Interim Results

National Grid Group PLC
20 November 2001


NATIONAL GRID GROUP plc

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2001

Continued strong performance from electricity businesses

Niagara Mohawk acquisition expected to complete early in 2002

Latin American telecoms fully written down



Financial highlights
  * Operating profit before exceptional items and          up 6% to £385
    goodwill amortisation                                  million

  * Basic earnings per share, excluding exceptionals and   up 24% to 13.9p
    goodwill amortisation

  * Interim dividend in line with policy                   up 6.8% to 6.46p
                                                           per share
  * Net after tax exceptional charges                      £282 million



Commenting, James Ross, Chairman, said:

'National Grid's core electricity businesses are continuing to perform well and
to deliver on our strategy, producing good growth in operating profit and
strong cash flows.

'We have completed the review of our Latin American telecoms businesses. In
Brazil, despite Intelig making good operational progress, finalisation of long
term vendor financing has not proved possible. The general economic conditions
in the region are also clearly not helpful, particularly for Silica Networks in
Argentina. In view of this, we and our partners are seeking new strategic
investors for Intelig and are pursuing a sale of Silica. In the meantime, we
have taken a conservative view and have fully written-down the carrying value
of our Latin American telecom investments.

'In the US we have filed a comprehensive rate settlement for Niagara Mohawk
which provides benefits for both customers and shareholders. We expect to
complete the acquisition early in the next calendar year and intend to fund 50
per cent of the acquisition cost with cash.

'With the acquisition of Niagara Mohawk, our total investment in the US since
early 2000 will rise to some £9 billion. We are confident of earning a nominal
pre-tax return of 10.5 per cent on our US business by March 2005, a level
materially higher than we are expected to earn in the UK and accompanied by
substantially longer term regulatory agreements.

The businesses continue to perform well and are on track to meet our
expectations for the year. With the completion of the acquisition of Niagara
Mohawk, our enlarged Group will be well-positioned to deliver growing earnings
and cashflow that support our progressive dividend policy.'

Unless otherwise indicated, profit numbers are stated before exceptional items
and goodwill amortisation



GROUP RESULTS

Operating profit was up 6 per cent to £385 million in the first half, resulting
from improved performance by the US distribution and transmission businesses
and Intelig, partly offset by the expected reductions in stranded cost recovery
and interconnectors.

Net interest increased £52 million to £153 million, mainly reflecting Intelig's
higher interest costs (up £32 million), due to interest paid on vendor
financing and exchange rate impacts on Intelig's US dollar-denominated debt.
The first half of the last financial year included a £17 million benefit
relating to closing out fixed interest rate swaps. Interest cover, excluding
exceptionals, goodwill amortisation and the impact of exchangeable bonds, was
3.0 times.

Reflecting the increase in interest charges, profit before tax was £232
million, down from £261 million for the same period last year.

The tax charge for the period, including deferred tax and excluding exceptional
items, was £24 million as compared to £92 million in the same period last year.
The reduction reflects the adjustment to the prior period associated with the
implementation of full provisioning for deferred tax (UK Financial Reporting
Standard 19, 'Deferred Tax') and the release of prior year tax provisions in
this period. We estimate that the effective tax rate for the year ending 31
March 2002 will be 26 per cent, before exceptional items but after the release
of prior year tax provisions.

Profit after tax and minority interests was £206 million, up from £166 million
for the same period last year, with basic earnings per share rising 24 per cent
to 13.9 pence.

Net after tax exceptional charges for the period were £282 million. These
charges were largely the result of a £290 million charge taken to write down
fully the carrying value of our Latin American telecoms investments and provide
for all expected liabilities.

The Board has declared an interim dividend of 6.46 pence per share to be paid
on 15 January 2002 to shareholders on the register at 30 November 2001. This is
an increase of 6.8 per cent (5 per cent real) over the interim dividend last
year, in line with our dividend policy.


ELECTRICITY

All of National Grid's electricity businesses performed in line with
expectations.

In the UK, price-controlled turnover of £434 million was up 1 per cent from the
same period last year reflecting the effect of the new price control regime
which commenced on 1 April this year. Controllable costs have been reduced by 3
per cent in real terms over last year, and we remain confident of exceeding
Ofgem's expectations of cost reductions over the period of the price control.

The implementation of the New Electricity Trading Arrangements (NETA) has been
very successful. Our performance under the new Balancing Services Incentive
Scheme (BSIS) is satisfactory with a £9 million contribution to operating
profit for the first half of the year, approximately the same as the first half
performance last year under the Transmission Services Scheme (TSS). Performance
for the full year is difficult to predict and will depend upon the impact of
the winter months on the balancing market.

