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.