of IFRS 15 ‘Revenue from Contracts with Customers’,
whereas generation services (which solely relate to the contract with LIPA in the US)
are accounted for under IFRS 16 ‘Leases’ as rental income, also presented within revenue.
Revenue is recognised to reflect the transfer of goods or services to customers at an
amount that reflects the consideration to which the Group expects to be entitled to in
exchange for those goods or services and excludes amounts collected on behalf of third
parties and value added tax. The Group recognises revenue when it transfers control
over a product or service to a customer.
Revenue in respect of regulated activities is determined by regulatory agreements that
set the price to be charged for services in a given period based on pre-determined allowed
revenues. Variances in service usage can result in actual revenue collected exceeding
(over-recoveries) or falling short (under-recoveries) of allowed revenues. Where regulatory
agreements allow the recovery of under-recoveries or require the return of over-recoveries,
the allowed revenue for future periods is typically adjusted. In these instances, no assets
or liabilities are recognised for under- or over-recoveries respectively, because the
adjustment relates to future customers and services that have not yet been delivered.
Revenue in respect of non-regulated activities includes the sale of capacity on our
interconnectors, which is determined at auctions and capacity market income. Capacity is
sold in either day, month, quarter or year-ahead tranches. The price charged is determined
by market fundamentals rather than regulatory agreement. The interconnectors are subject
to regulation with regard to the levels of returns they are allowed to earn. Where amounts
fall below this range they receive top-up revenues and where amounts exceed this range
they must pass back the excess. In these instances, assets or liabilities are recognised for
the top-up or pass-back respectively.
Below, we include a description of principal activities, by reportable segment, from which the Group
generates its revenue. For more detailed information about our segments, see note 2.
(a) UK Electricity Transmission
The UK Electricity Transmission segment principally generates revenue by providing electricity
transmission services in England and Wales. Our business operates as a monopoly regulated by Ofgem,
which has established price control mechanisms that set the amount of annual allowed returns our
business can earn (along with the Scottish and Offshore transmission operators amongst others).
The transmission of electricity encompasses the following principal services:
–the supply of high-voltage electricity – revenue is recognised based on usage. Our performance
obligation is satisfied over time as our customers make use of our network. We bill monthly in advance
and our payment terms are up to 60 days. Price is determined prior to our financial year end with
reference to the regulated allowed returns and estimated annual volumes; and
–construction work (principally for connections) – revenue is recognised over time, as we provide access
to our network. Customers can either pay over the useful life of the connection or up front. Where the
customer pays up front, revenues are deferred as a contract liability and released over the life of the
asset.
For other construction where there is no consideration for any future services (for example diversions),
revenues are recognised as the construction work is completed.
(b) UK Electricity Distribution
The UK Electricity Distribution segment principally generates revenue by providing electricity distribution
services in the Midlands and South West of England and South Wales. Similar to UK Electricity
Transmission, UK Electricity Distribution operates as a monopoly in the jurisdictions that it operates
in and is regulated by Ofgem.
The distribution of electricity encompasses the following principal services:
–electricity distribution – revenue is recognised based on usage by customers (over time), based upon
volumes and price. The price control mechanism that determines our annual allowances is similar to
UK Electricity Transmission. Revenues are billed monthly and payment terms are typically within
14 days; and
–construction work (principally for connections) – revenue is recognised over time as we provide access
to our network. Where the customer pays up front, revenues are deferred as a contract liability and
released over the life of the asset.
For other construction where there is no consideration for any future services, revenues are recognised
as the construction work is completed.
(c) New England
The New England segment principally generates revenue by providing electricity and gas supply
and distribution services and high-voltage electricity transmission services in New England. Supply and
distribution services are regulated by the Massachusetts Department of Public Utilities (MADPU) and
transmission services are regulated by the Federal Energy Regulatory Commission (FERC), both of
whom regulate the rates that can be charged to customers.
The supply and distribution of electricity and gas and the provision of electricity transmission facilities
encompasses the following principal services:
–electricity and gas supply and distribution and electricity transmission – revenue is recognised based
on usage by customers (over time). Revenues are billed monthly and payment terms are 30 days; and
–construction work (principally for connections) – revenue is recognised over time as we provide
access to our network. Where the customer pays up front, revenues are deferred as a contract liability
or customer contributions (where they relate to government entities) and released over the life of
the connection.
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Notes to the consolidated financial statements cont.
3. Revenue cont.
(d) New York
The New York segment principally generates revenue by providing electricity and gas supply and
distribution services and high-voltage electricity transmission services in New York. Supply and distribution
services are regulated by the New York Public Service Commission (NYPSC) and transmission services
are regulated by the FERC, both of which regulate the rates that can be charged to customers.
The supply and distribution of electricity and gas and the provision of electricity transmission facilities
encompasses the following principal services:
–electricity and gas supply and distribution and electricity transmission – revenue is recognised based
on usage by customers (over time). Revenues are billed monthly and payment terms are 30 days; and
–construction work (principally for connections) – revenue is recognised over time as we provide
access to our network. Where the customer pays up front, revenues are deferred as a contract liability
or customer contributions (where they relate to government entities) and released over the life of
the connection.
(e) National Grid Ventures
National Grid Ventures generates revenue from electricity interconnectors, LNG at the Isle of Grain in the
UK and Providence, Rhode Island in the US, NG Renewables and rental income.
The Group recognises revenue from transmission services through interconnectors and LNG importation
at the Isle of Grain and Providence by means of customers’ use of capacity and volumes. Revenue is
recognised over time and is billed monthly. Payment terms are up to 30 days. The Group disposed of its
interest in Grain LNG in November 2025 (see note 10).
Electricity generation revenue is earned from the provision of energy services and supply capacity to
produce energy for the use of customers of LIPA through a power supply agreement, where LIPA receives
all of the energy and capacity from the asset until at least 2028. The arrangement is treated as an operating
lease within the scope of the leasing standard where we act as lessor, with rental income being recorded
as other revenue, which forms part of total revenue. Lease payments (capacity payments) are recognised
on a straight-line basis and variable lease payments are recognised as the energy is generated.
Other revenue in the scope of IFRS 15 principally includes sales of renewables projects from NG Renewables
to Emerald Energy Venture LLC (Emerald), which was jointly controlled by National Grid and Washington
State Investment Board (WSIB). The Group disposed of its interest in NG Renewables, together with
Emerald, in May 2025 (see note 10). NG Renewables developed wind and solar generation assets in
the US, while Emerald had a right of first refusal to buy, build and operate those assets. Revenue was
recognised as it was earned.
Other revenue, recognised in accordance with standards other than IFRS 15, primarily comprises
adjustments in respect of the interconnector cap and floor and Use of Revenue regimes constructed
by Ofgem for certain wholly owned interconnector subsidiaries. Under the cap and floor regime, where
an interconnector expects to exceed its total five-year cap, a provision and reduction in revenue is
recognised in the current reporting period (see note 26). Where an interconnector does not expect to
reach its five-year floor, either an asset will be recognised where a future inflow of economic benefits is
considered virtually certain, or a contingent asset will be disclosed where the future inflow is concluded
to be probable. Under the Use of Revenue framework, any revenues in excess of an agreed incentive
level must be passed on as savings to consumers. Where the obligation to transfer excess revenues
arises, a payable and reduction in revenue is recognised in the current reporting period.
(f) Other
Revenue in Other relates to our UK commercial property business. Revenue is predominantly recognised in
accordance with standards other than IFRS 15 and comprises property sales by our UK commercial property
business. Property sales are recorded when the sale is legally completed.
(g) UK Electricity System Operator
The Group disposed of the UK Electricity System Operator on 1 October 2024. Prior to its disposal
and the formation of the NESO, the UK Electricity System Operator earned revenue for balancing supply
and demand of electricity on Great Britain’s electricity transmission system, where it acted as principal.
Balancing services are regulated by Ofgem and revenue payable by generators and suppliers of electricity
was recognised as the service was provided.
The UK Electricity System Operator also collected revenues on behalf of transmission operators,
principally National Grid Electricity Transmission plc and the Scottish and Offshore transmission operators,
from users (electricity suppliers) who connect to or use the transmission system. As the UK Electricity
System Operator acted as an agent in this capacity, transmission network revenues were recorded net
of payments to transmission operators.
(h) Disaggregation of revenue
In the following tables, revenue is disaggregated by primary geographical market and major service lines.
The table below reconciles disaggregated revenue with the Group’s reportable segments (see note 2).
Revenue for the year
ended 31 March 2026
UK Electricity
Transmission
£m
UK Electricity
Distribution
£m
New
England
£m
New
York
£m
National
Grid
Ventures
£m
Other
£m
Total
£m
Revenue under IFRS 15
Transmission
2,597
—
55
355
713
—
3,720
Distribution
—
1,859
4,061
7,204
—
—
13,124
Other1
29
73
9
17
20
4
152
Total IFRS 15 revenue
2,626
1,932
4,125
7,576
733
4
16,996
Other revenue
Generation
—
—
—
—
364
—
364
Other2
185
5
49
42
(40)
86
327
Total other revenue
185
5
49
42
324
86
691
Total revenue from
continuing operations
2,811
1,937
4,174
7,618
1,057
90
17,687
1.The UK Electricity Distribution other IFRS 15 revenue principally relates to engineering recharges, which are the recovery of costs incurred
for construction work requested by customers, such as the rerouting of existing network assets.
2.Other revenue, recognised in accordance with accounting standards other than IFRS 15, includes property sales by our UK commercial
property business, rental income, income arising in connection with the Transition Services Agreements following the sale of the ESO,
and an adjustment to NGV revenue in respect of the interconnector cap and floor and Use of Revenue regimes constructed by Ofgem.
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Notes to the consolidated financial statements cont.
3. Revenue cont.
(h) Disaggregation of revenue cont.
Geographical split for the year
ended 31 March 2026
UK Electricity
Transmission
£m
UK Electricity
Distribution
£m
New
England
£m
New
York
£m
National
Grid
Ventures
£m
Other
£m
Total
£m
Revenue under IFRS 15
UK
2,626
1,932
—
—
713
—
5,271
US
—
—
4,125
7,576
20
4
11,725
Total IFRS 15 revenue
2,626
1,932
4,125
7,576
733
4
16,996
Other revenue
UK
185
5
—
—
(61)
72
201
US
—
—
49
42
385
14
490
Total other revenue
185
5
49
42
324
86
691
Total revenue from
continuing operations
2,811
1,937
4,174
7,618
1,057
90
17,687
Revenue for the year
ended 31 March 2025
UK Electricity
Transmission
£m
UK Electricity
Distribution
£m
UK
Electricity
System
Operator
£m
New
England
£m
New
York
£m
National
Grid
Ventures
£m
Other
£m
Total
£m
Revenue under IFRS 15
Transmission1
2,265
—
46
85
252
879
1
3,528
Distribution
—
2,327
—
4,193
6,371
—
—
12,891
System Operator
—
—
966
—
—
—
—
966
Other2
29
90
—
9
16
171
3
318
Total IFRS 15 revenue
2,294
2,417
1,012
4,287
6,639
1,050
4
17,703
Other revenue
Generation
—
—
—
—
—
384
—
384
Other3
190
4
—
19
50
(84)
112
291
Total other revenue
190
4
—
19
50
300
112
675
Total revenue from
continuing operations
2,484
2,421
1,012
4,306
6,689
1,350
116
18,378
1.The UK Electricity System Operator transmission revenue generated in the period up until its disposal represented transmission revenues
collected, net of payments made to transmission owners.
2.The UK Electricity Distribution other IFRS 15 revenue principally relates to engineering recharges, which are the recovery of costs incurred
for construction work requested by customers, such as the rerouting of existing network assets. Within NGV, the other IFRS 15 revenue
principally relates to revenue generated from our NG Renewables business.
3.Other revenue, recognised in accordance with accounting standards other than IFRS 15, includes property sales by our UK commercial
property business, rental income, income arising in connection with the Transition Services Agreements following the sales of NECO, the
UK Gas Transmission business and the ESO, and an adjustment to NGV revenue in respect of the interconnector cap and floor and Use
of Revenue regimes constructed by Ofgem.
Geographical split for the year
ended 31 March 2025
UK
Electricity
Transmission
£m
UK
Electricity
Distribution
£m
UK
Electricity
System
Operator
£m
New
England
£m
New
York
£m
National
Grid
Ventures
£m
Other
£m
Total
£m
Revenue under IFRS 15
UK
2,294
2,417
1,012
—
—
889
1
6,613
US
—
—
—
4,287
6,639
161
3
11,090
Total IFRS 15 revenue
2,294
2,417
1,012
4,287
6,639
1,050
4
17,703
Other revenue
UK
190
4
—
—
—
(111)
11
94
US
—
—
—
19
50
411
101
581
Total other revenue
190
4
—
19
50
300
112
675
Total revenue from
continuing operations
2,484
2,421
1,012
4,306
6,689
1,350
116
18,378
Revenue for the year
ended 31 March 2024
UK
Electricity
Transmission
£m
UK
Electricity
Distribution
£m
UK
Electricity
System
Operator
£m
New
England
£m
New
York
£m
National
Grid
Ventures
£m
Other
£m
Total
£m
Revenue under IFRS 15
Transmission1
2,591
—
(10)
73
493
869
—
4,016
Distribution
—
1,712
—
3,786
5,500
—
—
10,998
System Operator
—
—
3,763
—
—
—
—
3,763
Other2
25
73
—
8
15
168
4
293
Total IFRS 15 revenue
2,616
1,785
3,753
3,867
6,008
1,037
4
19,070
Other revenue
Generation
—
—
—
—
—
360
—
360
Other3
79
5
—
81
86
(65)
234
420
Total other revenue
79
5
—
81
86
295
234
780
Total revenue from
continuing operations
2,695
1,790
3,753
3,948
6,094
1,332
238
19,850
1.The UK Electricity System Operator transmission revenue generated in the year represents transmission revenues collected, net of
payments made to transmission owners.
2.The UK Electricity Transmission and UK Electricity Distribution other IFRS 15 revenue principally relates to engineering recharges, which
are the recovery of costs incurred for construction work requested by customers, such as the rerouting of existing network assets. Within
NGV, the other IFRS 15 revenue principally relates to revenue generated from our NG Renewables business.
3.Other revenue, recognised in accordance with accounting standards other than IFRS 15, includes property sales by our UK commercial
property business, rental income, income arising in connection with the Transition Services Agreements following the sales of The
Narragansett Electric Company (NECO) and the UK Gas Transmission business, and a provision and adjustment to NGV revenue in
respect of the interconnector cap and floor and Use of Revenue regimes constructed by Ofgem.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
3. Revenue cont.
(h) Disaggregation of revenue cont.
Geographical split for the year
ended 31 March 2024
UK
Electricity
Transmission
£m
UK
Electricity
Distribution
£m
UK
Electricity
System
Operator
£m
New
England
£m
New
York
£m
National
Grid
Ventures
£m
Other
£m
Total
£m
Revenue under IFRS 15
UK
2,616
1,785
3,753
—
—
878
1
9,033
US
—
—
—
3,867
6,008
159
3
10,037
Total IFRS 15 revenue
2,616
1,785
3,753
3,867
6,008
1,037
4
19,070
Other revenue
UK
79
5
—
—
—
(76)
22
30
US
—
—
—
81
86
371
212
750
Total other revenue
79
5
—
81
86
295
234
780
Total revenue from
continuing operations
2,695
1,790
3,753
3,948
6,094
1,332
238
19,850
Contract liabilities (see note 23) represent revenue to be recognised in future periods relating to
contributions in aid of construction of £2,809 million (2025:£2,514 million; 2024: £2,246 million).Revenue
is recognised over the life of the asset. The asset lives for connections in UK Electricity Transmission, UK
Electricity Distribution, New England and New York are up to 40 years, 69 years, 51 years and 51 years
respectively. The weighted average amortisation period over which revenue for contract liabilities is
recognised is 26 years.
Future revenues in relation to unfulfilled performance obligations amount to £1.4 billion (2025: £1.5 billion;
2024: £6.1 billion). £1.4 billion (2025: £1.5 billion; 2024: £1.9 billion) relates to connection contracts in UK
Electricity Transmission which will be recognised as revenue over a weighted average of 25 years.
The amount of revenue recognised for the year ended 31 March 2026 from performance obligations
satisfied (or partially satisfied) in previous periods, mainly due to changes in the estimate of the stage of
completion, is £nil (2025: £nil; 2024: £nil).
4. Other operating costs
Below we have presented separately certain items included in our operating costs from
continuing operations. These include a breakdown of payroll costs (including disclosure
of amounts paid to key management personnel) and fees paid to our external auditors.
2026
2025
2024
£m
£m
£m
Depreciation, amortisation and impairment¹
2,247
2,175
2,061
Payroll costs
1,992
2,143
2,043
Purchases of electricity
1,489
1,429
1,497
Purchases of gas
2,091
1,578
1,289
Property and other taxes
1,443
1,402
1,279
UK electricity balancing costs
—
1,143
2,486
Impairment of joint venture
—
303
—
Other2
3,240
3,071
4,553
Other operating costs
12,502
13,244
15,208
Impairment losses on financial assets
243
200
179
Total operating costs from continuing operations
12,745
13,444
15,387
Operating costs from continuing operations include:
Inventory consumed
454
506
408
Research and development expenditure
38
43
32
1.Depreciation, amortisation and impairment relates to property, plant and equipment and other intangible assets. The charge is stated net
of depreciation and amortisation capitalised.
2.Included within Other are the costs incurred for the ongoing upkeep, repair, and management of infrastructure and assets necessary to
ensure reliable energy delivery and operational efficiency.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
4. Other operating costs cont.
(a) Payroll costs
2026
2025
2024
£m
£m
£m
Wages and salaries1
3,515
3,497
3,206
Social security costs
313
279
256
Defined contribution scheme costs
152
144
129
Defined benefit pension costs
73
114
96
Share-based payments
45
37
37
Severance costs (excluding pension costs)
16
10
12
4,114
4,081
3,736
Less: payroll costs capitalised
(2,122)
(1,938)
(1,693)
Total payroll costs from continuing operations
1,992
2,143
2,043
1.Included within wages and salaries are US other post-retirement benefit costs of £27 million (2025: £25 million; 2024: £26 million).
For further information, refer to note 25.
(b) Number of employees
31 March
2026
Monthly
average
2026
31 March
2025
Monthly
average
2025
31 March
2024
Monthly
average
2024
UK
14,554
14,105
13,477
13,919
13,956
13,439
US
18,472
18,286
18,177
17,888
17,469
17,406
Total number
of employees
(continuing operations)
33,026
32,391
31,654
31,807
31,425
30,845
(c) Key management compensation
2026
2025
2024
£m
£m
£m
Short-term employee benefits
11
8
7
Share-based payments
7
4
5
Total key management compensation
18
12
12
Key management compensation relates to the Board, including the Executive Directors and Non-executive
Directors, for the years presented.
(d) Auditor’s remuneration
Auditor’s remuneration is presented below in accordance with the requirements of the Companies Act
2006 and the principal accountant fees and services disclosure requirements of Item 16C of Form 20-F:
2026
2025
2024
£m
£m
£m
Audit fees payable to the Parent Company’s auditor and
their associates in respect of:
Audit of the Parent Company’s individual and consolidated
financial statements1
2.6
2.8
2.8
The auditing of accounts of any associate of the Company
8.6
8.7
8.8
Other services supplied2
6.9
7.2
7.3
18.1
18.7
18.9
Total other services3
All other fees:
Other assurance services4
1.5
1.0
4.0
Other non-audit services not covered above
0.1
—
—
1.6
1.0
4.0
Total auditor’s remuneration
19.7
19.7
22.9
1.Audit fees in each year represent fees for the audit of the Company’s financial statements for the years ended 31 March 2026, 2025
and 2024.
2.Other services supplied represent fees payable for services in relation to other statutory filings or engagements that are required to be
carried out by the auditor. In particular, this includes fees for reports under section 404 of the US Public Company Accounting Reform
and Investor Protection Act of 2002 (Sarbanes-Oxley Act), audit reports on regulatory returns and the review of interim financial
statements for the six-month periods ended 30 September 2025, 2024 and 2023 respectively.
3.There were notax compliance or tax advisory fees and no audit-related fees as described in Item 16C(b) of Form 20-F.
4.In all years, principally relates to assurance services provided in relation to comfort letters for debt issuances and reporting accountant
services. The years ended 31 March 2026 and 31 March 2025 also includes fees for ESG reporting assurance.
The Audit & Risk Committee considers and makes recommendations to the Board, to be put to
shareholders for approval at each AGM, in relation to the appointment, reappointment, removal and
oversight of the Company’s independent auditor. The Committee, under authority granted at the AGM,
also considers and approves the audit fees on behalf of the Board in accordance with the Competition
and Markets Authority Audit Order 2014.
Certain services are prohibited from being performed by the external auditor under the Sarbanes-Oxley
Act and the FRC’s 2024 Revised Ethical Standard. Of the above services, none were prohibited.
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Additional Information
Notes to the consolidated financial statements cont.
5. Exceptional items and remeasurements
To monitor our segmental financial performance, we use an adjusted profit measure that
excludes exceptional items and remeasurements. We exclude certain income and expenses
from adjusted profit because, if included, these items could distort understanding of our
performance for the year and the comparability between periods. This note analyses these
items, which are included in our results for the year but are excluded from adjusted profit.
Exceptional items and remeasurements from continuing operations
2026
2025
2024
£m
£m
£m
Included within operating profit
Exceptional items:
Net loss on disposal of NG Renewables
(96)
—
—
Net gain on the sale of Grain LNG
489
—
—
Transaction, separation and integration costs1
(17)
(65)
(44)
Changes in environmental provisions
—
146
(496)
Net gain on the sale of the ESO
—
187
—
Provision for UK electricity balancing costs
—
151
(498)
Impairment of joint venture
—
(303)
—
Major transformation programme
—
(74)
—
Cost efficiency programme
—
—
(65)
IFA fire
—
—
92
376
42
(1,011)
Remeasurements – commodity contract derivatives
11
127
24
387
169
(987)
1.Transaction, separation and integration costs represent the aggregate of distinct activities undertaken by the Group in the years presented.
Details of remeasurements, tax exceptional items and the tax effect of exceptional items and
remeasurements are also provided in this note.
2026
2025
2024
£m
£m
£m
Included within operating profit
387
169
(987)
Included within finance income and costs
Remeasurements:
Net gains on financial assets at fair value through profit and loss
2
1
4
Net (losses)/gains on financing derivatives
(56)
3
11
(54)
4
15
Included within share of post-tax results of joint ventures and
associates
Remeasurements:
Net losses on financial instruments
—
(2)
(64)
Total included within profit before tax
333
171
(1,036)
Included within tax
Tax on exceptional items
8
76
159
Tax on remeasurements
8
(36)
(7)
16
40
152
Total exceptional items and remeasurements after tax
349
211
(884)
Analysis of total exceptional items and remeasurements after tax
Exceptional items after tax
384
118
(852)
Remeasurements after tax
(35)
93
(32)
Total exceptional items and remeasurements after tax
349
211
(884)
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
5. Exceptional items and remeasurements cont.
Exceptional items
Management uses an exceptional items framework that has been discussed and approved by the Audit
& Risk Committee. This follows a three-step process which considers the nature of the event, the financial
materiality involved and any particular facts and circumstances. In considering the nature of the event,
management focuses on whether the event is within the Group’s control and how frequently such an
event typically occurs. With respect to restructuring costs, these represent additional expenses incurred
that are not related to the normal business and day-to-day activities. These can take place over multiple
reporting periods given the scale of the Group, the nature and complexity of the transformation initiatives
and due to the impact of strategic transactions. In determining the facts and circumstances, management
considers factors such as ensuring consistent treatment between favourable and unfavourable
transactions, the precedent for similar items, the number of periods over which costs will be spread or
gains earned, and the commercial context for the particular transaction. The exceptional items framework
was last updated in March 2022.
Items of income or expense that are considered by management for designation as exceptional items
include significant restructurings, write-downs or impairments of non-current assets, significant changes
in environmental or decommissioning provisions, integration of acquired businesses, gains or losses on
disposals of businesses or investments and significant debt redemption costs as a consequence of
transactions such as significant disposals or issues of equity, and the related tax, as well as deferred
tax arising on changes to corporation tax rates.Costs arising from efficiency and transformation
programmes include redundancy costs. Redundancy costs are charged to the consolidated income
statement in the year in which a commitment is made to incur the costs and the main features of the
restructuring plan have been announced to affected employees.
Set out below are details of the transactions against which we have considered the application of our
exceptional items framework in each of the years for which results are presented.
2026
Net loss on disposal of NG Renewables
In the year the Group recognised a net loss of £96 million (before tax) on the disposal of its interest in
National Grid Renewables Development LLC (NG Renewables) to Brookfield Asset Management for cash
consideration of £1,531 million ($2,061 million) (see note 10). The receipt of cash has been recognised
within net cash used in investing activities within the consolidated cash flow statement.
Net gain on disposal of Grain LNG
In the year the Group recognised a net gain of £489 million on the disposal of its interest in Grain LNG to
a consortium of multinational energy company, Centrica plc and energy transition infrastructure investment
firm, Energy Capital Partners LLC, part of Bridgepoint Group plc for expected consideration of £1,375 million,
which includes an estimate for an adjustment to the consideration under the Sale and Purchase
Agreement (see note 10). The receipt of cash has been recognised within net cash used in investing
activities within the consolidated cash flow statement.
Transaction, separation and integration costs
In May 2024, we announced the sale of NG Renewables and Grain LNG as part of our strategic focus
on becoming a leading pureplay networks business. Both disposals were completed in the current year,
and the transaction costs were included in gain or loss on disposal (see note 10). Separation costs
of£17 million were incurred in relation to the disposals of NG Renewables and Grain LNG. The costs
incurred primarily related to professional fees and employee costs. These costs have been classified
as exceptional in accordance with our exceptional items policy. While the costs incurred in isolation
are not sufficiently material to warrant classification as an exceptional item, when taken in aggregate
with the respective disposals, the impact to the consolidated income statement incurred over both
years is sufficiently material to be classified as exceptional in line with our policy. The total cash outflow
for the year was £44 million.
Changes in environmental provisions
In the US, we recognise environmental provisions related to the remediation of the Gowanus Canal,
Newtown Creek and the former manufacturing gas plant facilities previously owned or operated by
the Group or its predecessor companies. The sites are subject to both state and federal environmental
remediation laws in the US. Potential liability for the historical contamination may be imposed on
responsible parties jointly and severally, without regard to fault, even if the activities were lawful when
they occurred. The provisions and the Group’s share of estimated costs are re-evaluated at each
reporting period. In the year, following discussions with the Environmental Protection Agency on the
scope and design of remediation activities related to the Gowanus and Newtown Creek, we have re-
evaluated our estimates of total costs and recognised a net movement in the associated provision of £nil.
Under the terms of our rate plans, we are entitled to recovery of environmental clean-up costs from rate
payers in future reporting periods. Such recoveries through overall allowed revenues are not classified
as exceptional in the future periods that they occur due to the extended duration over which such costs
are recovered and the immateriality of the recoveries in any given year.
Major transformation programme
Following the appointment of a new Chief Executive Officer in November 2025, strategic priorities were
updated and as a result the transformation programme launched in 2024 has been reshaped. The costs
expected to be incurred in aggregate going forward no longer meet the quantitative threshold to be
classified as exceptional.
2025
Changes in environmental provisions
In the prior year, following discussions with the New York State Department of Environmental
Conservation and the Environmental Protection Agency on the scope and design of remediation activities
related to certain of our responsible sites, we re-evaluated our estimates of total costs and recognised a
net decrease of £64 million in relation to our provisions. Under the terms of our rate plans, we are entitled
to recovery of environmental clean-up costs from rate payers in future reporting periods. Such recoveries
through overall allowed revenues are not classified as exceptional in the future periods that they occur due
to the extended duration over which such costs are recovered and the immateriality of the recoveries in
any given year.
In the year ended 31 March 2025, the real discount rate applied to the Group’s environmental provisions
was also revised to 2.0% to reflect the substantial and sustained change in US Government bond yield
curves (see note 26). The principal impact of this rate increase was a £82 million decrease in our US
environmental provisions. The weighted average remaining duration of our cash flows was around 10 years.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
5. Exceptional items and remeasurements cont.
Exceptional items cont.
Net gain on disposal of the ESO
In the year ended 31 March 2025, the Group completed the disposal of the ESO to the UK Government
for consideration of £673 million. As a result, the Group derecognised net assets of £486 million, resulting
in a gain of £187 million. The receipt of cash was recognised within net cash used in investing activities
within the consolidated cash flow statement.
Provision for UK electricity balancing costs
In the year ended 31 March 2024, the ESO’s operating profit increased due to a substantial over-recovery
of allowed revenues received under its regulatory framework. Under IFRS a corresponding liability is not
recognised for the return of over-recoveries as this relates to future customers and services that have not
yet been delivered. Following legislation to enable the separation of the ESO and the formation of the
NESO, the Group recognised a liability of £498 million in the year ended 31 March 2024 representing the
element of the over-recovery that was expected to be settled through the sale process. In the prior year,
the liability was remeasured at £347 millionto reflect the final amount of over-recovered revenues that
transferred through with the ESO on disposal on 1 October 2024.
Impairment of joint venture
In the prior year, we agreed with our joint venture partner, RWE Renewables, that our investment in
Community Offshore Wind, LLC will pause project development for the time being. The Group determined
that the investment has negligible value and an impairment of £303 million was recognised (see note 16).
Transaction, separation and integration costs
In the year ended 31 March 2025, transaction and separation costs of £26 million were incurred in
relation to the planned disposal of NG Renewables and £8 million in relation to the planned disposal of
Grain LNG. The costs incurred primarily related to professional fees and employee costs. In remeasuring
the NG Renewables disposal group to fair value less costs to sell in accordance with IFRS 5, the Group
also recognised a £31 million impairment loss. These costs were classified as exceptional in accordance
with our exceptional items policy. While the costs incurred in isolation were not sufficiently material to
warrant classification as an exceptional item, when taken in aggregate with the respective disposals, the
impact to the consolidated income statement incurred over both years would be sufficiently material to be
classified as exceptional in line with our policy. The total cash outflow for the year was £6 million.
Major transformation programme
Following the announcement of our strategic priorities in May 2024, the Group entered into a new
four‑year transformation programme designed to implement our refreshed strategy to be a pre-eminent
pureplay networks business. In the prior year, the Group incurred £74 million of costs in relation to the
programme. The costs recognised primarily related to technology implementation costs, employee
costs and professional fees incurred in delivering the programme. While the costs incurred since the
commencement of the programme did not meet the quantitative threshold to be classified as exceptional
on a standalone basis, when taken in aggregate with the costs expected to be incurred over the duration
of the programme, we concluded that the costs should be classified as exceptional in line with our
exceptional items policy. The total cash outflow for the period was £62 million.
2024
Provision for UK electricity balancing costs
As described above, during the year ended 31 March 2024 the ESO’s operating profit increased due
to a substantial over-recovery of allowed revenues received under its regulatory framework. The Group
recognised a liability for the over-recovered revenues which were forecasted to transfer through the
sales process.
Changes in environmental provisions
In the year ended 31 March 2024, following discussions with the New York State Department of
Environmental Conservation and the Environmental Protection Agency on the scope and design of
remediation activities related to certain of our responsible sites, we re-evaluated our estimates of total
costs and increased our US environmental provision by £496 million. Under the terms of our rate plans,
we are entitled to recovery of environmental clean-up costs from rate payers in future reporting periods.
Transaction, separation and integration costs
Separation costs of £11 million were incurred in relation to the disposal of NECO, £6 million in relation
to the disposal of the UK Gas Transmission business and £27 million in connection with the integration
of NGED. The costs incurred primarily related to professional fees, relocation costs and employee costs.
