National Grid (NGG) Q2 2027 Earnings Call Transcript

DATE

Thu, Nov. 5, 2026

CALL PARTICIPANTS

• Chief Executive Officer - Zoë Yujnovich
• Chief Financial Officer - Andrew Agg
• Interim Director of Investor Relations - Andrew Downey

TAKEAWAYS

• Capital Investment -- £6.7 billion, representing a 32% increase at constant currency driven by record spending in U.K. Electricity Transmission.
• Underlying EPS -- 36.5p, growing 22% due to stronger operational performance and fair value gains in the National Grid Partners portfolio.
• FY 2027 EPS Guidance -- 15% to 16% growth, upgraded from previous estimates reflecting execution momentum and one-off fair value gains.
• FY 2027 Capital Investment Guidance -- £13.5 billion, reflecting a faster pace of supply chain delivery and project milestones.
• 5-Year Capital Investment Plan -- £70 billion through fiscal year 2031, with 80% of supply chain and delivery mechanisms already secured.
• U.K. Electricity Transmission Operating Profit -- £1.2 billion, up 45% primarily due to higher allowed revenues under the RIIO-T3 framework.
• U.K. Electricity Transmission Investment -- £2.9 billion, a 71% increase at constant currency reflecting the step-up into the RIIO-T3 framework and ASTI project ramp-up.
• New York Capital Investment -- £1.8 billion, increasing 11% behind electric transmission upgrades and gas maintenance programs.
• New England Capital Investment -- £1.1 billion, rising 14% driven by asset condition and system capacity investments.
• Interim Dividend -- 16.97p per share, a 3.8% increase in line with the company's inflation-protected progressive policy.
• Net Debt -- £48.6 billion, an increase of £4.5 billion from the prior period due to capital investment, interest, and the Joulent investment.
• Joulent Investment -- $1.75 billion for a 35% interest, targeting contracted power solutions for large-load U.S. customers.
• Generation Connections -- 2.5 gigawatts, more than doubling the generation connected in the entirety of fiscal year 2026.
• U.K. Electricity Distribution Operating Profit -- £550 million, remaining broadly flat as indexation-driven revenue was offset by higher depreciation and maintenance costs.
• U.K. Electricity Distribution Investment -- £834 million, growing 10% primarily due to increased asset health and connections investment.
• New York Operating Profit -- £487 million, a 9% increase at constant currency driven by asset base growth and recovery of unremunerated costs.
• New England Operating Profit -- £266 million, a 10% decrease as higher net revenues were offset by a one-off provision and increased depreciation.
• National Grid Partners Gains -- £84 million, reflecting one-off fair value gains from successful capital market transactions, including the sale of Dragos and the ERock IPO.
• Operating Cash Flow -- £4.1 billion, up 14% compared to the prior year driven by improved group cash generation.
• Net Finance Costs -- £722 million, up 6% reflecting higher average net debt partially offset by increased capitalized interest.
• Staffing Growth -- 3,600 new hires, with 90% recruited into operational businesses to support capital delivery programs.
• Statutory Revenue -- £8.1 billion, representing a 15% increase driven by asset base growth and higher returns in U.K. Electricity Transmission.
• Interest Rate Exposure -- 10% of net debt, representing the portion of the debt book sensitive to rate changes due to recovery mechanisms.

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RISKS

• Agg warned that in New England, higher net revenues were "more than offset by higher costs, including a one-off provision alongside higher depreciation and other investment-related costs," which contributed to a 10% decline in underlying operating profit for the segment.
• Yujnovich noted that the "Middle East conflict [is] putting direct pressure on consumer energy bills," identifying geopolitical tension as a factor impacting energy security and affordability.

SUMMARY

National Grid plc (NYSE:NGG) reported an acceleration in its capital delivery program and upgraded its annual earnings outlook. Management stated that the company is executing its largest-ever investment cycle, supported by the new RIIO-T3 framework in the U.K. and industrial demand in the U.S. The company has simplified its leadership structure and secured a significant portion of its long-term supply chain needs to mitigate global inflationary pressures and interest rate volatility.

• Chief Executive Officer Yujnovich stated, "Capital investment increased by 1/3 in the first half with important project milestones completed," supporting upgraded guidance for the full year.
• The company established a 35% interest in Joulent, which is developing a 2.7 gigawatt co-located data center power facility in West Texas called Project Kilby.
• Management reported that the Micron semiconductor chip site in New York is expected to account for 2 gigawatts of demand at full build, equivalent to one-third of NiMo Electric's current peak demand.
• The company achieved a 100-day schedule improvement on the Eastern Green Link 1 project by utilizing generative scheduling technology.
• Chief Financial Officer Agg noted that 75% of the company's debt book is covered by operating company level recovery mechanisms, providing a partial hedge against rising interest rates.
• National Grid secured a development consent order for the Sea Link project, progressing the deployment of the multiyear ASTI portfolio.

