2013/14

Half year results

London | Thursday 21 November 2013

2

This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

Exchange Act of 1934, as amended. These statements include information with respect to National Grid’s financial condition, its results of

operations and businesses, strategy, plans and objectives. Words such as ‘anticipates’, ‘expects’, ‘should’, ‘intends’, ‘plans’, ‘believes’, ‘outlook’,

‘seeks’, ‘estimates’, ‘targets’, ‘may’, ‘will’, ‘continue’, ‘project’ and similar expressions, as well as statements in the future tense, identify forward-

looking statements. These forward-looking statements are not guarantees of National Grid’s 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. Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid’s ability to control or estimate

precisely, such as changes in laws or regulations, presentations from and decisions by governmental bodies or regulators (including the

timeliness of consents for construction projects); 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 arising

from the potentially harmful nature of its activities; network failure or interruption (and National Grid’s actual or perceived response thereto), the

inability to carry out critical non network operations and damage to infrastructure, due to adverse weather conditions including the impact major

storms as well as the results of climate change or due to unauthorised access to or deliberate breaches of National Grid’s IT systems or

otherwise; performance against regulatory targets and standards and against National Grid’s peers with the aim of delivering stakeholder

expectations regarding costs and efficiency savings, including those related to investment programmes and internal transformation projects

(including the US financial system and process implementation); and customers and counterparties failing to perform their obligations to the

Company. Other factors that could cause actual results to differ materially from those described in this presentation include fluctuations in

exchange rates, interest rates and commodity price indices; restrictions and conditions (including filing requirements) in National Grid’s

borrowing and debt arrangements, funding costs and access to financing; regulatory requirements for the Company to maintain financial

resources in certain parts of its business and restrictions on some subsidiaries’ transactions such as paying dividends, lending or levying

charges; inflation; the delayed timing of recoveries and payments in National Grid’s regulated businesses and whether aspects of its activities

are contestable; the funding requirements and performance of National Grid’s pension schemes and other post-retirement benefit schemes; the

loss of key personnel or the ability to attract, train or retain qualified personnel and any significant disputes arising with the National Grid’s

employees or the breach of laws or regulations by its employees; and incorrect or unforeseen assumptions or conclusions (including financial

and tax impacts and other unanticipated effects) relating to business development activity, including assumptions in connection with joint

ventures. For further details regarding these and other assumptions, risks and uncertainties that may affect National Grid, please read the

Strategic Review section and the ‘Risk factors’ on pages 176 to 178 of National Grid’s most recent Annual Report on Form 20-F as updated by

National Grid’s unaudited half-year financial information for the six months ended 30 September 2013 published on 21 November 2013. In

addition, new factors emerge from time to time and National Grid cannot assess the potential impact of any such factor on its 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 presentation.

.

Cautionary statement

Highlights

2013/14

Half year results

Steve Holliday | Chief Executive

Agenda

4

Highlights Steve Holliday

Business review Andrew Bonfield

Outlook Steve Holliday

Solid start to 2013/14

5

Progress towards robust full year out-turn

New rate plans in place

SAP implementation

Elevate 2015 programme

US

Solid first half performance: on track for good full year result

UK Good progress managing against

regulatory targets

Thorough business reorganisation

Benefits of supplier & partner negotiations

Financial performance

6

£1.6bn

operating profit

£979m

profit

before tax

£761m

earnings

20.4p

earnings

per share

14.49p

dividend

per share

Note: Business performance, excluding exceptional items, remeasurements and stranded cost recoveries for continuing operations

All numbers include impacts of timing

Interim scrip suspended reflecting high take up in August

Safety

7

Lost time injury frequency rate refers to the number of lost time injuries per 100,000 hours worked in a 12 month period