The costs were classified as exceptional in accordance with our exceptional items policy. While the
transaction, separation and integration costs incurred during the year did not meet the quantitative
threshold to be classified as exceptional on a standalone basis, when taken in aggregate with the
£340 million of costs in previous periods, the costs qualified for exceptional treatment in line with our
exceptional items policy. The total cash outflow for the period was £33 million. The Group is entitled
to cost recovery in relation to the separation of the ESO. Accordingly, these costs were not classified
as exceptional.
Cost efficiency programme
During the year ended 31 March 2024, the Group incurred £65 million of costs in relation to the major
cost efficiency programme announced in November 2021, that targeted at least £400 million savings
per annum across the Group by the end of three years. The costs recognised in the period primarily
related to redundancy provisions, employee costs and professional fees incurred in delivering the
programme. While the costs incurred during the year did not meet the quantitative threshold to be
classified as exceptional on a standalone basis, when taken in aggregate with the £142 million of costs
incurred since the announcement of the programme, the costs qualified for exceptional treatment in line
with our exceptional items policy. The total cash outflow for the year was £53 million. The cost efficiency
programme completed in the year ended 31 March 2024.
Fire at IFA converter station
In September 2021, a fire at the IFA1 converter station in Sellindge, Kent caused significant damage to
infrastructure on site. In the period, the Group recognised net insurance claims of £92 million, which were
recognised as exceptional in line with our exceptional items policy and consistent with related claims in the
preceding year. The total cash inflow in the period in relation to the insurance proceeds was £92 million.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
5. Exceptional items and remeasurements cont.
Remeasurements
Remeasurements comprise unrealised gains or losses recorded in the consolidated income statement
arising from changes in the fair value of certain of our financial assets and liabilities accounted for at fair
value through profit and loss (FVTPL). Once the fair value movements are realised (for example, when
the derivative matures), the previously recognised fair value movements are then reversed through
remeasurements and recognised within earnings before exceptional items and remeasurements. These
assets and liabilities include commodity contract derivatives and financing derivatives to the extent that
hedge accounting is not available or is not fully effective.
The unrealised gains or losses reported in profit and loss on certain additional assets and liabilities treated
at FVTPL are also classified within remeasurements. These relate to financial assets (which fail the ‘solely
payments of principal and interest test’ under IFRS 9), the money market fund investments used by Group
Treasury for cash management purposes and the net foreign exchange gains and losses on borrowing
activities. These are offset by foreign exchange gains and losses on financing derivatives measured at fair
value. In all cases, these fair values increase or decrease because of changes in foreign exchange,
commodity or other financial indices over which we have no control.
We report unrealised gains or losses relating to certain discrete classes of financial assets accounted
for at FVTPL within adjusted profit. These comprise our portfolio of investments made by National Grid
Partners and our investment in Sunrun Neptune 2016 LLC (both within NGV). The performance of these
assets (including changes in fair value) is included in our assessment of adjusted profit for the relevant
business units.
Remeasurements excluded from adjusted profit are made up of the following categories:
i.Net gains/(losses) on commodity contract derivatives represent mark-to-market movements on certain
physical and financial commodity contract obligations in the US and UK. These contracts primarily
relate to the forward purchase of energy for supply to customers, or to the economic hedging thereof,
that are required to be measured at fair value and that do not qualify for hedge accounting. Under the
existing rate plans in the US, commodity costs are recoverable from customers although the timing of
recovery may differ from the pattern of costs incurred;
ii.Net gains/(losses) on financing derivatives comprise gains and losses arising on derivative financial
instruments, net of interest accrued, used for the risk management of interest rate and foreign
exchange exposures and the offsetting foreign exchange losses and gains on the associated borrowing
activities. These exclude gains and losses for which hedge accounting has been effective and have
been recognised directly in the consolidated statement of other comprehensive income or are offset
by adjustments to the carrying value of debt (see notes 17 and 32). Net foreign exchange gains and
losses on financing derivatives used for the risk management of foreign exchange exposures are offset
by foreign exchange losses and gains on borrowing activities; and
iii.Net gains/(losses) on financial assets measured at FVTPL comprise gains and losses on the investment
funds held by our insurance captives which are categorised as FVTPL (see note 15).
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Additional Information
Notes to the consolidated financial statements cont.
6. Finance income and costs
This note details the interest income generated by our financial assets and interest expense incurred on our financial liabilities, primarily our financing portfolio (including our financing
derivatives). It also includes the net interest on our pensions and other post-retirement assets.
Finance income and costs remeasurements include unrealised gains and losses on certain assets and liabilities treated at FVTPL. The effective interest income and interest expense and dividends on these items
are included in finance income and finance costs before remeasurements respectively.
2026
2025
2024
Notes
£m
£m
£m
Finance income
Net interest income on pensions and other post-retirement benefit obligations
25
114
98
100
Interest income on financial instruments:
Bank deposits and other financial assets
263
341
139
Dividends received on equities held at fair value through other comprehensive income (FVOCI)
—
1
1
Net gains on FVTPL financial assets
2
1
4
Other income
1
9
4
Finance income
380
450
248
Finance costs
Interest expense on financial liabilities held at amortised cost:
Bank loans and overdrafts
(115)
(110)
(140)
Other borrowings1
(1,591)
(1,553)
(1,424)
Interest on derivatives
(229)
(285)
(277)
Unwinding of discount on provisions and other payables
(123)
(130)
(102)
Other interest
(15)
(26)
(31)
Derivatives designated as hedges for hedge accounting²
(24)
4
13
Derivatives not designated as hedges for hedge accounting²
(32)
(1)
(2)
Less: interest capitalised³
424
294
251
Finance costs4
(1,705)
(1,807)
(1,712)
Net finance costs from continuing operations
(1,325)
(1,357)
(1,464)
1.Includes interest expense on lease liabilities (see note 13 for details).
2.Includes a net foreign exchange loss on borrowing and investment activities of £711 million (2025: £241 milliongain; 2024: £271 milliongain) offset by foreign exchange gains and losses on financing derivatives measured at fair value and the impacts of hedge accounting.
3.Interest on funding attributable to assets in the course of construction in the current year was capitalised at a rate of 4.4% (2025: 4.3%; 2024: 4.7%). In the UK, capitalised interest qualifies for a current year tax deduction with tax relief claimed of £65 million (2025: £39 million;
2024: £39 million). In the US, capitalised interest is added to the cost of property, plant and equipment, and qualifies for tax depreciation allowances.
4.Finance costs include principal accretion on inflation-linked liabilities of £168 million (2025: £152 million; 2024: £208 million).
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
7. Tax
Tax is payable in the territories where we operate, mainly the UK and the US. This note
gives further details of the total tax charge and tax liabilities, including current and deferred
tax. Current tax charge is the tax payable on this year’s taxable profits. Deferred tax is an
accounting adjustment to provide for tax that is expected to arise in the future due to
differences in the accounting and tax bases.
The tax charge for the period is recognised in the income statement, the statement of comprehensive
income or directly in the statement of changes in equity, according to the accounting treatment of the
related transaction. The tax charge comprises both current and deferred tax.
Current tax assets and liabilities are measured at the amounts expected to be recovered from or paid
to the tax authorities. The tax rates and tax laws used to compute the amounts are those that have been
enacted or substantively enacted by the reporting date.
The Group operates internationally in territories with different and complex tax codes. Management
exercises judgement in relation to the level of provision required for uncertain tax outcomes. Where there
are tax positions not yet agreed with the tax authorities, different interpretations of legislation could lead to
a range of outcomes. Judgements are made for each position having regard to particular circumstances
and advice obtained.
Deferred tax is provided for, using the balance sheet liability method and is recognised on temporary
differences between the carrying amount of assets and liabilities in the financial statements and the
corresponding tax bases.
Deferred tax liabilities are generally recognised on all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. However, deferred tax assets and liabilities are not
recognised if the temporary differences arise from the initial recognition of goodwill or from the initial
recognition of other assets and liabilities in a transaction (other than a business combination) that
affects neither the accounting nor the taxable profit or loss.
Deferred tax liabilities are recognised on taxable temporary differences arising on investments in
subsidiaries and joint arrangements except where the Company is able to control the reversal of
the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset is realised, based on the tax rates and tax laws that have been enacted or
substantively enacted by the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred
tax asset to be recovered. Unrecognised deferred tax assets are reassessed at each reporting date and
are recognised to the extent that it has become probable that future taxable profits will allow the deferred
tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when they relate to income taxes levied by the same tax authority,
and the Company and its subsidiaries intend to settle their current tax assets and liabilities on a net basis.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
7. Tax cont.
The tax charge for the year can be analysed as follows:
2026
2025
2024
£m
£m
£m
Current tax:
UK corporation tax at 25% (2025: 25%; 2024: 25%)
9
66
410
UK corporation tax adjustment in respect of prior years
(4)
(36)
(36)
5
30
374
Overseas corporation tax
9
47
82
Overseas corporation tax adjustment in respect of prior years
(168)
(39)
(90)
(159)
8
(8)
Total current tax from continuing operations
(154)
38
366
Deferred tax:
UK deferred tax
642
524
388
UK deferred tax adjustment in respect of prior years
(7)
25
43
635
549
431
Overseas deferred tax
289
195
(40)
Overseas deferred tax adjustment in respect of prior years
169
39
74
458
234
34
Total deferred tax from continuing operations
1,093
783
465
Total tax charge from continuing operations
939
821
831
Tax charged/(credited) to the consolidated statement of comprehensive income and equity
2026
2025
2024
£m
£m
£m
Current tax:
Share-based payments
(1)
(1)
(2)
Deferred tax:
Investments at fair value through other comprehensive income
—
—
1
Cash flow hedges, cost of hedging and own credit reserve
(16)
36
56
Remeasurements of pension assets and post-retirement
benefit obligations
39
(23)
(50)
Share-based payments
(9)
2
—
13
14
5
Total tax recognised in the statements of comprehensive income
from continuing operations
23
13
7
Total tax relating to share-based payments recognised directly
in equity from continuing operations
(10)
1
(2)
13
14
5
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
7. Tax cont.
The tax charge for the year for continuing operations, is lower (2025: lower tax charge; 2024: higher tax charge) than at the standard rate of corporation tax in the UK of 25% (2025: 25%; 2024: 25%):
2026
2025
2024
£m
£m
£m
Profit before tax from continuing operations
4,182
3,650
3,048
Profit before tax from continuing operations multiplied by UK corporation tax rate of 25% (2025: 25%; 2024: 25%)
1,046
913
762
Effect of:
Adjustments in respect of prior years1
(10)
(11)
(9)
Expenses not deductible for tax purposes
58
40
155
Non-taxable income2
(150)
(107)
(43)
Adjustment in respect of foreign tax rates
14
4
(20)
Deferred tax impact of change in UK tax rate
—
—
—
Adjustment in respect of post-tax profits of joint ventures and associates included within profit before tax
(19)
(18)
(9)
Other3
—
—
(5)
Total tax charge from continuing operations
939
821
831
%
%
%
Effective tax rate – continuing operations
22.5
22.5
27.3
1.The prior year adjustments are primarily due to agreement of prior period tax returns.
2.Includes tax on chargeable disposals after the offset of capital losses. The gains on disposal of Grain LNG in the current year and the ESO in the prior year were both subject to the Substantial Shareholding Exemption.
3.Other primarily comprises the movement in the deferred tax asset on previously unrecognised capital losses, claims for land remediation relief and claims for Research & Development credit.
Factors that may affect future tax charges
The main UK corporation tax rate is 25% and deferred tax balances as at 31 March 2026 have been calculated at 25%.
There are currently no legislative federal tax proposals being considered in the US that would impact National Grid. Therefore, the income tax balances as of 31 March 2026 have been calculated at the prevailing
tax rates based on the current tax laws.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
7. Tax cont.
Tax included within the statement of financial position
The following are the major deferred tax assets and liabilities recognised, and the movements thereon,
during the current and prior reporting periods:
Regulatory
licences
£m
Accelerated
tax
depreciation
£m
Share-
based
payments
£m
Pensions
and other
post-
retirement
benefits
£m
Financial
instruments
£m
Other net
temporary
differences1
£m
Total
£m
Deferred tax liabilities/
(assets)
At 1 April 2024
429
8,816
(25)
461
(275)
(1,887)
7,519
Exchange adjustments
and other2
—
(147)
—
(5)
—
57
(95)
Charged/(credited) to
income statement
—
925
(3)
58
62
(256)
786
(Credited)/charged to
other comprehensive
income and equity
—
—
2
(23)
38
—
17
Disposals
—
(60)
—
—
—
(5)
(65)
Reclassification to held
for sale (note 10)
—
(122)
—
—
—
(2)
(124)
At 1 April 2025
429
9,412
(26)
491
(175)
(2,093)
8,038
Exchange adjustments
and other2
—
(144)
—
(4)
—
51
(97)
Charged/(credited) to
income statement
—
1,158
(5)
6
24
(88)
1,095
(Credited)/charged to
other comprehensive
income and equity
—
—
(9)
39
(14)
—
16
Disposals
—
(12)
—
—
—
—
(12)
At 31 March 2026
429
10,414
(40)
532
(165)
(2,130)
9,040
1.The deferred tax asset of £2,130 million as at 31 March 2026 (2025: £2,093 million) in respect of other net temporary differences relates
to losses of £456 million (2025: £298 million), US contract and lease liabilities of £632 million (2025: £603 million), US environmental
provisions of £558 million (2025: £575 million), US bad debt provision of £161 million (2025: £155 million) and other short-term temporary
differences of £323 million (2025: £462 million).
2.Exchange adjustments and other primarily comprises foreign exchange arising on translation of the US dollar deferred tax balances.
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and
there is an intention to settle the balances net. The deferred tax balances (after offset) for statement of
financial position purposes consist solely of deferred tax liabilities of £9,040 million (2025: £8,038 million).
Deferred tax assets in respect of some capital losses as well as trading losses and non-trade deficits have
not been recognised as their future recovery is uncertain or not currently anticipated. The total deferred
tax assets not recognised are as follows:
2026
2025
£m
£m
Capital losses
2,482
2,484
Trading losses
9
9
The capital losses arose in the UK on disposal of certain businesses or assets. They are available to carry
forward indefinitely but can only be offset against future capital gains.
At 31 March 2026 and 31 March 2025, there were no recognised deferred tax liabilities for taxes that
would be payable on the unremitted earnings of the Group’s subsidiaries or its associates as there are
no significant corporation tax consequences of the Group’s UK, US or overseas subsidiaries or associates
paying dividends to their parent companies. There are also no significant income tax consequences for
the Group from the payment of dividends by the Group to its shareholders.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
8. Earnings per share (EPS)
EPS is the amount of profit after tax attributable to each ordinary share. Basic EPS is
calculated as profit after tax for the year attributable to equity shareholders divided by the
weighted average number of shares in issue during the year. Diluted EPS shows what the
impact would be if all outstanding share options were exercised and treated as ordinary
shares at year end. The weighted average number of shares is increased by additional
shares issued as scrip dividends and reduced by shares repurchased by the Company
during the year. The earnings per share calculations are based on profit after tax attributable
to equity shareholders of the Company which excludes non-controlling interests.
(a) Basic EPS
Earnings
EPS
Earnings
EPS
Earnings
EPS
2026
2026
2025
2025
2024
2024
£m
pence
£m
pence
£m
pence
Earnings from continuing
operations
3,241
65.5
2,826
60.0
2,216
55.5
Earnings from discontinued
operations
—
—
76
1.6
74
1.9
Total earnings
3,241
65.5
2,902
61.6
2,290
57.4
2026
2025
2024
millions
millions
millions
Weighted average number
of ordinary shares – basic
4,946
4,707
3,991
(b) Diluted EPS
Earnings
EPS
Earnings
EPS
Earnings
EPS
2026
2026
2025
2025
2024
2024
£m
pence
£m
pence
£m
pence
Earnings from continuing
operations
3,241
65.2
2,826
59.8
2,216
55.3
Earnings from discontinued
operations
—
—
76
1.6
74
1.8
Total earnings
3,241
65.2
2,902
61.4
2,290
57.1
2026
2025
2024
millions
millions
millions
Weighted average number
of ordinary shares – diluted
4,971
4,729
4,008
(c) Reconciliation of basic to diluted average number of shares
2026
2025
2024
millions
millions
millions
Weighted average number of ordinary shares – basic
4,946
4,707
3,991
Effect of dilutive potential ordinary shares – employee share plans
25
22
17
Weighted average number of ordinary shares – diluted
4,971
4,729
4,008
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
9. Dividends
Interim dividends are recognised when they become payable to the Company’s shareholders. Final
dividends are recognised when they are approved by shareholders.
2026
2025
2024
Pence
per
share
Cash
dividend
£m
Scrip
dividend
£m
Pence
per share
Cash
dividend
£m
Scrip
dividend
£m
Pence
per share
Cash
dividend
£m
Scrip
dividend
£m
Final dividend
in respect of the
prior year
30.88
894
617
39.12
811
643
37.60
1,325
56
Interim dividend
in respect of the
current year
16.35
729
80
15.84
718
59
19.40
393
320
47.23
1,623
697
54.96
1,529
702
57.00
1,718
376
The Directors are proposing a final dividend for the year ended 31 March 2026 of 32.14p per share
that would absorb approximately £1,598 million of shareholders’ equity (assuming all amounts are
settled in cash). It will be paid on 23 July 2026 to shareholders who are on the register of members
at 29 May 2026 (subject to shareholders’ approval at the AGM). A scrip dividend will be offered as
an alternative.
10. Assets held for sale and discontinued operations
The results and cash flows of significant assets or businesses sold during the year
are shown separately from our continuing operations and presented within discontinued
operations in the income statement and cash flow statement. Assets and businesses
are classified as held for sale when their carrying amounts are expected to be recovered
through sale rather than through continuing use. They only meet the held for sale condition
when the assets are ready for immediate sale in their present condition, management is
committed to the sale and it is highly probable that the sale will complete within one year.
Depreciation ceases on assets and businesses when they are classified as held for sale
and the assets and businesses are impaired if the proceeds less sale costs fall short
of the carrying value.
National Grid Renewables
On 24 February 2025, the Group agreed to sell NG Renewables, its US onshore renewables business,
to Brookfield Asset Management. The disposal subsequently completed on 29 May 2025 for consideration
of £1,531 million ($2,061 million). As NG Renewables did not represent a separate major line of business
or geographical operation, it did not meet the criteria for classification as discontinued operations and
therefore the results for the period until disposal are not separately disclosed on the face of the
income statement.
Financial information relating to the loss arising on the disposal of NG Renewables is set out below:
£m
Goodwill
51
Property, plant and equipment
438
Investment in joint venture
906
Trade and other receivables
141
Cash and cash equivalents
58
Financial investments
41
Other assets
66
Total assets on disposal
1,701
Borrowings
(2)
Other liabilities
(159)
Total liabilities on disposal
(161)
Net assets on disposal
1,540
Satisfied by:
Proceeds
1,531
Total consideration
1,531
Less:
Disposal-related costs
(11)
Loss on disposal before tax and reclassification of foreign currency
translation reserve
(20)
Reclassification of foreign currency translation reserve¹
(76)
Tax
5
Post-tax loss on disposal
(91)
1.The reclassification of the foreign currency translation reserve attributable to NG Renewables comprises a loss of £84 million relating to
the retranslation of NG Renewables’ operations offset by a gain of £8 million relating to borrowings, cross-currency swaps and foreign
exchange forward contracts used to hedge the Group’s net investment in NG Renewables.
NG Renewables generated a loss after tax of £14 million for the period until 29 May 2025 (2025: £60 million
loss; 2024: £65 million loss).
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
10. Assets held for sale and discontinued operations cont.
Grain LNG
On 14 August 2025, the Group agreed to sell Grain LNG, its UK LNG asset, to a consortium of
multinational energy companies, Centrica plc and energy transition infrastructure investment firm,
Energy Capital Partners LLC, part of Bridgepoint Group plc. The disposal subsequently completed on
28 November 2025. As Grain LNG did not represent a separate major line of business or geographical
operation, it did not meet the criteria for classification as discontinued operations and therefore the
results for the period until disposal are not separately disclosed on the face of the income statement.
The Group has recognised a £124 million liability as an adjustment to the consideration under the Sale
and Purchase Agreement for post closing capital project obligations based on management’s best estimate
of the expected outflow. Given the inherent complexity of the project, and the number of parties involved,
the Group has considered a range of potential outcomes, including the risk that costs could exceed our
estimates. The Group has concluded the risk of a materially adverse impact to our operations, cash flows
or financial position is remote.
Financial information relating to the gain arising on the disposal of Grain LNG is set out below:
£m
Other intangible assets
27
Property, plant and equipment
962
Trade and other receivables
27
Cash and cash equivalents
163
Other assets
20
Total assets on disposal
1,199
Borrowings
(135)
Other liabilities
(196)
Total liabilities on disposal
(331)
Net assets on disposal
868
Satisfied by:
Proceeds
1,375
Total consideration
1,375
Less:
Disposal-related costs
(18)
Gain on disposal
489
Grain LNG generated a profit after tax of £89 million for the period until 28 November 2025 (2025:
£120 million; 2024: £114 million).
The UK Gas Transmission business
In July 2024, the Group sold its remaining 20% equity interest in the UK Gas Transmission business
(held through its holding in GasT TopCo Limited). This interest had been classified as held for sale from
31 January 2023 until the date of disposal, as detailed in the Annual Report and Accounts for the year
ended 31 March 2025. The total sales proceeds were £686 million and the gain on disposal, after
transaction costs, was £25 million.
The disposal of the Group’s remaining interest in GasT TopCo Limited was the final stage of the plan to
dispose of the UK Gas Transmission business first announced in 2021. As a result, the gain on disposal
and any remeasurements pertaining to the financial derivatives noted above are shown separately from
the continuing business for all periods presented on the face of the income statement as a discontinued
operation. This is also reflected in the statement of comprehensive income, as well as earnings per share
(EPS) being shown split between continuing and discontinued operations.
The summary income statements for the years ended 31 March 2025 and 2024 are as follows:
2025
2024
£m
£m
Operating profit
—
—
Finance income
5
17
Finance costs1
47
62
Profit before tax
52
79
Tax
(1)
(1)
Profit after tax from discontinued operations
51
78
Gain/(loss) on disposal
25
(4)
Total profit after tax from discontinued operations
76
74
1.Finance costs included the remeasurement of the Further Acquisition Agreement option and the Remaining Acquisition Agreement, as
detailed in the Annual Report and Accounts for the year ended 31 March 2025.
The summary statements of comprehensive income for the years ended 31 March 2025 and 2024 are
as follows:
2025
2024
£m
£m
Profit after tax from discontinued operations
76
74
Other comprehensive (loss)/income from discontinued operations
Items from discontinued operations that may be reclassified subsequently to
profit or loss:
Net (losses)/gains on investments in debt instruments measured at fair value
through other comprehensive income
(13)
13
Tax on items that may be reclassified subsequently to profit or loss
3
(3)
Total (losses)/gains from discontinued operations that may be
reclassified subsequently to profit or loss
(10)
10
Other comprehensive (loss)/income for the year, net of tax from
discontinued operations
(10)
10
Total comprehensive income for the year from discontinued
operations
66
84
Details of the cash flows relating to discontinued operations are set out within the consolidated cash
flow statement.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
11. Goodwill
Goodwill represents the excess of what we paid to acquire businesses over the fair value
of their net assets at the acquisition date. We assess whether goodwill is recoverable by
performing an impairment review annually or more frequently if events or changes in
circumstances indicate a potential impairment.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing exchange rate. Goodwill is allocated to CGUs,
or groups of CGUs, and this allocation is made to those CGUs that are expected to benefit from the
acquisition in which the goodwill arose.
Impairment is recognised where there is a difference between the carrying value of the CGU and the
estimated recoverable amount of the CGU to which that goodwill has been allocated. Any impairment
is recognised immediately in the income statement and is not subsequently reversed. Any impairment
loss is first allocated to the carrying value of the goodwill and then to the other assets within the CGU.
Recoverable amount is defined as the higher of fair value less costs to sell and estimated value-in-use
at the date the impairment review is undertaken. Value-in-use represents the present value of expected
future cash flows, discounted using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
Total
£m
Net book value at 1 April 2024
9,729
Exchange adjustments
(117)
Reclassification to held for sale (note 10)
(80)
Net book value at 1 April 2025
9,532
Exchange adjustments
(115)
Net book value at 31 March 2026
9,417
There was no significant accumulated impairment charge as at 31 March 2026 or 31 March 2025.
Impairment review of goodwill and indefinite-lived intangibles
Goodwill and indefinite-lived intangibles (see note 12) are reviewed annually for impairment and the
recoverability is assessed by comparing the carrying amount of our operations with the expected
recoverable amount on a value-in-use basis which uses pre-financing and pre-tax cash flow projections
based on the Group’s financial plans, approved by the Directors. See below for a summary of which
operations our goodwill and indefinite-lived intangibles are allocated to.
2026
2025
CGU or group of CGUs
£m
£m
Goodwill:
National Grid Ventures – US
97
100
New England
1,471
1,506
New York
3,128
3,205
UK Electricity Distribution1
4,721
4,721
Total goodwill
9,417
9,532
Indefinite-lived intangibles (regulatory licences related
to UK Electricity Distribution):
West Midlands
518
518
East Midlands
519
519
South Wales
257
257
South West
420
420
Total indefinite-lived intangibles
1,714
1,714
1.This is a combination of the West Midlands, East Midlands, South Wales and South West CGUs, reflecting the level at which the goodwill
is monitored.
In each assessment, the value-in-use has been calculated assuming a stable regulatory framework and
is based on projections that incorporate our best estimates of future cash flows, including costs, changes
in commodity prices, future rates and growth. Such projections reflect our current regulatory agreements
and allow for future agreements and recovery of investment, including those related to achieving the net
zero plans of the jurisdictions that we operate in. Our plans have proved to be reliable guides in the past
and the Directors believe the estimates are appropriate.
(a) Cash flow periods, terminal value and discount rate assumptions
We select cash flow durations longer than five years, when our forecasts are considered reliable. The cash
flow durations selected reflect our knowledge and understanding of the regulatory environments in which
we operate, and most significantly, where markets have legislated decarbonisation commitments by 2050,
we may utilise longer cash flow forecasts that reflect the investment required to deliver those commitments
before applying a terminal value at the point those commitments are due to be fulfilled and market growth
is expected to stabilise. For our regulated UK ED operations, we consider cash flow durations that run
until 2050, reflecting the expected investment required in the network, in excess of economy‑wide
long‑term growth rates in order to deliver the energy transition. Total expenditure forecasts, comprising
capital and operating expenditure, are estimated with reference to the Group’s strategic modelling and
expectations around a reasonable energy transition based upon the policies and commitments in place
today. Cash flows related to uncommitted future restructurings and enhancement capital expenditure
(beyond activity to reinforce the network and build new connections) are excluded from the projections.
For our regulated US operations (New York and New England CGUs), we use a five-year cash flow
forecast. For our National Grid Ventures operations, we typically model cash flows extending out to
the end of each project’s operational life based on the long-term horizon of our projects.
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Additional Information
Notes to the consolidated financial statements cont.
11. Goodwill cont.
(a) Cash flow periods, terminal value and discount rate assumptions cont.
For our UK ED business, a nominal terminal growth rate of 1.6% (2025: 1.8%) is assumed upon
the terminal year cash flows, reflecting management’s best view, based on market and operational
experience, of the expected long-term growth in the relevant market. For our regulated US operations
we apply a growth rate of 2.4% (2025: 2.3%). This has been determined with regard to data on industry
growth projections, specifically related to the energy transition, and projected growth in real Gross
Domestic Product (GDP) for the territory within which the CGU is based.
Pre-tax cash flows are discounted by applying a pre-tax discount rate reflecting the time value of money
and the risks specific to the group of assets. In practice, the post-tax discount rate for the group of
assets in question is derived from a post-tax weighted average cost of capital. The assumptions used
in the calculation of the weighted average cost of capital are benchmarked to externally available data.
The determined discount rate is independent of the entity’s capital structure and reflects a market
participant’s view of a risk adjusted discount rate specific to the CGU or group of CGUs. The post-tax
discount rate is then grossed up to a pre-tax discount rate that is applied to pre-tax cash flows. The
pre‑tax discount rates used for the year ended 31 March 2026 were as follows: UK ED Group 5.2%
(2025: 5.4%); UK ED distribution network operators 5.2% (2025: 5.3%); New York 5.1% (2025: 6.3%);
New England 5.0% (2025: 6.2%); and National Grid Ventures – US 5.3% (2025: 6.7%).
(b) Key inputs and sensitivity analysis
In assessing the carrying value of goodwill and licences, we have sensitised our forecasts to factor
in adjustments to key inputs to each model. While regulatory licences are tested for impairment before
we test goodwill, we consider the sensitivity for goodwill attributable to UK ED and our regulated
US operations and those related to licences separately below.
Goodwill – UK ED, regulated US operations (New York and New England) and National Grid
Ventures – US
While key assumptions underpinning the goodwill valuations will change over time, the Directors
consider that no reasonably foreseeable change would result in an impairment of goodwill. This is in
view of the long-term nature of the key assumptions, including those used in determining an appropriate
discount rate, and specifically the risk-free rate and total market return, the margin by which the estimated
value-in-use exceeds the carrying amount and the nature of the regulatory regimes that UK ED and our
regulated US businesses operate under.
Indefinite-lived regulatory licences – UK ED
No reasonably possible changes to inputs to the impairment test performed over the South West,
East Midlands, West Midlands and South Wales Distribution Network Operator licences were identified
as resulting in an impairment.
12. Other intangible assets
Other intangible assets are the software assets controlled by us and the electricity
distribution licences which provide us with the right to operate and invest in the relevant
network that operates as a monopoly in the licensed geographical area. The regulatory
licences were acquired following the Group’s acquisition of NGED.
Our electricity distribution licences are indefinite-lived intangible assets for which there is no foreseeable
limit to the period over which they are expected to generate net cash inflows. Once granted by Ofgem,
the licence is issued to a licensee on the basis that it remains active into perpetuity. On that basis, the
value attributed to the electricity distribution network licence assets is considered to have an indefinite
useful life. The regulatory licence assets are subject to a review for impairment annually, or more
frequently if events or circumstances indicate a potential impairment (see note 11 for details of
impairment tests performed over indefinite-lived intangible assets). Any impairment is charged to
the income statement as it arises.
Software is recorded at cost less accumulated amortisation and any provision for impairment. Our
software assets are tested for impairment only if there is an indication that their carrying values may
have been impaired. Impairments of assets are calculated as the difference between the carrying value
of the asset and the recoverable amount, if lower. Where such an asset does not generate cash flows
that are independent from other assets, the recoverable amount of the CGU to which that asset belongs
is estimated. Impairments are recognised in the consolidated income statement within other operating
costs. Any assets which suffered impairment in a previous period are reviewed for possible reversal
of the impairment at each reporting date.
Internally generated intangible assets are recognised only if: i) an asset is created that can be identified;
ii) it is probable that the asset created will generate future economic benefits; and iii) the development cost
of the asset can be measured reliably. Where no internally generated intangible asset can be recognised,
development expenditure is recorded as an expense in the period in which it is incurred.
Cloud computing arrangements are reviewed to determine if the Group has control of the software
intangible asset. Control is considered to exist where the Group has the right to take possession of the
software and run it on its own or a third party’s computer infrastructure or if the Group has exclusive rights
to use the software such that the supplier is unable to make the software available to other customers.
Costs relating to configuring or customising the software in a cloud computing arrangement are assessed
to determine if there is a separate intangible asset over which the Group has control. If an asset is
identified, it is capitalised and amortised over the useful economic life of the asset. To the extent that no
separate intangible asset is identified, then the costs are either expensed when incurred or recognised as
a prepayment and spread over the term of the arrangement if the costs are concluded to not be distinct.
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Additional Information
Notes to the consolidated financial statements cont.