Overall operating profit for the UK transmission business was £243 million,
similar to the first six months of last year.

In line with our expectations, UK interconnector turnover was down 35 per cent
to £28 million, due to the introduction of capacity auctions for the French
interconnector for which there has been lower demand partially driven by
reduced UK wholesale prices. Operating profit was £7 million, down from £23
million in the first six months of last year.

As well as providing core expertise and strong cashflow, the performance of our
UK business strengthens the platform from which we are seeking opportunities
among the evolving Regional Transmission Organisations (RTOs) in the US.
Earlier this month we signed definitive agreements with the Alliance RTO to act
as its managing member, which are being considered by the Federal Energy
Regulatory Commission.

In the US, distribution operating profit was up 14 per cent to £83 million,
reflecting higher deliveries and reduced controllable costs. Warm summer
weather this year, combined with cool weather last year, resulted in
distribution volumes up 3.7 per cent. We estimate the underlying volume growth
to be up just over 1 per cent. Controllable costs are down 2 per cent in real
terms on an annualised basis. We remain confident of meeting our target of a 30
per cent reduction in controllable costs by March 2004.

Contribution from US stranded cost recovery fell by 36 percent to £25 million,
principally due to a one-off benefit of £12 million in the same period last
year.

In the US, the nominal pre-tax return on investment for the six months ended 30
September 2001 was an annualised 9.3 per cent, on track to meet our 10.5 per
cent target for the existing US business by March 2004.

NIAGARA MOHAWK ACQUISITION

The acquisition of Niagara Mohawk continues to progress well. National Grid and
Niagara Mohawk filed a joint rate settlement with the New York Public Service
Commission on 11 October, which is awaiting approval. Niagara Mohawk completed
the sale of its nuclear facilities earlier this month. Following approval by
New York, we will still require approval by the Securities and Exchange
Commission, which we expect to receive in time to complete the transaction
early in 2002.

The proposed ten-year rate plan offers immediate reductions of delivery rates
for all customers, averaging 8 per cent, and freezes delivery charges going
forward. It also provides attractive shareholder benefits through substantial
incentives to reduce costs while improving service. Our integration planning
for the acquisition is well advanced. We expect to meet the $190 million cost
reduction target contained in the rate plan by the fourth year following
completion, achieving half of the savings by the end of next financial year. As
a result, we expect the acquisition to enhance earnings per share before
exceptional items and after goodwill amortisation in the first full year and
are confident that we will meet our additional objective of earning a nominal
pre-tax return of 10.5 per cent on our expanded US business by the year ending
March 2005.

Prior to completion, Niagara Mohawk shareholders will have the opportunity to
make elections for cash or National Grid shares or a combination of both. We
will fund 50 per cent of the acquisition cost with cash, subject to receipt of
sufficient shareholder elections.

TELECOMS

We have completed the review of our Latin American telecom businesses that we
announced in our trading statement on 4 October.

Intelig has continued to meet overall revenue and EBITDA targets with our share
of operating loss for the period reduced to £22 million from £70 million for
the same period last year. Intelig's performance satisfied the pre-conditions
to completing permanent vendor financing, but the vendors have not provided the
permanent financing facility.

As a consequence, the shareholders of Intelig (National Grid, Sprint, and
France Telecom) have appointed advisors to seek new strategic investors. In the
meantime, Intelig continues to be funded by the interim vendor financing, which
has been rolled over, together with limited additional funds from shareholders
and vendors.

Silica Networks, a carriers' carrier operating primarily in Argentina, has been
affected by the general telecoms market downturn and the severe economic
difficulties in that country. As a result, we and the other shareholders have
cut costs, suspended further investment and are seeking a purchaser for the
business.

Manquehue net, our joint venture with Williams and MetroGas in Santiago, Chile,
has been impacted by the local economic downturn. Again, strong management
action is being taken to reduce costs.

Given these difficulties, we have adopted a conservative approach with the full
write down and provision for all expected liabilities totalling £290 million.

Energis, our associate, recently announced resilient first half results and
reinforced its fully funded position with new bank facilities. Energis Polska,
our joint venture in Poland with Energis, launched commercial operation in June
2001 and has won some significant corporate customers with its range of data
and voice services.

Lastly, GridCom and NEESCom, our wholly-owned telecom businesses, continued to
execute their business plans. GridCom won a significant contract with Hutchison
to provide turnkey services in the UK.

Looking ahead, we continue to see telecoms as a complement to our electricity
businesses but will focus on opportunities which are more closely related to
our core infrastructure assets and capabilities.

OUTLOOK

The businesses continue to perform well and are on track to meet our
expectations for the year. With the completion of the acquisition of Niagara
Mohawk, our enlarged Group will be well-positioned to deliver growing earnings
and cashflow that support our progressive dividend policy.


