Statement re IFRS

National Grid Transco PLC
04 March 2005


4 March 2005

                           National Grid Transco plc
                  International Financial Reporting Standards

National Grid Transco plc ('NGT' or the 'Group') is today holding a presentation
to brief analysts and investors on its implementation of International Financial
Reporting Standards ('IFRS'). NGT will begin to report its group consolidated
results under IFRS from 1 April 2005.

The adoption of IFRS will have a significant impact on NGT's future reported
financial results, and is expected to lead to an increase in reported operating
profit, profit before tax and earnings per share and a reduction in reported net
assets. The table below illustrates the impact that the adoption of IFRS would
have had on NGT's consolidated profit and loss account and net assets for the
year ended 31 March 2004 if IFRS had been adopted.

Illustrative impacts of the adoption of IFRS by NGT
for the year ended 31 March 2004:

                                  Under           Under
                                   IFRS       UK GAAP**      Change     % Change
Underlying operating
profit* (£m)                      2,763           2,213       + 550         + 25
Underlying profit before
taxation* (£m)                    1,935           1,391       + 544         + 39
Underlying earnings per
share* (pence)                     46.0            33.9       + 12.1        + 36

Statutory operating profit (£m)   2,476           1,837       + 639         + 35
Statutory profit before
taxation (£m)                     1,874           1,337       + 537         + 40
Statutory earnings per
share (pence)                      47.0            35.0       + 12.0        + 34

Net assets at 31 March 2004 (£m)  1,014           1,271       - 257         - 20

The adjustments are unaudited, are included for illustrative purposes only and
may change as the Group finalises its analysis of the effect of IFRS.


The most significant areas to be impacted by the adoption of IFRS are the
accounting treatments of replacement expenditure and regulatory assets. Other
key areas that will be impacted include the treatments of pensions and other
post retirement benefits, profits on disposal of properties, deferred taxation
and goodwill.

The adoption of IFRS represents an accounting change only, and will not affect
the operations, cashflows or distributable reserves of the Group. Similarly,
there will be no impact on the regulated asset values or regulatory agreements
of any of the Group's businesses.

Commenting today, Steve Lucas, Group Finance Director, said:

'We regard these changes as positive in that they will enhance comparability
with other European companies in our sector, not least in relation to the
biggest change which concerns the treatment of replacement expenditure.'

An analyst presentation will be held at JPMorgan Cazenove, 20 Moorgate,
London EC2A 6AD at 10:00am (UK time) today.


* The Group's definition of 'underlying' changes from UK GAAP to IFRS. UK GAAP
'underlying' results exclude goodwill amortisation and exceptional items. Under
IFRS, there is no goodwill amortisation and hence no need to exclude it for the
purposes of showing 'underlying' results. IFRS 'underlying' results include
profits or losses arising on the disposal of properties by SecondSite, the
Group's property management business, which is considered to be part of the
normal recurring operating activities of the Group. IFRS 'underlying' results
exclude other material, and significant non-recurring items or transactions that
are similar in concept to exceptional items under UK GAAP.

** During the current financial year, the Group has implemented FRS20 (Share
based payment). The full year results for 2003/04 under UK GAAP were announced
in May 2004 before FRS20 had been implemented. Hence the figures for the
financial year ended 2003/04 under UK GAAP shown in the table above are restated
for the impact of FRS20.



CONTACT DETAILS

Investors
Alexandra Lewis          [phone]         [phone](m)
Dave Campbell            [phone]         [phone](m)
Bob Seega (US)           [phone]

Media
Clive Hawkins            [phone]         [phone](m)

Citigate Dewe Rogerson   [phone]
Anthony Carlisle         [phone](m)


Live telephone coverage of presentation - password National Grid Transco

Dial in number           [phone]


Telephone replay of presentation (available until 18 March 2005)

Dial in number           [phone]
Account number           869448
Recording number         445445


Live and archived webcast of the presentation will be available
at www.ngtgroup.com



Notes to Editors:

International Financial Reporting Standards

Under European Union (EU) regulations all EU companies listed on an EU stock
exchange are required to use 'endorsed' International Financial Reporting
Standards (IFRS) published by the International Accounting Standards Board, in
drawing up their financial statements for accounting periods beginning on or
after 1 January 2005. For NGT, IFRS will be adopted beginning with the financial
year commencing 1 April 2005.

NGT is the first UK utility to quantify the impact that IFRS is likely to have
on its reported results. IFRS is expected to result in an increase in reported
underlying and statutory operating profit of the Group. The main reason for this
is the change in accounting treatment for both replacement expenditure (repex)
in NGT's UK gas distribution businesses and regulatory assets in NGT's US
businesses. At the statutory level, the expected positive impact also reflects
the fact that goodwill is no longer to be amortised.