12. Other intangible assets cont.
(a) Analysis of other intangible assets
Regulatory
licences
£m
Software
£m
Assets in the
course of
construction
£m
Total
£m
Cost at 1 April 2024
1,714
3,093
392
5,199
Exchange adjustments
—
(61)
(7)
(68)
Additions
—
16
462
478
Disposals
—
(7)
—
(7)
Reclassifications1
—
376
(363)
13
Reclassification to held for sale (note 10)
—
(16)
—
(16)
Cost at 1 April 2025
1,714
3,401
484
5,599
Exchange adjustments
—
(56)
(8)
(64)
Additions
—
84
609
693
Disposals
—
(10)
—
(10)
Reclassifications¹
—
547
(556)
(9)
Cost at 31 March 2026
1,714
3,966
529
6,209
Accumulated amortisation at 1 April 2024
—
(1,758)
(10)
(1,768)
Exchange adjustments
—
36
—
36
Amortisation charge for the year
—
(323)
—
(323)
Accumulated amortisation of disposals
—
7
—
7
Reclassifications¹
—
2
—
2
Reclassification to held for sale (note 10)
—
11
—
11
Accumulated amortisation at 1 April 2025
—
(2,025)
(10)
(2,035)
Exchange adjustments
—
25
—
25
Amortisation charge for the year
—
(339)
—
(339)
Accumulated amortisation of disposals
—
10
10
20
Reclassifications¹
—
(1)
—
(1)
Accumulated amortisation at 31 March 2026
—
(2,330)
—
(2,330)
Net book value at 31 March 2026²
1,714
1,636
529
3,879
Net book value at 31 March 2025
1,714
1,376
474
3,564
1.Reclassifications includes amounts transferred to property, plant and equipment (see note 13).
2.The Group has capitalised £224 million (2025: £271 million) in relation to the Gas Business Enablement system in the US, of which
£224 million (2025: £271 million) is in service and is being amortised over 10 years, with the remainder included within assets in the course
of construction. A further £72 million (2025: £82 million) relates to our UK general ledger system within software and is being amortised
over 10 years.
(b) Asset useful economic lives
No amortisation is provided on regulatory licences. Software is amortised over the period we expect to
receive a benefit from the asset. An amortisation expense is charged to the income statement to reflect
the reduced value of the asset over time. Amortisation is calculated by estimating the number of years we
expect the asset to be used (its useful economic life or UEL) and charging the cost of the asset to the
income statement equally over this period.
Years
Software
3 to 10
Regulatory licences
Indefinite
13. Property, plant and equipment
Property, plant and equipment are the physical assets controlled by us. The Group’s interest
comprises legally protected statutory or contractual rights of use. Property, plant and
equipment is recorded at cost, less accumulated depreciation and any impairment losses.
The cost of property, plant and equipment primarily represents the amount initially paid or the fair value
on the date of acquisition of a business. Cost includes the purchase price of the asset; any payroll and
finance costs incurred which are directly attributable to the construction of property, plant and equipment
together with an appropriate portion of overheads which are directly linked to the capital work performed;
and the cost of any associated asset retirement obligations.
Additions represent the purchase or construction of new assets, including capital expenditure for safety
and environmental assets, and extensions to, enhancements to, or replacement of, existing assets.
All costs associated with projects or activities which have not been fully commissioned at the period
end are classified within assets in the course of construction.
A depreciation expense is charged to the income statement to reflect annual wear and tear and the
reduced value of the asset over time. Depreciation is calculated by estimating the number of years we
expect the asset to be used (its useful economic life or UEL) and charging the cost of the asset to the
income statement equally over this period.
Items within property, plant and equipment are tested for impairment only if there is some indication
that the carrying value of the assets may have been impaired. Impairments of assets are calculated as
the difference between the carrying value of the asset and the recoverable amount, if lower. Where such
an asset does not generate cash flows that are independent from other assets, the recoverable amount
of the cash-generating unit to which that asset belongs is estimated. Impairments are recognised in the
income statement and, if immaterial, are included within the depreciation charge for the year.
We operate an energy networks business and therefore have a significant physical asset base. We
continue to invest in our networks to maintain reliability, create new customer connections and ensure
our networks are flexible, resilient and prepared for the transition to net zero. Our business plan envisages
these additional investments will be funded through a mixture of cash generated from operations and the
issue of new debt and equity.
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Additional Information
Notes to the consolidated financial statements cont.
13. Property, plant and equipment cont.
(a) Analysis of property, plant and equipment
Land and
buildings
£m
Plant and
machinery
£m
Assets
in the
course of
construction
£m
Motor
vehicles
and office
equipment
£m
Total
£m
Cost at 1 April 2024
4,210
74,551
7,022
1,350
87,133
Exchange adjustments
(55)
(965)
(91)
(21)
(1,132)
Additions1
60
1,172
7,529
220
8,981
Disposals
(59)
(387)
(9)
(239)
(694)
Adjustment for change in discount rate on
decommissioning provisions (note 26)
—
7
—
—
7
Reclassifications2
198
4,583
(4,876)
83
(12)
Reclassification to held for sale (note 10)
(110)
(1,195)
(502)
(19)
(1,826)
Cost at 1 April 2025
4,244
77,766
9,073
1,374
92,457
Exchange adjustments
(55)
(934)
(91)
(20)
(1,100)
Additions1
108
1,362
8,696
259
10,425
Disposals
(47)
(363)
(28)
(164)
(602)
Adjustment for change in discount rate on
decommissioning provisions (note 26)
(22)
(66)
—
—
(88)
Reclassifications2
192
5,607
(5,834)
84
49
Cost at 31 March 2026
4,420
83,372
11,816
1,533
101,141
Accumulated depreciation at 1 April 2024
(758)
(16,730)
(67)
(671)
(18,226)
Exchange adjustments
12
200
—
11
223
Depreciation charge for the year3
(93)
(1,632)
4
(203)
(1,924)
Disposals
49
387
9
236
681
Reclassifications2
(32)
33
3
(5)
(1)
Reclassification to held for sale (note 10)
51
817
—
13
881
Accumulated depreciation at 1 April 2025
(771)
(16,925)
(51)
(619)
(18,366)
Exchange adjustments
12
197
—
11
220
Depreciation charge for the year3
(96)
(1,665)
2
(230)
(1,989)
Disposals
29
361
1
163
554
Reclassifications2
18
(44)
(16)
2
(40)
Accumulated depreciation at 31 March 2026
(808)
(18,076)
(64)
(673)
(19,621)
Net book value at 31 March 2026
3,612
65,296
11,752
860
81,520
Net book value at 31 March 2025
3,473
60,841
9,022
755
74,091
1.Additions include right-of-use assets recognised during the year.
2.Represents amounts transferred between categories, (to)/from other intangible assets (see note 12), (to)/from inventories.
3.Depreciation of assets in the course of construction relates to impairment provision adjustments.
(b) Asset useful economic lives
No depreciation is provided on freehold land or assets in the course of construction. Other items of
property, plant and equipment are depreciated, on a straight-line basis, at rates estimated to write off
their book values over their estimated UELs. In assessing UELs, consideration is given to any contractual
arrangements and operational requirements relating to particular assets. The assessments of estimated
UELs and residual values of assets are performed annually.
Certain network assets are depreciated using the group method of depreciation, in which a single
composite depreciation rate is applied to a particular class of property, plant and equipment. This method
pools similar assets together, and then depreciates each group as a whole over their respective useful
lives. In the US, the Company conducts independent depreciation studies on a periodic basis as part of
the regulatory ratemaking process to estimate group depreciation rates. These depreciation studies are
subject to review and approval by the US state and federal regulators, with the depreciation expense
recovered through rates charged to customers. Likewise in the UK, the composite depreciation rates are
benchmarked to internal engineering studies and known asset performance lives. Depreciation expense
includes a component for the original cost of assets and a component for estimated cost of future
removal, net of any salvage value at retirement. Upon retirement of components of the Company’s
network assets, the original cost of the retired assets, net of salvage value, is charged against
accumulated depreciation, with no gain or loss recognised.
Unless otherwise determined by operational requirements, the depreciation periods for the principal
categories of property, plant and equipment are shown in the table that follows split between the UK
and US, along with the weighted average remaining UEL for each class of property, plant and equipment
(which is calculated by dividing the net book value of that class of asset by the respective annual
depreciation charge).
Years
UK
US
Weighted
average
remaining
UEL
Freehold and leasehold buildings
up to 65
up to 100
43
Plant and machinery:
Electricity transmission plant and wires
up to 100
10 to 85
32
Electricity distribution plant
14 to 99
5 to 85
46
Electricity generation plant
n/a
15 to 93
8
Interconnector plant and other
5 to 70
5 to 54
25
Gas plant – mains, services and regulating equipment
n/a
20 to 95
54
Gas plant – storage
n/a
20 to 60
24
Gas plant – meters
n/a
14 to 45
26
Motor vehicles and office equipment
up to 30
up to 34
3
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Additional Information
Notes to the consolidated financial statements cont.
13. Property, plant and equipment cont.
(c) Gas asset lives
The role that our US gas networks play in the pathway to achieving the greenhouse gas emissions
reductions targets set in the jurisdictions in which we operate remains subject to uncertainty.
Policymakers in New York and Massachusetts continue to indicate an increase in electrification to meet
their respective decarbonisation targets, while as a Group we are committed in our transition to net zero.
However, developments during the current financial year indicate that, despite some regulation changes
and customer incentive schemes favouring electrification, the pathway to full electrification remains
uncertain due to barriers such as heightened affordability concerns and increased regulatory uncertainty.
As a result, there is a reduced risk that the UELs of certain elements of our gas networks may be
shortened in line with future policy, regulatory frameworks and planning systems aimed to support the
decarbonisation of the energy sector.
In the US, our gas distribution asset lives are assessed as part of detailed depreciation studies completed
as part of each separate rate proceeding. Depreciation studies consider the physical condition of assets
and the expected operational life of an asset. The weighted average remaining UEL for our US gas
distribution fixed asset base is circa 54 years; however, a proportion of our assets are assumed to have
UELs which extend beyond 2080. In assessing these UELs, we consider a range of different pathways
related to our gas assets. These pathways factor in the net zero ambitions of the Group and the jurisdictions
that we operate in, anticipated changes in customer behaviour, developments in new technology, the
feasibility and affordability of electrification, and the ability to decarbonise fuel through the use of renewable
natural gas (RNG) and green hydrogen. On balance of the different pathways considered, we continue
to believe the lives identified by rate proceedings are the best estimate of the assets’ UELs given the
need to provide safe, affordable and reliable heating services. We keep this assumption under review
and we continue to actively engage and support our regulators to enable the clean energy transition.
Asset depreciation lives feed directly into our US regulatory recovery mechanisms, such that any
shortening of asset lives and regulatory recovery periods as agreed with regulators should be recoverable
through future rates, subject to agreement, over future periods, as part of wider considerations around
ensuring the continuing affordability of gas in our service territories.
Given the uncertainty described relating to the UELs of our gas assets, below we provide a sensitivity
analysis for the depreciation charge for our New York and New England segments were a shorter UEL
presumed. It should be noted that the net zero pathways which we consider probable all suggest some
role for gas in heating buildings beyond 2050, so our sensitivity analysis for 2050 illustrates an unlikely
worst-case scenario.
Increase in depreciation expense for
the year ended 31 March 2026
Increase in depreciation expense for
the year ended 31 March 2025
New York
£m
New England
£m
New York
£m
New England
£m
UELs limited to 2050
277
90
235
78
UELs limited to 2060
130
37
110
32
UELs limited to 2070
64
11
54
9
Note that this sensitivity calculation excludes any assumptions regarding the residual value for our asset
base and the effect that shortening asset depreciation lives would be expected to have on our regulatory
recovery mechanisms. In the event that any of the US gas distribution assets are stranded, the Group
would expect to recover the associated costs. While recovery is not guaranteed and is determined by
regulators in the US, there are precedents for stranded asset cost recovery for US utility companies.
(d) Right-of-use assets
The Group leases various properties, land, equipment and cars. New lease arrangements entered into
are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. The right-of-use asset and associated lease liability arising from a lease
are initially measured at the present value of the lease payments expected over the lease term. The lease
payments include fixed payments, any variable lease payments dependent on an index or a rate, and any
break fees or renewal option costs that we are reasonably certain to incur. The discount rate applied is
the rate implicit in the lease or, if that is not available, the incremental rate of borrowing for a similar term
and similar security. The liabilities for the majority of the Group’s lease portfolio are calculated using the
incremental borrowing rate. This is determined based on observable data for borrowing rates for the
specific Group entity that has entered into the lease, with specific adjustments for the term of the lease
and any lease-specific risk premium. The lease term takes account of extension options that are at
our option if we are reasonably certain to exercise the option and any lease termination options unless
we are reasonably certain not to exercise the option. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to the income statement over the lease period using the
effective interest rate method. The right-of-use asset is depreciated over the shorter of the asset’s useful
life and the lease term on a straight-line basis. For short-term leases (lease term of 12 months or less)
and leases of low-value assets (such as computers), the Group continues to recognise a lease expense
on a straight-line basis.
The table that follows shows the movements in the net book value of right-of-use assets included within
property, plant and equipment at 31 March 2026 and 31 March 2025, split by category. The associated
lease liabilities are disclosed in note 21.
Land and
buildings
£m
Plant and
machinery
£m
Assets
in the
course of
construction
£m
Motor
vehicles
and office
equipment
£m
Total
£m
Net book value at 1 April 2024
293
128
—
307
728
Exchange adjustments
(6)
(2)
—
(7)
(15)
Additions
39
2
—
159
200
Reclassification to held for sale
(note 10)
(2)
(15)
—
—
(17)
Disposals
—
—
—
(3)
(3)
Depreciation charge for the year
(21)
(12)
—
(87)
(120)
Net book value at 31 March 2025
303
101
—
369
773
Exchange adjustments
(6)
(2)
—
(6)
(14)
Additions
23
—
—
199
222
Disposals
(11)
—
—
(2)
(13)
Depreciation charge for the year
(24)
(6)
—
(102)
(132)
Net book value at 31 March 2026
285
93
—
458
836
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Additional Information
Notes to the consolidated financial statements cont.
13. Property, plant and equipment cont.
(d) Right-of-use assets cont.
The following balances have been included in the income statement for the years ended 31 March 2026
and 31 March 2025 in respect of right-of-use assets:
2026
2025
£m
£m
Included within net finance income and costs:
Interest expense on lease liabilities
(41)
(40)
Included within revenue:
Lease income1
385
406
Included within operating expenses:
Expense relating to short-term and low-value leases
(27)
(24)
1.Included within lease income is£364 million (2025: £384 million) of variable lease payments, the majority of which relates to the power
supply arrangement entered into with LIPA (see note 3).
14. Other non-current assets
Other non-current assets include assets that do not fall into specific non-current asset
categories (such as goodwill or property, plant and equipment) where the benefit to be
received from the asset is not due to be received until after 31 March 2027.
2026
2025
£m
£m
Other receivables¹
291
299
Non-current tax assets
20
—
Prepayments²
1,073
660
1,384
959
1.Primarily comprises amounts due in relation to property sales to The Berkeley Group. These amounts will be fully received by 2031.
2.Included within prepayments are capital expenditure prepayments made to suppliers to secure production capacity for certain of our
capital projects. The associated cash flows for capital expenditure prepayments are included within purchases of property, plant and
equipment within the consolidated cash flow statement.
15. Financial and other investments
The Group holds a range of financial and other investments. These investments include
short-term money market funds, quoted investments in bonds of other companies,
investments in our venture capital portfolio (National Grid Partners), and investments
that cannot be readily used in operations, principally collateral deposited in relation
to derivatives.
The classification of each investment held by the Group is determined based on two main factors:
–its contractual cash flows – whether the asset’s cash flows are solely payments of the principal and
interest on the financial asset on pre‑determined dates or whether the cash flows are determined
by other factors such as the performance of a company; and
–the business model for holding the investments – whether the intention is to hold onto the investment
for the longer term (collect the contractual cash flows) or to sell the asset with the intention of managing
any gain or loss on sale or to manage any liquidity requirements.
The three categories of financial and other investments are as follows:
–Financial assets at amortised cost – debt instruments that have contractual cash flows that are solely
payments of principal and interest, and which are held within a business model whose objective is to
collect contractual cash flows, are held at amortised cost. This category includes our receivables in
relation to deposits and collateral;
–FVOCI debt and other investments – debt investments, such as bonds, that have contractual cash
flows that are solely payments of principal and interest, and which are held within a business model
whose objective is both to collect the contractual cash flows and to sell the debt instruments, are
measured at FVOCI, with gains or losses recognised in the consolidated statement of comprehensive
income instead of through the income statement. On disposal, any gains or losses are recognised
within finance income in the income statement (see note 6). Other investments include insurance
contracts which are held to back the present value of unfunded pension liabilities (see note 25); and
–FVTPL investments – other financial investments are subsequently measured at fair value with any
gains or losses recognised in the income statement (FVTPL). This primarily comprises our money
market funds, insurance company fund investments and corporate venture capital investments held
by National Grid Partners.
Financial and other investments are initially recognised on trade date. Subsequent to initial recognition,
the fair values of financial assets that are quoted in active markets are based on bid prices. When
independent prices are not available, fair values are determined by applying valuation techniques used by
the relevant markets, including observable market data where possible (see note 32(g) for further details).
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Additional Information
Notes to the consolidated financial statements cont.
15. Financial and other investments cont.
2026
2025
£m
£m
Non-current
FVOCI debt and other investments
385
384
FVTPL investments
450
407
Financial assets at amortised cost
7
7
842
798
Current
FVTPL investments
1,914
5,156
Financial assets at amortised cost
539
597
2,453
5,753
3,295
6,551
Financial and other investments include the following:
Investments in short-term money market funds
1,370
4,725
Investments held by National Grid Partners
387
346
Investments in Sunrun
63
60
Balances that are restricted or not readily used in operations:
Collateral1
438
506
Insurance company and non-qualified plan investments
676
578
Cash surrender value of life insurance policies
252
238
Other investments
109
98
3,295
6,551
1.The collateral balance includes £404 million (2025: £477 million) of collateral placed with counterparties with whom we have entered into
a credit support annex to the International Swaps and Derivatives Association (ISDA) Master Agreement; £30 million (2025: £24 million)
of restricted amounts allocated for specific projects within National Grid Electricity Transmission plc and National Grid Electricity
Distribution plc; £4 million (2025: £5 million) insurance captive letters of credit.
FVTPL and FVOCI investments are recorded at fair value. The carrying value of current financial assets
at amortised cost approximates their fair values, primarily due to short-dated maturities. The exposure
to credit risk at the reporting date is the fair value of the financial investments. For further information on
our credit risk, refer to note 32(a).
For the purposes of impairment assessment, the investments in bonds are considered to be low risk as
they are investment grade securities; life insurance policies are held with regulated insurance companies;
and deposits, collateral receivable and other financial assets at amortised cost have an average credit
rating on a weighted basis of AA or better at all times based on investment policy. All financial assets
held at FVOCI or amortised cost are therefore considered to have low credit risk and have an immaterial
impairment loss allowance equal to 12-month expected credit losses.
In determining the expected credit losses for these assets, some or all of the following information has
been considered: credit ratings, the financial position of counterparties, the future prospects of the
relevant industries and general economic forecasts.
No FVOCI or amortised cost financial assets have had modified cash flows during the period. There has
been no change in the estimation techniques or significant assumptions made during the year in assessing
the loss allowance for these financial assets. There were no significant movements in the gross carrying
value of financial assets during the year that contribute to changes in the loss allowance. No collateral is
held in respect of any of the financial investments in the above table. No balances are more than 30 days
past due and no balances were written off during the year.
16. Investments in joint ventures and associates
Investments in joint ventures and associates represent businesses we do not control but
over which we exercise joint control or significant influence. They are accounted for using
the equity method. A joint venture is an arrangement established to engage in economic
activity, which the Group jointly controls with other parties and has rights to a share of the
net assets of the arrangement. An associate is an entity which is neither a subsidiary nor
a joint venture, but over which the Group has significant influence.
2026
2025
Associates
£m
Joint
ventures
£m
Total
£m
Associates
£m
Joint
ventures
£m
Total
£m
Share of net assets
at 1 April
174
434
608
158
1,262
1,420
Exchange adjustments
(17)
30
13
(4)
(46)
(50)
Additions
23
4
27
23
93
116
Share of post-tax results
for the year
15
61
76
11
62
73
Impairment
—
—
—
—
(303)
(303)
Dividends received
(18)
(82)
(100)
(18)
(53)
(71)
Disposals
—
—
—
(1)
—
(1)
Reclassification to held
for sale (note 10)
—
—
—
—
(582)
(582)
Other movements
—
—
—
5
1
6
Share of net assets
at 31 March
177
447
624
174
434
608
A list of joint ventures and associates, including the name and proportion of ownership, is provided
in note 34. Transactions with and outstanding balances with joint ventures and associates are shown
in note 31. The joint ventures and associates have no significant contingent liabilities to which the Group
is exposed and the Group has no significant contingent liabilities in relation to its interests in the joint
ventures and associates. The Group has capital commitments in relation to its joint ventures and
associates of £526 million (2025: £635 million), which primarily relate to the funding of new capital
investment projects.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
16. Investments in joint ventures and associates cont.
The following table describes the Group’s material joint ventures and associates at 31 March 2026:
Joint venture1
% stake
BritNed Development
Limited1
50%
BritNed is a joint venture with the Dutch transmission system operator,
TenneT, and operates the subsea electricity interconnector between
Great Britain and the Netherlands, commissioned in 2011.
Nemo Link Limited1
50%
Nemo is a joint venture with the Belgian transmission operator,
Elia, and operates the subsea electricity interconnector between
Great Britain and Belgium, which became operational in 2019.
1.The joint ventures have reporting periods ending on 31 December with monthly management reporting information provided to the Group.
The Group also held a 51% interest in Emerald Energy Venture, LLC, a joint venture with Washington
State Investment Board which builds and operates wind and solar assets. In the prior year, the Group
classified its interest in Emerald, together with NG Renewables, as held for sale and ceased equity
accounting for its share of results (see note 10). The disposal subsequently completed on 29 May 2025.
In March 2021, the Group entered into an offshore partnership agreement with RWE Renewables to form
Community Offshore Wind, LLC. The purpose of the joint venture is to explore, develop, and eventually
construct and operate renewable facilities in the northeastern US offshore wind market. In February 2022,
the partnership successfully bid in the New York Bight seabed lease auction. The Group’s investment in
Community Offshore Wind represents our share of the seabed lease and initial development costs
incurred to date. As of 31 March 2025, the project had not yet reached the construction stage.
In the prior year, an Executive Memorandum was issued by the US Administration on wind power,
temporarily suspending offshore wind leasing, ordering a review of existing leases and directing a review
and pause on permitting. Accordingly, we agreed with RWE Renewables to place a temporary pause on
development of the project. As detailed in the Annual Report and Accounts for the year ended 31 March
2025, we considered the potential impact on our valuation of our investment in Community Offshore
Wind and determined that the investment had a negligible value. Accordingly, the carrying value of the
£303 million investment was fully impaired. The impairment charge was recognised in the NGV operating
segment. Whilst development activity is currently suspended, we continue to consider Community
Offshore Wind could play an important role in New York’s future energy strategy. We will reassess the
project development pause should market conditions improve in the future.
Summarised financial information as at 31 March, together with the carrying amount of material
investments, is as follows:
BritNed Development
Limited
Nemo Link
Limited
2026
2025
2026
2025
£m
£m
£m
£m
Statement of financial position
Non-current assets
338
352
448
447
Cash and cash equivalents
65
76
128
118
All other current assets
59
48
11
8
Non-current liabilities
(38)
(51)
(25)
(3)
Non-current financial liabilities
(33)
(32)
(11)
(32)
Current liabilities
(44)
(39)
(103)
(109)
Net assets
347
354
448
429
Carrying amount of the Group’s investment
174
177
224
215
BritNed Development
Limited
Nemo Link
Limited
2026
2025
2026
2025
£m
£m
£m
£m
Income statement
Revenue
151
108
108
102
Depreciation and amortisation
(16)
(16)
(24)
(23)
Other costs
(20)
(23)
(16)
(16)
Operating profit
115
69
68
63
Net interest (expense)/income
(2)
(1)
1
1
Profit before tax
113
68
69
64
Income tax expense
(26)
(18)
(17)
(16)
Profit for the year
87
50
52
48
Group’s share of post-tax results for the year
44
25
26
24
The aggregate information of associates and joint ventures that are not individually material is as follows:
2026
2025
£m
£m
Share of post-tax results for the year
6
24
Impairment
—
(303)
Share of total comprehensive income
6
(279)
Aggregate carrying value of the Group’s interests
226
216
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
17. Derivative financial instruments
Derivatives are financial instruments that derive their value from the price of an underlying
item such as interest rates, foreign exchange rates, credit spreads, commodities, equities
or other indices. In accordance with policies approved by the Board, derivatives are
transacted generally to manage exposures to fluctuations in interest rates, foreign exchange
rates and commodity prices. Our derivatives balances comprise two broad categories:
–financing derivatives – these are used to manage our exposure to interest rates and
foreign exchange rates. Specifically, we use these derivatives to manage our financing
portfolio, holdings in foreign operations and contractual operational cash flows; and
–commodity contract derivatives – these are used to manage exposure to price and
supply risks related to our US customers and UK business. Some forward contracts
for the purchase of commodities meet the definition of derivatives. We also enter into
derivative financial instruments linked to commodity prices, including options and swaps,
which are used to manage market price volatility.
Derivatives are initially recognised at fair value and subsequently remeasured to fair value at each
reporting date. Changes in fair values are recorded in the period they arise, in either the consolidated
income statement or other comprehensive income. Where the gains or losses recorded in the income
statement arise from changes in the fair value of derivatives to the extent that hedge accounting is
not applied or is not fully effective, these are recorded as remeasurements, detailed in notes 5 and 6.
Where the fair value of a derivative is positive it is carried as a derivative asset, and where negative
as a derivative liability.
The fair value of derivative financial instruments is calculated by taking the present value of future
cash flows, primarily incorporating market observable inputs where available. The various inputs
include foreign exchange spot and forward rates, yield curves of the respective currencies, currency
basis spreads between the respective currencies, interest rate and inflation curves, the forward rate
curves of underlying commodities and, for those positions that are not fully cash collateralised, the
credit quality of the counterparties.
Certain clauses embedded in non-derivative financial instruments or other contracts are presented
as derivatives because they impact the risk profile of their host contracts and they are deemed to
have risks or rewards not closely related to those host contracts.
Further information on how derivatives are valued and used for risk management purposes is presented
in note 32. Information on commodity contracts and other commitments not meeting the definition of
derivatives is presented in note 30.
The fair values of derivatives by category are as follows:
2026
2025
Assets
£m
Liabilities
£m
Total
£m
Assets
£m
Liabilities
£m
Total
£m
Current
215
(268)
(53)
113
(381)
(268)
Non-current
623
(750)
(127)
369
(821)
(452)
838
(1,018)
(180)
482
(1,202)
(720)
Financing derivatives
717
(950)
(233)
375
(1,138)
(763)
Commodity contract
derivatives
121
(68)
53
107
(64)
43
838
(1,018)
(180)
482
(1,202)
(720)
(a) Financing derivatives
The fair values of financing derivatives by type are as follows:
2026
2025
Assets
£m
Liabilities
£m
Total
£m
Assets
£m
Liabilities
£m
Total
£m
Interest rate swaps
129
(216)
(87)
98
(196)
(98)
Cross-currency interest rate
swaps
448
(528)
(80)
193
(766)
(573)
Foreign exchange forward
contracts¹
114
(120)
(6)
53
(81)
(28)
Inflation-linked swaps
26
(86)
(60)
31
(95)
(64)
717
(950)
(233)
375
(1,138)
(763)
1.Included within the foreign exchange forward contracts balance are £19 million (2025: £45 million) of derivative liabilities in relation to the
hedging of capital expenditure.
The maturity profile of financing derivatives is as follows:
2026
2025
Assets
£m
Liabilities
£m
Total
£m
Assets
£m
Liabilities
£m
Total
£m
Current
Less than 1 year
123
(237)
(114)
19
(355)
(336)
123
(237)
(114)
19
(355)
(336)
Non-current
In 1 to 2 years
88
(86)
2
46
(61)
(15)
In 2 to 3 years
69
(45)
24
41
(77)
(36)
In 3 to 4 years
34
(17)
17
47
(73)
(26)
In 4 to 5 years
51
(8)
43
6
(25)
(19)
More than 5 years
352
(557)
(205)
216
(547)
(331)
594
(713)
(119)
356
(783)
(427)
717
(950)
(233)
375
(1,138)
(763)
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
17. Derivative financial instruments cont.
(a) Financing derivatives cont.
The notional contract amounts of financing derivatives by type are as follows:
2026
2025
£m
£m
Interest rate swaps
(7,113)
(7,763)
Cross-currency interest rate swaps
(16,413)
(16,019)
Foreign exchange forward contracts
(11,508)
(7,761)
Inflation-linked swaps
(2,970)
(3,190)
(38,004)
(34,733)
(b) Commodity contract derivatives
The fair values of commodity contract derivatives by type are as follows:
2026
2025
Assets
£m
Liabilities
£m
Total
£m
Assets
£m
Liabilities
£m
Total
£m
Commodity purchase contracts
accounted for as derivative contracts
Forward purchases of gas
—
—
—
3
(7)
(4)
Gas options
3
(3)
—
—
—
—
Derivative financial instruments
linked to commodity prices
Electricity capacity
7
(10)
(3)
2
(17)
(15)
Electricity swaps
110
(44)
66
74
(38)
36
Electricity options
—
—
—
1
(1)
—
Gas swaps
—
(8)
(8)
15
(1)
14
Gas options
1
(3)
(2)
12
—
12
121
(68)
53
107
(64)
43
The maturity profile of commodity contract derivatives is as follows:
2026
2025
Assets
£m
Liabilities
£m
Total
£m
Assets
£m
Liabilities
£m
Total
£m
Current
Less than one year
92
(31)
61
94
(26)
68
92
(31)
61
94
(26)
68
Non-current
In 1 to 2 years
27
(24)
3
12
(20)
(8)
In 2 to 3 years
1
(11)
(10)
1
(12)
(11)
In 3 to 4 years
1
(2)
(1)
—
(2)
(2)
In 4 to 5 years
—
—
—
—
(2)
(2)
More than 5 years
—
—
—
—
(2)
(2)
29
(37)
(8)
13
(38)
(25)
121
(68)
53
107
(64)
43
The notional quantities of commodity contract derivatives by type are as follows:
2026
2025
Forward purchases of gas1
13m Dth
74m Dth
Electricity capacity
4 TWh
5 TWh
Electricity swaps
15,514 GWh
14,040 GWh
Electricity options
241 GWh
334 GWh
Gas swaps
28m Dth
30m Dth
Gas options
139m Dth
89m Dth
1.Forward gas purchases have terms up to one month (2025: three years). The contractual obligations under these contracts are £21 million
(2025: £46 million).
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
18. Inventories
Inventories represent assets that we intend to use in order to generate revenue in the
short term, either by selling the asset itself (for example fuel stocks) or by using it to fulfil
a service to a customer or to maintain our network (consumables).
Inventories are stated at the lower of weighted average cost and net realisable value. Where applicable,
cost comprises direct materials and direct labour costs as well as those overheads that have been directly
incurred in bringing the inventories to their present location and condition.
Emission allowances, principally relating to the emissions of carbon dioxide in the UK and sulphur and
nitrous oxides in the US, are recorded as inventory. They are initially recorded at cost and subsequently
at the lower of cost and net realisable value. A liability is recorded in respect of the obligation to deliver
emission allowances and emission charges are recognised in the income statement in the period
in which emissions are made.
2026
2025
£m
£m
Fuel stocks
90
95
Raw materials and consumables
357
356
Emission allowances
112
106
559
557
There is a provision for obsolescence of £1 million against inventories as at 31 March 2026 (2025: £1 million).