UK Significant improvement

in UK

Lost time injury rate

improved to under 0.1

US Performance not yet at

UK levels

Investments in training

and safety initiatives

£40m

£30m

£26m

Scoping

Tendering

Smart Design

Generating efficiency in the UK

8

Transmission

Headcount reductions

Totex efficiencies

- Alliance arrangements

- Competitive contracting

Efficiencies reduce

consumer bills

Generating efficiency in the UK

9

Transmission

Headcount reductions

Totex efficiencies

- Alliance arrangements

- Competitive contracting

Efficiencies reduce

consumer bills Efficiencies reduce consumer bills

Gas Distribution

IT investments

Contract renegotiation

Field force reorganisation

Repex strategic partners

10

Sept

2013

Sept

2012

UK Elec.Transmission 703 681

UK Gas Transmission 92 130

UK Gas Distribution 248 324

US Regulated 571 575

Other Activities 74 114

Joint ventures - 1

Total 1,688 1,825

£m

Capital investment

Summary

11

Solid start to the year

Foundations for good overall

performance in the year

Business Review

2013/14

Half year results

Andrew Bonfield | Finance Director

13

Performance measures

Measuring performance requires additional

information produced annually

Added context to IFRS movements

More detailed disclosure at full year

- Regulatory returns

- Regulatory revenue movements and “IOUs”

- Regulated Asset Value

14

Higher operating profit, led by increased

regulatory allowances, link to RPI and French

interconnector

Timing over-recovery of £10m

Solid business performance

UK Electricity Transmission

operating profit % of group operating profit

39

Business performance, excluding exceptional items, remeasurements and stranded cost recoveries, prior period numbers adjusted for the implementation of IAS 19 (revised) ‘Employee benefits’

All figures calculated at constant currency including timing

Constant currency figures calculated by applying the average 2013 rate ($1.55 to £1.00) to 2012 results (when the average rate was $1.58 to £1.00)

All timing over and under recoveries referred to are in period numbers

UK Transmission

12% Operating profit ex. timing % of group operating profit

Higher operating profits driven by higher

regulatory allowances

Timing over-recovery of £8m % of group operating profit

29

Lower operating profit led by £60m loss of

deferral income. £57m timing under-recovery

Partially mitigated by new Massachusetts storm

fund and lower bad debt expense

Operating performance from main UK non-regulated

businesses in line with prior year

Profitability offset by continued US systems

implementation costs

£614m

Lower operating profit reflecting reduced allowed

return, higher gearing and gas permit timing

Timing under-recovery of £12m

UK Gas Transmission

9 £133m operating profit % of group operating profit

UK Gas Distribution

£456m operating profit

% of group operating profit

US Regulated

£330m operating profit

21

% of group operating profit

Other

£39m operating profit

2

Year on year timing of £32m

Higher revenues led by RIIO revenue resets and

the French interconnector

Increased controllable costs and depreciation

15

Visual representation only – not to scale

Business performance, excluding exceptional items, remeasurements and stranded cost recoveries. Prior period numbers adjusted for the implementation of IAS 19 (revised) ‘Employee benefits

Constant currency figures calculated by applying the average 2013 rate ($1.55 to £1.00) to 2012 results (when the average rate was $1.58 to £1.00)

Post retirement costs represent pensions and other post employment benefits

Operating profit

1,597 1,572

32

91

25

45 (71) (10) (34) (30)

(73)

2012operatingprofit atconstantcurrency

timing net regulatedincome

controllableoperating

costs

postretirement

costs

regulateddepreciation

&amortisation

bad debts otheroperating

costs

US systemcosts

otheractivities

2013operating

profit

£m

Operating profit

Operating profit excluding timing 3% lower

2% lower

16

US systems

Increased SAP workload continues

Complex project, touching around 90 other systems

Need to separate LIPA systems from start of 2014

Costs in the second half expected to be lower than

the ~£90m incurred in first six months

17

Interest, tax and earnings

Finance costs

9% higher* than 2012

Business performance, excluding exceptional items, remeasurements and stranded cost recoveries

* Constant currency figures calculated by applying the average 2013 rate ($1.55 to £1.00) to 2012 results (when the average rate was $1.58 to £1.00)

