24th Mar 2005 07:00
National Grid Transco PLC24 March 2005 24 March 2005 National Grid Transco close period trading update for the year ended 31 March 2005 Earnings growth in line with expectations National Grid Transco plc (the "Group") is today issuing its trading updateprior to entering its close period on 1 April 2005 and the announcement of itspreliminary results on 19 May 2005. The Group continues to trade in line with expectations, with both underlyingprofit before tax* and underlying earnings* expected to be ahead of last year.This is despite the year-on-year impact of the weaker dollar, which is expectedto amount to around £20 million at the earnings level. At constant currency, Group underlying operating profit* is also expected to beahead of last year. The Group's US Distribution business has continued toperform well and expects to achieve its target to reduce controllable costs by20% in real terms over the 3 years ended March 2005. In the UK, the Group hasalso benefited from the new connections charging reform ("Plugs") in UKTransmission and the contribution from Crown Castle UK (CCUK), which wasacquired by the Group during the year. These factors have more than offset theexpected reduction in profits in the UK Distribution business resulting from theplanned higher level of UK gas main replacement expenditure ("repex") and theyear-on-year reduction in gas transportation prices exacerbated by reducedvolumes due to warmer than normal weather. Repex is now expected to amount toaround £470m for the full year. Net debt at 31 March 2005 is expected to be around £13.5 billion, which ishigher than last year primarily due to the cost of the CCUK acquisition (£1.1billion), partially offset by the weaker dollar. The Group will achieve a lowerinterest charge this year despite an increase in interest rates over the periodand the higher level of net debt. The effective tax rate on underlying profit before tax* is anticipated to besimilar to last year's rate. UK Gas Distribution network sales and return of value The process to obtain the required regulatory approvals relating to the proposedsale of four of the Group's UK gas distribution networks remains on track andcompletion is expected towards the end of the second calendar quarter of 2005.It is proposed that the £2.0 billion return of value to shareholders from theproceeds of these sales will be achieved by way of a B share scheme. The schemeis to be combined with a consolidation of the Group's ordinary shares and willallow shareholders to opt to receive the return as either income or capital. It is expected that the Extraordinary General Meeting seeking shareholderapproval of the B share scheme will be held on the same day as the AnnualGeneral Meeting, 25 July 2005, with the return of value following during August. * Excluding exceptional items and goodwill amortisation Cautionary statement This announcement contains certain statements that are neither reportedfinancial results nor other historical information. These statements areforward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended. Because these forward-looking statements are subject to assumptions,risks and uncertainties, actual future results may differ materially from thoseexpressed in or implied by such statements. Many of these assumptions, risks anduncertainties relate to factors that are beyond National Grid Transco's abilityto control or estimate precisely, such as delays in obtaining or adverseconditions contained in regulatory approvals, competition and industryrestructuring, changes in economic conditions, currency fluctuations, changes ininterest and tax rates, changes in energy market prices, changes in historicalweather patterns, changes in laws, regulations or regulatory policies,developments in legal or public policy doctrines, the impact of changes toaccounting standards, technological developments, the failure to retain keymanagement, the availability of new acquisition opportunities or the timing andsuccess of future acquisition opportunities. Other factors that could causeactual results to differ materially from those described in this announcementinclude the ability to continue to integrate the US and UK businesses acquiredby or merged with the Group, the failure for any reason to achieve reductions incosts or to achieve operational efficiencies, unseasonable weather impacting ondemand for electricity and gas, the behaviour of UK electricity marketparticipants on system balancing, the timing of amendments in prices to shippersin the UK gas market, the performance of National Grid Transco's pension schemesand the regulatory treatment of pension costs, the impact of the proposeddisposal by National Grid Transco of four of its UK gas distribution networksand any adverse consequences arising from outages on or otherwise affectingenergy networks owned and/or operated by National Grid Transco. For a more detailed description of these assumptions, risks and uncertainties,together with any other risk factors, please see National Grid Transco's filingswith the United States Securities and Exchange Commission (and in particular the"Risk Factors" and "Operating and Financial Review" sections filed with its mostrecent annual report on Form 20F). Recipients are cautioned not to place unduereliance on these forward-looking statements, which speak only as of the date ofthis announcement. National Grid Transco does not undertake any obligation torelease publicly any revisions to these forward-looking statements to reflectevents or circumstances after the date of this announcement. Contacts InvestorsAlexandra Lewis +44 (0)20 7004 3170 +44 (0)7768 554879(m)David Campbell +44 (0)20 7004 3171 +44 (0)7799 131783(m)Richard Smith +44 (0)20 7004 3172 +44 (0)7747 006321(m)Bob Seega (US) +1 508 389 2598 MediaClive Hawkins +44 (0)20 7004 3147 +44 (0) 7836 357173(m) Citigate Dewe Rogerson +44 (0)20 7638 9571Anthony Carlisle +44 (0)7973 611888(m) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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