Presentations

An analyst presentation will be held at the City Presentation Centre, 4
Chiswell Street, London EC1Y 4UP at 9:00 am (UK time) today.

A press presentation will be held at the same address at 11:00 am (UK time)
today.

Live coverage of the analyst presentation

UK: [phone]

USA: [phone]

Telephone replay of the analyst presentation (available for 5 days)

UK: [phone] (pin 118188£)

USA:      [phone] (pin 152653£)

Website replay of the analyst presentation from around 4:00 pm (UK time) today
on www.nationalgrid.com (available for 6 months)

Analyst teleconference at 3.00 pm UK time (10.00 am Eastern and 7.00 am
Pacific)

UK: [phone] (quote National Grid)

USA: [phone] (quote National Grid)

Replay of the teleconference (available for 5 days)

UK:[phone] (pin 635322)

USA: [phone] (pin 1340075)

Photographs are available at www.newscast.co.uk.

Contact

National Grid

Roger Urwin

Mike Jesanis

Investors UK Marcy Reed [phone]

mobile: [phone]

Terry McCormick [phone]

mobile: [phone]

US: Karen Shih [phone]



Press:      Susan Stevens [phone]

Mobile [phone]

Clive Hawkins [phone]

mobile: [phone]

Citigate Dewe Rogerson [phone]

Anthony Carlisle mobile: [phone]

Sue Pemberton





NATIONAL GRID GROUP plc

GROUP PROFIT AND LOSS ACCOUNT

Six months ended 30 September 2001
                                                Six months ended    Year ended
                                                    30 September      31 March
                                              2001          2000          2001
                                                      (restated)    (restated)
                                 Notes          £m            £m            £m
Group turnover - continuing
operations                        2(a)    1,989.5       1,792.8       3,799.7
Operating costs                          (1,764.3)     (1,461.5)     (3,094.2)
                                        ----------    ----------    ----------
Operating profit of Group
undertakings                      2(c)      225.2         331.3         705.5
Share of joint ventures' and
associate's operating loss        2(c)     (195.5)        (55.3)        (96.0)
                                        ----------    ----------    ----------
Operating profit
- Before exceptional items and
goodwill amortisation             2(b)      384.8         362.4         739.4
- Exceptional costs               3(a)      (17.0)        (46.8)        (45.3)
- Impairment of investments in joint
ventures                          3(b)     (290.4)            -             -
- Goodwill amortisation                     (47.7)        (39.6)        (84.6)
                                        ----------    ----------    ----------
Total operating profit - continuing
operations                        2(c)       29.7         276.0         609.5
Exceptional profit relating to
partial disposal of Energis       3(c)       20.1         132.3         243.3
Profit on disposal of businesses                -             -          20.1
Net interest                       4       (152.7)       (101.0)       (255.1)
                                        ----------    ----------    ----------
(Loss)/profit on ordinary
activities before taxation                 (102.9)        307.3         617.8
- Taxation (excluding exceptional
items)                             5        (23.5)        (92.1)       (182.1)
- Taxation (exceptional items)                5.5         143.3         235.4
                                        ----------    ----------    ----------
Taxation (total)                            (18.0)         51.2          53.3
                                        ----------    ----------    ----------
(Loss)/profit on ordinary
activities after taxation                  (120.9)        358.5         671.1
Minority interests                           (3.1)         (3.7)         (6.9)
                                        ----------    ----------    ----------
(Loss)/profit for the period               (124.0)        354.8         664.2
Dividends                          6        (95.6)        (89.5)       (223.0)
                                        ----------    ----------    ----------
Retained (loss)/profit                     (219.6)        265.3         441.2
                                            ======        ======        ======
(Loss)/earnings per ordinary share
Basic, on (loss)/profit for the period    7 (8.4)p         24.1p         45.0p
Basic, on adjusted profit for the                                     
period*                                   7  13.9p         11.2p         20.0p
Diluted, on (loss)/profit for the
period                                    7 (8.4)p         22.9p         42.9p
Diluted, on adjusted profit for the
period*                                   7  13.5p         11.0p         19.8p
* Adjusted profit excludes
exceptional items and
goodwill amortisation
Dividends per ordinary share              6  6.46p         6.05p        15.08p





GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

Six months ended 30 September 2001
                                                Six months ended     Year ended
                                                    30 September       31 March
                                             2001           2000           2001
                                                      (restated)     (restated)
                                  Note         £m             £m             £m
(Loss)/profit for the period              (124.0)         354.8          664.2
Exchange adjustments                       (25.6)           0.5          (14.7)
Tax on exchange adjustments                    -              -           31.9
                                       ----------     ----------     ----------
Total recognised gains and
losses relating to the period             (149.6)         355.3          681.4
                                                          ======         ======
Prior period adjustment             1     (802.3)
                                       ----------
Total gains and losses
recognised since last annual
report                                    (951.9)
                                           ======