19. Trade and other receivables
Trade and other receivables include amounts which are due from our customers for
services we have provided, accrued income which has not yet been billed, prepayments
and other receivables that are expected to be settled within 12 months.
Trade and other receivables are initially recognised at fair value, except for trade receivables that do not
have a significant financing component which are measured at transaction price, and are subsequently
measured at amortised cost, less any appropriate allowances for estimated irrecoverable amounts.
2026
2025
£m
£m
Trade receivables
3,091
3,050
Accrued income
882
1,083
Provision for impairment of receivables and accrued income
(603)
(578)
Trade receivables and accrued income, net
3,370
3,555
Prepayments
336
340
Other receivables
161
197
3,867
4,092
Trade receivables are non-interest-bearing and generally have a term of up to 60 days. Due to their short
maturities, the fair value of trade and other receivables approximates their carrying value. The maximum
exposure of trade and other receivables to credit risk is the carrying amount reported on the balance sheet.
Provision for impairment of receivables
A provision for credit losses is recognised at an amount equal to the expected credit losses that will arise
over the lifetime of the trade receivables and accrued income.
2026
2025
£m
£m
At 1 April
578
559
Exchange adjustments
(13)
(11)
Charge for the year, net of recoveries
243
200
Uncollectible amounts written off
(205)
(168)
Reclassification to held for sale (note 10)
—
(2)
At 31 March
603
578
The trade receivables balance, accrued income balance and provisions balance split by geography are
as follows:
As at 31 March 2026
As at 31 March 2025
UK
US
Total
UK
US
Total
£m
£m
£m
£m
£m
£m
Trade receivables
194
2,897
3,091
265
2,785
3,050
Accrued income
289
593
882
513
570
1,083
Provision for impairment of
receivables and accrued income
(5)
(598)
(603)
(3)
(575)
(578)
478
2,892
3,370
775
2,780
3,555
There are no retail customers in the UK businesses. A provision matrix is not used in the UK, as an
assessment of expected losses on individual debtors is performed and the provision is not material.
In the US, £2,824 million (2025: £2,813 million) of the gross trade receivables and accrued income
balance is attributable to retail customers. For non-retail US customer receivables, a provision matrix
is not used and expected losses are determined on individual debtors.
The provision for retail customer receivables in the US is calculated based on a series of provision
matrices which are prepared by regulated entity and by customer type. The expected loss rates in each
provision matrix are based on historical loss rates adjusted for current and forecast economic conditions
at the balance sheet date. The inclusion of forward-looking information in the provision matrix-setting process
under IFRS 9 results in loss rates that reflect expected future economic conditions and the recognition of
an expected loss on all debtors even where no loss event has occurred.
National Grid plc Annual Report and Accounts 2025/26
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
19. Trade and other receivables cont.
Provision for impairment of receivables cont.
In calculating our provision for impairment of receivables at 31 March 2026, we incorporate actual
cash collection levels experienced over a three-year period (placing greater weight on the most recent
study, gradually decreasing for older periods) to determine the expected loss rates per category
of outstanding receivable by operating company. These are benchmarked against provision matrices
run on pre‑COVID-19 behaviour and data. Factored into our analysis are expected cash collections
based on the collection activities in New England and New York, as well as the outlook for the wider
macroeconomic environment. The resulting rates are summarised in the provision matrix shown below.
Based on our review, we recognised a charge of £243 million (2025: £200 million), which represents
our best estimate based on the information available. We based our review on certain macroeconomic
factors, including unemployment levels, inflation, average commodity rate changes and our experience
regarding debtor recoverability.
The average expected loss rates and gross balances for the retail customer receivables in our US operations
are set out below.
2026
2025
%
£m
%
£m
Accrued income
4
554
5
546
0 – 30 days past due
4
1,040
5
1,033
30 – 60 days past due
15
288
16
313
60 – 90 days past due
23
158
24
154
3 – 6 months past due
30
174
31
172
6 – 12 months past due
37
181
38
186
Over 12 months past due
59
429
53
409
2,824
2,813
US retail customer receivables are not collateralised. Trade receivables are written off when regulatory
requirements are met. Write-off policies vary between jurisdictions as they are aligned with the local
regulatory requirements, which differ between regulators. There were no significant amounts written off
during the period that were still subject to enforcement action. Our internal definition of default is aligned
with that of the individual regulators in each jurisdiction.
For further information on our wholesale and retail credit risk, refer to note 32(a).
20. Cash and cash equivalents
Cash and cash equivalents include cash balances, together with short-term investments
with an original maturity of three months or less that are readily convertible to cash.
The carrying amounts of cash and cash equivalents approximate their fair values.
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits
are made for periods varying between one day and three months, depending on the immediate cash
requirements, and earn interest at the respective short-term deposit rates.
Cash and cash equivalents held in currencies other than sterling have been converted into sterling
at year‑end exchange rates. For further information on currency exposures, refer to note 32(c).
Cash and cash equivalents at 31 March 2026 include £nil (2025: £nil) that is restricted.
2026
2025
£m
£m
Cash at bank
375
625
Short-term deposits
—
553
Cash and cash equivalents
375
1,178
21. Borrowings
We borrow money primarily in the form of bonds and bank loans. These are for a fixed
term and may have fixed or floating interest rates or are linked to inflation indices. We
use derivatives to manage risks associated with interest rates, inflation rates and foreign
exchange. Lease liabilities are also included within borrowings.
Our price controls and rate plans lead us to fund our networks within a certain ratio
of debt to equity or regulatory asset value and, as a result, we have issued a significant
amount of debt. As we continue to invest in our networks, the amount of debt is expected
to increase over time. To maintain a strong balance sheet and to allow us to access
capital markets at commercially acceptable interest rates, we balance the amount of
debt we issue with the value of our assets, and we take account of certain other metrics
used by credit rating agencies.
Borrowings, which include interest-bearing and inflation-linked debt, overdrafts and collateral payable,
are initially recorded at fair value. This normally reflects the proceeds received (net of direct issue costs
for liabilities measured at amortised cost). Subsequently, borrowings are stated at amortised cost. Where
a borrowing is held at amortised cost, any difference between the proceeds after direct issue costs and
the redemption value is recognised over the term of the borrowing in the income statement using the
effective interest rate method.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
21. Borrowings cont.
2026
2025
£m
£m
Current
Bank loans
975
488
Bonds
2,780
1,828
Commercial paper
—
2,226
Lease liabilities
145
120
3,900
4,662
Non-current
Bank loans
1,045
1,834
Bonds
41,062
40,334
Lease liabilities
748
709
42,855
42,877
Total borrowings
46,755
47,539
Total borrowings are repayable as follows:
2026
2025
£m
£m
Less than 1 year
3,900
4,662
In 1 to 2 years
2,513
3,283
In 2 to 3 years
4,369
2,458
In 3 to 4 years
2,322
4,281
In 4 to 5 years
3,138
2,261
More than 5 years:
By instalments
264
337
Other than by instalments
30,249
30,257
46,755
47,539
The fair value of borrowings, excluding lease liabilities, at 31 March 2026 was £42,505 million
(2025: £43,137 million). Where market values were available, the fair value of borrowings (Level 1)
was £35,727 million (2025: £34,639 million). Where market values were not available, the fair value
of borrowings (Level 2) was £6,778 million (2025: £8,498 million) and calculated by discounting cash
flows at prevailing interest rates. The notional amount outstanding of the debt portfolio at 31 March 2026
was £46,113 million (2025: £46,739 million).
Collateral is placed with or received from any derivative counterparty where we have entered into a
credit support annex to the ISDA Master Agreement once the current mark-to-market valuation of the
trades between the parties exceeds an agreed threshold. Included in current bank loans is £47 million
(2025: £49 million) in respect of cash received under collateral agreements. For further details of our
borrowing facilities, refer to note 33. For further details of our bonds in issue, please refer to the debt
investor section of our website. Unless included herein, the information on our website is unaudited.
Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments expected over the lease
term. The discount rate applied is the rate implicit in the lease or, if that is not available, the incremental
rate of borrowing for a similar term and similar security. The lease term takes account of exercising any
extension options that are at our option if we are reasonably certain to exercise the option as well as any
lease termination options, unless we are reasonably certain not to exercise the option. Each lease
payment is allocated between the liability and finance cost. The finance cost is charged to the income
statement over the lease period using the effective interest rate method. The associated right-of-use
assets are disclosed in note 13.
2026
2025
£m
£m
Gross lease liabilities are repayable as follows:
Less than 1 year
172
143
1 to 5 years
491
425
More than 5 years
456
494
1,119
1,062
Less: finance charges allocated to future periods
(226)
(233)
893
829
The present value of lease liabilities are as follows:
Less than 1 year
145
120
1 to 5 years
407
347
More than 5 years
341
362
893
829
22. Trade and other payables
Trade and other payables include amounts owed to suppliers, tax authorities and other
parties which are due to be settled within 12 months. The total also includes deferred
amounts, some of which represent monies received from customers but for which we have
not yet delivered the associated service. These amounts are recognised as revenue when
the service is provided.
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost.
2026
2025
£m
£m
Trade payables
3,374
2,965
Deferred payables
423
401
Customer contributions1
30
32
Social security and other taxes
95
131
Other payables2
1,127
943
5,049
4,472
1.Relates to amounts received from government-related entities for connecting to our networks, where we have obligations remaining under
the contract.
2.Included within Other payables are employee benefit accruals.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
23. Contract liabilities
Contract liabilities primarily relate to the advance consideration received from customers
for construction contracts, mainly in relation to connections, for which revenue is
recognised over the life of the asset.
2026
2025
£m
£m
Current
110
96
Non-current
2,699
2,418
2,809
2,514
Significant changes in the contract liabilities balances during the period are as follows:
2026
2025
£m
£m
As at 1 April
2,514
2,246
Exchange adjustments
(28)
(28)
Revenue recognised that was included in the contract liability balance at the
beginning of the period
(97)
(129)
Increases due to cash received, excluding amounts recognised as revenue
during the period
420
425
At 31 March
2,809
2,514
24. Other non-current liabilities
Other non-current liabilities include deferred income and customer contributions which will
not be recognised as income until after 31 March 2027. It also includes other payables that
are not due until after that date.
Other non-current liabilities are initially recognised at fair value and subsequently measured at amortised cost.
2026
2025
£m
£m
Deferred income
6
6
Customer contributions1
401
403
Other payables²
707
467
1,114
876
1.Relates to amounts received from government-related entities for connecting to our networks, where we have obligations remaining under
the contract.
2.Included within other payables are payments due in respect of the IFA1 interconnector in accordance with the Use of Revenue regime,
and the IFA2 and North Sea Link interconnector in accordance with the interconnector cap and floor regime constructed by Ofgem.
The fair value of Other payables approximates their carrying value.
25. Pensions and other post-retirement benefits
All of our employees are eligible to participate in a pension plan. We have defined
contribution (DC) and defined benefit (DB) pension plans in the UK and the US. In the US,
we also provide post-retirement benefits to eligible employees in the form of healthcare
cover and life insurance. The fair value of associated plan assets and present value
of DB obligations are updated annually in accordance with IAS 19 ‘Employee Benefits’.
We separately present our UK and US pension plans to show the geographical split.
Below we provide a more detailed analysis of the amounts recorded in the primary
financial statements and the actuarial assumptions used to value the DB obligations.
UK pension plans
Defined contribution plan
UK employees are eligible to join the National Grid UK Retirement Plan (NGUKRP), a section of a Master
Trust arrangement managed by Legal & General. National Grid pays contributions into the NGUKRP to
provide DC benefits on behalf of its employees, generally providing a double match of member
contributions up to a maximum Company contribution of 12% of salary.
Investment risks are borne by the member and there is no legal or constructive obligation on National Grid
to pay additional contributions in the instance that investment performance is poor. Payments to this DC
plan are charged as an expense as they fall due.
Defined benefit plans
National Grid operates various DB pension arrangements in the UK. These include Section A of the
National Grid UK Pension Scheme (NGUKPS), three sections of the industry-wide Electricity Supply
Pension Scheme (ESPS), a legacy scheme (WPUPS), a DB section within WPPS and some unfunded
pension obligations. These plans each hold assets in separate Trustee administered funds and are
managed by Trustee companies with boards consisting of company and member appointed Directors.
These plans are all closed to new members, except for the ESPS schemes in very rare circumstances.
The arrangements are subject to independent actuarial funding valuations carried out by the Trustees
every three years. Following consultation and agreement with the Company, the qualified actuary certifies
the employers’ contributions which, together with the specified contributions payable by the employees
and proceeds from the plans’ assets, are expected to be sufficient to fund the benefits payable. The latest
full actuarial valuations for each of the DB plans were carried out at 31 March 2025, with one of the plans
showing a funding shortfall at the valuation date. This shortfall will be funded via recovery plan payments
from the Company of £18 million per annum from 1 April 2026. The Company also funds the cost of
future benefit accrual (over and above member contributions) for each of the DB plans, with the aggregate
level of ongoing contributions (excluding recovery plan payments) over the year to 31 March 2026 totalling
£93 million (2025: £100 million). For some of the DB plans, the Company also pays contributions in
respect of the costs of plan administration.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
25. Pensions and other post-retirement benefits cont.
UK pension plans cont.
Defined benefit plans cont.
The Company has also established security arrangements with two of its DB plans. For National Grid
Electricity Group (NGEG) of ESPS, the Company provides contingent security in the form of surety bonds,
letters of credit or cash payments which are implemented if certain trigger events occur in respect of
National Grid Electricity Transmission plc. This security would become payable to the scheme on certain
company-related events, such as loss of licence or insolvency, however the amount payable is currently
capped at £nil for the next three years given the strong funding position of the scheme. In respect of
Section A of NGUKPS, there is a guarantee in place which is enforceable on insolvency or on failure to
pay pension obligations to Section A and can be claimed against National Grid plc, National Grid Holdings
One plc or Lattice Group Limited.
In July 2025, the Trustees of NGUKPS completed a further bulk annuity transaction with Rothesay
covering approximately £0.9 billion of pensioner liabilities, meaning broadly three quarters of scheme
liabilities have now been insured. This transaction reflected National Grid’s continued strategy to insure
pension risk when affordable and efficient to do so.
US pension plans
The US pension plans are governed by the Retirement Plan Committee (RPC), a fiduciary committee. The
RPC is structured in accordance with US laws governing retirement plans under the Employee Retirement
Income Security Act (ERISA) and comprises appointed employees of the Company.
Defined contribution plan
National Grid has a DC pension plan which allows employee as well as Company contributions. Non-union
employees hired after 1 January 2011, as well as most new hire union employees, receive a core
contribution into the DC plan ranging from 3% to 9% of salary, irrespective of the employee’s contribution
into the plan. Most employees also receive a matching contribution that varies between 25% and 50%
of employee contributions up to a maximum Company contribution of 8%. The assets of the plans are
held in trusts and administered by the RPC.
Defined benefit plans
National Grid sponsors four non-contributory qualified DB pension plans, which provide vested non-union
employees hired before 1 January 2011, and vested eligible union employees, with retirement benefits
within prescribed limits as defined by the US Internal Revenue Service. National Grid also provides non-
qualified DB pension arrangements for a closed group of current and former employees with designated
company investments set aside to fund these obligations. Benefits under the DB plans generally reflect
age, years of service and compensation, and are paid in the form of an annuity or lump sum. The Company
funds the DB plans by contributing no less than the minimum amount required, but no more than the
maximum tax-deductible amount allowed under US Internal Revenue Service regulations. The range of
contributions determined under these regulations can vary significantly depending upon the funded status
of the plans. At present, there is some flexibility in the amount that is contributed on an annual basis.
In general, the Company’s policy for funding the US pension plans is to contribute the amounts collected
in rates and capitalised in the rate base during the year, to the extent that the funding is no less than the
minimum amount required. For the current financial year, these contributions amounted to approximately
£19 million (2025: £27 million).
During the year, some of our US DB pension plans undertook annuity buyout transactions in which
a portion of existing retiree pension payments were transferred to a reputable insurance company in
exchange for single bulk premium payments. As a result, all associated financial, governance and
administrative responsibilities for those payments were transferred to the selected insurer.
US other post-retirement benefits
National Grid provides post-retirement healthcare and life insurance benefits to eligible employees.
Eligibility is based on certain age and length of service requirements and, in most cases, retirees
contribute to the cost of their healthcare coverage. In the US, there is no governmental requirement to
pre-fund post-retirement healthcare and life insurance plans. However, in general, the Company’s policy
for funding the US retiree healthcare and life insurance plans is to contribute amounts collected in rates
and capitalised in the rate base during the year. For the current financial year, these contributions
amounted to £8 million (2025: £10 million).
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
25. Pensions and other post-retirement benefits cont.
Actuarial assumptions
On retirement, members of DB plans receive benefits whose value is dependent on factors such as
salary and length of pensionable service. National Grid’s obligation in respect of DB pension plans is
calculated separately for each DB plan by projecting the estimated amount of future benefit payments
that employees have earned for their pensionable service in the current and prior periods. These future
benefit payments are discounted to determine the present value of the liabilities.
Advice is taken from independent actuaries relating to the appropriateness of the key assumptions
applied, including life expectancy, expected salary and pension increases, and inflation. Comparatively
small changes in the assumptions used may have a significant effect on the amounts recognised in
the consolidated income statement, the consolidated statement of other comprehensive income and
the net asset or liability recognised in the consolidated statement of financial position. The sensitivities
to significant risks are disclosed in note 35. Remeasurements of pension assets and post-retirement
benefit obligations are recognised in full in the period in which they occur in the consolidated statement
of other comprehensive income.
The Company has applied the following financial assumptions in assessing DB liabilities:
UK pensions
US pensions
US other post-retirement
benefits
2026
2025
2024
2026
2025
2024
2026
2025
2024
%
%
%
%
%
%
%
%
%
Discount rate – past
service
6.00
5.73
4.87
5.60
5.50
5.15
5.60
5.50
5.15
Discount rate – future
service
6.35
5.95
4.92
5.60
5.50
5.15
5.60
5.50
5.15
Rate of increase in RPI
– past service
3.17
2.99
3.05
n/a
n/a
n/a
n/a
n/a
n/a
Rate of increase in RPI
– future service
3.06
2.85
2.92
n/a
n/a
n/a
n/a
n/a
n/a
Salary increases
3.32
3.08
3.10
4.50
4.50
4.50
4.50
4.50
4.50
Initial healthcare cost
trend rate
n/a
n/a
n/a
n/a
n/a
n/a
7.10
7.80
7.10
Ultimate healthcare
cost trend rate
n/a
n/a
n/a
n/a
n/a
n/a
4.50
4.50
4.50
For UK pensions, single equivalent financial assumptions are shown above for presentational purposes,
although full yield curves have been used in our calculations. The discount rate is determined by reference
to high-quality UK corporate bonds at the reporting date. The rate of increase in salaries has been set
using a promotional scale where appropriate. The rates of increases stated are not indicative of historical
increases awarded or a guarantee of future increase, but merely an appropriate assumption used in
assessing DB liabilities. Our DB plans in the UK provide for pension increases that are generally linked
to the Retail Price Index (RPI), subject to relevant caps and floors.
Discount rates for US pension liabilities have been determined by reference to appropriate yields on high-
quality US corporate bonds at the reporting date based on the duration of plan liabilities. The healthcare
cost trend rate is expected to reach the ultimate trend rate by 2037 (2025: 2033).
The table below sets out the projected life expectancies adopted for the UK and US pension arrangements:
UK pensions
US pensions
2026
2025
2024
2026
2025
2024
years
years
years
years
years
years
Assumed life expectation for a
retiree aged 65
Males
21.9
21.5
21.5
21.9
21.8
21.6
Females
24.2
23.9
23.5
23.9
23.8
23.9
In 20 years:
Males
22.9
22.4
22.6
23.5
23.4
23.3
Females
25.6
25.3
24.9
25.5
25.4
25.5
The weighted average duration of the DB obligation for each category of plan is 10 years for UK pension
plans, 11 years for US pension plans and 11 years for US other post-retirement benefit plans. The table
below summarises the split of DB obligations by status for each category of plan:
UK pensions
US pensions
US other
post-retirement benefits
2026
2025
2026
2025
2026
2025
%
%
%
%
%
%
Active members
10
11
42
40
30
28
Deferred members
7
7
10
10
—
—
Pensioner members
83
82
48
50
70
72
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
25. Pensions and other post-retirement benefits cont.
Amounts recognised in the consolidated statement of financial position
The geographical split of pensions and other post-retirement benefits is as shown below:
UK pensions
US pensions
US other
post-retirement benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Present value of funded obligations
(9,319)
(9,424)
(4,009)
(4,508)
(1,770)
(2,222)
(15,098)
(16,154)
Fair value of plan assets
10,441
10,603
4,608
5,180
2,731
2,658
17,780
18,441
1,122
1,179
599
672
961
436
2,682
2,287
Present value of unfunded obligations
(51)
(51)
(186)
(196)
(10)
—
(247)
(247)
Other post-employment liabilities
—
—
—
—
(44)
(47)
(44)
(47)
1,071
1,128
413
476
907
389
2,391
1,993
Restrictions on asset recognised
—
—
—
—
(244)
(77)
(244)
(77)
Net defined benefit asset
1,071
1,128
413
476
663
312
2,147
1,916
Represented by:
Liabilities
(51)
(51)
(186)
(196)
(123)
(326)
(360)
(573)
Assets
1,122
1,179
599
672
786
638
2,507
2,489
1,071
1,128
413
476
663
312
2,147
1,916
The extent to which pension assets have been recognised in the UK and in the US reflects legal and actuarial advice that we have taken regarding recognition of surpluses under IFRIC 14. In the UK, the Group has
an unconditional right to a refund in the event of a winding up. In the US, surplus assets of a plan may be used to pay for future benefits expected to be earned under that plan.
At 31 March 2026, the Group has an irrecoverable surplus of £244 million (2025: £77 million)related to one OPEB plan. The economic benefit from reductions in future contributions to the plan is not sufficient to
cover the surplus and this plan does not have an unconditional right to a refund of surplus assets in the event of a winding up without incurring significant tax charges.
Amounts recognised in the income statement and statement of other comprehensive income
The expense or income arising from all Group retirement benefit arrangements recognised in the Group income statements is shown below:
2026
2025
2024
£m
£m
£m
Included within operating costs
Administration costs
27
22
22
Included within payroll costs
Defined benefit plan costs:
Current service cost1
123
138
143
Past service cost – augmentations and redundancies
2
1
9
Gains on settlement
(25)
—
(30)
100
139
122
Included within finance income and costs
Net interest income adjusted for change to irrecoverable surplus
(114)
(98)
(100)
Total expense included in income statement
13
63
44
Exchange losses
(14)
(20)
(6)
Remeasurement gains/(losses) of pension assets and post-retirement benefit obligations
287
(29)
(218)
Adjustments for restrictions on the defined benefit asset
(155)
(77)
—
Total gain/(loss) included in the statement of other comprehensive income
118
(126)
(224)
1.Of the current service cost, £33 million (2025: £34 million; 2024: £35 million) has been capitalised to property, plant and equipment.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
25. Pensions and other post-retirement benefits cont.
Amounts recognised in the income statement and statement of other comprehensive income cont.
The geographical split of pensions and other post-retirement benefits is shown below:
UK pensions
US pensions
US other post-retirement benefits
2026
2025
2024
2026
2025
2024
2026
2025
2024
£m
£m
£m
£m
£m
£m
£m
£m
£m
Included within operating costs
Administration costs
19
14
13
6
6
7
2
2
2
Included within payroll costs
Defined benefit plan costs:
Current service cost
34
45
45
62
68
72
27
25
26
Past service cost – augmentations and redundancies
2
1
9
—
—
—
—
—
—
Gains on settlement
—
—
—
(25)
—
(30)
—
—
—
36
46
54
37
68
42
27
25
26
Included within finance income and costs
Net interest income adjusted for change to irrecoverable surplus
(58)
(68)
(84)
(22)
(19)
(13)
(34)
(11)
(3)
Total (income)/expense included in income statement
(3)
(8)
(17)
21
55
36
(5)
16
25
Exchange losses
—
—
—
(7)
(10)
(5)
(7)
(10)
(1)
Remeasurement (losses)/gains of pension assets and post-retirement benefit obligations
(156)
(257)
(474)
(54)
106
99
497
122
157
Adjustments for restrictions on the defined benefit asset
—
—
—
—
—
—
(155)
(77)
—
Total (loss)/gain included in the statement of other comprehensive income
(156)
(257)
(474)
(61)
96
94
335
35
156
Reconciliation of the net defined benefit asset
UK pensions
US pensions
US other
post-retirement benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Opening net defined benefit asset
1,128
1,261
476
408
389
145
1,993
1,814
Income/(cost) recognised in the income statement before adjustment for irrecoverable surplus
3
8
(21)
(55)
16
(16)
(2)
(63)
Remeasurement and foreign exchange effects recognised in the statement of other comprehensive income
(156)
(257)
(61)
96
491
112
274
(49)
Employer contributions
93
112
19
27
8
143¹
120
282
Other movements
3
4
—
—
3
5
6
9
1,071
1,128
413
476
907
389
2,391
1,993
Restrictions on the defined benefit asset
—
—
—
—
(244)
(77)
(244)
(77)
Closing net defined benefit asset
1,071
1,128
413
476
663
312
2,147
1,916
1.In addition to the regular employer contributions that are described above, the Company made a one-off contribution of £133 million to the OPEB schemes in the prior year.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
25. Pensions and other post-retirement benefits cont.
Changes in the present value of defined benefit obligations (including unfunded obligations)
The table below shows the movement in defined benefit obligations across our DB plans over the year.
Past service cost – augmentations and redundancies
(2)
(1)
—
—
—
—
(2)
(1)
Liabilities extinguished on settlements
—
—
468
—
—
—
468
—
Medicare subsidy received
—
—
—
—
(37)
(31)
(37)
(31)
Employee contributions
(5)
(5)
—
—
—
—
(5)
(5)
Benefits paid
725
756
280
282
142
165
1,147
1,203
Exchange adjustments
—
—
121
110
57
52
178
162
Closing defined benefit obligations
(9,370)
(9,475)
(4,195)
(4,704)
(1,780)
(2,222)
(15,345)
(16,401)
Changes in the value of plan assets
The table below shows the movement in pension assets across our DB plans over the year.
UK pensions
US pensions
US other
post-retirement benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Opening fair value of plan assets
10,603
11,782
5,180
5,320
2,658
2,631
18,441
19,733
Interest income
510
601
263
265
137
131
910
997
Return on plan assets (less than)/in excess of interest1
(29)
(1,131)
3
(24)
98
(49)
72
(1,204)
Administration costs
(19)
(14)
(6)
(6)
(2)
(2)
(27)
(22)
Assets distributed on settlements
—
—
(443)
—
—
—
(443)
—
Employer contributions
93
112
19
27
8
143
120
282
Employee contributions
5
5
—
—
—
—
5
5
Benefits paid
(722)
(752)
(280)
(282)
(105)
(134)
(1,107)
(1,168)
Exchange adjustments
—
—
(128)
(120)
(63)
(62)
(191)
(182)
Closing fair value of plan assets
10,441
10,603
4,608
5,180
2,731
2,658
17,780
18,441
Actual return on plan assets
481
(530)
266
241
235
82
982
(207)
Expected contributions to plans in the following year
55
89
28
19
10
—
93
108
1.For the year ended 31 March 2026 this included actuarial losses of £60 million resulting from the purchase of a bulk annuity policy with Rothesay.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
25. Pensions and other post-retirement benefits cont.
Asset allocations
The allocation of assets by asset class is set out below. Within these asset allocations there is significant diversification across regions, asset managers, currencies and bond categories.
UK pensions
2026
2025
2024
Quoted
Unquoted
Total
Quoted
Unquoted
Total
Quoted
Unquoted
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
Equities
842
103
945
716
123
839
576
153
729
Corporate bonds
1,018
—
1,018
1,338
(1)
1,337
1,910
—
1,910
Government securities and liability-driven investments
—
3,378
3,378
—
3,938
3,938
—
5,259
5,259
Property1
—
403
403
—
451
451
—
679
679
Diversified alternatives
412
231
643
381
428
809
669
572
1,241
Bulk annuity policies
—
4,059
4,059
—
3,239
3,239
—
2,060
2,060
Longevity swap
—
—
—
—
—
—
—
(94)
(94)
Cash and cash equivalents
—
—
—
1
—
1
3
—
3
Other (including net current assets and liabilities)
—
(5)
(5)
—
(11)
(11)
—
(5)
(5)
2,272
8,169
10,4412
2,436
8,167
10,6032
3,158
8,624
11,7822
1.The allocation in property includes £284 million (2025: £294 million, 2024: £288 million) of investments in forestry funds.
2.The fair value of plan assets set out above includes employer-related investment exposure of £nil (2025: £nil, 2024: £44 million). The investment strategies for some of the DB plans use repurchase agreements to increase market exposure of their liability-driven investments, with the fair
value of these instruments totalling approximately £2.5 billion at 31 March 2026 (2025: £2.9 billion, 2024: £2.7 billion).
US pensions
2026
2025
2024
Quoted
Unquoted
Total
Quoted
Unquoted
Total
Quoted
Unquoted
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
Equities
—
848
848
—
887
887
99
1,224
1,323
Corporate bonds
1,682
339
2,021
1,955
401
2,356
1,987
403
2,390
Government securities
621
460
1,081
737
467
1,204
360
444
804
Property
—
163
163
—
196
196
—
237
237
Diversified alternatives
—
357
357
—
384
384
54
502
556
Cash and cash equivalents
130
—
130
152
—
152
9
—
9
Other (including net current assets and liabilities)
4
4
8
(2)
3
1
1
—
1
2,437
2,171
4,608
2,842
2,338
5,180
2,510
2,810
5,320
US other post-retirement benefits
2026
2025
2024
Quoted
Unquoted
Total
Quoted
Unquoted
Total
Quoted
Unquoted
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
Equities
36
553
589
31
522
553
37
524
561
Corporate bonds
1,217
161
1,378
1,350
47
1,397
1,351
46
1,397
Government securities
455
1
456
441
1
442
410
1
411
Diversified alternatives
121
—
121
103
—
103
92
9
101
Other (including insurance contracts)
2
185
187
—
163
163
—
161
161
1,831
900
2,731
1,925
733
2,658
1,890
741
2,631
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
25. Pensions and other post-retirement benefits cont.
Main defined benefit risks
National Grid underwrites the financial and demographic risks associated with the Group’s DB plans.
Although the governing bodies have sole responsibility for setting investment strategies and managing risks,
National Grid closely works with and supports the governing bodies of each plan, to assist them in mitigating
the risks associated with their plans and to ensure that the plans are funded to meet their obligations.
The most significant risks associated with the DB plans are as follows:
Main risks
Description and mitigation
Investment risk
The plans invest in a variety of asset classes, with actual returns likely to differ from the
underlying discount rate adopted, impacting on the funding position of the plan through
the net balance sheet asset or liability. Each plan seeks to balance the level of
investment return required with the risk that it can afford to take, to design the most
appropriate investment portfolio.
Changes in
bond yields
Liabilities will fluctuate as yields change. Volatility of the net balance sheet asset or
liability is controlled through liability-matching strategies. The investment strategies
allow for the use of synthetic as well as physical assets to be used for hedging.
Inflation risk
Changes in inflation will affect current and future pensions but are partially mitigated
through investing in inflation-matching assets and hedging instruments as well as bulk
annuity policies. The investment strategies allow for the use of synthetic as well as
physical assets to be used for hedging.
Member
longevity
Improvements in life expectancy will lead to pension payments being paid for longer
than expected and benefits ultimately being more expensive. This risk has been partly
mitigated by the investment in bulk annuity policies for NGEG of ESPS and NGUKPS.
Counterparty
risk
This is managed by having a diverse range of counterparties and through having a
strong collateralisation process. Measurement and management of counterparty risk
is delegated to the relevant investment managers. For our bulk annuity policies, various
termination provisions were included in the contracts, managing our exposure to
counterparty risk. The insurers’ operational performance and financial strength are
monitored on a regular basis.