INDUSTRY GLOSSARY

• ASTI: Accelerated Strategic Transmission Investment, a framework for fast-tracking major U.K. transmission projects.
• RIIO-T3: The U.K. regulatory price control for electricity transmission that runs from 2026 to 2031.
• ED3: The U.K. electricity distribution price control period scheduled to begin in 2028.
• NiMo: Niagara Mohawk, National Grid's electric and gas distribution business serving Upstate New York.
• KEDNY/KEDLI: KeySpan Energy Delivery New York and KeySpan Energy Delivery Long Island, the company's gas businesses in Downstate New York.
• NGP: National Grid Partners, the corporate venture capital and innovation arm of the company.
• RAV: Regulated Asset Value, the value of the assets upon which a regulated utility is permitted to earn a return.
• CPIH: A measure of consumer price inflation in the U.K. that includes owner occupiers' housing costs.
• DCO: Development Consent Order, the primary planning permission required for major infrastructure projects in the U.K.
• AMI: Advanced Metering Infrastructure, integrated systems of smart meters and communication networks.
• Joulent: A strategic partnership focused on power solutions and high-voltage infrastructure for large-load U.S. customers.

Full Conference Call Transcript

Zoe Yujnovich: Good morning, everyone, and welcome to National Grid's Half Year 2027 Results Presentation. Six months ago, I set a clear direction for National Grid to build on our strong foundations, sharpen performance, and advance us as a world-class business. Since then, we simplified the organization, enhanced accountability, accelerated delivery of our capital program, and increasingly deployed technology to improve our business. Today, I'd like to bring to life how the initiatives we're driving are already having an impact through improving performance and underpinning our confidence in growth. I'll then hand over to Andy for our financial performance and outlook before we take questions. Let me start with the key messages from the first half.

In May, I introduced our new strategic framework with the brilliant basics designed to drive better performance across the business through competitive benchmarking and continuous improvement. And the big shifts, focusing our attention on the few transformations necessary to respond to the ever-changing external market. We've made strong progress, and I'm pleased to say that the execution of the brilliant basics is already translating into sharpened delivery. There are 3 key messages I'd like to highlight. First, capital investment increased by 1/3 in the first half with important project milestones completed. As a result, we've upgraded our capital investment guidance for the year.

Our progress, together with some one-off fair value gains within National Grid Partners supported strong first half EPS growth and means we're also slightly upgrading our full year EPS growth guidance. Second, we're changing how National Grid operates as we drive the big shifts. Some highlights include simplifying the organization to create clearer accountability and better quality decision-making, scaling practical technology and AI tools to improve productivity and delivery and shaping policy outcomes that support affordability and resilience. Third, we continue to build momentum in our disciplined growth.

Here, we're focused primarily on our core regulated businesses as we continue to help shape the long-term regulatory environment with ED3 and our upcoming U.S. rate cases as examples, while at the same time, exploring adjacencies that will support longer-term growth, where there's a strong portfolio fit and opportunity to earn attractive returns with our investment in Joulent as an example. I'm pleased with the increased pace of execution across our strategic framework in the past 6 months. Taken together, this strengthens our confidence in delivering our 5-year growth targets. And in turn, this will support customer affordability, deliver better outcomes for our wider stakeholders and underpins our compelling investor proposition with double-digit investor returns.

Our capital delivery, combined with our focus on sharpening performance is translating into strong financial outcomes. Capital investment increased 32% to GBP 6.7 billion, a new record for the first half. We now expect full year investment of GBP 13.5 billion, putting us firmly on the run rate required to deliver at least GBP 70 billion by the end of FY '31. This is supported by continued supply chain progress in the past 6 months as we've secured over GBP 3 billion of further delivery mechanisms, taking the total to over 80%. Underlying EPS increased by 22% to 36.5p, reflecting stronger performance across the business and gains from 2 successful capital market transactions within National Grid Partners.

We're, therefore, slightly upgrading our full year EPS growth guidance to 15% to 16%. The Board has also declared an interim dividend of 16.97p per share, a year-on-year increase of 3.8%. This is in line with our policy that aims to deliver an inflation-protected progressive dividend. Andy will come back to the financials in more detail later. For now, let me turn to how we're delivering our strategy. The external environment continues to evolve rapidly with many of the energy market drivers of change supporting growth in our business. Geopolitics and the macroeconomic environment remain complex with the Middle East conflict putting direct pressure on consumer energy bills.

Energy security and affordability are therefore, amongst the most critical topics for governments, regulators and our customers. Meanwhile, the pace of change in technology and customer needs is accelerating, presenting both an opportunity to evolve how we run our business and creating a large demand runway. This is accentuated by the scale of electrification needed to support the energy transition. We must, therefore, get more capacity from our existing networks through leveraging technology at scale, while at the same time, investing to build network capacity needed for the future. Our strategic framework is designed to navigate this complex environment and leverage the structural growth it presents.

Importantly, we've now fully aligned the organization behind this framework through a simplified operating model while reducing the group executive committee from 13 members to 8. This gives clear regional accountability to our newly formed U.K. and U.S. businesses, supported by enterprise-wide capabilities across capital, technology and innovation and our functions. And by delivering our framework, we'll build a business that makes better quality decisions at pace, drive stronger execution and solidifies a superior growth trajectory. Let me start with capital and the delivery of our largest ever investment program. Starting in the U.K., capital investment increased strongly across both electricity transmission and distribution. The structural drivers of our investments are diverse.