IFRS is expected to result in a reduction in reported net assets of the Group.
The positive effect on the value of reported net assets from the full
capitalisation of replacement expenditure is expected to be more than offset by
the negative adjustments from no longer recognising regulatory assets on the
balance sheet and from bringing pension liabilities onto the balance sheet.


Further detail of the significant adjustments is below:

Replacement expenditure

Repex represents the cost of planned maintenance on gas mains and services
assets, the vast majority of which relates to the Group's UK gas distribution
business. Under UK GAAP repex is written off to the profit and loss account as
incurred. Under IFRS it will be capitalised and depreciated over its useful
life. There will be no change to the regulatory treatment of repex as 50% of the
spend will continue to be added to the Regulatory Asset Value and 50% will be
recovered in the year of spend. Had NGT adopted IFRS for 2003/04 underlying
earnings per share would have been 6.0p higher and net assets at 31 March 2004
would have been £2.8 billion higher after tax.


Regulatory assets

Regulatory assets arise when a US based public utility, authorised by its
regulator, defers to its balance sheet certain costs or revenues which would
otherwise be charged to expense or revenues. These assets are currently recorded
on the balance sheet under UK GAAP. Under IFRS, regulatory assets are not
permitted to be recognised in the balance sheet. Instead, costs will be charged
to the income statement when incurred, and recoveries from customers will be
recognised when receivable. Had NGT adopted IFRS for 2003/04 underlying earnings
per share would have been 2.9p higher and net assets at 31 March 2004 would have
been £1.9 billion lower after tax.


Pensions and other post retirement benefits

Under UK GAAP, the Group's pension and post retirement benefits are accounted
for under SSAP 24. Under IFRS these benefits will be accounted for under IAS 19.
This will result in the Group recognising all of its net pension and other post
retirement benefit obligations on the balance sheet at 1 April 2004. Had NGT
adopted IFRS for 2003/04 underlying earnings per share would have been 1.1p
higher and net assets at 31 March 2004 would have been £1.4 billion lower after
tax.


Profits on disposal of properties

Under UK GAAP, FRS 3 requires that certain items should be recorded as
'non-operating exceptional items' below operating profit. Included within these
items are profits and losses arising on the disposal of tangible fixed assets.
There is no such requirement under IFRS. The Group will show these items within
its underlying results where property sales are a normal ongoing business
activity of the Group. Had NGT adopted IFRS for 2003/04, this adjustment would
have increased underlying earnings per share by 2.3p after tax but would have
had no effect on the net assets of the Group.


Goodwill

Goodwill represents the difference between the fair value attributed to the net
assets of an acquired business and the consideration paid for that business. The
goodwill recorded in the Group's accounts at 31 March 2004 primarily arose from
the acquisition of the US subsidiaries. Under UK GAAP goodwill is amortised over
20 years. Under IFRS there is no longer a requirement for goodwill to be
amortised, but it will be reviewed for impairment. Had NGT adopted IFRS for
2003/04, this adjustment would have had no effect on underlying earnings per
share, as goodwill has always been excluded from the Group's UK GAAP measure of
underlying earnings. There is no effect on net assets at 31 March 2004, as
goodwill is no longer amortised prospectively and no adjustment is required for
previously charged goodwill amortisation.



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 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 Transco's ability
to control or estimate precisely, such as delays in obtaining, or adverse
conditions contained in, regulatory approvals, competition and industry
restructuring, changes in economic conditions, currency fluctuations, changes in
interest and tax rates, changes in energy market prices, changes in historical
weather patterns, changes in laws, regulations or regulatory policies,
developments in legal or public policy doctrines, the impact of changes to
accounting standards, technological developments, the failure to retain key
management, the availability of new acquisition opportunities or the timing and
success of future acquisition opportunities. Other factors that could cause
actual results to differ materially from those described in this announcement
include the ability to integrate the US and UK businesses acquired by or merged
with National Grid Transco or to continue to realise the expected synergies from
such integrations, the failure for any reason to achieve reductions in costs or
to achieve operational efficiencies, unseasonable weather impacting on demand
for electricity and gas, the behaviour of UK electricity market participants on
system balancing, the timing of amendments in prices to shippers in the UK gas
market, the performance of National Grid Transco's pension schemes and the
regulatory treatment of pension costs, the impact of the proposed disposal by
National Grid Transco of four of its UK gas distribution networks and any
adverse consequences arising from outages on or otherwise affecting energy
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 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 Form 20-F). Recipients are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
announcement. National Grid Transco does not undertake any obligation to release
publicly any revisions to these forward-looking statements to reflect events or
circumstances after the date of this announcement.




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