SUMMARISED GROUP BALANCE SHEET

At 30 September 2001
                                                At 30 September     At 31 March
                                             2001          2000            2001
                                                     (restated)      (restated)
                                  Note         £m            £m              £m
Fixed assets
Intangible assets - goodwill             1,304.6       1,337.6         1,386.2
Tangible assets                          5,637.8       5,467.9         5,617.3
Investments
- Joint ventures                           160.6         409.7           398.8
- Associate                                391.1         317.4           401.9
- Other investments                        141.5         158.3           145.1
                                       ----------    ----------      ----------
Total Investments                          693.2         885.4           945.8
                                       ----------    ----------      ----------
                                         7,635.6       7,690.9         7,949.3
                                       ----------    ----------      ----------
Current assets
Stocks                                      35.5          35.6            34.1
Debtors (due within one year)              792.9         781.4           880.4
Debtors (due after one year)               901.8         923.5         1,053.9
Assets held for exchange                    16.6          16.6            16.6
Business held for resale                       -         133.7               -
Cash and deposits                          500.9         649.7           271.2
                                       ----------    ----------      ----------
                                         2,247.7       2,540.5         2,256.2
Creditors (due within one year)         (1,450.1)     (2,138.5)       (2,213.7)
                                       ----------    ----------      ----------
Net current assets                         797.6         402.0            42.5
                                       ----------    ----------      ----------
Total assets less current
liabilities                              8,433.2       8,092.9         7,991.8
Creditors (due after one year)          (4,380.6)     (3,975.0)       (3,755.5)
Provisions for liabilities and
charges                                 (1,584.9)     (1,582.9)       (1,521.0)
                                       ----------    ----------      ----------
Net assets employed                      2,467.7       2,535.0         2,715.3
                                           ======        ======          ======
Capital and reserves
Called up share capital                    174.9         174.7           174.7
Share premium account                      286.1         275.0           276.9
Profit and loss account                  1,971.4       2,030.6         2,221.9
                                       ----------    ----------      ----------
Equity shareholders' funds          8    2,432.4       2,480.3         2,673.5
Minority interests                          35.3          54.7            41.8
                                       ----------    ----------      ----------
                                         2,467.7       2,535.0         2,715.3
                                           ======        ======          ======



SUMMARISED GROUP CASH FLOW STATEMENT

Six months ended 30 September 2001
                                                Six months ended     Year ended
                                                    30 September       31 March
                                             2001           2000           2001
                                    Note       £m             £m             £m
Net cash inflow from operating
activities                            9    548.0          343.4          810.6
Dividends from joint ventures                6.8            8.7           20.3
Net cash outflow for returns on
investments and servicing of
finance                                   (102.8)        (125.0)        (306.9)
Net corporate tax refund/(paid)             43.7          (58.4)        (137.2)
Net cash outflow for capital
expenditure                               (194.7)        (198.6)        (457.6)
Net cash outflow for
acquisitions and disposals                 (31.0)        (648.0)        (582.2)
Equity dividends paid                     (133.4)        (123.2)        (212.5)
                                       ----------     ----------     ----------
Net cash inflow/(outflow) before
management of liquid
resources and financing                    136.6         (801.1)        (865.5)
Net cash (outflow)/inflow from
the management of liquid
resources                                 (225.5)         372.3          775.2
Net cash inflow from financing             110.7          418.5           88.4
                                       ----------     ----------     ----------
Movement in cash and
overdrafts                                  21.8          (10.3)          (1.9)
                                           ======         ======         ======







NOTES

1. Prior period adjustments

The adoption of Financial Reporting Standard 19 'Deferred Tax' (FRS 19) has
resulted in a change in the method of accounting for deferred tax, from a
partial to a full provision basis. This change in accounting policy has been
reflected in the accounts as a prior period adjustment in accordance with
Financial Reporting Standard 3. As a result, equity shareholders' funds at 30
September 2000 and 31 March 2001 have been reduced by £753.1m and £802.3m
respectively and the comparative amounts of profit after taxation for the six
months ended 30 September 2000 and the year ended 31 March 2001 have been
reduced by £57.8m and £104.8m respectively.

Prior period numbers have also been restated to reflect a revised segmental
analysis of National Grid USA's results (for the six months ended 30 September
2000 only), and a revised presentation of the minority interests' share of the
results of associated undertakings. The minority interests, which were
previously reported within operating profit, net interest and taxation, are now
included within minority interests.