Importantly, our investment will support lower consumer bills through reducing system constraint costs and is expected to create over 60,000 U.K. jobs. In electricity transmission, investment rose by 71% to GBP 2.9 billion. This primarily reflects the ramp-up of ASTI investment to GBP 1.5 billion, along with other major projects to reinforce the network and connect new generation. We're also using technology to improve our capital delivery. For instance, we're using Sensat's infrastructure visualization mapping technology to test different construction options against real-world constraints before we get to site, reducing in-person visits, enabling earlier decisions and reducing overheads.

We also connected 2.5 gigawatts of generation in the first half, including the Sofia Wind Farm and the U.K.'s fourth largest battery project in Newport. This is more than double the generation connected in the whole of FY '26 and demonstrates our significant momentum. We also see strong growth in electricity distribution, where our investment increased by 10% to GBP 834 million in the first half as we continue to invest in asset health to enhance our resilience and support connections. We're currently finalizing our ED3 business plan, which is reaffirming our planned investment of GBP 9 billion over the coming 5 years.

This is 40% higher than the previous period and will support vital economic development in our Midlands, Southwestern Wales service areas, consistent with the government's devolution agenda. Let me give some additional detail on ASTI, which accounts for around GBP 17 billion of investment over the next 5 years and underpins much of our U.K. growth. Our timetable remains on schedule with 100% of the critical primary supply chain already secured and GBP 500 million of additional non-primary supply chain contracts signed in the first half. All 6 of our Wave 1 ASTI projects are now in construction, with the majority of these projects due to complete by March 2031.

Of course, across a portfolio of this scale, not every project will go exactly to plan. For instance, we've learned from our experience of the ASTI framework and the EGL 1 delay event, and we're applying those lessons to drive better performance across the program. That includes identifying a 100-day schedule improvement on EGL 1 through generative scheduling as we work to get back on track, while Yorkshire Green and EGL 2 are tracking ahead of schedule. On Wave 2, our first 2 projects at Pentir to Trawsfynydd are now in construction, with the remaining 9 Wave 2 ASTI projects also progressing through the planning and consenting processes.

For instance, we secured the development consent order for Sea Link last week, enabling us to move the project into its next phase and the outcome on Norwich to Tilbury is due early next year. Last week, we also made our DCO submissions for EGL 3 and 4 and expect to submit all remaining ASTI project planning submissions by the end of March 2027. ASTI is therefore moving steadily from development into construction. As you can see on the slide, we remain on track for our key delivery schedule dates and the ASTI-related RIIO-T3 investment with 15% of Wave 1 and 5% of Wave 2 deployed in the first half. Recent project milestones bring the progress to life.

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

Elsewhere, our Yorkshire Green project is progressing well and is expected to be the first of our ASTI portfolio to go live on the system. And we also energized a 1.4 gigawatt offshore wind farm. Cordi and Carl will provide more detail on our progress at the U.K. Transmission Investor Deep Dive event, which is planned for December. Turning now to the U.S., where we've successfully grown our rate base by over 70% since 2020. This growth is underpinned by multiple drivers, including ongoing network resilience, accelerating industrial and consumer demand and the need for additional system capacity.

Importantly, we're seeing that demand directly within our service territories as we progress discussions with large load customers in areas, including advanced manufacturing and data centers. As a result, first half investment grew across both New York and New England. New York investment increased by 11% to GBP 1.8 billion, including around GBP 800 million in gas maintenance, principally through our decades-long leak-prone pipe replacement program as well as GBP 800 million across electric transmission and distribution. In New England, investment increased by 14% to GBP 1.1 billion, underpinned by similar drivers across both gas and electricity with local regulators supporting the need for modernization.

During the first half of the year, work commenced on the first phase of the electricity connection for Micron's semiconductor chip manufacturing site in Upstate New York, supporting an initial 480 megawatts of demand. At full build, it's expected to account for around 2 gigawatts of demand, equivalent to almost 1/3 of NiMo Electric's current peak demand, and Micron will become our largest single electric customer in New York. Our connections will allow Micron to invest more than $100 billion in Central New York and create approximately 9,000 direct jobs in addition to almost 50,000 jobs across the broader regional economy and supply chain, with the state now attracting a significant and growing semiconductor manufacturing ecosystem.

We also completed our SmartPath Connect transmission project and began refurbishing a major century-old transmission line in Massachusetts. These projects show the significant growth in our regions and how investment is translating into additional capacity, reliability and economic growth. To this point, I focused on capital delivery and how strong project management is enabling us to deliver to schedule and budget, a brilliant basic. But a world-class network operator must also maximize the value of its existing infrastructure and enhance the customer experience. That's why we're also focused on sharpening performance across our existing assets, our customer service, and our corporate functions.

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

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

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

CPIH over the 5-year period to FY '31. Let me bring that together through a lens that's deeply important to us, our customers. We have 3 priorities here. First, supporting affordability. That means getting more from our existing assets to avoid unnecessary investment, sharing value where our assets outperform, going beyond the regulatory framework where it matters and providing targeted support for vulnerable customers. Examples of this include using AI tools such as GridCare to unlock network capacity and our focus on affordability, helping to enroll over 65,000 more of our U.S. customers on to low-income discount rates over the past year.