Default risk
Debt investments are predominantly made in regulated markets in assets considered
to be of investment grade. Where investments are made either in non-investment grade
assets or outside of regulated markets, investment levels are kept to prudent levels and
subject to agreed ranges, to control the risk.
Liquidity risk
The pension plans hold sufficient cash to meet benefit requirements, with other
investments being held in liquid or realisable assets to meet unexpected cash flow
requirements. These could include collateral calls relating to the plans’ liability-matching
assets which could result from extreme market movements. Should the plans not have
sufficient liquidity to meet cash flow requirements, they could be forced to take sub-
optimal investment decisions such as selling assets at a reduced price. The plans
generally do not borrow money, or act as guarantor, to provide liquidity to other parties.
Currency risk
Fluctuations in the value of foreign denominated assets due to exposure to currency
exchange rates are managed through currency hedging overlay and currency hedging
carried out by some of the investment managers.
In June 2023, the UK High Court issued a ruling in the case of Virgin Media Limited versus NTL Pension
Trustees II Limited and others relating to the validity of certain historical pension changes. A subsequent
appeal was dismissed in July 2024 by the Court of Appeal. The Group has performed its review of past
significant changes made to its UK defined benefit pension arrangements and it has concluded that
there is no financial impact from the ruling of the case.
Investment strategies
The Trustees and RPC, after taking advice from professional investment advisors and in consultation
with National Grid, set their key principles, including expected returns, risk and liquidity requirements.
They formulate an investment strategy to manage risk through diversification, taking into account
expected contributions, maturity of the pension liabilities and, in the UK, the strength of the covenant.
These strategies allocate investments between return-seeking assets such as equities and property,
and liability-matching assets such as bulk annuity policies, government securities and corporate bonds
which are intended to protect the funding position.
The approximate investment allocations for our plans at 31 March 2026 are as follows:
UK pensions
US pensions
US other post-
retirement benefits
%
%
%
Return-seeking assets
19
30
26
Liability-matching assets
81
70
74
The governing bodies generally delegate responsibility for the selection of specific bonds, securities and
other investments to appointed investment managers, who are selected based on the required skills,
expertise in those markets, process and financial security to manage the investments. Their performance
is regularly reviewed against measurable objectives, consistent with each pension plan’s long-term
objectives and accepted risk levels.
In the UK, each of our pension plans has Responsible Investment (RI) Policies, which consider ESG
factors and generally incorporate the six UN‑backed Principles for Responsible Investment (UNPRI).
While each Trustee board understands its fiduciary responsibility to maximise return on investments
based on an appropriate level of risk, they each also recognise that ESG factors can be material to
financial outcomes and can have a potential impact on the quality and sustainability of long-term
investment returns. The principal defined contribution arrangement in the UK embeds ESG factors
in the investment options offered to members. As well as offering a range of self‑select ethical funds,
it directly incorporates its Climate Impact Pledge into the default investment options, which act to align
the funds to a carbon net zero future.
While in the US there is no regulatory requirement to have ESG-specific principles embedded in investment
policies, our investment managers consider ESG principles to inform their decision-making process.
US DC plan members can access ESG investment funds through the mutual fund brokerage window.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
26. Provisions
Provisions are recognised where a legal or constructive obligation exists at the reporting
date, as a result of a past event, where the outflow of economic benefit is probable and
where the amount of the obligation can be reliably estimated.
Provisions are recognised for the costs of environmental remediation; decommissioning costs for certain
assets that we are required to remove at the end of their useful economic lives; restructuring costs; and
for certain other situations where the above thresholds are met.
Long-term provisions are measured based on management’s best estimates of the likely cash flows,
discounted at an appropriate discount rate. The unwinding of the discount is included within the income
statement within finance costs. Short-term provisions are measured at the expected cash outflow and
are not discounted.
Environmental
£m
Decommissioning
£m
Other
£m
Total
provisions
£m
At 1 April 2024
2,418
353
338
3,109
Exchange adjustments
(47)
(5)
(1)
(53)
Additions
60
45
211
316
Unused amounts reversed
(126)
(8)
(16)
(150)
Adjustment for change in discount rate1
(82)
7
—
(75)
Unwinding of discount
105
13
5
123
Utilised
(139)
(6)
(58)
(203)
Reclassification to held for sale (note 10)
(17)
—
(1)
(18)
At 31 March 2025
2,172
399
478
3,049
Exchange adjustments
(49)
(4)
(4)
(57)
Additions
59
43
200
302
Unused amounts reversed
(53)
(50)
(26)
(129)
Adjustment for change in discount rate
(2)
(88)
—
(90)
Unwinding of discount
101
12
3
116
Utilised
(135)
(4)
(113)
(252)
Reclassifications to other payables (note 24)
—
—
(178)
(178)
At 31 March 2026
2,093
308
360
2,761
2026
2025
£m
£m
Current
425
357
Non-current
2,336
2,692
2,761
3,049
1.In the prior year, US environmental provisions decreased by £82 million as a result of the change in the real discount rate from 1.5%
to 2.0%.
Environmental provisions
We recognise environmental provisions for the estimated restoration and remediation costs relating to
a number of sites owned and managed by subsidiary undertakings, together with certain US sites that
National Grid no longer owns. The environmental provision is as follows:
2026
2025
Discounted
£m
Real
undiscounted
£m
Real
discount
rate
Discounted
£m
Real
undiscounted
£m
Real
discount
rate
UK sites
82
91
1.4%
107
115
1.0%
US sites
2,011
2,340
2.0%
2,065
2,440
2.0%
2,093
2,431
2,172
2,555
Remediation expenditure in the US is expected to be incurred until 2079, of which the majority relates
to two Superfund sites (being sites where hazardous substances are present as a result of the historical
operations of manufacturing gas plants previously owned or operated by the Group or its predecessor
companies in Brooklyn, New York). The weighted average duration of the forecasted cash flows is 9 years.
Under the terms of our rate plans, we are entitled to recovery of environmental clean-up costs from
rate payers.
Remediation expenditure in the UK relates to old gas manufacturing sites and also to electricity
transmission sites. Cash flows are expected to be incurred until 2070.
The real undiscounted amount is management’s best estimate of the actual cash flows that will be
required. The provisions are calculated based on these cash flows discounted at the appropriate real
discount rate for the jurisdiction, which is determined using the relevant government bond yield curve
and the weighted average life of the provisions.
Numerous estimation uncertainties affect the calculation of these provisions, including the impact of and
possibility of changes to regulatory requirements, the accuracy of site surveys, unexpected contaminants,
the scope of remediation work, transportation costs, the impact of alternative technologies, the expected
timing, cost and duration of cash flows, and changes in the real discount rate. These provisions incorporate
our best estimate of the financial effect of these uncertainties, but future changes in any of the assumptions
could materially impact the calculation of the provision.
Changes in the provision arising from revised estimates, discount rates or changes in the expected
timing of expenditure are recognised in the income statement. A sensitivity of the impact of changes
to the US environmental provision real discount rate and changes in estimated future cash flows is shown
in note 35. The facts and circumstances relating to particular cases are evaluated regularly in determining
whether an environmental provision should be revised (see note 30).
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
26. Provisions cont.
Decommissioning provisions
We recognise provisions for decommissioning costs for various assets we are required to remove at
the end of their lives, including the safe removal of asbestos for certain of our generation units and the
restoration of seabeds in respect of our interconnectors. Provisions to decommission significant portions
of our regulated transmission and distribution assets are not recognised where no legal obligations
exist and where a realistic alternative exists to incurring costs to decommission the assets at the end
of their lives.
An initial estimate of decommissioning costs attributable to property, plant and equipment is recorded
as part of the cost of the related property, plant and equipment. Changes in the provision arising from
revised estimates, discount rates or changes in the expected timing of expenditure that relates to
property, plant and equipment are recorded as adjustments to their carrying value and depreciated
prospectively over their remaining estimated useful economic lives. Expenditure is expected to be
incurred until 2116.
Other provisions
Included within other provisions at 31 March 2026 are the following amounts:
–£167 million (2025: £172 million) of estimated liabilities in respect of past events insured by
subsidiary undertakings and policy excesses incurred by operating companies. Estimates are
based on experience from previous years. We expect that cash flows will be incurred until 2055;
–£nil (2025: £159 million) of estimated liabilities in respect of interconnector excess revenues are
recognised at the reporting date, as the first assessment period of the interconnector cap and floor
regime for IFA2 and North Sea Link (see note 3(e)) concluded on 31 March 2026. Based on the
respective interconnectors’ performance against their cumulative caps, the liability has been finalised
at £178 million and has been reclassified to other payables within non-current liabilities (see note 24).
Cash outflows will be required to settle these liabilities by the financial year ending 31 March 2028; and
–£80 million (2025: £39 million) in respect of emissions provisions, expected to be utilised by 2027
through the delivery of emission allowances.
27. Share capital
Ordinary share capital represents the total number of shares issued which are publicly
traded. We also disclose the number of treasury shares the Company holds, which are
shares that the Company has bought itself, predominantly to actively manage and settle
employee share option and reward plan liabilities.
Share capital is accounted for as an equity instrument. An equity instrument is any contract that includes a
residual interest in the consolidated assets of the Company after deducting all its liabilities and is recorded at
the proceeds received, net of direct issue costs, with an amount equal to the nominal amount of the shares
issued included in the share capital account and the balance recorded in the share premium account.
Allotted, called-up and fully paid
Shares
million
Nominal value
£m
At 1 April 2024
3,967
493
Rights Issue
1,085
135
Issued during the year in lieu of dividends1
81
10
At 31 March 2025
5,133
638
Issued during the year in lieu of dividends1
66
9
At 31 March 2026
5,199
647
1.The issue of shares under the scrip dividend programme is considered to be a bonus issue under the terms of the Companies Act 2006,
and the nominal value of the shares is charged to the share premium account.
The share capital of the Company consists of ordinary shares of 12204⁄473 pence nominal value each
including ADSs. The ordinary shares and ADSs (each of which represents five ordinary shares) allow
holders to receive dividends and vote at general meetings of the Company. The Company holds treasury
shares but may not exercise any rights over these shares, including the entitlement to vote or receive
dividends. There are no restrictions on the transfer or sale of ordinary shares.
In line with the provisions of the Companies Act 2006, the Company has amended its Articles of Association
and ceased to have authorised share capital.
The Company conducts a share forfeiture programme following the completion of a tracing and notification
exercise to any shareholders who have not had contact with the Company over the past 12 years, in
accordance with the provisions set out in the Company’s Articles of Association. Under the share forfeiture
programme, the shares and dividends associated with shares of untraced members have been forfeited,
with the resulting proceeds transferred to the Company to use in line with the Company’s strategy in
relation to corporate responsibility. During the financial year, the Company received £2 million (2025:
£5 million) of proceeds from the sale of untraced shares and derecognised £1 million (2025: £3 million)
of liabilities related to unclaimed dividends, which are reflected in share premium and the income
statement respectively.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
27. Share capital cont.
Rights Issue
In June 2024, the Company completed a Rights Issue to support the future capital investment plans
of the Group. The Company raised £6,839 million (net of expenses of £162 million) through the issue
of 1,085 million new ordinary shares at 645 pence each on the basis of 7 new ordinary shares for every
24 existing ordinary shares. The issue price represented a discount of 33% to the closing ex-dividend
share price on 23 May 2024, the announcement date of the Rights Issue. The structure of the Rights
Issue gave rise to a merger reserve, representing the net proceeds of the Rights Issue less the nominal
value of the new shares issued. Following the receipt of the cash proceeds through the structure,
the excess of the net proceeds over the nominal value of the share capital issued was considered
realised and transferred from the merger reserve to retained earnings.
Treasury shares
At 31 March 2026, the Company held 226 million (2025: 235 million) of its own shares. The market
value of these shares as at 31 March 2026 was £2,863 million (2025: £2,377 million).
For the benefit of employees and in connection with the operation of the Company’s various share
plans, the Company made the following transactions in respect of its own shares during the year
ended 31 March 2026:
–During the year, 5 million (2025: 9 million) treasury shares were gifted to National Grid Employee
Share Trusts and 5 million (2025: 3 million) treasury shares were reissued in relation to employee
share schemes, in total representing 0.2% (2025: 0.2%) of the ordinary shares in issue as at 31 March
2026. The nominal value of these shares was £1 million (2025: £1 million) and the total proceeds
received were £40 million (2025: £18 million).
–During the year, the Company made payments totalling £3 million (2025: £11 million) to National
Grid Employee Share Trusts to enable the Trustees to make purchases of National Grid plc shares
to settle share awards in relation to all employee share plans and discretionary reward plans. The
cost of such purchases is deducted from retained earnings in the period that the transaction occurs.
The maximum number of ordinary shares held in Treasury during the year was 235 million (2025: 247 million),
representing 4.5% (2025: 4.8%) of the ordinary shares in issue as at 31 March 2026 and having a nominal
value of £29 million (2025: £31 million).
28. Other equity reserves
Other equity reserves are different categories of equity as required by accounting standards
and represent the impact of a number of our historical transactions or fair value movements
on certain financial instruments that the Company holds.
Other equity reserves comprise the translation reserve (see note 1C), cash flow hedge reserve and
the cost of hedging reserve (see note 32), debt instruments at fair value through other comprehensive
income reserve (FVOCI debt) (see note 15), the capital redemption reserve and the merger reserve.
The merger reserve arose as a result of the application of merger accounting principles under the then
prevailing UK GAAP, which under IFRS 1 was retained for mergers that occurred prior to the IFRS
transition date. Under merger accounting principles, the difference between the carrying amount of
the capital structure of the acquiring vehicle and that of the acquired business was treated as a merger
difference and included within reserves. The merger reserve represents the difference between the
carrying value of subsidiary undertaking investments and their respective capital structures following
the Lattice demerger from BG Group plc and the 1999 Lattice refinancing.
The cash flow hedge reserve will either amortise as the committed future cash flows from borrowings are
paid, be capitalised in fixed assets, or amortise as committed future cash flows from revenue are received
(as described in note 32). See note 15 for further detail on FVOCI debt and note 32 in respect of cost of
hedging reserve.
As the amounts included in other equity reserves are not attributable to any of the other classes of equity
presented, they have been disclosed as a separate classification of equity.
National Grid plc Annual Report and Accounts 2025/26
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Strategic Report
Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
28. Other equity reserves cont.
Translation
£m
Cash flow
hedge
£m
Cost of
hedging
£m
FVOCI
debt
£m
Capital
redemption
£m
Merger
£m
Total
£m
At 1 April 2023
1,306
(61)
(38)
79
19
(5,165)
(3,860)
Exchange adjustments1
(335)
—
—
—
—
—
(335)
Net gains taken to equity
—
16
37
34
—
—
87
Transferred to profit or loss
—
224
(11)
—
—
—
213
Net losses in respect of cash flow
hedging of capital expenditure
—
(37)
—
—
—
—
(37)
Tax
—
(50)
(6)
(4)
—
—
(60)
Cash flow hedges transferred to the
statement of financial position, net of tax
—
2
—
—
—
—
2
At 1 April 2024
971
94
(18)
109
19
(5,165)
(3,990)
Exchange adjustments1
(352)
—
—
—
—
—
(352)
Net gains/(losses) taken to equity
—
30
(46)
(12)
—
—
(28)
Transferred to profit or loss
—
188
(6)
—
—
—
182
Rights Issue
—
—
—
—
—
6,704
6,704
Transfer to retained earnings
—
—
—
—
—
(6,704)
(6,704)
Net losses in respect of cash flow
hedging of capital expenditure
—
(16)
—
—
—
—
(16)
Tax
—
(50)
13
3
—
—
(34)
Cash flow hedges transferred to the
statement of financial position, net of tax
—
5
—
—
—
—
5
At 1 April 2025
619
251
(57)
100
19
(5,165)
(4,233)
Exchange adjustments¹
(348)
—
—
—
—
—
(348)
Exchange differences reclassified to
the consolidated income statement
on disposal2
76
—
—
—
—
—
76
Net gains taken to equity
—
368
40
7
—
—
415
Transferred to profit or loss
—
(489)
(4)
—
—
—
(493)
Net gains in respect of cash flow
hedging of capital expenditure
—
22
—
—
—
—
22
Tax
—
25
(9)
—
—
—
16
Cash flow hedges transferred to the
statement of financial position, net of tax
—
3
—
—
—
—
3
At 31 March 2026
347
180
(30)
107
19
(5,165)
(4,542)
1.The exchange adjustments recorded in the translation reserve comprise a loss of £380 million (2025: loss of £408 million; 2024: loss
of £397 million) relating to the translation of foreign operations, offset by a gain of £32 million (2025: gain of £56 million; 2024: gain
of £62 million) relating to borrowings, cross-currency swaps and foreign exchange forward contracts used to hedge the net investment
in non sterling-denominated subsidiaries.
2.The reclassification of the foreign currency translation reserve relates to the disposal of NG Renewables and comprises a loss of £84 million
relating to the retranslation of NG Renewables’ operations offset by a gain of £8 million relating to borrowings, cross-currency swaps and
foreign exchange forward contracts used to hedge the Group’s net investment in NG Renewables.
29. Net debt
We define net debt as the amount of borrowings and financing derivatives less cash and
current financial investments.
(a) Composition of net debt
2026
2025
2024
£m
£m
£m
Cash and cash equivalents (see note 20)
375
1,178
559
Current financial investments (see note 15)
2,453
5,753
3,699
Borrowings (see note 21)
(46,755)
(47,539)
(47,072)
Financing derivatives1 (see note 17)
(233)
(763)
(793)
(44,160)
(41,371)
(43,607)
1.The financing derivatives balance included in net debt excludes the commodity derivatives (see note 17)
National Grid plc Annual Report and Accounts 2025/26
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Strategic Report
Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
29. Net debt cont.
(b) Analysis of changes in net debt
Notes
Borrowings
£m
Financing derivatives
used to hedge debt
£m
Total liabilities from
financing activities
£m
Cash
and cash
equivalents
£m
Financial
investments
£m
Other financing
derivatives
£m
Total1
£m
At 1 April 2025
(47,539)
(733)
(48,272)
1,178
5,753
(30)
(41,371)
Net decrease in cash and cash equivalents
—
—
—
(948)
—
—
(948)
Included within financing cash flows:
Proceeds received from loans
(4,172)
—
(4,172)
—
—
—
(4,172)
Repayment of loans
2,961
—
2,961
—
—
—
2,961
Payments of lease liabilities
145
—
145
—
—
—
145
Net movements in short-term borrowings
2,225
—
2,225
—
—
—
2,225
Cash inflows on derivatives
—
(93)
(93)
—
—
—
(93)
Cash outflows on derivatives
—
38
38
—
—
—
38
Interest paid
1,659
273
1,932
—
—
—
1,932
Non-net debt financing cash flows
(33)
—
(33)
—
—
—
(33)
Included within investing cash flows:
Net movements in short-term financial investments
—
—
—
—
(3,285)
—
(3,285)
Cash inflows on derivatives
—
—
—
—
—
(20)
(20)
Cash outflows on derivatives
—
—
—
—
—
6
6
Derivative cash flows included in capital expenditure
—
—
—
—
—
5
5
Interest received
—
—
—
—
(231)
—
(231)
Derivative cash flows included in revenue
—
—
—
—
—
1
1
Fair value gains and losses
118
549
667
—
5
—
672
Foreign exchange movements
(190)
—
(190)
(8)
(17)
—
(215)
Interest (charges)/income
6
(1,706)
(246)
(1,952)
—
230
17
(1,705)
Other non-cash movements2
(223)
—
(223)
—
—
—
(223)
Reclassification to held for sale3
—
—
—
153
(2)
—
151
At 31 March 2026
(46,755)
(212)
(46,967)
375
2,453
(21)
(44,160)
Balances at 31 March 2026 comprise:
Non-current assets
—
587
587
—
—
7
594
Current assets
—
77
77
375
2,453
46
2,951
Current liabilities
(3,900)
(191)
(4,091)
—
—
(46)
(4,137)
Non-current liabilities
(42,855)
(685)
(43,540)
—
—
(28)
(43,568)
(46,755)
(212)
(46,967)
375
2,453
(21)
(44,160)
1.The net debt balance at 31 March 2026 includes accrued interest of £459 million.
2.Other non-cash movements primarily comprise additions to lease liabilities.
3.Reclassification to held for sale represents the disposals of NG Renewables and Grain LNG (see note 10).
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
29. Net debt cont.
(b) Analysis of changes in net debt cont.
Notes
Borrowings
£m
Financing derivatives
used to hedge debt
£m
Total liabilities from
financing activities
£m
Cash
and cash
equivalents
£m
Financial
investments
£m
Other financing
derivatives
£m
Total¹
£m
At 1 April 2024
(47,072)
(764)
(47,836)
559
3,699
(29)
(43,607)
Net increase in cash and cash equivalents
—
—
—
765
—
—
765
Included within financing cash flows:
Proceeds received from loans
(3,237)
—
(3,237)
—
—
—
(3,237)
Repayment of loans
2,861
—
2,861
—
—
—
2,861
Payments of lease liabilities
130
—
130
—
—
—
130
Net movements in short-term borrowings
(925)
—
(925)
—
—
—
(925)
Cash inflows on derivatives
—
(62)
(62)
—
—
—
(62)
Cash outflows on derivatives
—
106
106
—
—
—
106
Interest paid
1,608
312
1,920
—
—
—
1,920
Non-net debt financing cash flows
(8)
—
(8)
—
—
—
(8)
Included within investing cash flows:
Net movements in short-term financial investments
—
—
—
—
2,606
—
2,606
Cash inflows on derivatives
—
—
—
—
—
(11)
(11)
Cash outflows on derivatives
—
—
—
—
—
6
6
Derivative cash flows included in capital expenditure
—
—
—
—
—
9
9
Interest received
—
—
—
—
(332)
—
(332)
Derivative cash flows included in revenue
—
—
—
—
—
(8)
(8)
Fair value gains and losses
(26)
(30)
(56)
—
1
(7)
(62)
Foreign exchange movements
866
—
866
(23)
(25)
—
818
Interest (charges)/income
6
(1,663)
(295)
(1,958)
—
338
10
(1,610)
Other non-cash movements2
(207)
—
(207)
—
—
—
(207)
Reclassification to held for sale3
10
134
—
134
(123)
(534)
—
(523)
At 31 March 2025
(47,539)
(733)
(48,272)
1,178
5,753
(30)
(41,371)
1.The net debt balance at 31 March 2025includes accrued interest of £477 million.
2.Other non-cash movements primarily comprise additions to lease liabilities.
3.Reclassification to held for sale represents the closing net debt position of NG Renewables and Grain LNG and the disposal of the ESO (see note 10).
National Grid plc Annual Report and Accounts 2025/26
193
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
29. Net debt cont.
(b) Analysis of changes in net debt cont.
Notes
Borrowings
£m
Financing derivatives
used to hedge debt
£m
Total liabilities from
financing activities
£m
Cash
and cash
equivalents
£m
Financial
investments
£m
Other financing
derivatives
£m
Total1
£m
At 1 April 2023
(42,985)
(793)
(43,778)
163
2,605
37
(40,973)
Net increase in cash and cash equivalents
—
—
—
427
—
—
427
Included within financing cash flows:
Proceeds received from loans
(5,563)
—
(5,563)
—
—
—
(5,563)
Repayment of loans
1,701
—
1,701
—
—
—
1,701
Payments of lease liabilities
118
—
118
—
—
—
118
Net movements in short-term borrowings
(544)
—
(544)
—
—
—
(544)
Cash inflows on derivatives
—
(86)
(86)
—
—
—
(86)
Cash outflows on derivatives
—
58
58
—
—
—
58
Interest paid
1,330
297
1,627
—
—
—
1,627
Non-net debt financing cash flows
(18)
—
(18)
—
—
—
(18)
Included within investing cash flows:
Net movements in short-term financial investments
—
—
—
—
1,141
—
1,141
Cash inflows on derivatives
—
—
—
—
—
(123)
(123)
Cash outflows on derivatives
—
—
—
—
—
—
—
Derivative cash flows included in capital expenditure
—
—
—
—
—
5
5
Interest received
—
—
—
—
(148)
—
(148)
Derivative cash flows included in revenue
—
—
—
—
—
(11)
(11)
Fair value gains and losses
(69)
40
(29)
—
4
60
35
Foreign exchange movements
718
—
718
(1)
(49)
—
668
Interest (charges)/income
6
(1,564)
(284)
(1,848)
—
152
7
(1,689)
Other non-cash movements2
(209)
4
(205)
—
—
(4)
(209)
Reclassification to held for sale3
13
—
13
(30)
(6)
—
(23)
At 31 March 2024
(47,072)
(764)
(47,836)
559
3,699
(29)
(43,607)
1.The net debt balance at 31 March 2024includes accrued interest of £490 million.
2.Other non-cash movements primarily comprise additions to lease liabilities.
3.Reclassification to held for sale represents the closing net debt position of the ESO (see note 10).
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
30. Commitments and contingencies
Commitments are those amounts that we are contractually required to pay in the future as
long as the other party meets its obligations. These commitments primarily relate to energy
purchase agreements and contracts for the purchase of assets which, in many cases,
extend over a long period of time. Contingent assets are disclosed where the Group
concludes that an inflow of economic benefits is probable.
2026
2025
£m
£m
Future capital expenditure
Contracted for but not provided
7,085
5,017
Energy purchase commitments1
Less than 1 year
1,527
1,265
In 1 to 2 years
1,360
1,259
In 2 to 3 years
1,343
1,147
In 3 to 4 years
1,191
1,011
In 4 to 5 years
1,031
927
More than 5 years
10,305
8,271
16,757
13,880
1.Energy purchase commitments relate to contractual commitments to purchase electricity or gas that are used to satisfy physical delivery
requirements to our customers or for energy that we use ourselves (i.e. normal purchase, sale or usage) and hence are accounted for as
ordinary purchase contracts (see note 32(f)). Details of commodity contract derivatives that do not meet the normal purchase, sale or
usage criteria, and hence are accounted for as derivative contracts, are shown in note 17(b).
Through the ordinary course of our operations, we are party to various litigation, claims and investigations,
including Ofgem’s investigation into the North Hyde substation incident. These investigations are ongoing.
The potential maximum penalty for a licence breach following an Ofgem investigation is 10% of turnover.
We continue to monitor this position and engage with ongoing investigations. We do not expect the
ultimate resolution of any proceedings, including the Ofgem investigation, to have a material adverse
effect on our results of operations, cash flows or financial position. A description of the Group’s post-
closing capital project obligations in relation to the Grain LNG disposal is provided in note 10.
Contingent liabilities
The Group is subject to national and local laws governing the clean-up of sites used previously in its
operations. These laws and associated regulations require the Group to take future actions to remediate
the effects on the environment of the release of chemicals and other substances. Such contingencies
may exist for various sites, including manufactured gas plants, power stations and water courses that
were impacted by those activities. The ultimate costs of these clean-ups involve estimation uncertainty
as work may be impacted by changing regulations and additional work may be required once sites
have been fully surveyed. The estimated clean-up costs have been provided for in note 26 based upon
management’s best estimate of the likely future cash flows. While the amounts of future possible costs
that are not provided for could be material to the Group’s results in the period when they are recognised,
it is not possible to reliably estimate the amounts involved at this time. As environmental remediation
costs are recoverable through the Group’s rate-setting processes, the Group does not expect these
costs to have a material impact on its liquidity.
31. Related party transactions
Related parties include joint ventures, associates, investments and key management
personnel.
The following significant transactions with related parties were in the normal course of business. Amounts
receivable from and payable to related parties are due on normal commercial terms.
2026
2025
2024
£m
£m
£m
Sales: Goods and services supplied to joint ventures1
36
153
221
Sales: Goods and services supplied to associates
1
1
1
Sales: Goods and services supplied to subsidiary of an associate1
—
51
70
Purchases: Goods and services received from joint ventures
—
—
6
Purchases: Goods and services received from associates2
—
29
4
Purchases: Goods and services received from subsidiaries
of an associate
—
—
1
Purchases: Goods and services received from a pension plan
2
—
—
Interest received from joint ventures
—
6
—
Interest paid to joint ventures
1
2
—
Receivables from joint ventures3
4
323
80
Receivables from associates
—
1
—
Receivables from subsidiaries of an associate
—
—
8
Payables to joint ventures
11
15
—
Payables to associates
—
—
1
Dividends received from joint ventures4
83
62
152
Dividends received from associates5
18
39
117
1.During the year, £3 million of sales were made to Emerald Energy Venture LLC (2025: £114 million; 2024: £126 million), £11 million
(2025: £12 million; 2024: £71 million) of sales were made to Nemo Link Limited and £nil (2025: £51 million; 2024: £70 million) of sales
were made to National Gas Transmission Plc up until its disposal.
2.Includes decommissioning expense in relation to associates.
3.Amounts receivable from joint ventures include £nil (2025: £320 million; 2024: £77 million) from Emerald Energy Venture LLC.
4.Includes dividends of £54 million (2025: £22 million; 2024: £116 million) received from BritNed Development Limited and £26 million
(2025: £26 million; 2024: £17 million) from Nemo Link Limited.
5.Includes dividends received during the year from New York Transco LLC of £18 million (2025: £17 million; 2024: £12 million). In the
prior year, dividends of £22 million were received up to the disposal of GasT TopCo Limited (2024: £102 million).
Details of investments in principal subsidiary undertakings, joint ventures and associates are disclosed
in note 34, and information relating to pension fund arrangements is disclosed in note 25. For details
of Directors’ and key management remuneration, refer to note 4(c).
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management
Our activities expose us to a variety of financial risks, including credit risk, liquidity risk,
capital risk, currency risk, interest rate risk, inflation risk and commodity price risk. Our risk
management programme focuses on the unpredictability of financial markets and seeks to
minimise potential volatility of financial performance from these risks. We use financial
instruments, including derivative financial instruments, to manage these risks.
Risk management related to financing activities is carried out by a central treasury department under
policies approved by the Audit & Risk Committee of the Board. The objective of the treasury department
is to manage funding and liquidity requirements, including managing associated financial risks, to within
acceptable boundaries. The Audit & Risk Committee provides written principles for overall risk management
and written policies covering the following specific areas: foreign exchange risk, interest rate risk, credit
risk, liquidity risk, use of derivative financial instruments and non-derivative financial instruments, and
investment of excess liquidity. The Audit & Risk Committee has delegated authority to administer the
commodity price risk policy and credit policy for US‑based commodity transactions to the Energy
Procurement Risk Management Committee and the National Grid USA Board of Directors.
We have exposure to the following risks, which are described in more detail below:
–credit risk;
–liquidity risk;
–currency risk;
–interest rate risk;
–commodity price risk;
–fair value risk; and
–capital risk.
Where appropriate, derivatives and other financial instruments used for hedging currency and interest
rate risk exposures are formally designated as fair value, cash flow or net investment hedges as defined
in IFRS 9. Hedge accounting allows the timing of the profit or loss impact of qualifying hedging instruments
to be recognised in the same reporting period as the corresponding impact of hedged exposures.
To qualify for hedge accounting, documentation is prepared specifying the risk management objective
and strategy, the component transactions and methodology used for measurement of effectiveness.
Hedge accounting relationships are designated in line with risk management activities further described
below. The categories of hedging entered into are as follows:
–currency risk arising from our forecast foreign currency transactions (capital expenditure or revenues)
is designated in cash flow hedges;
–currency risk arising from our net investments in foreign operations is designated in net investment
hedges; and
–currency and interest rate risk arising from borrowings are designated in cash flow or fair value hedges.
Critical terms of hedging instruments and hedged items are transacted to match on a 1:1 ratio by notional
values. Hedge ineffectiveness can nonetheless arise from inherent differences between derivatives and
non-derivative instruments and other market factors, including credit, correlations, supply and demand,
and market volatilities. Ineffectiveness is recognised in the remeasurements component of finance income
and costs (see note 6). Hedge accounting is discontinued when a hedging relationship no longer qualifies
for hedge accounting.
