Trading Statement

National Grid Group PLC
26 March 2002

National Grid pre-close trading update for the year ending 31 March 2002

Financial results for the year at top end of expectations

National Grid Group plc (National Grid) is today starting its usual analyst
briefings ahead of the close period prior to the announcement on 30 May 2002 of
results for the year ending 31 March 2002. The following information will be
provided:

Key points

  • Group results expected to be at top end of analyst forecasts.
  • UK transmission operating profits significantly ahead of expectations.
  • US business maintains strong performance.
  • Acquisition of Niagara Mohawk completed on 31 January for 59 per cent
    shares, 41 per cent cash - all elections for shares and cash met in full.
  • Investment in Energis expected to be substantially written down.

Electricity

The UK transmission business has continued to trade strongly with record peak
demand leading to over-recovery of price-controlled revenues expected to be
about £15 million. As a result of continued success in controlling balancing
costs, the Balancing Services Incentive Scheme is expected to produce
substantially increased profits in the second half.

The US electricity business has maintained strong performance. Continued
improvements in the distribution and transmission operations in New England are
expected to more than offset the continued decrease in stranded cost recovery.
Full year operating profit from New England is, therefore, expected to be ahead
of last year. The additional contribution to operating profit from our New York
operation is expected to be around £85 million.

In Argentina, operating profit for the year ended 31 December 2001 from our
joint venture, Transener, is in line with expectations. However, the devaluation
of the peso has adversely affected Transener's balance sheet since the majority
of its borrowings are in US dollars. As a result of this, we will account for
our share of the joint venture's non-cash exceptional foreign exchange losses.
Based on the closing peso:US dollar exchange rate of 2.65 peso:1 USD on 22
March, this would be approximately £85 million.

Telecoms

National Grid expects to write down substantially all the £350 million carrying
value of its 32.5 per cent stake in Energis. National Grid is also evaluating
with its partners the options for Energis Polska.

In Latin America, National Grid's share of Intelig's operating losses for the
year is expected to be less than £40 million, compared with £118 million last
year. Indicative offers from potential investors in Intelig are being evaluated.

Other items

As anticipated, net debt and preference share capital of subsidiaries is
expected to be approximately £8.5 billion at 31 March 2002, some £4.8 billion
higher than at the half year, primarily as a result of the Niagara Mohawk
acquisition.

Net interest expense is expected to be some 25 per cent higher than last year,
primarily due to increased debt associated with the acquisition of Niagara
Mohawk and further borrowings within our joint ventures and associates.

Exceptional restructuring costs in the UK and US are expected to amount to
around £110 million.

Tax charge

Due to the release of £73 million of prior year tax provisions, the effective
tax rate for the year on the profit before tax, excluding exceptional items, is
now expected to be approximately 20 per cent.

Shares in issue

As part of the consideration paid to Niagara Mohawk shareholders, National Grid
issued approximately 279 million new shares on 31 January 2002. This increased
the number of outstanding shares to some 1,777 million and the weighted average
number of shares for the year ending 31 March 2002 for purposes of calculating
earnings per share to around 1,527 million.


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 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.


Contacts

National Grid Group

Stephen Box, Group Finance Director

Michael Jesanis, Chief Operating Officer, NG USA


Investors

Marcy Reed           [phone] [phone](m)

Terry McCormick      [phone] [phone](m)

Louise Clamp         [phone] [phone](m)

Karen Shih                508-389-3176 (US)


Media

Clive Hawkins      [phone] [phone](m)


Citigate Dewe Rogerson: [phone]

Anthony Carlisle        [phone](m)



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