In the U.K., our interconnectors both support increased energy security and directly benefit consumers when they outperform with GBP 400 million in payments to consumers over the past 3.5 years and a further GBP 300 million forecast to be paid over the next 2.5 years, subject to Ofgem approval. Second, we want to improve the customer experience, which is a journey of better technology tools and a change in culture about what good looks like. We're already well on the way to digitizing and simplifying our customer interactions and are redesigning journeys end-to-end. We're also strengthening our storm and winter response for what is already turning out to be another challenging winter period.

Third, we want to enable faster connections to the grid. Connections reform is creating a clearer route for viable projects, but it's been a challenging and frustrating process for some of our customers. We're doing all that we can to support our customers through the process, and we're leveraging innovation to move faster where we can in a complex ecosystem. However, the long-term solution does require a whole system change. We're, therefore, actively advocating for the steps needed to deliver connections and reduce costs for our customers. Fortunately, the government's recent budget announcements offered some clear policy directions that we embrace.

Together, these initiatives turn investment and operational improvement into more affordable, reliable outcomes for customers and ultimately translate into stronger performance for our investors. It's also part of what will differentiate National Grid as a world-class operator. The big shifts help us scale these improvements across National Grid. The first is leadership, people and performance led by Emma, where we're targeting clearer accountability and better quality decisions at pace while building stronger capabilities and attracting talent. During the first half, we've simplified our operating model and hired more than 3,600 people with 90% recruited into our operational businesses as we scale our delivery, including over 400 graduates and apprentices.

We've also committed GBP 5 million to support practical training and qualifications for 5,000 young people in the U.K. The second is technology and innovation, where we're scaling proven tools to strengthen cyber defenses, accelerate capital delivery, unlock capacity, optimize asset reliability, and enhance the customer experience. Alice is now bringing this together in her new role, leading the combined team. Examples in the first half include Exodigo's underground mapping technology, which has reduced change orders on several major projects and Envelio's mapping analytics, which are helping us identify areas where capacity exists on our network to assist developers with site selection and speed up customer connections.

For customers, we're beginning to roll out the market-leading Kraken platform across our 6.5 million U.S. customers and have already deployed Amazon Connect in the U.K. to support our 8 million distribution customers, replacing legacy systems with more resilient, scalable, and insight-led platforms. Our third big shift is external positioning, where we're shaping policy and regulatory outcomes that support affordability, resilience, and growth, led by Cordi in the U.K. and Sally in the U.S. As you'd expect, we've been progressing our price controls and rate cases in both the U.K. and the U.S. This includes the 1-year rate stabilization submitted for KEDNY and KEDLI in Downstate New York, keeping customer bills flat for 1 year in the current affordability environment.

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

The third element of our framework is disciplined growth, growing our core while building future optionality. Our priority remains sustainable long-term growth in our regulated networks, which means continuing to shape the future policy and regulatory frameworks that enable this growth. For instance, we're finalizing our ED3 business plan, responding to Ofgem scenarios, which point to further growth in capital investment across the next 5-year price control. We also expect to submit multiyear rate cases over the coming months in Downstate New York Gas, KEDNY and KEDLI and our Upstate NiMo businesses. At the same time, the changing energy landscape is creating opportunities to use our capabilities beyond our existing footprint through National Grid Ventures.

As I outlined in May, we'll pursue these selectively, focusing on areas where we've got a competitive advantage that deliver long-duration cash flows, and can earn attractive risk-adjusted returns. In the U.K., this could include interconnectors and offshore hybrid assets and in the U.S., competitive transmission and innovative solutions for large load customers. Joulent is a good example. It gives us exposure to growing data center power demand beyond the U.S. Northeast, while offering the potential for attractive risk-adjusted returns above our regulated business. The majority of our $1.75 billion investment will support the development of Project Kilby, a 2.7 gigawatt co-located data center power facility in West Texas. The project is already at an advanced stage.

A 50-50 joint venture with Chevron has been established. EPC contracts are being finalized and all the turbines and other critical equipment have been secured, with delivery expected over the next 12 months. Importantly, a 20-year power purchase agreement has been signed with Microsoft, providing long-term predictable cash flows with a AAA-rated customer. The remaining development milestones are being progressed with first power targeted for 2028. And as you can see from this simplified view of the site, we bring more than capital. Kilby involves kilometers of wires and substations to create a multi-gigawatt islanded mini grid.

We bring deep power system expertise, including energy management and high-voltage substation development as well as strong supply chain relationships for critical electrical equipment. And through our U.S. GENCO business on Long Island, we also have long-standing experience operating gas turbines. So Joulent is an exciting growth opportunity where we can put capabilities we already have to work in a new and growing market while building new capabilities along the way. So to conclude before the financials, we set a clear direction in May, and the first half shows we're following through. Capital investment is accelerating, major projects are progressing, and the changes we're making to the organization are sharpening performance.