Certain hedging instrument components are treated separately as costs of hedging with the gains and
losses deferred in a component of other equity reserves and released systematically into profit or loss
to correspond with the timing and impact of hedged exposures, or released in full to finance costs upon
an early discontinuation of a hedging relationship.
Refer to sections (c) currency risk and (d) interest rate risk below for further details on hedge accounting.
(a) Credit risk
We are exposed to the risk of loss resulting from counterparties’ default on their commitments, including
failure to pay or make a delivery on a contract. This risk is inherent in our commercial business activities.
Exposure arises from derivative financial instruments, deposits with banks and financial institutions, trade
receivables and committed transactions with wholesale and retail customers.
Treasury credit risk
Counterparty risk arises from the investment of surplus funds and from the use of derivative financial
instruments. As at 31 March 2026, the following limits were in place for investments and derivative
financial instruments held with banks and financial institutions:
Maximum limit
£m
Utilisation of
maximum limit
£m
Long-term limit
£m
Utilisation of
long-term limit
£m
Triple ‘A’ G7 sovereign entities (AAA)
3,308
—
2,481
—
Triple ‘A’ vehicles (AAA)
500
275
—
—
Triple ‘A’ range institutions and
non-G7 sovereign entities (AAA)
3,008
—
2,256
—
Double ‘A+’ G7 sovereign entities (AA+)
3,008
—
2,256
—
Double ‘A’ range institutions (AA)
1,805 to 2,406
0 to 358
1,353 to 1,805
0 to 340
Single ‘A’ range institutions (A)
602 to 1,203
0 to 676
451 to 902
0 to 424
The maximum limit applies to all transactions, including long-term transactions. The long-term limit applies
to transactions which mature in more than 12 months’ time.
As at 31 March 2026 and 2025, we had a number of exposures to individual counterparties. In accordance
with our treasury policies, counterparty credit exposure utilisations are monitored daily against the
counterparty credit limits. Counterparty credit ratings and market conditions are reviewed continually, with
limits being revised and utilisation adjusted, if appropriate. Management does not expect any significant
losses from non-performance by these counterparties. Investments associated with insurance and
employee benefit trusts, such as the investments held at FVOCI, sit outside of treasury credit risk and
are managed to individual mandates aligned to their regulated purpose.
National Grid plc Annual Report and Accounts 2025/26
196
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(a) Credit risk cont.
Commodity credit risk
The credit policy for UK- and US-based commodity transactions is owned by the Audit & Risk Committee
of the Board, which establishes controls and procedures to determine, monitor and minimise the credit
exposure to counterparties.
Wholesale and retail credit risk
Our principal commercial exposure is in the US, where we are required to supply electricity and gas under
state regulations. Our policies and practices are designed to limit credit exposure by collecting security
deposits prior to providing utility services, or after utility services have commenced if certain applicable
regulatory requirements are met. Collection activities are managed on a daily basis. Sales to retail
customers are usually settled in cash, cheques, electronic bank payments or by using major credit cards.
We are committed to measuring, monitoring, minimising and recording counterparty credit risk in our
wholesale business. The utilisation of credit limits is regularly monitored, and collateral is collected against
these accounts when necessary. See note 19 for further details.
Offsetting financial assets and liabilities
The following tables set out our financial assets and liabilities which are subject to offset and to enforceable
master netting arrangements or similar agreements. The tables show the amounts which are offset and
reported net in the statement of financial position. Amounts which cannot be offset under IFRS, but which
could be settled net under terms of master netting arrangements if certain conditions arise, and with
collateral received or pledged, are presented to show National Grid’s net exposure.
Financial assets and liabilities on different transactions would only be reported net in the balance sheet
if the transactions were with the same counterparty, a currently enforceable legal right of offset exists
and the cash flows were intended to be settled on a net basis.
Amounts which do not meet the criteria for offsetting on the statement of financial position, but could be
settled net in certain circumstances, principally relate to derivative transactions under ISDA agreements,
where each party has the option to settle amounts on a net basis in the event of default of the other party.
Commodity contract derivatives that have not been offset on the balance sheet may be settled net in
certain circumstances under ISDA or North American Energy Standards Board (NAESB) agreements.
The Group has no offsetting arrangements in relation to bank account balances and bank overdrafts
as at 31 March 2026 (2025: £nil).
The gross amounts offset for trade payables and receivables, which are subject to general terms
and conditions, are insignificant.
Related amounts
available to be offset but
not offset in statement
of financial position
At 31 March 2026
Gross
carrying
amounts
£m
Gross
amounts
offset
£m
Net amount
presented in
statement of
financial
position
£m
Financial
instruments
£m
Cash
collateral
received/
pledged
£m
Net amount
£m
Assets
Financing derivatives
717
—
717
(413)
(27)
277
Commodity contract
derivatives
121
—
121
(33)
(24)
64
838
—
838
(446)
(51)
341
Liabilities
Financing derivatives
(950)
—
(950)
413
361
(176)
Commodity contract
derivatives
(68)
—
(68)
33
—
(35)
(1,018)
—
(1,018)
446
361
(211)
(180)
—
(180)
—
310
130
Related amounts
available to be offset but
not offset in statement
of financial position
At 31 March 2025
Gross
carrying
amounts
£m
Gross
amounts
offset
£m
Net amount
presented in
statement of
financial
position
£m
Financial
instruments
£m
Cash
collateral
received/
pledged
£m
Net amount
£m
Assets
Financing derivatives
375
—
375
(296)
(12)
67
Commodity contract
derivatives
107
—
107
(20)
—
87
482
—
482
(316)
(12)
154
Liabilities
Financing derivatives
(1,138)
—
(1,138)
296
462
(380)
Commodity contract
derivatives
(64)
—
(64)
20
(7)
(51)
(1,202)
—
(1,202)
316
455
(431)
(720)
—
(720)
—
443
(277)
National Grid plc Annual Report and Accounts 2025/26
197
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(b) Liquidity risk
Our policy is to determine our liquidity requirements by the use of both short-term and long-term cash
flow forecasts. These forecasts are supplemented by a financial headroom analysis which is used to
assess funding requirements for at least a 24-month period and maintain adequate liquidity for
a continuous 12-month period.
We believe our contractual obligations, including those shown in commitments and contingencies in
note 30, can be met from existing cash and investments, operating cash flows and other financing that we
reasonably expect to be able to secure in the future, together with the use of committed facilities if required.
Our debt agreements and banking facilities contain covenants, including those relating to the periodic
and timely provision of financial information by the issuing entity, restrictions on disposals and financial
covenants, such as restrictions on the level of subsidiary indebtedness. Failure to comply with these
covenants, or to obtain waivers of those requirements, could in some cases trigger a right, at the lender’s
discretion, to require repayment of some of our debt and may restrict our ability to draw upon our facilities
or access the capital markets.
The following is a payment profile of our financial liabilities and derivatives:
At 31 March 2026
Less than
1 year
£m
1 to 2
years
£m
2 to 3
years
£m
More than
3 years
£m
Total
£m
Non-derivative financial liabilities
Borrowings, excluding lease liabilities
(3,217)
(2,417)
(4,289)
(35,279)
(45,202)
Interest payments on borrowings1
(1,645)
(1,533)
(1,426)
(15,433)
(20,037)
Lease liabilities
(172)
(158)
(136)
(653)
(1,119)
Other non-interest-bearing liabilities
(4,501)
(707)
—
—
(5,208)
Derivative financial liabilities
Financing derivatives – receipts2
5,298
4,237
1,818
2,657
14,010
Financing derivatives – payments2
(5,637)
(4,559)
(1,943)
(3,294)
(15,433)
Commodity contract derivatives – receipts2
4
3
1
—
8
Commodity contract derivatives – payments2
(31)
(11)
(3)
(1)
(46)
Derivative financial assets
Financing derivatives – receipts2
5,536
4,436
1,458
4,417
15,847
Financing derivatives – payments2
(5,412)
(4,242)
(1,429)
(4,189)
(15,272)
Commodity contract derivatives – receipts2
90
25
—
—
115
Commodity contract derivatives – payments2
(39)
(41)
(31)
(21)
(132)
(9,726)
(4,967)
(5,980)
(51,796)
(72,469)
1.The interest on borrowings is calculated based on borrowings held at 31 March without taking account of future issues. Floating rate
interest is estimated using a forward interest rate curve as at 31 March. Payments are included on the basis of the earliest date on which
the Company can be required to settle.
2.The receipts and payments line items for derivatives comprise gross undiscounted future cash flows, after considering any contractual
netting that applies within individual contracts. Where cash receipts and payments within a derivative contract are settled net, and the
amount to be received/(paid) exceeds the amount to be paid/(received), the net amount is presented within derivative receipts/(payments).
At 31 March 2025
Less than
1 year
£m
1 to 2
years
£m
2 to 3
years
£m
More than
3 years
£m
Total
£m
Non-derivative financial liabilities
Borrowings, excluding lease liabilities
(4,111)
(3,159)
(2,404)
(36,381)
(46,055)
Interest payments on borrowings1
(1,552)
(1,497)
(1,397)
(16,707)
(21,153)
Lease liabilities
(143)
(131)
(117)
(671)
(1,062)
Other non-interest-bearing liabilities
(3,908)
(467)
—
—
(4,375)
Derivative financial liabilities
Financing derivatives – receipts2
4,236
3,179
4,710
2,822
14,947
Financing derivatives – payments2
(4,777)
(3,514)
(5,072)
(3,380)
(16,743)
Commodity contract derivatives – receipts2
9
5
1
—
15
Commodity contract derivatives – payments2
(67)
(36)
(29)
(43)
(175)
Derivative financial assets
Financing derivatives – receipts2
1,907
4,032
2,598
1,460
9,997
Financing derivatives – payments2
(1,897)
(3,970)
(2,467)
(1,369)
(9,703)
Commodity contract derivatives – receipts2
84
8
—
—
92
Commodity contract derivatives – payments2
(16)
(6)
(3)
—
(25)
(10,235)
(5,556)
(4,180)
(54,269)
(74,240)
1.The interest on borrowings is calculated based on borrowings held at 31 March without taking account of future issues. Floating rate
interest is estimated using a forward interest rate curve as at 31 March. Payments are included on the basis of the earliest date on which
the Company can be required to settle.
2.The receipts and payments line items for derivatives comprise gross undiscounted future cash flows, after considering any contractual
netting that applies within individual contracts. Where cash receipts and payments within a derivative contract are settled net, and the
amount to be received/(paid) exceeds the amount to be paid/(received), the net amount is presented within derivative receipts/(payments).
(c) Currency risk
National Grid operates internationally with mainly pound sterling as the functional currency for the UK
companies and US dollar for the US businesses. Currency risk arises from three major areas: funding
activities, capital investment and related revenues, and holdings in foreign operations. This risk is
managed using financial instruments including derivatives as approved by policy, typically cross-currency
interest rate swaps, foreign exchange swaps and forwards.
Funding activities – we borrow in various debt markets across the world. Foreign currency funding gives
rise to risk of volatility in the amount of functional currency cash to be repaid. This risk is reduced by
swapping principal and interest back into the functional currency of the issuer. All foreign currency debt
and transactions are hedged except where they provide a natural offset to assets elsewhere in the Group.
Capital investment and related revenues – capital projects often incur costs or generate revenues in a
foreign currency, most often euro transactions done by the UK business. Our policy for managing foreign
exchange transaction risk is to hedge contractually committed foreign currency cash flows over a
prescribed minimum size, typically by buying euro forwards to hedge future expenditure and selling euro
forwards to hedge future revenues. For hedges of forecast cash flows, our policy is to hedge a proportion
of highly probable cash flows.
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(c) Currency risk cont.
Holdings in foreign operations – we are exposed to fluctuations on the translation into pounds sterling
of our foreign operations. The policy for managing this translation risk is to issue foreign currency debt
or to replicate foreign debt using derivatives that pay cash flows in the currency of the foreign operation.
The primary managed exposure arises from dollar denominated assets and liabilities held by our US
operations, with a smaller euro exposure in respect of joint venture investments.
Derivative financial instruments were used to manage foreign currency risk as follows:
2026
Sterling
£m
Euro
£m
Dollar
£m
Other
£m
Total
£m
Cash and cash equivalents
287
2
86
—
375
Financial investments
1,769
—
684
—
2,453
Borrowings
(12,161)
(13,552)
(19,469)
(1,573)
(46,755)
Pre-derivative position
(10,105)
(13,550)
(18,699)
(1,573)
(43,927)
Derivative effect
(7,984)
15,022
(9,141)
1,870
(233)
Net debt position
(18,089)
1,472
(27,840)
297
(44,160)
2025
Sterling
£m
Euro
£m
Dollar
£m
Other
£m
Total
£m
Cash and cash equivalents
1,047
—
131
—
1,178
Financial investments
5,129
—
624
—
5,753
Borrowings
(13,913)
(12,968)
(19,217)
(1,441)
(47,539)
Pre-derivative position
(7,737)
(12,968)
(18,462)
(1,441)
(40,608)
Derivative effect
(8,539)
13,886
(7,755)
1,645
(763)
Net debt position
(16,276)
918
(26,217)
204
(41,371)
The exposure to dollars largely relates to our net investment hedge activities and exposure to euros largely
relates to hedges for our future non‑sterling capital expenditure and associated revenues.
The currency exposure on other financial instruments is as follows:
2026
Sterling
£m
Euro
£m
Dollar
£m
Other
£m
Total
£m
Trade and other receivables
353
—
2,318
—
2,671
Other non-current assets
223
—
68
—
291
Trade and other payables
(1,868)
—
(2,633)
—
(4,501)
Other non-current liabilities
(360)
—
(347)
—
(707)
2025
Sterling
£m
Euro
£m
Dollar
£m
Other
£m
Total
£m
Trade and other receivables
424
—
2,272
—
2,696
Other non-current assets
243
—
56
—
299
Trade and other payables
(1,359)
—
(2,549)
—
(3,908)
Other non-current liabilities
(171)
—
(296)
—
(467)
The carrying amounts of other financial instruments are denominated in the above currencies, which
in most instances are the functional currency of the respective subsidiaries. Our exposure to dollars is
due to activities in our US subsidiaries. We do not have any other significant exposure to currency risk
on these balances.
Hedge accounting for currency risk
Where available, derivatives transacted for hedging are designated for hedge accounting. Economic
offset is qualitatively determined because the critical terms (currency and volume) of the hedging
instrument match the hedged exposure. If a forecast transaction was no longer expected to occur,
the cumulative gain or loss previously reported in equity would be transferred to the income statement.
This has not occurred in the current or comparative years.
Cash flow hedging of currency risk of capital expenditure and revenue are designated as either hedging
the exposure to movements in the spot or forward translation risk. Gains and losses on hedging
instruments arising from undesignated forward points and foreign currency basis spreads are excluded
from designation and are recognised immediately in profit or loss, along with any hedge ineffectiveness.
On recognition of the hedged purchase or sale in the financial statements, the associated hedge gains
and losses, deferred in the cash flow hedge reserve in other equity reserves, are transferred out of
reserves and included with the recognition of the underlying transaction. Where a non-financial asset
or a non-financial liability results from a forecast transaction or firm commitment being hedged, the
amounts deferred in reserves are included directly in the initial measurement of that asset or liability.
Net investment hedging is also designated as hedging the exposure to movements in spot translation
rates only: spot-related gains and losses on hedging instruments are presented in the cumulative
translation reserve within other equity reserves to offset gains or losses on translation of the hedged
balance sheet exposure. Any ineffectiveness is recognised immediately in the income statement.
Amounts deferred in the cumulative translation reserve with respect to net investment hedges are
subsequently recognised in the income statement in the event of disposal of the overseas operations
concerned. Any remaining amounts deferred in the cost of hedging reserve are also released to the
income statement over the life of the hedging instrument.
Hedges of foreign currency funding are designated as cash flow hedges or fair value hedges of forward
exchange risk (hedging both currency and interest rate risk together, where applicable). Gains and losses
arising from foreign currency basis spreads are excluded from designation and are treated as a cost
of hedging, deferred initially in other equity reserves and released into profit or loss over the life of the
hedging relationship. Hedge accounting for funding is described further in the interest rate risk section
that follows.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(d) Interest rate risk
National Grid’s interest rate risk arises from our long-term borrowings. Our interest rate risk management
policy is to seek to minimise total financing costs (being interest costs and changes in the market value
of debt). Hedging instruments principally consist of interest rate and cross-currency swaps that are used
to translate foreign currency debt into functional currency and to adjust the proportion of fixed rate and
floating rate in the borrowings portfolio to within a range set by the Audit & Risk Committee of the Board.
The benchmark interest rates hedged are currently based on Secured Overnight Financing Rate (SOFR)
for USD and Sterling Overnight Index Average (SONIA) for GBP.
We also consider inflation risk and hold some inflation-linked borrowings. We believe that these provide
a partial economic offset to the inflation risk associated with our UK inflation-linked revenues.
The table in note 21 sets out the carrying amount, by contractual maturity, of borrowings that are
exposed to interest rate risk before taking into account interest rate swaps.
Net debt was managed using derivative financial instruments to hedge interest rate risk as follows:
2026
Fixed rate
£m
Floating
rate
£m
Inflation
linked
£m
Other1
£m
Total
£m
Cash and cash equivalents
85
290
—
—
375
Financial investments
—
2,419
—
34
2,453
Borrowings²
(41,460)
(836)
(4,459)
—
(46,755)
Pre-derivative position
(41,375)
1,873
(4,459)
34
(43,927)
Derivative effect
5,042
(5,215)
(60)
—
(233)
Net debt position
(36,333)
(3,342)
(4,519)
34
(44,160)
2025
Fixed rate
£m
Floating
rate
£m
Inflation
linked
£m
Other1
£m
Total
£m
Cash and cash equivalents
131
1,047
—
—
1,178
Financial investments
—
5,719
—
34
5,753
Borrowings²
(39,847)
(3,061)
(4,631)
—
(47,539)
Pre-derivative position
(39,716)
3,705
(4,631)
34
(40,608)
Derivative effect
3,841
(4,540)
(64)
—
(763)
Net debt position
(35,875)
(835)
(4,695)
34
(41,371)
1.Represents financial instruments which are not directly affected by interest rate risk, such as investments in equity or other similar financial
instruments.
2.Commercial paper is presented as floating rate as it has short-term maturities between 1–7 months and is regularly refinanced at current
market rates.
Hedge accounting for interest rate risk
Borrowings paying variable or floating rates expose National Grid to cash flow interest rate risk, partially
offset by cash held at variable rates. Where a hedging instrument results in paying a fixed rate, it is
designated as a cash flow hedge because it has reduced the cash flow volatility of the hedged borrowing.
Changes in the fair value of the derivative are initially recognised in other comprehensive income as gains
or losses in the cash flow hedge reserve, with any ineffective portion recognised immediately in the
income statement.
Borrowings paying fixed rates expose National Grid to fair value interest rate risk. Where the hedging
instrument pays a floating rate, it is designated as a fair value hedge because it has reduced the fair
value volatility of the borrowing. Changes in the fair value of the derivative and changes in the fair value
of the hedged item in relation to the risk being hedged are both adjusted on the balance sheet and
offset in the income statement to the extent the fair value hedge is effective, with the residual difference
remaining as ineffectiveness.
Both types of hedges are designated as hedging the currency and interest rate risk arising from changes
in forward points. Amounts accumulated in the cash flow hedge reserve (cash flow hedges only) and the
deferred cost of hedging reserve (both cash flow and fair value hedges) are reclassified from reserves to
the income statement on a systematic basis as hedged interest expense is recognised. Adjustments
made to the carrying value of hedged items in fair value hedges are similarly released to the income
statement to match the timing of the hedged interest expense.
When hedge accounting is discontinued, any remaining cumulative hedge accounting balances continue
to be released to the income statement to match the impact of outstanding hedged items. Any remaining
amounts deferred in the cost of hedging reserve are released immediately to the income statement
as finance costs.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(e) Hedge accounting
In accordance with the requirements of IFRS 7, certain additional information about hedge accounting is disaggregated by risk type and hedge designation type in the tables below:
Year ended 31 March 2026
Fair value hedges of
foreign currency and/or
interest rate risk
£m
Cash flow hedges of foreign
currency and/or interest rate
risk
£m
Cash flow hedges of foreign
currency risk
£m
Net investment hedges
£m
Consolidated statement of comprehensive income
Net gains/(losses) in respect of:
Cash flow hedges
—
378
12
—
Cost of hedging
10
29
—
1
Net investment hedges
—
—
—
32
Transferred to profit or loss in respect of:
Cash flow hedges
—
(484)
(5)
—
Cost of hedging
1
(1)
—
(4)
Reclassification of foreign currency translation reserve¹
—
—
—
(8)
Consolidated statement of changes in equity
Other equity reserves – cost of hedging balances
(14)
(25)
—
—
Consolidated statement of financial position
Borrowings – carrying value of hedging instruments
Liabilities – non-current
—
—
—
(1,694)
Derivatives – carrying value of hedging instruments2
Assets – current
9
20
2
7
Assets – non-current
62
424
4
2
Liabilities – current
(118)
(23)
(12)
(2)
Liabilities – non-current
(458)
(103)
(15)
(14)
Profiles of the significant timing, price and rate information of hedging instruments
Maturity range
Jun 26 – Apr 2045
Jun 26 – Apr 2042
Apr 2026 – Jun 2031
Jun 2026 – Jan 2034
Spot foreign exchange range:
GBP:USD
n/a
1.30 – 1.66
1.26 – 1.36
1.29 – 1.36
GBP:EUR
1.11 – 1.24
1.08 – 1.19
1.11 – 1.19
1.15 – 1.16
EUR:USD
1.05 – 1.15
1.06 – 1.15
n/a
n/a
Interest rate range:
GBP
SONIA -261bps/+374bps
0.976% – 7.410%
n/a
n/a
USD
SOFR +118bps/+223bps
2.755% – 5.989%
n/a
n/a
1.The reclassification of the net investment hedge on the disposal of NG Renewables has been included within Other operating costs.
2.The use of derivatives may entail a derivative transaction qualifying for more than one hedge type designation under IFRS 9. Therefore, the derivative amounts in the table above are grossed up by hedge type, whereas they are presented net at an instrument level in the statement
of financial position.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(e) Hedge accounting cont.
Year ended 31 March 2025
Fair value hedges of
foreign currency and/or
interest rate risk
£m
Cash flow hedges of
foreign currency and/or
interest rate risk
£m
Cash flow hedges of
foreign currency risk
£m
Net investment hedges
£m
Consolidated statement of comprehensive income
Net gains/(losses) in respect of:
Cash flow hedges
—
26
(12)
—
Cost of hedging
(14)
(36)
—
4
Net investment hedges
—
—
—
56
Transferred to profit or loss in respect of:
Cash flow hedges
—
182
6
—
Cost of hedging
1
(3)
—
(4)
Consolidated statement of changes in equity
Other equity reserves – cost of hedging balances
(24)
(54)
—
3
Consolidated statement of financial position
Borrowings – carrying value of hedging instruments
Liabilities – non-current
—
—
—
(1,734)
Derivatives – carrying value of hedging instruments1
Assets – current
—
1
3
6
Assets – non-current
32
194
1
—
Liabilities – current
(253)
(50)
(6)
(2)
Liabilities – non-current
(397)
(183)
(41)
(1)
Profiles of the significant timing, price and rate information of hedging instruments
Maturity range
Jan 2026 – Sep 2044
Jun 2025 – Nov 2040
Apr 2025 – Jun 2031
Apr 2025 – Jan 2034
Spot foreign exchange range:
GBP:USD
n/a
1.30 – 1.66
1.25 – 1.30
1.26 – 1.29
GBP:EUR
1.11 – 1.24
1.08 – 1.19
1.11 – 1.21
1.19 – 1.21
EUR:USD
1.05 – 1.15
1.06 – 1.15
n/a
n/a
Interest rate range:
GBP
SONIA -260bps/+374bps
0.976% – 7.410%
n/a
n/a
USD
SOFR +83bps/+223bps
2.095% – 5.989%
n/a
n/a
1.The use of derivatives may entail a derivative transaction qualifying for more than one hedge type designation under IFRS 9. Therefore, the derivative amounts in the table above are grossed up by hedge type, whereas they are presented net at an instrument level in the statement
of financial position.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(e) Hedge accounting cont.
The following tables show the effects of hedge accounting on financial position and year-to-date performance for each type of hedge.
(i) Fair value hedges of foreign currency and interest rate risk on recognised borrowings:
As at 31 March 2026
Balance of fair value hedge adjustments in borrowings
Change in value used for calculating ineffectiveness
Hedging instrument notional
Continuing hedges
Discontinued hedges
Hedged item
Hedging instrument
Hedge ineffectiveness
Hedge type
£m
£m
£m
£m
£m
£m
Foreign currency and interest rate risk on borrowings1
(8,098)
660
(21)
(104)
97
(7)
1.The carrying value of the hedged borrowings is £7,767 million, of which £314 million is current and £7,453 million is non-current.
As at 31 March 2025
Balance of fair value hedge adjustments in borrowings
Change in value used for calculating ineffectiveness
Hedging instrument notional
Continuing hedges
Discontinued hedges
Hedged item
Hedging instrument
Hedge ineffectiveness
Hedge type
£m
£m
£m
£m
£m
£m
Foreign currency and interest rate risk on borrowings1
(6,767)
756
(25)
106
(94)
12
1.The carrying value of the hedged borrowings was £6,414 million, of which £118 million was current and £6,296 million was non-current.
(ii) Cash flow hedges of foreign currency and interest rate risk:
As at 31 March 2026
Balance in cash flow hedge reserve
Change in value used for calculating ineffectiveness
Hedging instrument notional
Continuing hedges
Discontinued hedges
Hedged item
Hedging instrument
Hedge ineffectiveness
Hedge type
£m
£m
£m
£m
£m
£m
Foreign currency and interest rate risk on borrowings
and forecast cash flows
(13,762)
258
—
(359)
356
(3)
Foreign currency risk on forecast cash flows
(2,715)
(22)
—
(21)
21
—
As at 31 March 2025
Balance in cash flow hedge reserve
Change in value used for calculating ineffectiveness
Hedging instrument notional
Continuing hedges
Discontinued hedges
Hedged item
Hedging instrument
Hedge ineffectiveness
Hedge type
£m
£m
£m
£m
£m
£m
Foreign currency and interest rate risk on borrowings and
forecast cash flows
(14,769)
376
—
(33)
27
(6)
Foreign currency risk on forecast cash flows
(1,907)
(43)
—
12
(12)
—
(iii) Net investment hedges of foreign currency risk:
As at 31 March 2026
Balance in translation reserve
Change in value used for calculating ineffectiveness
Hedging instrument notional
Continuing hedges
Discontinued hedges
Hedged item
Hedging instrument
Hedge ineffectiveness
Hedge type
£m
£m
£m
£m
£m
£m
Currency risk on foreign operations
(3,210)
76
(2,520)
(32)
32
—
As at 31 March 2025
Balance in translation reserve
Change in value used for calculating ineffectiveness
Hedging instrument notional
Continuing hedges
Discontinued hedges
Hedged item
Hedging instrument
Hedge ineffectiveness
Hedge type
£m
£m
£m
£m
£m
£m
Currency risk on foreign operations
(2,641)
55
(2,523)
(56)
56
—
National Grid plc Annual Report and Accounts 2025/26
203
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(f) Commodity price risk
We purchase electricity and gas to supply our customers in the US and to meet our own energy needs.
Substantially all our costs of purchasing electricity and gas for supply to customers are recoverable at an
amount equal to cost. The timing of recovery of these costs can vary between financial periods leading to
an under- or over-recovery within any particular year that can lead to large fluctuations in the income
statement. We follow approved policies to manage price and supply risks for our commodity activities.
Our energy procurement risk management policy and delegations of authority govern our US commodity
trading activities for energy transactions. The purpose of this policy is to ensure we transact within pre-
defined risk parameters and only in the physical and financial markets where we or our customers have a
physical market requirement. In addition, state regulators require National Grid to manage commodity risk
and cost volatility prudently through diversified pricing strategies. In some jurisdictions we are required to
file a plan outlining our strategy to be approved by regulators. In certain cases, we might receive guidance
with regard to specific hedging limits.
Energy purchase contracts for the forward purchase of electricity or gas that are used to satisfy physical
delivery requirements to customers, or for energy that the Group uses itself, meet the expected purchase
or usage requirements of IFRS 9. They are, therefore, not recognised in the financial statements until they
are realised. Disclosure of commitments under such contracts is made in note 30.
US states have introduced a variety of legislative requirements with the aim of increasing the proportion
of our electricity that is derived from renewable or other forms of clean energy. Annual compliance filings
regarding the level of Renewable Energy Certificates (and other similar environmental certificates) are
required by the relevant department of utilities. In response to the legislative requirements, National Grid
has entered into long-term, typically fixed-price, energy supply contracts to purchase both renewable
energy and environmental certificates. We are entitled to recover all costs incurred under these contracts
through customer billing.
Under IFRS, where these supply contracts are not accounted for as leases, they are considered to
comprise two components, being a forward purchase of power at spot prices and a forward purchase
of environmental certificates at a variable price (being the contract price less the spot power price).
With respect to our current contracts, neither of these components meets the requirement to be accounted
for as a derivative. The environmental certificates are currently required for compliance purposes, and at
present there are no liquid markets for these attributes. Furthermore, this component meets the expected
purchase or usage exemption of IFRS 9. We expect to enter into an increasing number of these contracts
in order to meet our compliance requirements in the short to medium term. In future, if and when liquid
markets develop, and to the extent that we are in receipt of environmental certificates in excess of our
required levels, this exemption may cease to apply and we may be required to account for forward
purchase commitments for environmental certificates as derivatives at fair value through profit and loss.
In the UK, financial transactions have been traded to manage exposures on the North Sea Link
interconnector. These bilateral transactions are cash-settled against the relevant day-ahead prices in
order to manage the risk associated with the sale of physical capacity on the link. The mark-to-market
exposure of any open positions is calculated based on futures products in the GB and Nordic markets.
(g) Fair value analysis
Included in the statement of financial position are financial instruments which are measured at fair value.
These fair values can be categorised into hierarchy levels that are representative of the inputs used in
measuring the fair value. The best evidence of fair value is a quoted price in an actively traded market.
In the event that the market for a financial instrument is not active, a valuation technique is used.
2026
2025
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Assets
Investments held at FVTPL
1,914
—
450
2,364
5,156
—
407
5,563
Investments held at FVOCI1
—
385
—
385
—
384
—
384
Financing derivatives
—
691
26
717
—
344
31
375
Commodity contract derivatives
—
111
10
121
—
102
5
107
1,914
1,187
486
3,587
5,156
830
443
6,429
Liabilities
Financing derivatives
—
(864)
(86)
(950)
—
(1,043)
(95)
(1,138)
Commodity contract derivatives
—
(55)
(13)
(68)
—
(39)
(25)
(64)
—
(919)
(99)
(1,018)
—
(1,082)
(120)
(1,202)
1,914
268
387
2,569
5,156
(252)
323
5,227
1.Investments held includes instruments which meet the criteria of IFRS 9 or IAS 19.
Level 1:
Financial instruments with quoted prices for identical instruments in active markets.
Level 2:
Financial instruments with quoted prices for similar instruments in active markets or quoted
prices for identical or similar instruments in inactive markets, and financial instruments
valued using models where all significant inputs are based directly or indirectly on
observable market data.
Level 3:
Financial instruments valued using valuation techniques where one or more significant inputs
are based on unobservable market data.
Our Level 1 financial investments and liabilities held at fair value are valued using quoted prices from liquid
markets and primarily comprise investments in short-term money market funds.
Our Level 2 financial investments held at fair value primarily include bonds with a tenor greater than one
year and are valued using quoted prices for similar instruments in active markets or quoted prices for
identical or similar instruments in inactive markets. Alternatively, they are valued using models where all
significant inputs are based directly or indirectly on observable market data.