2. Segmental analysis
                                                  Six months ended   Year ended
                                                      30 September     31 March
                                                 2001         2000         2001
                                                        (restated)
a) Turnover                                        £m           £m           £m
Transmission - UK                              608.5        643.2      1,315.6
Transmission - USA                             104.2        100.2        194.7
Distribution - USA                             933.5        673.1      1,519.0
Stranded costs recovery and generation-USA     124.5        174.8        334.9
Interconnectors - UK                            27.5         42.4         83.6
Interconnectors - USA                           22.4         23.5         47.9
Telecommunications - USA                         6.5          4.3          9.5
Other activities (i)                           198.1        155.2        339.7
Sales between businesses                       (35.7)       (23.9)       (45.2)
                                           ----------   ----------   ----------
Group turnover - continuing operations       1,989.5      1,792.8      3,799.7
                                               ======       ======       ======
Europe                                         800.5        819.1      1,696.6
North America                                1,189.0        973.7      2,103.1
                                           ----------   ----------   ----------
                                             1,989.5      1,792.8      3,799.7
                                               ======       ======       ======

(i) Turnover primarily comprises EnMo, which provides the On-the-day Commodity
Market for gas trading in Great Britain, and contracting activities.

Stranded costs recovery

Under settlement agreements reached as part of industry restructuring, National
Grid USA is allowed to recover its costs (net of sales proceeds) and, where
applicable, a return on those costs, associated with its ongoing efforts to
exit the generation business.


                                                  Six months ended  Year ended
                                                      30 September    31 March
                                                  2001        2000        2001
                                                        (restated)  (restated)
b) Operating profit - before exceptional items      £m          £m          £m
and goodwill amortisation
Transmission - UK                               243.4       242.8       486.3
Transmission - USA                               30.8        24.0        49.6
Distribution - USA                               82.9        72.6       154.8
Stranded costs recovery and
generation - USA                                 24.9        39.0        61.7
Interconnectors - UK                              6.9        22.5        42.8
Interconnectors - USA                             8.4        11.0        22.3
Interconnectors - Other                             -        (0.4)       (0.1)
Telecommunications - USA                          1.8         1.6         2.9
Other activities                                 (0.5)       (1.6)        0.8
                                            ----------  ----------  ----------
Group undertakings                              398.6       411.5       821.1
                                            ----------  ----------  ----------
Telecommunications - Energis                     (3.7)        2.4         4.4
Telecommunications - Intelig                    (21.8)      (69.7)     (118.0)
Telecommunications - Other                       (6.4)       (0.6)       (3.4)
Other electricity activities                     18.1        18.8        35.3
                                            ----------  ----------  ----------
Joint ventures and associate                    (13.8)      (49.1)      (81.7)
                                            ----------  ----------  ----------
Total operating profit - before exceptional
items and goodwill amortisation                 384.8       362.4       739.4
                                                ======      ======      ======
Europe                                          246.3       274.1       545.0
North America                                   150.0       144.9       288.0
Latin America                                   (14.1)      (59.0)      (97.8)
Rest of the World                                 2.6         2.4         4.2
                                            ----------  ----------  ----------
                                                384.8       362.4       739.4
                                                ======      ======      ======
Electricity                                     416.2       431.4       859.5
Telecommunications                              (31.4)      (69.0)     (120.1)
                                            ----------  ----------  ----------
                                                384.8       362.4       739.4
                                                ======      ======      ======




                                                  Six months ended  Year ended
                                                      30 September    31 March
                                                  2001        2000        2001
                                                        (restated)  (restated)
c) Operating profit - after exceptional items       £m          £m          £m
and goodwill amortisation
Transmission - UK                               243.4       242.8       486.3
Transmission - USA                               24.7        18.5        37.6
Distribution - USA                               55.5        47.6       101.8
Stranded costs recovery and
generation - USA                                 24.9        39.0        61.7
Interconnectors - UK                              6.9        22.5        42.8
Interconnectors - USA                             8.4        11.0        22.3
Interconnectors - Other                             -        (0.4)       (0.1)
Telecommunications - USA                         (0.4)       (0.5)       (1.4)
Other activities                                 (0.5)       (2.4)       (0.2)
Exceptional costs - USA                          (4.3)      (46.8)      (45.3)
Exceptional costs - UK                          (12.7)          -           -
Impairment of investments in joint ventures    (120.7)          -           -
                                            ----------  ----------  ----------
Group undertakings                              225.2       331.3       705.5
                                            ----------  ----------  ----------
Telecommunications - Energis                    (15.4)       (3.8)       (9.4)
Telecommunications - Intelig                    (21.8)      (69.7)     (118.0)
Telecommunications - Other                       (6.7)       (0.6)       (3.9)
Other electricity activities                     18.1        18.8        35.3
Impairment of investments in joint ventures    (169.7)          -           -
                                            ----------  ----------  ----------
Joint ventures and associate                   (195.5)      (55.3)      (96.0)
                                            ----------  ----------  ----------
Total operating profit - after exceptional items
and goodwill amortisation                        29.7       276.0       609.5
                                                ======      ======      ======
Europe                                          222.0       267.9       531.2
North America                                   110.0        64.7       172.4
Latin America                                  (304.9)      (59.0)      (98.3)
Rest of the World                                 2.6         2.4         4.2
                                            ----------  ----------  ----------
                                                 29.7       276.0       609.5
                                                ======      ======      ======
Electricity                                     365.8       353.3       748.2
Telecommunications                             (336.1)      (77.3)     (138.7)
                                            ----------  ----------  ----------
                                                 29.7       276.0       609.5
                                                ======      ======      ======