And I'm pleased to have been able to share a number of examples that evidence our execution to date and how we're delivering for our customers. There's always more to do, and you have my commitment to maintain this delivery focus and improvement. This progress strengthens our confidence in the 5-year plan and in the outcomes we can deliver for customers, shareholders and our wider stakeholders. I'll now hand you over to Andy, who will take you through our financial performance and outlook.

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

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

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

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

Turning now to the U.S., where, as usual, profitability in both businesses is weighted to the second half, reflecting the typical seasonality. Underlying operating profit for New York was GBP 487 million, 9% higher than the prior year from higher net revenue driven by asset base growth and the recovery of previously unremunerated costs. This was partially offset by an increase in depreciation, reflecting our ongoing investment program and higher costs, including property taxes. Capital investment was GBP 1.8 billion, 11% higher than the prior year, driven by increased investment in our upstate transmission upgrade projects and reinforcement of our distribution networks. In New England, underlying operating profit was GBP 266 million, 10% lower than the prior period.

Higher net revenues in the period were driven by asset base growth and our capital tracker mechanisms. These were more than offset by higher costs, including a one-off provision alongside higher depreciation and other investment-related costs from the increasing capital program. Capital investment was GBP 1.1 billion, 14% higher than the prior year, driven by increased asset condition and system capacity investments and our ongoing gas mains replacement activity. Moving to National Grid Ventures, where the underlying contribution was GBP 174 million, including joint ventures. The year-on-year decrease of GBP 53 million was primarily due to the disposal of Grain LNG in the prior year, partially offset by stronger interconnector performance.

Capital investment across National Grid Ventures was GBP 100 million, reflecting ongoing maintenance expenditure, including refurbishment of the IFA1 interconnector. In addition, we have invested GBP 941 million into the Joulent joint venture during the first half and expect the remainder of the full GBP 1.3 billion to be deployed in the coming months as we work towards a final investment decision on Project Kilby. Other activities, including joint ventures, reported a loss of GBP 24 million. Centrally held corporate costs were partially offset by GBP 84 million of one-off fair value gains within our National Grid Partners investment portfolio.

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

Cash generated from operations was GBP 4.1 billion, up 14% compared to the prior year. This increase is driven by improved group cash generation. Net debt increased by GBP 4.5 billion in the period to GBP 48.6 billion, with cash inflows from operations being more than offset by strong capital investment, our investment in Joulent, interest and dividend payments. For the full year, we now expect net debt to increase by a further GBP 4 billion, including the remaining Joulent funding. Net finance costs were GBP 722 million, an increase of 6% compared to the prior year due to higher average net debt partially offset by higher capitalized interest as our investment program ramps up.

I presented this slide in May, and I'm repeating it because I think it's important to reiterate just how resilient our regulated business model is given the volatile macroeconomic environment. In the U.K., inflation protection across our regulated asset base supports real equity returns. In the U.S., revenue indexation, cost recovery and the ability to pace investment help us manage inflation. We also have limited exposure to the current volatility in wholesale energy costs with full recovery of energy procured for U.S. customers. And we manage currency risk deliberately, hedging around 70% of our U.S. assets with dollar-denominated debt. Together, these protections limit volatility and reinforce the visibility of our long-term growth, supporting our differentiated investment case.

Moving specifically to interest rates, given their focus across the wider market and where our business has limited exposure. Around 75% of our debt book is covered by operating company level recovery mechanisms. In the U.K., the RAV-weighted trailing debt tracker closely matches our actual issuance profile, and we have a strong track record of financing outperformance. In the U.S., actual debt costs are reflected in rates as well as a forecast of debt costs in New York, while the regular rate case cycle provides opportunities to reset the allowed cost of debt. We carefully manage the interest rate exposure on the remaining portion of the debt book with only around 10% of our net debt being rate sensitive.

And in the U.K., indexation of allowed equity returns to real gilt yields provides a further partial hedge against higher rates. In terms of our holding company debt, our average issuance tenor is 7 years to 10 years with maturities extending well into the 2030s. We can also access a range of global funding markets and currencies to issue efficiently. Importantly, our 5-year framework was based on the forward curves back in March, which had assumed a degree of rising rates. Given the strong protections, even a sustained increase in rates of 100 basis points across the 5-year framework would only impact FY '31 EPS by around 1p, including the benefit of capitalized interest.

Against that resilient backdrop, we remain firmly on track to deliver our 5-year financial framework to FY '31. The upgrades to our FY '27 guidance provide clear evidence of that progress. Capital investment is now expected to be higher at around GBP 13.5 billion, reflecting a slightly faster pace of supply chain delivery and underlying EPS growth is now expected to be 15% to 16%. As mentioned earlier, net debt will be around GBP 4 billion higher, including the remaining Joulent funding.

That near-term delivery strengthens our confidence in the 5-year framework with our capital investment program of at least GBP 70 billion, underpinning around 10% annual asset growth and underlying EPS growth of 8% to 10% per annum from the FY '26 baseline. Alongside that growth, we continue to offer a progressive inflation-protected dividend policy and expect to maintain credit metrics above our current thresholds to at least FY '31. Let me finish with what this means for investors. Our investment program is underpinned by multiple investment drivers, providing high visibility growth alongside a business model that is resilient to macroeconomic volatility, which provides a unique stability.