Our Level 2 financing derivatives include cross-currency, interest rate and foreign exchange derivatives.
We value these by discounting all future cash flows by externally sourced market yield curves at the
reporting date, taking into account the credit quality of both parties. These derivatives can be priced using
liquidly traded interest rate curves and foreign exchange rates, and therefore we classify our vanilla trades
as Level 2 under the IFRS 13 framework.
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(g) Fair value analysis cont.
Our Level 2 US commodity contract derivatives include over-the-counter gas and power swaps as well
as forward physical gas deals. We value our contracts based on market data obtained from the New York
Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE), where monthly prices are available.
We discount based on externally sourced market yield curves at the reporting date, taking into account
the credit quality of both parties and liquidity in the market. Our commodity contracts can be priced using
liquidly traded swaps. Therefore, we classify our vanilla trades as Level 2 under the IFRS 13 framework.
Our Level 3 financing derivatives include inflation-linked swaps, where the market is illiquid. In valuing
these instruments, we use in‑house valuation models and obtain external valuations to support each
reported fair value.
Our Level 3 UK commodity contract derivatives consist of UK electricity capacity swaps.
Our Level 3 US commodity contract derivatives primarily consist of our forward purchases of electricity
and gas that we value using proprietary models. Derivatives are classified as Level 3 where significant
inputs into the valuation technique are neither directly nor indirectly observable (including our own
data, which are adjusted, if necessary, to reflect the assumptions market participants would use in
the circumstances).
Our Level 3 financial investments include equity investments accounted for at fair value through profit
and loss. These equity holdings are part of our corporate venture capital portfolio held by National Grid
Partners and comprise a series of relatively small, early-stage non-controlling minority interest unquoted
investments where prices or valuation inputs are unobservable. Nineteen equity investments (out of 42)
are fair valued based on the latest transaction price (a price within the last 12 months), either being the
price we paid for the investments, marked to a latest round of funding and adjusted for our preferential
rights or based on an internal model. In addition, we have 23 investments without a transaction in the
last 12 months that underwent an internal valuation process using the Black-Scholes Merton Option
Pricing Model (OPM Backsolve). Between 12 and 18 months, a blend between OPM Backsolve and
other techniques is utilised, such as proxy group revenue multiples, discounted cash flow, comparable
company analysis and probability weighted expected return approach, in order to triangulate a valuation.
After 18 months, the valuation is based on these alternative methods as the last fundraising price is no
longer a reliable basis for valuation.
Our Level 3 financial investments also include our investment in Sunrun Neptune 2016 LLC, which is
accounted for at fair value through profit and loss. The investment is fair valued by discounting expected
cash flows using a weighted average cost of capital specific to Sunrun Neptune 2016 LLC.
The changes in value of our Level 3 financial instruments are as follows:
Financing
derivatives
Commodity
contract
derivatives
Other3
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
At 1 April
(64)
(64)
(20)
(13)
407
483
323
406
Net gains/(losses) for the year1,2
4
—
51
(41)
21
(77)
76
(118)
Purchases
—
—
—
—
30
45
30
45
Settlements
—
—
(34)
25
(8)
(44)
(42)
(19)
Reclassifications/transfers
out of Level 3⁴
—
—
—
9
—
—
—
9
At 31 March
(60)
(64)
(3)
(20)
450
407
387
323
1.Gain of £4 million (2025: £nil) is attributable to financing derivatives held at the end of the reporting period and has been recognised
in finance costs in the consolidated income statement.
2.Includes a loss of £2 million (2025: £6 millionloss) attributable to commodity contract derivative financial instruments held at the end
of the reporting period and has been recognised in other operating costs in the consolidated income statement.
3.Other comprises our investments in Sunrun Neptune 2016 LLC and the investments made by National Grid Partners, which are accounted
for at fair value through profit and loss. Net gains and losses are recognised within revenue in the consolidated income statement.
4.£nil (2025: £9 million) of US Commodity contract derivatives were reclassified out of Level 3 to Level 2 in the period due to
improved observability of the fair value of these instruments.
The impacts on a post-tax basis of reasonably possible changes in significant Level 3 assumptions
are as follows:
Financing
derivatives
Commodity
contract
derivatives
Other3
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
10% increase in commodity prices1
—
—
(6)
8
—
—
10% decrease in commodity prices1
—
—
6
(7)
—
—
+10% market area price change
—
—
(11)
—
—
—
-10% market area price change
—
—
9
—
—
—
+20 basis points change in Limited Price Inflation
(LPI) market curve²
(32)
(33)
—
—
—
—
-20 basis points change in LPI market curve²
30
33
—
—
—
—
+20 basis points increase between RPI
and Consumer Price Index (CPI)
26
31
—
—
—
—
-20 basis points decrease between RPI and CPI
(25)
(29)
—
—
—
—
+100 basis points change in discount rate
—
—
—
—
(6)
(6)
-100 basis points change in discount rate
—
—
—
—
7
7
+10% change in venture capital price
—
—
—
—
29
26
-10% change in venture capital price
—
—
—
—
(29)
(26)
1.Level 3 commodity price sensitivity is included within the sensitivity analysis disclosed in note 35.
2.A reasonably possible change in assumption of other Level 3 derivative financial instruments is unlikely to result in a material change in fair values.
3.The investments acquired in the period were on market terms, and sensitivity is considered insignificant at 31 March 2026.
The impacts disclosed above were considered on a contract-by-contract basis, with the most significant
unobservable inputs identified.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
32. Financial risk management cont.
(h) Capital risk management
The capital structure of the Group consists of shareholders’ equity, as disclosed in the consolidated
statement of changes in equity, and net debt (note 29). National Grid’s objectives when managing capital
are: to safeguard our ability to continue as a going concern; to remain within regulatory constraints of our
regulated operating companies; and to maintain an efficient mix of debt and equity funding, thus achieving
an optimal capital structure and cost of capital. We regularly review and manage the capital structure as
appropriate in order to achieve these objectives.
Maintaining appropriate credit ratings for our operating and holding companies is an important aspect
of our capital risk management strategy and balance sheet efficiency. We monitor our balance sheet
efficiency using several metrics, including funds from operations (FFO)/adjusted net debt, retained cash
flow (RCF)/adjusted net debt, regulatory gearing and interest cover. For the year ended 31 March 2026,
these metrics for the Group were 13.0% (2025: 13.7%), 9.3% (2025: 9.8%), 61% (2025: 61%) and
4.0x (2025: 3.8x), respectively. We believe these are consistent with the current credit ratings for National
Grid plc in respect of the main companies of the Group, based on guidance from the rating agencies.
We monitor the RAV gearing within National Grid Electricity Transmission plc (NGET) and the four
distribution network operators of National Grid Electricity Distribution plc (NGED). This is calculated
as net debt expressed as a percentage of RAV, and indicates the level of debt employed to fund our
UK‑regulated businesses. It is compared with the level of RAV gearing specified by Ofgem for the
respective notional companies, 55% for NGET and 60% for the four NGED distribution network operators.
We also monitor net debt as a percentage of rate base for our US operating companies, comparing this
with the allowed rate base gearing inherent within each of our agreed rate plans, typically around 50%.
As part of the Group’s debt financing arrangements, we are subject to a number of financial covenants
associated with existing borrowings and facility arrangements:
–subsidiary indebtedness relating to both non-US and US subsidiaries is required to be limited.
As at 31 March 2026 the lowest applicable limit of total subsidiary indebtedness in absolute terms
was £45 billion for non-US subsidiaries and $45 billion for US subsidiaries, and headroom on both
of these limits exceed £12 billion;
–the Articles of Association of National Grid plc limit Group total borrowings less cash and short-term
investments in absolute terms to £70 billion. As at 31 March 2026, headroom on the limit exceeds
£25 billion; and
–net debt to RAV gearing covenants limit gearing to 85% of RAV for each NGED operating company.
As at 31 March 2026, headroom on this covenant exceeds 30 percentage points for all impacted
companies based on the covenant definition of net debt. The carrying value of the bonds under this
covenant restriction is £2,889 million (2025: £3,005 million).
We consider the risk of breaching these covenants as remote given the level of headroom present.
The majority of our regulated operating companies in the US and the UK are subject to certain restrictions
on the payment of dividends by administrative order, contract and/or licence. The types of restrictions that
a company may have that would prevent a dividend being declared or paid unless they are met include
the following:
–the requirement to notify by certification regulators and certain lenders;
–dividends must be approved in advance by the relevant US state regulatory commission;
–the subsidiary must have one or two recognised rating agency credit ratings of at least investment
grade depending on contractual requirements;
–the securities of National Grid plc must maintain an investment grade credit rating, and if that rating is
the lowest investment grade bond rating it cannot have a negative watch/review for downgrade notice
by a credit rating agency;
–dividends must be limited to cumulative retained earnings, including pre-acquisition retained earnings
and in line with relevant company legislation;
–the subsidiary must not carry out any activities other than those permitted by the licences;
–the subsidiary must not create any cross-default obligations or give or receive any intra-group
cross‑subsidies;
–the percentage of equity compared with total capital of the subsidiary must remain above certain levels; and
–in relation to each of the NGED operating companies, the percentage of debt relative to the RAV must
remain below 85%.
These restrictions are subject to alteration in the US as and when a new rate case or rate plan is agreed
with the relevant regulatory bodies for each operating company and, in the UK, through the normal licence
review process.
As most of our business is regulated, at 31 March 2026 the majority of our net assets are subject to some
of the restrictions noted above. These restrictions are not considered to be significantly onerous, nor do
we currently expect they will prevent the planned payment of dividends in the future in line with our
dividend policy.
All the above requirements are monitored on a regular basis in order to ensure compliance. The Group
has complied with all externally imposed capital requirements to which it is subject.
33. Borrowing facilities
To support our liquidity requirements and provide backup to commercial paper and other
borrowings, we agree committed credit facilities with financial institutions over and above
the value of borrowings that may be required. These committed credit facilities are undrawn.
An analysis of the maturity of our undrawn committed facilities as at31 March 2026 is shown below:
2026
2025
£m
£m
Undrawn committed borrowing facilities expiring:
Less than 1 year
—
—
In 1 to 2 years
5,408
—
In 2 to 3 years
604
5,982
In 3 to 4 years
1,745
105
In 4 to 5 years
—
1,745
More than 5 years
250
—
8,007
7,832
Of the unused facilities at 31 March 2026, £7,968 million (2025: £7,792 million) is available for liquidity
purposes, while £39 million (2025: £40 million) is available as backup to specific US borrowings. Since
31 March 2026, £5,158 million of facilities due to mature in one to two years have been extended by
an additional year and have a new expiry date of 1 June 2028.
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
34. Subsidiary undertakings, joint arrangements and associates
While we present consolidated results in these financial statements as if we were one company, our legal structure is such that there are a number of different operating and holding
companies that contribute to the overall result. This structure has evolved through acquisitions as well as regulatory requirements to have certain activities within separate legal entities.
Subsidiary undertakings
A list of the Group’s subsidiaries as at 31 March 2026 is given below. The entire share capital of subsidiaries is held within the Group except where the Group’s ownership percentages are shown. These percentages
give the Group’s ultimate interest and therefore allow for the situation where subsidiaries are owned by partly owned intermediate subsidiaries. Where subsidiaries have different classes of shares, this is largely for
historical reasons, and the effective percentage holdings given represent both the Group’s voting rights and equity holding. Unless otherwise indicated against the company name, the share class held by the Group
in each undertaking is through ordinary shares (also referred to as common stock in certain countries). Where an alternative share class applies (including where there is no share capital), this is identified using the
following annotations: [a] Limited by Guarantee; [b] Membership interest; [c] Common stock and Preference shares; [d] Partnership interest. Shares in National Grid (US) Holdings Limited, National Grid Luxembourg
SARL, NGG Finance plc and NG Holdings Two PTE. Ltd are held directly by National Grid plc. All other holdings in subsidiaries are owned by other subsidiaries within the Group. All subsidiaries are consolidated in
the Group’s financial statements. The Group does not have any branches.
Principal Group companies are identified in bold. These companies are incorporated and principally operate in the countries under which they are shown. All entities incorporated in the US are taxed in the US
on their worldwide income other than where indicated in the footnotes below. Other entities are tax resident in their jurisdiction of incorporation other than where indicated in the footnotes below.
Incorporated in England and Wales
Registered office:
1–3 Strand, London, WC2N 5EH, UK
Birch Sites Limited
Carbon Sentinel Limited
Icelink Interconnector Limited
Lattice Group Limited
NatgridTW1 Limited
National Grid (US) Holdings Limited
National Grid (US) Investments 4 Limited
National Grid (US) Partner 1 Limited
National Grid Carbon Limited
National Grid Commercial Holdings Limited
National Grid Continental Limited
National Grid Distributed Energy Limited
National Grid Electricity Group Trustee Limited
National Grid Electricity Transmission plc
National Grid Energy Metering Limited
National Grid Holdings Limited
National Grid Holdings One plc
National Grid Hydrogen Limited
National Grid IFA 2 Limited
National Grid Interconnector Holdings Limited
National Grid Interconnectors Limited
National Grid International Limited
National Grid Lion Link Limited
National Grid Nautilus Limited
National Grid North Sea Link Limited
National Grid Offshore Limited
National Grid Partners Limited
National Grid Plus Limited
National Grid Property Holdings Limited
National Grid Twelve Limited
National Grid Twenty Eight Limited
National Grid Twenty Seven Limited
National Grid UK Limited
National Grid Ventures Limited
National Grid Viking Link Limited
National Grid William Limited
NGG Finance plc
Ngrid Intellectual Property Limited
Port Greenwich Limited
Registered Address:
Avonbank, Feeder Road, Bristol, BS2 0TB, United Kingdom
Central Networks Trustees Limited [a]
Kelston Properties 2 Limited
National Grid Electricity Distribution (East Midlands) plc
National Grid Electricity Distribution (South Wales) plc
National Grid Electricity Distribution (South West) plc
National Grid Electricity Distribution (West Midlands) plc
National Grid Electricity Distribution Generation Limited
National Grid Electricity Distribution Holdings Limited
National Grid Electricity Distribution Investments Limited
National Grid Electricity Distribution Midlands Limited
National Grid Electricity Distribution Network Holdings Limited
National Grid Electricity Distribution plc
National Grid Electricity Distribution Property Investments Limited
National Grid Helicopters Limited
National Grid Telecoms Limited
South Wales Electricity Share Scheme Trustees Limited
Western Power Pension Trustee Limited
WPD WEM Holdings Limited
WPD WEM Limited
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Financial Statements
Additional Information
Notes to the consolidated financial statements cont.
34. Subsidiary undertakings, joint arrangements and associates cont.
Registered Address:
Netley Old Hall Farm, Dorrington, Shrewsbury, United Kingdom, SY5 7JY
Sheet Road Management Company Limited (51%)
Registered Address:
Shire Hall, PO Box 9, Warwick, CV34 4RL, United Kingdom
Warwick Technology Park Management Company (No.2) Limited (60.56%)
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Financial Statements
Additional Information
The business in detail cont.
Regulation of UK ED: The RIIO-ED2 price control
RIIO-ED2, covering the period 1 April 2023 – 31 March 2028, is the second electricity distribution price
control to be set under the RIIO model. It builds on from the framework established in the first price
control, RIIO-ED1, that ran for eight years from 1 April 2015 to 31 March 2023.
Our RIIO-ED2 business plan was co-created with our stakeholders, through our largest ever stakeholder
consultation process with the broadest range of representatives. In order to enable us to actively drive the
nation’s move to decarbonisation, our RIIO-ED2 business plan has been designed to achieve four crucial
outcomes for our customers:
–Affordability: We aim to continue to deliver high standards of safety, reliability and customer service
that customers have come to expect from us, while keeping our portion of consumer bills affordable.
–Sustainability: We will support the UK’s ambitions to achieve net zero carbon emissions by 2050,
driving crucial changes in energy usage and customer green behaviour. We will set the benchmark by
achieving net zero in our own operations by 2043 (excluding Scope 3 emissions) and we will work
towards ensuring the network is ready to enable local authorities to achieve similar ambitions in
their regions. We will also actively work with the industry and government to achieve Clean Power 2030,
within which at least 95% of the country’s generation will come from clean sources including
renewables. This will see both UK ET and UK ED actively engaging with areas of reform to ensure that
the grid is decarbonised in a sustainable way.
–Connectability: We will strive to ensure that a lack of network capacity is not a barrier for our
customers. We will ensure that the network can cater for the increasing demand of low-carbon
technologies and renewable energy over RIIO-ED2, while recognising that the generation mix needs to
be balanced to retain resilience for security of supply. We will actively work with Ofgem and the industry
to reform the connections processes, including continuing engagement on a review of the end-to-end
connections journey. This will ensure that the connections process meets customers needs, while
enabling investment ahead of the need to support decarbonisation.
–Vulnerability: We will aim to deliver a first class programme of inclusive support. This will include
offering smart energy action plans for vulnerable customers each year, ensuring no one is left behind in
a smart future. We will also strive to more than double our ground breaking fuel poverty support to help
at least 113,000 fuel poor customers save £60 million on their energy bills over RIIO-ED2.
Regulation of UK ET: The RIIO-T2 price control
The RIIO-T2 price control built on the framework established for RIIO-T1, introduced a range of new
mechanisms to facilitate the transition to net zero, continued support for innovation, and incentivised us to
deliver outputs with ambitious targets aligned to our customers’ and stakeholders’ requirements.
The Independent User Group (IUG) includes a cross-section of the energy industry and represents the
interests of consumers, environmental and public interest groups, as well as large-scale and small-scale
customers. It was established in July 2018, acting as our critical liaison, to ensure stakeholders are at the
heart of our decision-making processes and our plan is fully reflective of customers’, consumers’ and
other stakeholders’ requirements.
The IUG’s enduring role in RIIO‑T2 focused on challenging business plans, enhancing transparency and
performance against commitments, and acting as a critical liaison on strategy, culture and key
stakeholder‑related areas.
Regulation of UK ET: The RIIO-T3 price control
RIIO‑T3 is Ofgem’s five‑year price control for electricity transmission running from April 2026 to March
2031, setting both the funding and regulatory framework under which NGET delivers and operates the
onshore transmission network. The framework is designed to enable a major expansion of the grid to
support decarbonisation and growth, while protecting consumers through ex‑ante scrutiny of costs,
defined outputs on reliability, connections and sustainability.
Funding is primarily set through ex‑ante allowances covering baseline operational expenditure and a large
programme of capital investment, supplemented by in‑period funding mechanisms, such as re‑openers
and pipeline arrangements to unlock additional funding as the need and scope of major projects become
clearer. NGET’s allowed revenue is adjusted for actual performance through a package of financial
incentives, including efficiency incentives on total expenditure, output‑based incentives, for example on
reliability, timely delivery of major projects and connections, and quality of service measures, alongside
innovation funding streams. Together, these mechanisms are intended to give NGET a “fair opportunity”
to earn its allowed return by delivering outputs efficiently and on time, while exposing it to downside risk
where performance falls short of consumers’ expectations, all within a licence framework that is central to
delivery and financeability under RIIO‑T3.
Competition in onshore transmission
We continue to support onshore competition where it can deliver benefits to consumers. The wider
landscape has shifted significantly since competition in onshore networks was first considered, and
continues to do so, particularly around the move to centralised network planning arrangements. We think
it is crucial that the competition framework is designed in the right way to incentivise innovation on design,
ensure timely and robust delivery and deliver benefits to customers. We are working closely with NESO,
DESNZ and Ofgem to support the development of the competition framework, ensuring that this is aligned
with the wider landscape, and to support identification of a suitable pipeline of projects.
Interconnectors regulation
Interconnectors primarily derive their revenues from sales of capacity to users who wish to move power
between market areas with different prices.
Under UK legislation, interconnection businesses must be separate from the transmission businesses.
There is a range of different regulatory models available for interconnector projects. These involve various
levels of regulatory intervention, ranging from fully merchant (where the project is fully reliant on sales of
interconnector capacity) to cap and floor.
The cap and floor regime is now the regulated route for interconnector investment in GB and may be
sought by project developers who do not qualify for, or do not wish to apply for, exemptions from UK and
European legislation which would facilitate a merchant development.
Offshore Hybrid Assets (OHA) combine interconnection with offshore wind. Ofgem established an OHA
pilot scheme and decided that an adjusted version of the cap and floor regulatory regime should apply to
those projects that receive approval within that scheme. The variations to the interconnector cap and floor
regime reflect the differing risks and characteristics of OHAs. In November 2024, Ofgem initially approved
the LionLink project between GB and the Netherlands, developed by National Grid Ventures with TenneT
Netherlands, for a pilot OHA regulatory regime.
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Additional Information
The business in detail cont.
Key parameters from Ofgem’s RIIO-ED2 determination for UK ED and RIIO-T2 and RIIO-T3 determination for UK ET
UK ED (ED2)
UK ET (T2)
UK ET (T3)
Allowed Return on Equity (RoE)1
5.28 – 5.59% (real, relative to CPIH) at 60% gearing
4.25 – 5.20% (real, relative to CPIH) at 55% gearing (4.52
– 5.59% at 60% gearing)
5.70% (real, relative to CPIH) at 55% gearing (6.12% at
60% gearing)
Allowed debt funding
Calculated and updated each year using 17-year trailing
average of iBoxx Utilities 10+ year index, plus 25bps
additional cost of borrowing, 55bps calibration
adjustments, plus 6bps infrequent issuer premium for
West Midlands, South Wales and South West
Calculated and updated each year using an extending
‘trombone-like’ trailing average of iBoxx Utilities 10+ year
index (increased from 10 years for 2021/22 to 14 years for
2025/26), plus 25bps additional borrowing costs
Implementation of a RAV weighting of the benchmark
index beginning from the start of RIIO-1
Calculated and updated each year using a 14-year
‘trombone-like’ trailing average of iBoxx GBP A and iBoxx
BBB non-financial 10+ year index, plus 26bps additional
borrowing costs, plus 43bps calibration adjustments
Implementation of a nominal allowance for fixed rate debt
(index-linked debt assumption 10%)
Depreciation of RAV
Straight-line 45-year depreciation
Straight-line over 45 years for post-2021 RAV additions,
with pre-2021 RAV additions as per RIIO-T1
Straight-line over 45 years for post-2021 RAV additions,
with pre-2021 RAV additions as per RIIO-T1
Notional gearing
60%
55%
55%
Split between fast/slow money
Capitalisation rate 1 slow money 77% – 79%
Capitalisation rate 2 slow money 85%
Fast: RIIO-T2 baseline 22%;
RIIO-T2 uncertainty mechanisms 15%
Slow: RIIO-T2 baseline 78%;
TO uncertainty mechanisms 85%
Fast: RIIO-T3 baseline 30%;
RIIO-T3 uncertainty mechanisms 15%
Slow: RIIO-T3 baseline 70%;
TO uncertainty mechanisms 85%
Sharing factor
50%
33%
25% sharing up to 5% of over/under-spend
10% sharing at 5%-20% over/under-spend
5% sharing beyond 20% over/under-spend
Allowed totex (cumulative for
the five years of RIIO-ED2,
RIIO-T2 and of RIIO-T3)
£5.5 billion in 2020/21 prices
£5.8 billion in 2018/19 prices
£5.0 billion in 2023/24 prices
1.The cost of equity in RIIO-ED2 is subject to annual adjustments that are calculated using the Capital Asset Pricing Model, through indexation of the ‘risk-free rate’ parameter. The range shown above is Ofgem’s estimate of the allowed RoE over the five years of RIIO-ED2, as updated in
the RIIO-ED2 Price Control Financial Model published in December 2023. The cost of equity in RIIO-T2 was subject to annual adjustments calculated using the Capital Asset Pricing Model, through indexation of the ‘risk-free rate’ parameter. The range shown above is Ofgem’s estimate
of the allowed RoE over the five years of RIIO-T2, as updated in the RIIO-T2 Price Control Financial Model published in January 2024. The cost of equity in RIIO-T3 is also subject to annual adjustments that are calculated using the Capital Asset Pricing Model, through indexation of the
‘risk-free rate’ parameter. 5.70% is the cost of equity for the first year of RIIO-T3 (2026/27) and Ofgem have not yet provided their estimate of the ‘risk free rate’ for the remainder of the period.
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Additional Information
The business in detail cont.
US regulation
Regulators
In the US, public utilities’ retail transactions are regulated by state utility commissions which serve as
economic regulators, approving cost recovery and authorised rates of return. The state commissions
establish the retail rates to recover the cost of transmission and distribution services within their
jurisdictions. They also serve the public interest by making sure utilities provide safe and reliable services
at just and reasonable prices. The commissions establish service standards and approve public utility
mergers and acquisitions. State commissions are also asked to approve a variety of programmes and
costs related to state energy and climate goals.
At the federal level, FERC regulates wholesale transactions for utilities, such as interstate transmission and
wholesale electricity sales, including rates for these services. FERC also regulates public utility holding
companies and centralised service companies, including those of our US businesses.
Regulatory process
The US regulatory regime is premised on allowing the utility the opportunity to recover its cost of service
and earn a reasonable return on its investments as determined by each commission. Utilities submit
formal rate filings (rate cases) to the relevant state regulator when additional revenues are necessary to
provide safe, reliable service to customers. Additionally, utilities can be compelled to file a rate case, either
due to complaints filed with the commission or at the commission’s own discretion.
The rate case is sometimes negotiated with parties representing customers and other interests. The utility
is required to prove that the requested rate change is just and reasonable, and the requested rate plan
can span multiple years. In the states where we operate, it can typically take 9 to 13 months for the
commission to render a final decision, although, in some instances, rules allow for longer negotiation
periods which may extend the length of the rate case proceeding. Unlike the state processes, FERC, as
the federal regulator, has no specified timeline for adjudicating a rate case; typically, it makes a final
decision retroactively when the case is completed.
Gas and electricity rates are established from a revenue requirement, or cost of service, equal to the
utility’s total cost of providing distribution or delivery services to its customers, as approved by the
commission in the rate case. This revenue requirement includes operating expenses, depreciation, taxes,
and a fair and reasonable return on shareholder capital invested in certain components of the utility’s
regulated asset base or ‘rate base’.
The final revenue requirement and rates for service are approved in the rate case decision. The revenue
requirement is derived from a comprehensive study of the utility’s total costs during a representative 12-
month period, referred to as a test year. Each commission has its own rules and standards for
adjustments to the test year. These may include forecast capital investments and operating costs.
Our rate plans
Each operating company has a set of rates for service. We have three electricity distribution companies:
(1) Niagara Mohawk Power Corporation, with operations in Upstate New York; (2) Massachusetts
Electric Company; and (3) Nantucket Electric Company, the latter two having operations
in Massachusetts.
We also have four gas distribution companies: (1) Niagara Mohawk Power Corporation, with operations
in Upstate New York; (2) The Brooklyn Union Gas Company, with operations in Downstate New York;
(3) KeySpan Gas East Corporation, with operations in Downstate New York; and (4) Boston Gas
Company, with operations in Massachusetts.
Our distribution companies have revenue decoupling mechanisms that delink their revenues
from the quantity of energy delivered and billed to customers. These mechanisms remove the natural
disincentive utility companies have for promoting and encouraging customer participation in
energy-efficiency programmes that lower energy end-use and distribution volumes.
We bill our customers for their use of electricity and gas services. Customer bills typically cover the cost of
the commodity (electricity or gas delivered) and charges covering our delivery service. Our customers are
allowed to select an unregulated competitive supplier for the commodity component of electricity and gas
utility services.
A substantial proportion of our costs, in particular electricity and gas commodity purchases, are pass-
through costs, fully recoverable from our customers. We recover pass-through costs through making
separate charges to customers, designed to recover those costs with no profit. We adjust the charges
from time to time, often annually to make sure that any over- or under-recovery of these costs is returned
to, or recovered from, our customers. Our rate plans are designed to a specific allowed RoE, by reference
to an allowed operating expense level and rate base. Some rate plans include earnings-sharing
mechanisms that allow us to retain a proportion of the earnings above our allowed RoE, achieved through
improving efficiency, with the balance benefiting customers. In addition, our performance under certain
rate plans is subject to service performance targets. We may be subject to monetary penalties in cases
where we do not meet those targets.
Our FERC-regulated transmission companies use formula rates (instead of periodic stated rate cases) to
set rates annually that recover their cost of service. Through the use of annual true-ups, formula rates
allow us to recover our actual costs incurred and the allowed RoE based on the actual transmission rate
base each year. We must make annual formula rate filings documenting the revenue requirement that
customers can review and challenge.
Revenue for our wholesale transmission businesses in New England and New York is collected from
wholesale transmission customers. These are typically other utilities and include our own New England
electricity distribution businesses. With the exception of Upstate New York, which continues to combine
retail transmission and distribution rates to end-use customers, these wholesale transmission costs are
generally incurred by distribution utilities on behalf of their customers. They are fully recovered as a pass-
through from end-use customers, as approved by each state commission.
Our Long Island generation plants sell capacity to the LIPA under 15-year and 25-year power supply
agreements and within wholesale tariffs approved by FERC.
Through the use of cost-based formula rates, these long-term contracts provide a similar economic effect
to cost-of-service rate regulation.
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Strategic Report
Corporate Governance
Financial Statements
Additional Information
The business in detail cont.
One measure used to monitor the performance of our regulated businesses is a comparison of achieved
RoE to allowed RoE. However, this measure cannot be used in isolation, as several factors may prevent
us from achieving the allowed RoE. These include financial market conditions, regulatory lag (e.g. the time
period after a rate or expense is approved for recovery but before we collect the same from customers)
and decisions by the regulator preventing cost recovery in rates from customers.
We work to increase achieved RoE through:
–productivity improvements
–positive performance against incentives or earned savings mechanisms, such as available energy-
efficiency programmes
–filing a new rate case when achieved returns are lower than those the Company could reasonably
expect to attain through a new rate case
US regulatory revenue requirement
US regulatory filings
The objectives of our rate case filings are to make sure we have the right cost of service and are able to
earn a fair and reasonable rate of return, while providing a safe, reliable and affordable service. To achieve
these objectives and reduce regulatory lag, we have been successful in many cases in obtaining relief,
such as:
–revenue-decoupling mechanisms
–capital trackers
–commodity-related bad debt true-ups
–pension and other post-employment benefit true-ups, separately from base rates
–performance-based frameworks such as incentives and multi-year plans
regulated asset growth. These measures include the inputs used by utility regulators to set the allowed
revenues for many of our businesses.
We use RPMs to monitor progress against our regulatory agreements and certain aspects of our strategic
objectives. Further, targets for certain of these performance measures are included in the Company’s
APP and LTPP and contribute to how we reward our employees. As such, we believe that they provide
close correlation to the economic value we generate for our shareholders and are therefore important
supplemental measures for our shareholders to understand the performance of the business and to
ensure a complete understanding of Group performance.
As the starting point for our RPMs is not IFRS, and these measures are not governed by IFRS, we are
unable to provide meaningful reconciliations to any directly comparable IFRS measures, as differences
between IFRS and the regulatory recognition rules applied have built up over many years. Instead, for
each of these we present an explanation of how the measure has been determined and why it is
important, and an overview as to why it would not be meaningful to provide a reconciliation to IFRS.
Alternative performance measures
Net revenue and underlying net revenue
‘Net revenue’ is revenue less pass-through costs, such as UK system balancing costs and gas and
electricity commodity costs in the US. Pass-through costs are fully recoverable from our customers and
are recovered through charges that are designed to recover those costs with no profit. Where revenue
received or receivable exceeds the maximum amount permitted by our regulatory agreement, adjustments
will be made to future prices to reflect this over-recovery. No liability is recognised, as such an adjustment
to future prices relates to the provision of future services. Similarly, no asset is recognised where a
regulatory agreement permits adjustments to be made to future prices in respect of an under-recovery.
‘Underlying net revenue’ further adjusts net revenue to remove the impact of ‘timing’, i.e. the in‑year
difference between allowed and collected revenues, including revenue incentives, as governed by our
rate plans in the US or regulatory price controls in the UK (but excluding totex-related allowances in
NGET and certain other adjustments).