3. Exceptional items

a) Exceptional costs

The exceptional costs of £17.0m (£11.5m after tax) substantially relate to
restructuring costs incurred as a result of a business reorganisation.

b) Impairment of investments in joint ventures

The exceptional charge of £290.4m (£290.4m after tax) relates to the write down
of the Group's investments in its Latin American telecom joint ventures. The
exceptional charge comprises a write-down of the carrying value of the Latin
American telecom joint ventures of £169.7m to their estimated recoverable
amounts, and the recognition of related liabilities of £120.7m.

c) Partial disposal of Energis

The exceptional profit totalling £20.1m (£20.1m after tax) relating to the
partial disposal of Energis arises from a reduction in the Group's interest in
Energis plc, an associated undertaking, as a result of the issue of shares by
Energis relating to the acquisition by Energis of further shares in Ision.



4. Net interest
                                                 Six months ended    Year ended
                                                     30 September      31 March
                                               2001          2000          2001
                                                       (restated)    (restated)
                                                 £m            £m            £m
Interest payable and similar charges         136.9         164.7         350.1
Interest capitalised                         (11.9)         (9.7)        (20.7)
Interest receivable and similar income       (24.1)        (73.1)       (112.9)
                                         ----------    ----------    ----------
                                             100.9          81.9         216.5
Joint ventures and associate                  51.8          19.1          38.6
                                         ----------    ----------    ----------
                                             152.7         101.0         255.1
                                             ======        ======        ======

5. Taxation

The tax charge of £23.5m on profit before taxation, excluding exceptional
items, for the six months ended 30 September 2001 is based on the estimated
effective tax rate, excluding exceptional items, for the year ending 31 March
2002 of 26%. The tax charge for the six months ended 30 September 2001 includes
all of the benefit of an adjustment to prior periods, which is also included in
arriving at the estimated effective tax rate of 26% for the year ending 31
March 2002.




6. Dividends

The interim dividend of 6.46p per ordinary share (2000: 6.05p) will be paid on
15 January 2002 to shareholders on the register on 30 November 2001.

7. (Loss)/earnings per ordinary share

Basic loss per ordinary share for the six months ended 30 September 2001 of
8.4p (2000: earnings of 24.1p) is calculated based on a loss for the period of
£124.0m (2000: profit of £354.8m) and 1,480.5m (2000: 1,474.8m) shares - being
the weighted average number of shares in issue during the period, excluding the
shares held by employee share trusts.

Basic earnings per ordinary share on the adjusted profit for the six months
ended 30 September 2001 of 13.9p (2000: 11.2p) excludes exceptional items (see
note 3) and goodwill amortisation totalling £329.5m (2000: £189.2m (net
credit)), and is based on earnings of £205.5m (2000: £165.6m).

For the purposes of calculating diluted loss/earnings per share, loss/earnings
and the weighted average number of shares have been adjusted for the effects of
all dilutive potential ordinary shares.



8. Reconciliation of movement in equity shareholders' funds

                                                   Six months ended  Year ended
                                                       30 September    31 March
                                                   2001        2000        2001
                                                         (restated)  (restated)
                                                     £m          £m          £m
(Loss)/profit for the period                    (124.0)      354.8       664.2
Dividends                                        (95.6)      (89.5)     (223.0)
                                             ----------  ----------  ----------
                                                (219.6)      265.3       441.2
Issue of ordinary shares                           4.1         0.3         0.9
Exchange adjustments                             (25.6)        0.5       (14.7)
Tax on exchange adjustments                          -           -        31.9
                                             ----------  ----------  ----------
Net (decrease)/increase in equity
shareholders' funds                             (241.1)      266.1       459.3
Equity shareholders' funds at start of period  2,673.5*    2,214.2     2,214.2
                                             ----------  ----------  ----------
Equity shareholders' funds at end of period    2,432.4     2,480.3     2,673.5
                                                 ======      ======      ======

* originally £3,475.8m before deducting prior period adjustment of £802.3m.