Effective interest rate of

5.3%

Higher cost of carry on

gross debt associated with

pre financing

£605m

Debt financing Operating companies, external debt

18

Over last six months long term interest rates increased by 100bps

Only back to 2011 levels – long way below pre-2008 financial crisis levels

US ~£4-5bn

~80% fixed rate

Debt allowances typically reflect

embedded fixed rate - matching

allowance manages risk

Limited exposure in medium

term to refinancing

UK ~£13-14bn

~45% RPI linked

Debt allowances reset annually

using iBoxx tracker

UK debt financing

19

2.92%

2.72%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

iBoxx annual

yield

iBoxx trailing

average

spread to

NG yield

iBoxx: real

rate of ~1.5%

Scope to deliver continued outperformance

20

Interest, tax and earnings

Business performance, excluding exceptional items, remeasurements and stranded cost recoveries

* Constant currency figures calculated by applying the average 2013 rate ($1.55 to £1.00) to 2012 results (when the average rate was $1.58 to £1.00)

Tax rate 400bp lower than

2012

Reflects lower proportion

of US profits in H1 and

lower UK corporation tax

rate

Effective tax rate

23% at £(225)m

Earnings per share

20.4p

Finance costs

9% higher* than 2012

Effective interest rate

of 5.3%

Higher cost of carry on

gross debt associated

with pre financing

£605m

£761m earnings

3,729m weighted avg.

shares

Dividend

21

2013/14 interim dividend held at 14.49p

Full effect of annual increase in the total dividend expected to be

reflected in this year’s final dividend

Future interim dividends expected to be 35% of the prior year’s full

dividend

“We aim to grow the ordinary dividend at least

in line with the rate of RPI inflation each year

for the foreseeable future”

Scrip dividend

22

August take up over 45%

Over next few years, scrip helps maintain an

A- credit rating

However, excess take up of little further value

Suspending this interim scrip option

Limits this year’s overall take up to around

30%

23

Cash flows and net debt

Operating cash flows from continuing operations before exceptional items, remeasurements, stranded cost recoveries and taxation

Period ended 30 September 2013 £m

Operating profit 1,572

Depreciation & amortisation 690

Pensions (174)

Working capital & other (130)

Net operating cash flow 1,958

Net debt 21,374

Net operating cash flow

£2.0bn Operating cash flow after capex

£85m Net debt

£21.4bn

24

Guidance for 2013/14

French interconnector performed well in first half,

somewhat lower in second half

SAP costs continue, albeit reduced level expected

Full year tax rate expected of 26% - 27%

Capital investment revised to around £3.5bn

Net debt increasing by around £1bn, excluding FX

Strategy, growth and returns

2013/14

Steve Holliday | Chief Executive

Half year results

26

Business developments

UK increased uncertainty around

timing of new generation build

US focusing on need for future

investments

0

800

1600

£m

09

/10

price

s

27

0

3000

6000

MW

2014 2019

load

non-load

UK: Electricity Transmission

Baseline MW connections Baseline capital expenditure allowance*

2014 2019

*Allowed capital spend for the electricity transmission owner, excludes system operator capex

28

0

20

40

60

80

2013 2023

Feb-2012 Aug-2013

UK: Electricity Transmission Contracted generation connections

Currently

low levels of

new

generation

construction Increase in

contracted

generation to

2023

Low level sustains

reflecting delayed

projects

29

UK: Electricity Transmission capital priorities Still investing in load related and strategic projects

Investment in

constraint reduction

Completion of

major projects

Extensive pre

works

30

UK: Electricity Transmission non-load investment Continuing at a material level

Age of grid

Need to replace critical

infrastructure

~£500m in 2012/13 –

similar levels in 2013/14 0

800

1600

£m

09

/10

price

s

load

non-load

Baseline capital expenditure allowance*

2014 2019

*Allowed capital spend for the electricity transmission owner, excludes system operator capex