That combination supports our 5-year framework, which is designed to deliver a compelling investor proposition with attractive and consistent double-digit investor returns. So thank you for listening, and we will now go to the audio Q&A. Andrew, over to you.

Andrew Downey: Thank you, Andy, and good morning, everyone. My name is Andrew Downey. I'm Interim Director of Investor Relations at National Grid. I'm joined by Zoe and Andy in the room, and we're now going to take questions. [Operator Instructions] So with that, we're going to go to questions. We'll start with the conference call, and then we'll go to any on the webcast. We'll start with Pavan first, and then we'll go to Mark and Rob Pulleyn as the first 3 questions. Pavan, if you're online.

Pavan Mahbubani: Yes. I'd like to ask 2, please. Firstly, in the U.K., can you talk about your conversations with the Energy Ministry about your execution, how that's tying into affordability? And just maybe higher-level comments on your U.K. plans and how you see the political backdrop? And maybe a couple of words on GB Grid would be helpful as well. And then secondly, we had the midterm election results this week, and I wondered, Zoe, if you have any comments on potential impacts to your investment in Joulent Project Kilby, if you expect any changes to the time line there or any update you can give?

Zoe Yujnovich: Super. Thanks, Pavan. Very helpful. I think the conversations we've had broadly across government, both with the Energy Secretary, but also with Number 10 have been very constructive. As you'd expect, they've been very focused on execution. We see that the conversation, and we saw this reinforced in the budget that was delivered is very much focused on affordability, and you see some measures that the government has taken around trying to provide relief for customers. I think what's always been clear for us but has been reinforced is the importance of us delivering against the capital plans that we have. We know that if we deliver our capital plans, it helps us.

Of course, we've talked before about constraint costs. But -- and that's, therefore, a help for customers, but it's also about getting more out of the grid. And we talked before in our presentation about the work we're doing to also unlock capacity out of our existing assets. In terms of Great British Grid, we support the ambition that sits behind that. We've been told that it's unlikely to have any impact in the near term, certainly probably under the existing rate cases that we have. However, we are very much supportive of the focus that the government is bringing around pace and driving the right outcomes for customers. And we are completely willing to work with Great British Grid.

We do have a site visit that we're planning to do with them in the near future to understand a little bit more as their plans start to evolve. I think the other question perhaps then to move to just around the U.S. election. Indeed, you didn't mention the Northeast, but in large part, that's because, of course, we see stability in our Northeast area. There is a change in Texas. I think the key thing that we have been focusing on for Joulent is it's -- the conversations that have been evolving in the U.S. around data centers have been very much around who pays and is there any repercussions around data centers being on the grid.

I think in this regard, we see our investment in Joulent and the first project, Kilby, is a model example of how data center development, I think, can be very constructive. It is, of course, located in a very remote part of Texas. It's in West Texas. And it is also behind the meter. So there isn't congestion that gets added to the grid. And indeed, the conversation around who pays is quite clear because the generation sits within the boundary of the Kilby development. And so I think most of the things that we hear, whether that be around either noise, water, impact to grid, who pays are well accounted for.

And of course, we're working so in a very strong partnership, the 50-50 JV with Chevron and under the long-term PPA with Microsoft. So I think some important partners that have longevity as well. Hopefully, Pavan, that gives you the response to your 2 questions.

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

Mark Freshney: Apologies in advance for the tone of these questions. But firstly, on Community Wind, you only got, I think, GBP 75 million write-back, but you had written off GBP 400 million. And my understanding is that RWE recognized the capital gain on money that you'd put in or the write-back, so to speak. So can you talk more about what's going on there? And further on Joulent, it's a lot of cash that you put into this entity. What protections do you have in the contract with Engine No. 1 and Joulent so that if for whatever reason this project doesn't go ahead, you would be able to recover the funds that you have invested.

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

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

Andrew Agg: Yes. Thanks, Mark, and thanks for the questions. Yes, just on Community Offshore Wind, people may remember, we took the decision about a couple of years ago now, given the legislative changes with the Trump administration that it was appropriate for us to impair our investment. As we've worked through with our partner, as you say, we've chosen to exit the arrangement with a view to redeploying those -- the funds into opportunities elsewhere. I think our decision was based on the certainty of the agreement that we were able to reach rather than risking going into further uncertainty in terms of being potentially, sort of, elongated further legal activity within the U.S.

So that was what behind that decision to redeploy those funds. So, do you want to pick up the strategic point?

Zoe Yujnovich: Yes. I think the first thing I think it's important to reinforce, Mark, is that our priority remains focused on the regulated core organic growth that we have. That said, we did talk about selectively looking beyond our existing footprint, but there were some significant criteria which would need to be met in order for us to be comfortable. The interconnectors and any adjacencies in, sort of, innovation around data center development were 2 examples we gave on some potential adjacents through our National Grid Ventures vehicle. And we were still looking in our investment thesis for long-duration cash flows and confidence that we could have attractive earnings on a risk-adjusted basis.