9. Net cash inflow from operating activities
                                                 Six months ended    Year ended
                                                     30 September      31 March
                                                  2001       2000          2001
                                                       (restated)    (restated)
                                                    £m         £m            £m
Operating profit of Group undertakings          225.2      331.3         705.5
Depreciation and amortisation                   183.5      193.8         380.0
Impairment of investments in joint ventures     120.7          -             -
Profit on disposal of tangible fixed assets      (4.0)      (6.2)         (6.6)
Increase in stocks                               (2.0)      (3.2)         (7.9)
Decrease/(increase) in debtors                  147.9      (76.8)       (189.8)
Decrease in creditors                          (108.7)     (79.0)        (55.3)
Decrease in provisions                          (14.4)     (12.6)        (11.7)
Other                                            (0.2)      (3.9)         (3.6)
                                            ---------- ----------    ----------
                                                548.0      343.4         810.6
                                                ======     ======        ======





10.     Movement in net debt
                                                   Six months ended  Year ended
                                                       30 September    31 March
                                                   2001        2000        2001
                                                     £m          £m          £m
Movement in cash and overdrafts                   21.8       (10.3)       (1.9)
Cash outflow/(inflow) from the management of
liquid resources                                 225.5      (372.3)     (775.2)
Increase in borrowings                          (101.4)     (415.6)      (81.4)
                                             ----------  ----------  ----------
Change in net debt resulting from cash flows     145.9      (798.2)     (858.5)
Acquisition of Group undertakings                    -      (161.9)     (162.2)
Certificates of tax deposit surrendered              -           -        (3.6)
Exchange adjustments                              60.6      (138.1)     (218.0)
Other non-cash movements                          (7.3)       (4.3)      (12.3)
                                             ----------  ----------  ----------
Movement in net debt in the period               199.2    (1,102.5)   (1,254.6)
Net debt at start of period                   (3,918.2)   (2,663.6)   (2,663.6)
                                             ----------  ----------  ----------
Net debt at end of period                     (3,719.0)   (3,766.1)   (3,918.2)
                                                 ======      ======      ======


11. Differences between UK and US Generally Accepted Accounting Principles
('GAAP')

The Group prepares its consolidated accounts in accordance with UK GAAP, which
differ in certain respects from US GAAP. The significant adjustments necessary
to restate net income and equity shareholders' funds in accordance with US GAAP
are set out below.



a) Net income
                                                 Six months ended    Year ended
                                                     30 September      31 March
                                               2001          2000          2001
                                                       (restated)    (restated)
                                                 £m            £m            £m
Profit for the period, excluding exceptional
items                                        157.8         126.0         210.7
Exceptional items after taxation            (281.8)        228.8         453.5
                                         ----------    ----------    ----------
Net (loss)/income under UK GAAP             (124.0)        354.8         664.2
                                         ----------    ----------    ----------
Adjustments to conform with US GAAP:
Deferred taxation                             25.3         (29.6)        (27.2)
Pensions                                      15.2           9.6          18.9
Share option schemes                          (0.7)         (4.8)         (5.3)
Tangible fixed assets                          1.7           1.7           3.4
Financial instruments                        (84.2)          5.1         (55.4)
Issue costs associated with EPICs             (0.9)         (0.9)         (1.8)
Carrying value of EPICs liability            179.7          65.0         152.5
Severance and integration costs                  -          38.7          23.6
Recognition of income                          5.9         (12.7)        (17.0)
Goodwill                                      35.7          (1.0)         (1.6)
Share of joint ventures' and associate's
adjustments to conform with US GAAP          (17.9)         21.5          56.0
Other                                          0.7             -             -
                                         ----------    ----------    ----------
Total US GAAP adjustments                    160.5          92.6         146.1
                                         ----------    ----------    ----------
Net income under US GAAP                      36.5         447.4         810.3
                                             ======        ======        ======
Basic earnings per share - US GAAP             2.5p         30.3p         54.9p
Diluted earnings per share - US GAAP           2.5p         28.7p         52.1p

Net income under US GAAP includes a net loss of £281.3m (2000 and year ended 31
March 2001 net gains of £267.7m and £527.9m respectively) which are treated as
exceptional items under UK GAAP.