31

UK: gas investments Different agenda

Major transmission investments always

planned for end of RIIO period

Gas distribution remains focused on

repex and safety agenda

32

UK: need for flexibility

Investment could accelerate

Totex allowances flex for the outputs needed

Customers only fund necessary outputs

Continue to invest a significant amount in next 2-3 years

Overall investment programme still feels about right

33

UK: medium term drivers of investment

Growth expectations remain

strong

0

20

40

60

80

2013 2023

Feb-2012 Aug-2013

Sustained investment at current

levels in UK Electricity

Transmission drives average

8-10% asset growth

Contracted generation connections

Overall UK growth ~6%pa

34

US: investment opportunities

Currently investing ~$1.8bn pa

Next year forecast ~$2bn pa

Medium term ~$2.5bn pa Shale gas

Changing generation mix

Network resilience

Business development

35

New York state

Repowering generation in Long Island

- Advanced discussions around $1.5bn

investment in Barrett facility

US: investment opportunities

New York Transmission consortium

energy superhighway

36

US: investment opportunities

Clean Line

Projects making good progress

Grain Belt Express Clean Line

- State of Kansas approval

- $2 billion project

- Targeted construction in 2016

- Commissioning in 2018

UK Streamline organisation and

deliver outputs to drive

outperformance under RIIO

US Build on new rate cases

and systems to enhance

customer service and drive

efficiencies

2013/14 priorities

37

Outlook

38

Solid start to the year

Remain confident of delivering

growth and returns

Appendix

2013/14

Half year results

Appendix 1: Pensions & other post-retirement

benefit obligations (IAS19 data)

UK US

At 30 September 2013 (£m) ESPS NGUK PS Pensions OPEBs NG total

Market value of assets 1,871 15,225 4,145 1,520 22,761

Present value of liabilities (2,476) (15,671) (4,465) (2,529) (25,141)

Net liability (605) (446) (320) (1,009) (2,380)

Deferred taxation 121 89 134 409 753

Liability net of taxation (484) (357) (186) (600) (1,627)

Discount rates 4.4% 4.4% 5.3% 5.3%

OPEBs = other post employment benefits

1 Adjusted for the impact of changes to financial accounting standard IAS19 (‘Employee Benefits’)

UK US

At 31 March 20131 (£m) ESPS NGUK PS Pensions OPEBs NG total

Market value of assets 1,943 15,449 4,378 1,515 23,285

Present value of liabilities (2,563) (15,998) (5,118) (3,103) (26,782)

Net liability (620) (549) (740) (1,588) (3,497)

Deferred taxation 143 126 303 636 1,208

Liability net of taxation (477) (423) (437) (952) (2,289)

Discount rates 4.3% 4.3% 4.7% 4.7%

40

Appendix 2: Timing Impacts

£m

UK Electricity

Transmission

UK Gas

Transmission

UK Gas

Distribution

US

Regulated Total

2013/14 Opening balance * 5 19 (8) 111 127

2013/14 over/(under) recovery 10 (12) 8 (57) (51)

2013/14 Closing balance to return / (recover) 15 7 - 54 76

2012/13 Opening balance (24) 2 2 132 112

2012/13 over/(under) recovery 21 (9) (3) (92) (83)

2012/13 Closing balance to return / (recover) (3) (7) (1) 40 29

Year on year timing variance (11) (3) 11 35 32

• All USD balances stated using the average 2013 rate ($1.55 to £1.00) 41

Appendix 3: Weighted average number of shares

Period ended 30 September 2013 2012

Number of shares (millions):

Prior period as reported (weighted average) - 3,637

January 2013 scrip dividend shares - 27

Current period opening shares 3,665 -

3,665 3,664

August 2013 dividend scrip shares 60 60

Other share issuances (weighted from issuance) 4 -

Weighted average number of shares (2012 restated) 3,729 3,724

Business performance earnings (£m) 761 766

Business performance EPS (2012 restated) 20.4p 20.6p

42