We did feel that Joulent meets that criteria because we can provide a solution to one of the significant problems that you see around data center development around speed to power and the expertise that we can bring around things like power systems, procurement relationships and operating that mini grid, given it's behind the meter and such a substantial 2.7 gigawatts is important. We believe we've got very strong protections in the contract in the event that there isn't development related to either the first project or further subsequent projects. I don't think we've given substantial detail.

And I think as we come into more maturity around some of the projects, we can provide more clarity, but certainly, we were very clear given the possible volatility around projects that we needed to be confident around the downside protections that we had in the Joulent negotiations. I think in interconnectors, maybe I'll ask Andy to say a few words, but it does still fit into that strategic bucket of needing to be delivering project economics, which we're comfortable with.

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

Firstly, all of these projects, we work very closely, firstly, with our partners, but also with regulators and other stakeholders to ensure that, as you said, costs are more expensive. We've seen that across our supply chain, but to make sure that the cost benefit analysis remains very strong. And we've seen that with our existing interconnector fleet as well. Over the last few years, the strength of that performance has enabled us to return over GBP 400 million to consumers, and we'd expect to return a further GBP 300 million subject to Ofgem approval over the next few years. So when these assets operate well, they benefit consumers because of the regulatory arrangements that Ofgem put in place.

So I'd push back slightly on your term lucrative. I think the returns are set appropriately by the regulator. We perform as strong as we can against that, and we share those benefits back with consumers. So in terms of timing, obviously, that will be very dependent on the projects themselves when we get to the point with our partners and regulators of believing that we're at an appropriate point.

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

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

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

Zoe Yujnovich: Thanks, Rob. Yes, to the first question, I think everything we see in the demand funnel, either in our regulated jurisdictions or indeed as we focus in the market around possible adjacencies like in the demand for Joulent, we do see substantial queues, and that's in the U.K., in the U.S. as well. Maybe there's a point just to reinforce that we haven't covered, but we mentioned it in our opening remarks.

I think it's really positive to see in our New York business that we start to see some of the fabrication of semiconductors in our Central New York region, which is covered under our NiMo footprint because I think it starts to bring demand that has the potential to grow to 2 gigawatts that's outside of the typical data center conversations that are being held across the U.S. That said, we do see that whilst not all data centers should be developed, there still is a significant number of data centers, which we expect to go into construction. But I do think it's important that we look at these things through 2 lenses.

No doubt, it has to meet the financial lens, and we've talked about the criteria that we have there. But increasingly, we've always believed this is important. It's the consultation with the local communities about making sure that the way in which we engage satisfies the local community requirements. And that will vary depending on the community that we're operating in, no different to the consultation that we do across the U.K. And similarly, it will be the case as we look to data center developments in the U.S. So in Joulent, there is a real pipeline that sits behind Kilby. It's at various levels of maturity.

And until we actually have confidence that it meets those criteria on social license and the financial hurdles that we're seeking, those won't be matured. When they hit those hurdles, we'll make sure that we come back with more information.

Andrew Agg: Okay. Thanks, Zoe. And good morning, Rob. Yes, on U.S. rate cases, as you've alluded to, a busy time in the coming months. We're expecting the outcome on our Massachusetts Gas rate case within the next month or so. And then we will follow that with filings across New York with our KEDNY/KEDLI downstate gas rate cases and our upstate Niagara Mohawk rate cases as well across both our electric and gas businesses. So in terms of ROEs, I think if I step back, what we have seen over the medium to long term is actually despite going through a period of very low risk-free rates, actually nominal returns have held up very well.

So as a corollary to that, I'm not sat here expecting a sudden rebound off the back of higher interest rates. So we will file asking for an incremental step, as you might expect, reflecting that rate environment. But I think as we've said in our remarks this morning, we also recognize the need to balance the funding of the required investment with the need to work with our regulators to address the affordability challenges. And I think you'll see that in the rate cases we file as we ask for what we believe is an appropriate return. So overall, I think we're at, sort of, the mid-9s at the moment. I think that's a reasonable proxy going forward.

But everything at the moment I see is in line with the 5-year guidance that we've given.

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

Marcin Wojtal: The first one is on the numbers. I believe you are now guiding for growth in operating cash flow of 15% year-on-year. But previously, there was a guidance for growth of 20%. So could you explain what has changed? My question number two is broader relates to your review for U.K. distribution with Ofgem. Are you perhaps concerned at all that there could be a greater focus on affordability given the political developments in the U.K. and that could perhaps have an impact on the financial parameters of RIIO-T3 for distribution compared to what we saw for transmission.

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

Andrew Agg: Okay. Yes. Thanks, and morning, Marcin. Yes, I think our updated guidance on cash flow, and I'll come back to what we've guided to in terms of where we see net debt heading as a result, is all reflecting just the updates that we've given both around some of our working capital movements, but in particular, the slightly higher interest charges that we expect and the levels of CapEx. As you've seen, we've obviously increased our CapEx expectations for the full year and some of that will flow through to cash as well. What you'll see is we've guided our net debt to increase by a further GBP 4 billion for the second half of the year.