b)     Equity shareholders' funds               At 30 September     At 31 March
                                              2001         2000            2001
                                                     (restated)      (restated)
                                                £m           £m              £m
Equity shareholders' funds under UK GAAP  2,432.4      2,480.3         2,673.5
                                        ----------   ----------      ----------
Adjustments to conform with US GAAP:
Deferred taxation                           (25.7)       (48.0)          (47.2)
Pensions                                    194.4        175.1           178.7
Shares held by employee share trusts         (4.9)       (13.6)          (10.2)
Ordinary dividends                           95.6         89.5           133.5
Tangible fixed assets                       (39.9)       (43.3)          (41.6)
Financial instruments                       (99.3)         6.1           (45.5)
Issue costs associated with EPICs             2.8          4.6             3.7
Carrying value of EPICs liability           217.2        (50.0)           37.5
Severance liabilities                           -          4.1               -
Recognition of income                       (11.1)       (12.7)          (17.0)
Goodwill                                     68.1         40.9            34.1
Share of joint ventures' and associate's
adjustments to conform with US GAAP         (34.1)        28.3            21.3
Other adjustments                            (2.3)         2.0            (0.8)
                                        ----------   ----------      ----------
Total US GAAP adjustments                   360.8        183.0           246.5
                                        ----------   ----------      ----------
Equity shareholders' funds under US GAAP  2,793.2      2,663.3         2,920.0
                                            ======       ======          ======

National Grid has adopted Statement of Financial Accounting Standards (SFAS)
133 'Accounting for Derivative Instruments and Hedging Activities' and SFAS 142
'Accounting for Goodwill and Other Intangible Assets' with effect from 1 April
2001. However, the associate has not applied SFAS 142 with effect from 1 April
2001, and consequently the US GAAP results reflect National Grid's share of the
associate's goodwill amortisation.

SFAS 133, as amended by SFAS 137 and 138, establishes accounting and reporting
standards for derivative instruments and hedging activities. The effect of
adopting SFAS 133 at 1 April 2001 has been to reduce US GAAP net income and
equity shareholders' funds by £13.9m (net of tax).

SFAS 142 requires that goodwill should no longer be amortised and that it must
be reviewed for impairment ('transitional goodwill impairment test') within six
months of adoption, and annually thereafter. The transitional goodwill
impairment test conducted at 1 April 2001, revealed that National Grid had no
impairment to recognise.

If SFAS 142 had been in effect for the six months ended 30 September 2000 and
the year ended 31 March 2001, reported net income under US GAAP would have been
higher by £33.6m and £70.9m respectively.


12.     Basis of preparation

The financial information contained in this announcement has, with the
exception of the change in accounting policy resulting from the adoption of FRS
19 (see note 1) and SFAS 133 and 142 (see note 11), been prepared on the basis
of the accounting policies set out in the Annual Report and Form-20F for the
year ended 31 March 2001 and does not constitute statutory accounts as defined
in Section 240 of the Companies Act 1985. The financial information in respect
of the year ended 31 March 2001 has been derived from the statutory accounts
for the year ended 31 March 2001, which have been delivered to the Registrar of
Companies. The auditors' report on those statutory accounts was unqualified and
did not contain a statement under Section 237(2) or (3) of the Companies Act
1985. The financial information in respect of the six months ended 30 September
2001 is unaudited but has been reviewed by the auditors and their report is set
out on page 20.

This interim results announcement was approved by the Board of Directors on 19
November 2001.


Independent Review Report to National Grid Group plc

Introduction

We have been instructed by National Grid Group plc to review the financial
information which comprises the Group Profit and Loss Account, the Summarised
Group Balance Sheet, the Summarised Group Cash Flow Statement, the Group
Statement of Total Recognised Gains and Losses and the related notes. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/
4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2001.



PricewaterhouseCoopers

Chartered Accountants

London

19 November 2001










Cautionary statement

This announcement 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 U.S. 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 those expressed in or implied by such 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 the ability to obtain
expected synergies from the agreed, but not completed, acquisition of Niagara
Mohawk, movements in the share price of Energis plc, delays in obtaining or
adverse conditions contained in regulatory approvals, competition and industry
restructuring, changes in economic conditions, changes in energy market prices,
changes in historical weather patterns, changes in laws, regulations or
regulatory policies, developments in legal or public policy doctrines,
technological developments, the availability of new acquisition opportunities
or the timing and success of future acquisition opportunities. For a more
detailed description of these assumptions, risks and uncertainties, together
with any other risk factors please see National Grid's filings with the United
States Securities and Exchange Commission (and in particular the 'Risk Factors'
and 'Operating and Financial Review' sections in its most recent annual report
on 20F). Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
announcement. National Grid does not undertake any obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date of this announcement.