On 18th June 2020, National Grid (LON: NG) one of the world’s largest investor-owned electricity and gas utility, announced its full-year results statement for the year ended 31st March 2020.
- Revenue: National Grid reported revenue of £14,570 million for the year ended 31st March 2020 which is 2% lower as compared to £14,969 million generated for the year ended March 2019.
- Operating profit: Operating profit for the company increased by 1%, from £3,427 million in 2019 to £3,454 million in 2020. The operating profit was higher due to various reasons like lower operating costs which offset higher costs, increased deprecation.
- Operating costs: Operating costs for decreased 7% for UK Electricity Transmission, 8% decrease for UK Gas Transmission and a 1% decrease for the US regulated Operations.
- Operating Margin: Operating Margin remained the same as 2.3% for both FY 19 and FY 20.
- Profit before tax: National Grid reported a 1% increase with £2,493 million profit before tax for the year ended March 2020 as compared to £2,474 million for 2019
- Capital Investment: Capital Investment increased by 19% from £4.5 bn for FY 19 to £5.4 bn for FY 2020. The investment was done to upgrade and modernize infrastructure and to build and maintain safe and reliable networks
- Asset growth: Due to capital investment, National Grid saw a 180 bps increase in asset growth, from 7.2% in FY 19 to 9% in FY20.
- Return on equity (ROE): ROE decreased 10 bps from 11.8% in FY 19 to 11.7% in FY 20.
National Grid reports four business segments. While two segments witnessed an increase in revenue the other two saw fall in revenue.
- UK Electricity Transmission- The high-voltage electricity transmission networks in England and Wales and Great Britain system operator. Total Sales generated in FY 20 was £3,702 million, up by 10% from £3,351 million in FY 19. Operating profit increased 8% from £1,092 million in FY 19 to £1,174 million in FY 20. Capital investment increased by 13% from £925 million in FY 19 to £1,043 million in FY 20. Regulated asset value (RAV) increased 4.4% YoY basis. Cost benefits from efficiency savings of £54 million. Return o Equity for FY 20 13.5%.
- UK Gas Transmission- The high-pressure gas transmission networks in Great Britain and system operators in Great Britain. Total Sales generated in FY 20 was £927 million, up by 3.5% from £896 million in FY 19. Operating profit increased by 18% from £341 million in FY 19 to £420 million in FY 20. Capital investment decreased by 19% from £308 million in FY 19 to £249 million in FY 20. Regulated asset value (RAV) increased 2.3% YoY basis. Cost benefits from efficiency savings of £19 million. Return on Equity for FY 20 is 9.8%
- US Regulated Gas- Distribution networks, electricity distribution networks, and high-voltage electricity transmission networks in New York and New England and electricity generation facilities in New York. Total Sales generated in FY 20 was £9,205 million, down by 6.5% from £9,846 million in FY19. Operating profit increased 3% from £1,594 million in FY 19 to £1,636 million in FY 20. Capital investment increased by 20% from £2,688 million in FY 19 to £3,228 million in FY 20. Return on Equity for FY 20 is 9.3%.
- NGV and Other activities – The business comprises all commercial operations in metering, LNG at the Isle of Grain in the UK, electricity interconnectors, and other investments. Total Sales generated in FY 20 was £736 million, down by 16% from £876 million in FY 19. Operating profit decreased by 40% from £400 million in FY 19 to £242 million in FY 20. Capital investment increased by 41% from £626 million in FY 19 to £885 million in FY 20.
John Pettigrew, National Grid’s chief executive said that National Grid made good progress in 2019/20. And that they expect the impact of COVID-19 on FY 21 to be recoverable over future years and therefore the company anticipates no material economic impact on the Group in the long-term. The company expects the net revenue to drop and costs to increase due to COVID-19. Group capital investment is expected to reduce to around £5 billion for 2020/21. The company is expecting an impact of £400 million on underlying operating profit for 2020/21 due to higher bad debts charges and COVID-19 related costs.