So that's all consistent. So that's what's behind that slight tick down in operating cash. It's the CapEx and interest rather than any deterioration in underlying operating performance.

Zoe Yujnovich: And I think on ED3, firstly, I'd say it's shaping up very constructively with Ofgem. Ofgem indicated that they would be using the T3 methodology as a starting point. And we will submit the ED3 business plan at the end of November using the sector-specific methodology that they released earlier as the basis. The similarity to T3 is important, but the investment drivers are quite different. T3, of course, is very much driven by the large transmission and strong visibility that we have around the powerful delivery incentives. For ED3, we do expect CapEx to grow, but there'll need to be a little bit more flexibility because the pace of electrification may change.

And we've been working very heavily with Ofgem as the way in which we look at affordability to make sure that we have the right incentives and therefore, investments, particularly for the secondary low-voltage system is more linked to the uptake that we have on things like heat pumps or EV vehicle penetration. So I think perhaps at the high level, I take reassurance that the framework will look quite similar to T3, but we are working quite closely with Ofgem around how we manage that flex versus build component and that we make sure that the incentives are appropriately rewarding those outcomes.

Andrew Downey: Great. Thanks, Marcin. We will go to Peter Crampton at Barclays next. Peter, if you can go ahead when you're online.

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

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

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

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

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

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

Andrew Downey: Fantastic. Thanks, Peter. [Operator Instructions] We've got 2 questions remaining. The first is from Jenny at Citi. So Jenny, please go ahead.

Jenny Ping: Three, please. Just going back to the portfolio of nonregulated businesses that you're building up. I just wanted to understand, Zoe, how you're thinking about portfolio construction. Obviously, to some of the previous questions, you talked about the potential for further investments in that business. How should we think about that portfolio as a percentage of the group? How sizable do you want to build that business? And Andy, just on the back of that, I don't think, and apologies if I missed it, but I don't think you gave an equity -- risk-adjusted equity return number in way of a hurdle rate. So if you have -- if you can repeat, please?

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

Zoe Yujnovich: Excellent. Thanks, Jenny. So let me start by -- we've mentioned this a number of times. So firstly, I think it's important we continue to reiterate that the focus is very much on our organic delivery of our GBP 70 billion program. And then as we look to adjacencies, we do look to make sure that we deliver on those long-duration cash flows and that we make sure that the returns are properly commensurate to the additional risk that we may be taking. I think we do not have a target size for that today other than to say it will remain small relative to our regulated core.

I think today, we see our NGV portfolio sits at around the 5% mark. And I think that, that's potentially could change a little bit, but our lion's share will remain in the regulated core. I think we're -- just on the hurdle rates, I think it's important to say that there isn't one number that will be in our mind. It will need to be risk adjusted. And so that will, of course, depend on how we articulate the risks project by project. So I think there's no particular number in mind. It's the reason why we want it to make sure it's above that of our regulated business.

But then on a risk-adjusted basis, we would expect that to be higher. Is there anything further, Andy, you'd like to mention on that?

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

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

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

Zoe Yujnovich: But I think the key message that I think is really important is that I think there may be some perceptions that the New York demand is much more driven by replacement or refurbishments. And I think that whilst there is some significant growth in our CapEx related to some of the reliability activity, we do still also see some structural demand, particularly as we see some of these fabrication facilities in the semiconductor industry pick up. And it's not just Micron.

There's been a number of public announcements issued by a number of others, which is why we see that broader ecosystem that's being developed around the Micron facility as having quite significant growth beyond even the 2 gigawatts that Micron has put out.

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

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

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

Andrew Downey: Great. Thanks, Jenny. So we're going to our final question from Ahmed at Jefferies.

Ahmed Farman: Just 2 quick ones from my side. The first one, you talked about a little bit of accelerated CapEx for this year due to, sort of, I think, better supply chain delivery. I'm a little bit interested in what parts of the supply chain are -- is that, sort of, coming through? And is there a broader point here about just more accelerated or front-loaded CapEx delivery across the plan vis-a-vis your previous assumptions? So that's my first question. Then my second question is just, sort of, more interested in your thoughts on how you're managing the impact of inflation within the context of your GBP 70 billion CapEx program.

I mean, obviously, you highlighted you have a lot of, sort of, supply chain locked in, but I still assume there would be unit price pressure. So just helpful to understand how you're mitigating those effects.

Zoe Yujnovich: Thanks, Ahmed. Let me take the first question. I'll pass you to Andy for the second. Yes, the uplift in our guidance for this year is largely related to faster supply chain derisking on our EGL 2 project, where we've secured the cables on an accelerated basis. And I think that the key point there is that we are getting better visibility of derisking the projects as they go from planning to securing. We've got 100% of the primary supply chain for the ASTI projects now in place. And we've got 80% of the supply chain that underpins the broader GBP 70 billion investment program also in place.

And so as we go through these various derisking activities, it further strengthens our confidence in the 5-year frame. I'd be careful to extrapolate that, that, therefore, means that we'll be issuing new guidance. It's a bit early to do so, but it certainly is encouraging that the derisking continues, but I wouldn't yet translate that into a higher 5-year guidance.

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

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

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

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