Year ended 31 March 2026
Gross
revenue
£m
Pass-
through
costs
£m
Net
revenue
£m
Timing
£m
Underlying
net revenue
£m
UK Electricity Transmission
2,898
(391)
2,507
77
2,584
UK Electricity Distribution
1,937
(184)
1,753
116
1,869
New England
4,174
(1,451)
2,723
(94)
2,629
New York
7,618
(3,113)
4,505
537
5,042
National Grid Ventures
1,098
—
1,098
—
1,098
Other
97
—
97
—
97
Sales between segments
(135)
—
(135)
—
(135)
Total
17,687
(5,139)
12,548
636
13,184
Year ended 31 March 2025
Gross
revenue
£m
Pass-
through
costs
£m
Net
revenue
£m
Timing
£m
Underlying
net revenue
£m
UK Electricity Transmission
2,619
(455)
2,164
151
2,315
UK Electricity Distribution
2,424
(185)
2,239
(407)
1,832
UK Electricity System Operator
1,029
(1,217)
(188)
479
291
New England
4,306
(1,658)
2,648
(61)
2,587
New York
6,689
(2,487)
4,202
343
4,545
National Grid Ventures
1,397
—
1,397
—
1,397
Other
122
—
122
—
122
Sales between segments
(208)
—
(208)
—
(208)
Total
18,378
(6,002)
12,376
505
12,881
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Corporate Governance
Financial Statements
Additional Information
Other unaudited financial information cont.
Year ended 31 March 2024
Gross
revenue
£m
Pass-
through
costs
£m
Net
revenue
£m
Timing
£m
Underlying
net revenue
£m
UK Electricity Transmission
2,735
(225)
2,510
(363)
2,147
UK Electricity Distribution
1,795
(233)
1,562
159
1,721
UK Electricity System Operator
3,788
(2,605)
1,183
(800)
383
New England
3,948
(1,653)
2,295
69
2,364
New York
6,094
(2,057)
4,037
20
4,057
National Grid Ventures
1,389
—
1,389
—
1,389
Other
244
—
244
—
244
Sales between segments
(143)
—
(143)
—
(143)
Total
19,850
(6,773)
13,077
(915)
12,162
Adjusted profit measures
In considering the financial performance of our business and segments, we use various adjusted profit
measures in order to aid comparability of results year-on-year.The various measures are presented on
pages 69 – 80 and reconciled below.
Adjusted results – these exclude the impact of exceptional items and remeasurements that are treated
as discrete transactions under IFRS and can accordingly be classified as such. This is a measure used
by management that is used to derive part of the incentive target set annually for remunerating certain
Executive Directors, and further details of these items are included in note 5 to the financial statements.
Underlying results – further adapts our adjusted results for continuing operations to take account of
volumetric and other revenue timing differences arising due to the in-year difference between allowed and
collected revenues, including revenue incentives, as governed by our rate plans in the US or regulatory
price controls in the UK (but excluding certain totex-related allowances in NGET and adjustments or
allowances for pension deficit contributions). For2025/26, as highlighted below, our underlying results
exclude £636 million (2024/25: £505 million) of timing differences, but did include $52 million (£39 million)
of major storm costs (net of in-year allowances and deductibles) as in the current year these did not exceed
our $100 million threshold to be excluded from underlying results. In 2024/25, we incurred $110 million
(£87 million) of major storm costs (net of in‑year allowances) which were excluded from our underlying
results. We expect to recover major storm costs incurred through regulatory mechanisms in the US.
Underlying results also exclude deferred tax in our UK regulated businesses (NGET and NGED). Our UK
regulated revenues contain an allowance for current tax, but not for deferred tax, so excluding the IFRS
deferred tax charge aligns our underlying results APM more closely with our regulatory performance measures.
Constant currency – the adjusted profit measures are also shown on a constant currency basis to show
the year-on-year comparisons excluding any impact of foreign currency translation movements.
Reconciliation of statutory, adjusted and underlying profits from continuing operations
at actual exchange rates
Year ended 31 March 2026
Statutory
£m
Exceptionals and
remeasurements
£m
Adjusted
£m
Timing
£m
Major
storm
costs
£m
Deferred tax
on underlying
profits in
NGET and
NGED
£m
Underlying
£m
UK Electricity Transmission
1,605
—
1,605
77
—
—
1,682
UK Electricity Distribution
1,122
—
1,122
116
—
—
1,238
New England
947
13
960
(94)
—
—
866
New York
1,184
(12)
1,172
537
—
—
1,709
National Grid Ventures
715
(388)
327
—
—
—
327
Other
(142)
—
(142)
—
—
—
(142)
Total operating profit
5,431
(387)
5,044
636
—
—
5,680
Net finance costs
(1,325)
54
(1,271)
—
—
—
(1,271)
Share of post-tax results of
joint ventures and associates
76
—
76
—
—
—
76
Profit before tax
4,182
(333)
3,849
636
—
—
4,485
Tax
(939)
(16)
(955)
(168)
—
499
(624)
Profit after tax
3,243
(349)
2,894
468
—
499
3,861
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238
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Other unaudited financial information cont.
Year ended 31 March 2025
Statutory
£m
Exceptionals
and
remeasurements
£m
Adjusted
£m
Timing
£m
Major
storm
costs
£m
Deferred tax
on underlying
profits in
NGET and
NGED
£m
Underlying
£m
UK Electricity Transmission
1,277
—
1,277
151
—
—
1,428
UK Electricity Distribution
1,598
12
1,610
(407)
—
—
1,203
UK Electricity System
Operator
(213)
(151)
(364)
479
—
—
115
New England
1,008
(26)
982
(61)
3
—
924
New York
1,269
(246)
1,023
343
84
—
1,450
National Grid Ventures
5
375
380
—
—
—
380
Other
(10)
(133)
(143)
—
—
—
(143)
Total operating profit
4,934
(169)
4,765
505
87
—
5,357
Net finance costs
(1,357)
(4)
(1,361)
—
—
—
(1,361)
Share of post-tax results of
joint ventures and associates
73
2
75
—
—
—
75
Profit before tax
3,650
(171)
3,479
505
87
—
4,071
Tax
(821)
(40)
(861)
(133)
(23)
401
(616)
Profit after tax
2,829
(211)
2,618
372
64
401
3,455
Year ended 31 March 2024
Statutory
£m
Exceptionals
and
remeasurements
£m
Adjusted
£m
Timing
£m
Major
storm
costs
£m
Deferred tax
on underlying
profits in
NGET and
NGED
£m
Underlying
£m
UK Electricity Transmission
1,674
3
1,677
(363)
—
—
1,314
UK Electricity Distribution
975
18
993
159
—
—
1,152
UK Electricity System
Operator
382
498
880
(800)
—
—
80
New England
641
2
643
69
90
—
802
New York
362
498
860
20
136
—
1,016
National Grid Ventures
558
(89)
469
—
—
—
469
Other
(117)
57
(60)
—
—
—
(60)
Total operating profit
4,475
987
5,462
(915)
226
—
4,773
Net finance costs
(1,464)
(15)
(1,479)
—
—
—
(1,479)
Share of post-tax results of
joint ventures and associates
37
64
101
—
—
—
101
Profit before tax
3,048
1,036
4,084
(915)
226
—
3,395
Tax
(831)
(152)
(983)
227
(61)
302
(515)
Profit after tax
2,217
884
3,101
(688)
165
302
2,880
Reconciliation of adjusted and underlying earnings from continuing operations
at constant currency
At constant currency
Adjusted
at actual
exchange
rate
£m
Constant
currency
adjustment
£m
Adjusted
£m
Timing
£m
Major
storm
costs
£m
Deferred tax
on underlying
profits in
NGET and
NGED
£m
Underlying
£m
Year ended 31 March 2025
UK Electricity Transmission
1,277
—
1,277
151
—
—
1,428
UK Electricity Distribution
1,610
—
1,610
(407)
—
—
1,203
UK Electricity System Operator
(364)
—
(364)
479
—
—
115
New England
982
(57)
925
(57)
3
—
871
New York
1,023
(58)
965
323
79
—
1,367
National Grid Ventures
380
—
380
—
—
—
380
Other
(143)
—
(143)
—
—
—
(143)
Total operating profit
4,765
(115)
4,650
489
82
—
5,221
Net finance costs
(1,361)
53
(1,308)
—
—
—
(1,308)
Share of post-tax results of
joint ventures and associates
75
(2)
73
—
—
—
73
Profit before tax
3,479
(64)
3,415
489
82
—
3,986
Tax
(861)
15
(846)
(130)
(20)
401
(595)
Profit after tax
2,618
(49)
2,569
359
62
401
3,391
Attributable to non-controlling
interests
(3)
—
(3)
—
—
—
(3)
Earnings
2,615
(49)
2,566
359
62
401
3,388
Earnings per share (pence)
55.6
(1.1)
54.5
7.7
1.3
8.5
72.0
National Grid plc Annual Report and Accounts 2025/26
239
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Other unaudited financial information cont.
At constant currency
Adjusted
at actual
exchange
rate
£m
Constant
currency
adjustment
£m
Adjusted
£m
Timing
£m
Major
storm
costs
£m
Deferred tax
on underlying
profits in
NGET and
NGED
£m
Underlying
£m
Year ended 31 March 2024
UK Electricity Transmission
1,677
—
1,677
(363)
—
—
1,314
UK Electricity Distribution
993
—
993
159
—
—
1,152
UK Electricity System Operator
880
—
880
(800)
—
—
80
New England
643
(38)
605
65
84
—
754
New York
860
(52)
808
19
128
—
955
National Grid Ventures
469
(1)
468
—
—
—
468
Other
(60)
(1)
(61)
—
—
—
(61)
Total operating profit
5,462
(92)
5,370
(920)
212
—
4,662
Net finance costs
(1,479)
52
(1,427)
—
—
—
(1,427)
Share of post-tax results of joint
ventures and associates
101
(2)
99
—
—
—
99
Profit before tax
4,084
(42)
4,042
(920)
212
—
3,334
Tax
(983)
10
(973)
227
(56)
302
(500)
Profit after tax
3,101
(32)
3,069
(693)
156
302
2,834
Attributable to non-controlling
interests
(1)
—
(1)
—
—
—
(1)
Earnings
3,100
(32)
3,068
(693)
156
302
2,833
Earnings per share (pence)
77.7
(0.8)
76.9
(17.4)
3.9
7.6
71.0
Earnings per share calculations from continuing operations
The table below reconciles the profit after tax from continuing operations as per the previous tables back
to the earnings per share from continuing operations for each of the adjusted profit measures.
Profit
after tax
£m
Non-
controlling
interest
£m
Profit after tax
attributable to
shareholders
£m
Weighted
average
number of
shares
millions
Earnings
per share
pence
Year ended 31 March 2026
Statutory
3,243
(2)
3,241
4,946
65.5
Adjusted
2,894
(2)
2,892
4,946
58.5
Underlying
3,861
(2)
3,859
4,946
78.0
Profit
after tax
£m
Non-
controlling
interest
£m
Profit after tax
attributable to
shareholders
£m
Weighted
average
number of
shares
millions
Earnings
per share
pence
Year ended 31 March 2025
Statutory
2,829
(3)
2,826
4,707
60.0
Adjusted
2,618
(3)
2,615
4,707
55.6
Underlying
3,455
(3)
3,452
4,707
73.3
Underlying at constant currency
3,391
(3)
3,388
4,707
72.0
Profit
after tax
£m
Non-
controlling
interest
£m
Profit after tax
attributable to
shareholders
£m
Weighted
average
number of
shares
millions
Earnings
per share
pence
Year ended 31 March 2024
Statutory
2,217
(1)
2,216
3,991
55.5
Adjusted
3,101
(1)
3,100
3,991
77.7
Underlying
2,880
(1)
2,879
3,991
72.1
Underlying at constant currency
2,834
(1)
2,833
3,991
71.0
National Grid plc Annual Report and Accounts 2025/26
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Corporate Governance
Financial Statements
Additional Information
Other unaudited financial information cont.
Timing and regulated revenue adjustments
As described on pages 220 – 225, our allowed revenues are set in accordance with our regulatory price controls or rate plans. We calculate the prices we charge our customers based on the estimated volume
of energy we expect will be delivered during the coming period. The actual volumes delivered will differ from the estimate. Therefore, our total actual revenue will be different from our total allowed revenue. These
differences are commonly referred to as timing differences. If we collect more than the allowed revenue, adjustments will be made to future prices to reflect this over‑recovery, and if we collect less than the allowed
level of revenue, adjustments will be made to future prices to reflect the under-recovery. In the US, a substantial portion of our costs are pass-through costs (including commodity and energy-efficiency costs) and
are fully recoverable from our customers. Timing differences between costs of this type being incurred and their recovery through revenue are also included in timing. The amounts calculated as timing differences
are estimates and subject to change until the variables that determine allowed revenue are final. Timing differences tend to be short-term in nature (typically less than two years) and are applicable where existing
regulatory recovery mechanisms are already in place, hence dependent on an operating company’s current rate plan or price control. Future revenue adjustments linked to mechanisms in rate plans that have not
yet been agreed are not normally considered to be timing.
New England and New York in-year over/(under)-recovery and all New England and New York balances have been translated using the average exchange rate of $1.34 for the year ended 31 March 2026.
UK Electricity
Transmission
£m
UK Electricity
Distribution
£m
UK Electricity
System Operator
£m
New England
£m
New York
£m
Total
£m
1 April 2025 opening balance1
9
118
—
(368)
301
60
(Under)/over-recovery
(77)
(116)
—
94
(537)
(636)
31 March 2026 closing balance to (recover)/return2
(68)
2
—
(274)
(236)
(576)
UK Electricity
Transmission
£m
UK Electricity
Distribution
£m
UK Electricity
System Operator
£m
New England
£m
New York
£m
Total
£m
1 April 2024 opening balance1
160
(282)
941
(425)
624
1,018
(Under)/over-recovery
(151)
407
(479)
57
(323)
(489)
Disposal
—
—
(462)
—
—
(462)
31 March 2025 closing balance to return/(recover)2
9
125
—
(368)
301
67
UK Electricity
Transmission
£m
UK Electricity
Distribution
£m
UK Electricity
System Operator
£m
New England
£m
New York
£m
Total
£m
1 April 2023 opening balance1
(213)
(124)
77
(360)
643
23
(Under)/over-recovery
363
(159)
800
(65)
(19)
920
31 March 2024 closing balance to return/(recover)2
150
(283)
877
(425)
624
943
1.Opening balances have been restated to reflect the finalisation of calculated over/(under)-recoveries in both the UK and the US and also adjusted for the regulatory time value of money impact on opening balances, where appropriate, in the UK.
2.The closing balance at 31 March 2026 was £584 million under-recovered (translated at the closing rate of $1.32:£1). 31 March 2025 was £65 million over-recovered (translated at the closing rate of $1.29:£1). 31 March 2024 was £954 million over-recovered (including discontinued
operations and translated at the closing rate of $1.26:£1).
In addition to the (short-term) timing adjustments described above, other regulated revenue adjustments also exist. For example, as part of the RIIO price controls in the UK, outperformance against allowances as
a result of the totex incentive mechanism, together with changes in output-related allowances included in the original price control, will almost always be adjusted in future revenue recoveries, typically starting in two
years’ time. We also receive revenues in relation to certain costs incurred or expected to be incurred (for example pension deficit contributions), with differences between revenues received and cost incurred adjusted
in future revenue recoveries, e.g. after a triennial actuarial pension funding valuation has been concluded. Our current IFRS revenues and earnings include these amounts that relate to certain costs incurred in prior
years or that will need to be repaid or recovered in future periods. Such adjustments will form an important part of the continuing difference between reported IFRS results and underlying economic performance
based on our regulatory obligations. In the US, accumulated regulatory entitlements cover a range of different areas, with the most significant being environmental remediation and pension assets, as well as deferred
storm costs. All regulatory entitlements are recoverable (or repayable) over different periods, which are agreed with the regulators to match the expected payment profile for the liabilities.
National Grid plc Annual Report and Accounts 2025/26
241
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Corporate Governance
Financial Statements
Additional Information
Other unaudited financial information cont.
Capital investment at constant currency
Capital investment measures are presented at actual exchange rates, but are also shown on a constant
currency basis to show the year-on-year comparisons excluding any impact of foreign currency translation
movements.
Year ended 31 March
At actual exchange rates
At constant currency
2026
2025
change
2026
2025
change
£m
£m
£m
£m
UK Electricity
Transmission
4,372
2,999
46%
4,372
2,999
46%
UK Electricity Distribution
1,617
1,426
13%
1,617
1,426
13%
New England
2,043
1,751
17%
2,043
1,650
24%
New York
3,428
3,289
4%
3,428
3,101
11%
Capital investment
(regulated networks)
11,460
9,465
21%
11,460
9,176
25%
National Grid Ventures
109
378
(71%)
109
362
(70%)
Other
7
4
75%
7
4
75%
Group capital
investment – total
11,576
9,847
18%
11,576
9,542
21%
Capital expenditure
Capital expenditure (for the purposes of measuring green capex aligned to the EU Taxonomy) comprises
additions to property, plant and equipment and intangible assets, but excludes capital prepayments
and equity contributions to joint ventures and associates during the period.
2026
2025
£m
£m
Asset type:
Property, plant and equipment
9,924
8,894
Non-current intangible assets
693
478
Transfers from prepayments
501
87
Group capital expenditure
11,118
9,459
Equity investments in joint ventures and associates
27
116
Capital expenditure prepayments
932
359
Transfers to capital expenditure additions
(501)
(87)
Group capital investment
11,576
9,847
Net debt
See note 29 of the financial statements on page 190 for the definition and reconciliation of net debt.
Funds from operations and interest cover
FFO are the cash flows generated by the operations of the Group. Credit rating metrics, including FFO,
are used as indicators of balance sheet strength.
2026
2025¹
2024¹
Year ended 31 March
£m
£m
£m
Interest expense (income statement)
1,649
1,810
1,723
Hybrid interest reclassified as dividend
(13)
(37)
(38)
Capitalised interest
424
294
251
Pensions interest adjustment
12
13
9
Unwinding of discount on provisions
(123)
(130)
(102)
Pension interest
—
—
94
Adjusted interest expense
1,949
1,950
1,937
Net cash inflow from operating activities
7,829
6,808
6,939
Interest received on financial instruments
231
332
148
Interest paid on financial instruments
(1,932)
(1,920)
(1,627)
Dividends received
105
126
176
Working capital adjustment
(632)
(104)
49
Excess employer pension contributions
16
26
27
Hybrid interest reclassified as dividend
13
37
38
Add back accretions
168
152
208
Difference in net interest expense in income statement
to cash flow
14
(45)
(253)
Difference in current tax in income statement to cash flow
‘project’ and similar expressions, as well as statements in the future tense, identify forward-looking
statements. This document also references sustainability-related targets and sustainability-related risks
(including climate-related targets and climate-related risks) which differ from conventional financial risks in
that they are complex, novel and tend to involve projection over long-term scenarios which are subject to
significant uncertainty and change.
These forward-looking statements and targets are not guarantees of our future performance and are
subject to assumptions, risks and uncertainties that could cause actual future results to differ materially
from those expressed in or implied by such forward-looking statements and targets. Many of these
assumptions, risks and uncertainties relate to factors that are beyond our ability to control or estimate
precisely, such as changes in laws or regulations; and decisions by governmental bodies or regulators,
including those relating to current and upcoming price controls in the UK and rate cases in the US; the
timing of construction and delivery by third parties of new generation projects requiring connection;
breaches of, or changes in, environmental, climate change, and health and safety laws or regulations,
including breaches or other incidents arising from the potentially harmful nature of our activities; network
failure or interruption, the inability to carry out critical non-network operations, and damage to
infrastructure, due to adverse weather conditions, including the impact of major storms as well as the
results of climate change, or due to counterparties being unable to deliver physical commodities; reliability
of and access to IT systems, including due to the failure of or unauthorised access to or deliberate
breaches of our systems and supporting technology; failure to adequately forecast and respond to
disruptions in energy supply; performance against regulatory targets and standards and against our peers
with the aim of delivering stakeholder expectations regarding costs and efficiency savings including
affordability considerations, as well as against targets and standards designed to support our role in the
energy transition; and customers and counterparties (including financial institutions) failing to perform their
obligations to the Company.
Other factors that could cause actual results to differ materially from those described in this document
include fluctuations in exchange rates, interest rates and commodity price indices; restrictions and
conditions (including filing requirements) in our borrowing and debt arrangements, funding costs and
access to financing; regulatory requirements for us to maintain financial resources in certain parts of our
business and restrictions on some subsidiaries’ transactions, such as paying dividends, lending or levying
charges; the delayed timing of recoveries and payments in our regulated businesses and whether aspects
of our activities are contestable; the funding requirements and performance of our pension schemes and
other post-retirement benefit schemes; the failure to attract, develop and retain employees with the
necessary competencies, including leadership and business capabilities, and any significant disputes
arising with our employees or breaches of laws or regulations by our employees; the failure to respond to
market developments, including competition for onshore transmission; the threats and opportunities
presented by emerging technology, including AI; the risk that global actions may not be effective in
transitioning to net zero and in managing relevant ESG risks, including in particular climate, nature-related
and human rights risks; the failure by the Company to respond to, or meet its own commitments
as a leader in relation to, climate change development activities relating to energy transition, including the
integration of distributed energy resources, which may result in the Company’s failure to achieve the
expected benefits of its strategic priorities; and the need to grow our business to deliver our strategy, as
well as incorrect or unforeseen assumptions or conclusions (including unanticipated costs and liabilities)
relating to business development activity, our strategic infrastructure projects and joint ventures.
Furthermore, in preparing the ESG-related information contained in this document, National Grid has
made a number of key judgements, estimations and assumptions, and the processes and issues involved
are complex. The ESG data, models and methodologies used are often relatively new, are rapidly evolving
and are not of the same standard as those available in the context of other financial information, nor are
they subject to the same or equivalent disclosure standards, historical reference points, benchmarks or
globally accepted accounting principles. In addition, the climate scenarios and the models that analyse
such scenarios, have limitations that are sensitive to key assumptions and parameters, which are
themselves subject to some uncertainty, and cannot fully capture all of the potential effects of climate,
policy and technology driven outcomes. Outputs of models, processed data and methodologies are also
likely to be affected by underlying data quality, which can be hard to assess, and our disclosures are
limited by the consistent availability of high-quality data. Whilst we expect data quality to improve over
time, there may be unexpected fluctuations year-on-year, and/or differences between the quality of the
data obtained, which could result in revisions to reported data going forward, meaning that such data may
not be reconcilable or comparable year-on-year. We expect industry guidance, market practice, and
regulations in this field to continue to change. There are also challenges faced in relation to the ability to
access data on a timely basis and the lack of consistency and comparability between data that is
available. This means the ESG-related forward-looking statements and ESG metrics discussed in this
document carry an additional degree of inherent risk and uncertainty.
In the light of uncertainty as to the nature of future policy and market response to climate change,
including between regions, and the effectiveness of any such response, National Grid may have to re-
evaluate its progress towards its ESG ambitions, commitments and targets in the future, update the
methodologies it uses or alter is approach to ESG and climate analysis and may be required to amend,
update and recalculate its ESG disclosures and assessments in the future, as market practice and data
quality and availability develops rapidly. In addition, the methodologies National Grid uses may develop
over time in line with market practice, regulation and/or developments in science, where applicable. Such
developments could result in revisions to reported data and lack of reconcilability or comparability.
For further details regarding these and other assumptions, risks and uncertainties that may affect National
Grid, please read the Strategic Report and the risk factors on pages 226 to 232 of this document. In
addition, new factors emerge from time to time, and we cannot assess the potential impact of any such
factor on our activities or the extent to which any factor, or combination of factors, may cause actual
future results to differ materially from those contained in any forward-looking statement. Except as may be
required by law or regulation, the Company undertakes no obligation to update any of its forward-looking
statements, which speak only as of the date of this document.
The contents of any website references in this document do not form part of this document.
Printed by a CarbonNeutral® Company certified to ISO 14001
environmental management system.
Printed on material from well-managed, FSC® certified forests and
other controlled sources.
100% of the inks used are vegetable oil based, 95% of press
chemicals are recycled for further use and, on average 99% of any
waste associated with this production will be recycled and the
remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an
international conservation charity, who offset carbon emissions
through the protection and preservation of high conservation value
land. Through protecting standing forests under threat of clearance,
carbon is locked-in that would otherwise be released.
National Grid plc
1–3 Strand
London WC2N 5EH
United Kingdom
nationalgrid.com
Further Information
Share ownership
At 1 June 2026, the latest practicable date, none of the directors had an individual beneficial interest amounting to greater than 1% of the Company’s shares.
Material interests in shares
The following summarises significant changes in the percentage ownership held by our major shareholders since 1 April 2025. The disclosure of certain major and significant shareholdings in the share capital of the company is governed by applicable legal requirements. The following disclosure is derived from notifications made under the Companies Act 2006, the UK Financial Conduct Authority’s Disclosure Guidance, Transparency Rules (DTR) and, where more timely, the US Securities Exchange Act of 1934.
BlackRock, Inc. held 8.5% of our outstanding share capital as at 1 April 2025. Such holdings decreased to 8.17% as at 25 November 2025. As noted on page 253 of the Annual Report, such holdings remained unchanged as at 31 March 2026. Such holdings increased to 8.42% as at 25 May 2026 and remained unchanged as at 1 June 2026.
Bank of America corporation held 5.60% of our outstanding share capital as at 1 April 2025. On 30 May 2025, we received notification that such holdings decreased below 3.00% of our outstanding share capital, and we have not received any notification that such holding has changed since that date.
Since 31 March 2026, we have not been notified of any other significant change in the percentage ownership held by our major shareholders.
Material interest in American Depositary Shares
As at 1 June 2026, we had 10,191 registered holders of our American Depositary Shares (ADSs) representing ownership of 8.63% of our issued and outstanding share capital, excluding ordinary shares held in treasury. As at 1 June 2026, based on information available to us, we believe that approximately 8.63% of our issued and outstanding share capital (whether in the form of shares or ADSs), excluding shares held in treasury, was held beneficially in the United States.
Insider Trading Policy
We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees, which policies and procedures are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to us. A copy of the policy is filed as Exhibit 11(b) to this Annual Report.
Subsequent Events
NONE
Representations and Warranties in the Exhibits
Pursuant to the rules and regulations of the SEC, the Company has filed certain agreements as exhibits to this Annual Report on Form 20-F. These agreements may contain representations and warranties by the parties to them. These representations and warranties have been made solely for the benefit of the other party or parties to such agreement and (i) may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements if those statements turn out to be inaccurate, (ii) may have been qualified by disclosures that were made to such other party or parties and that either have been reflected in the company’s filings or are not required to be disclosed in those filings, (iii) may apply materiality standards different from what may be viewed as material to investors and (iv) were made only as of the date of such agreements or such other date or dates as may be specified in such agreements.
In accordance with the instructions to Item 2(b)(i) of the Instructions to Exhibits to the Form 20-F, National Grid agrees to furnish to the SEC, upon request, a copy of any instrument relating to long-term debt that does not exceed 10 percent of the total assets of National Grid and its subsidiaries on a consolidated basis.
Reports of Independent Registered Public Accounting Firms—Audit opinions for Form 20-F
In addition to the financial information set forth on the pages referenced under Item 18 in the Form 20-F Cross Reference Table on page vii, the reports of Deloitte LLP (PCAOB ID 1147), Independent Registered Public Accounting Firm, are presented below:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of National Grid plc
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of National Grid plc and its subsidiaries (together the “Group”) as at 31 March 2026 and 2025, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended 31 March 2026, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as at 31 March 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended 31 March 2026, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IASB”).
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group’s internal control over financial reporting as at 31 March 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated 13 May 2026, expressed an unqualified opinion on the Group’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit and Risk Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
US environmental provisions – Refer to notes 1F, 26 and 35 to the financial statements
Critical Audit Matter Description
At 31 March 2026, the Group has £2,011 million of environmental provisions in the United States (“US”) relating to a number of sites owned and managed by the Group, together with certain sites which are no longer owned.
We have identified the US environmental provisioning at certain sites as a key audit matter due to the complexities in estimating the future cost of remediation.
The sites with the highest level of estimation uncertainty were identified as those with significant
contamination (“Superfund” sites) and certain other legacy Manufactured Gas Plant (“MGP”) sites based on factors including the presence of regulatory correspondence in the year and the level of change in the provision amount.
Environmental provisions are calculated based on management’s best estimate of the cash flows that will be required to settle the obligation, discounted at a real discount rate, calculated based on the US government bond yield curve and the weighted average life of the provisions.
The audit procedures required to evaluate the reasonableness of management’s estimates and assumptions required a high degree of auditor judgement and an increased extent of effort. Key estimates and assumptions included:
•the impact of changes in regulation or the environmental agencies’ interpretation and implementation of the regulations;
•the extent of contamination identified and modelled from ongoing exploratory and remediation works;
•the form, timing, extent, and associated cost of remediation needed; and
•the allocation of responsibility for remediation.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecasts of future cash flows of the Superfund and certain legacy MGP sites for US environmental provisions included the following, among others:
•We tested the effectiveness of controls over management’s compilation of its forecast cash flows.
•We completed public domain searches on federal databases across all Group subsidiaries’ sites to determine whether any relevant costs or applicable sites were omitted. We further checked for the latest regulatory changes at the federal and local level, and precedent from remediation plans recently agreed with the environmental agencies, to determine any indication of changing requirements;
•We evaluated the results of ongoing environmental testing for potential non-compliance or evidence that the existing or planned remediation activities would require revision or enhancement; and
•We performed additional procedures regarding the uncertainty over the allocation of responsibilities between the Potentially Responsible Parties (“PRPs”);
◦We made enquiries of the US internal legal counsel and obtained analysis directly from external legal counsel to understand potential changes to previously determined PRP positions, including shifts in liability, new legal interpretations, or ongoing negotiations that could impact the Group's share of responsibility;
◦We evaluated settlements reached in the current period with PRPs and analysed compliance with funding contributions requests, comparing the terms and outcomes to the Group's assumed shares of responsibility;
◦We evaluated publicly available financial statement information and disclosures for a selection of PRPs to identify contradictory evidence regarding their assumed share percentages and to assess their financial viability, which could impact their ability to fulfil their allocated responsibilities; and
◦We assessed the extent to which the evidence obtained demonstrated that the allocations will be substantially followed by all parties.
•We worked with our environmental specialists to assist us in evaluating the associated cost of remediation. Procedures included:
◦Agreeing the proposed remediation activities to technical engineering studies agreed with the environmental agencies;
◦Considering the latest correspondence with the environmental agencies where remediation plans are yet to be agreed; and
◦Agreeing costings to third-party contracts and estimates where available.
/s/ Deloitte LLP
London, United Kingdom 13 May 2026
We have served as the Group’s auditor since 2018.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of National Grid plc and subsidiaries (together the “Group”) as of 31 March 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of 31 March 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended 31 March 2026, of the Group and our report dated 13 May 2026, expressed an unqualified opinion on those consolidated financial statements.
BasisforOpinion
TheGroup’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management's report on internal control over financial reporting. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities lawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.
WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performingsuch other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally acceptedaccountingprinciples,andthatreceiptsandexpendituresof thecompanyarebeingmadeonly in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or dispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancial statements.
Because of its inherent limitations, internal control over financial reportingmay not preventor detect misstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttothe risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
List of subsidiaries - The list of the Company’s significant subsidiaries as of 31 March 2026 is incorporated by reference to “Financial Statements—Notes to the consolidated financial statements—34. Subsidiary undertakings, joint venture and associates—Subsidiary undertakings” on pages 206-209 included in the Annual Report on Form 20-F for the financial year ended 31 March 2025. This list excludes subsidiaries that do not, in aggregate, constitute a “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X as at 31 March 2026.
* Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.
