Continued Good Performance and Strong Earnings Per Share Growth

    LONDON, March 30 /PRNewswire-FirstCall/ -- National Grid plc (the
"Group") is today issuing its trading update as it enters its close period
ahead of the announcement of its preliminary results on Thursday 18 May 2006.
    The Group expects to deliver growth in operating profit* and, due to
significantly lower financing costs this year, strong growth in profit before
tax* for the year. The effective tax rate for the year is anticipated to be
around 31%. Earnings per share* are expected to be well ahead of last year,
reflecting the 1 August 2005 share consolidation**.
    The good operating performance reflects a continued focus on efficiencies
across the Group, as well as underlying volume growth in the US and higher UK
capacity auction income. This, together with the strengthening US dollar, is
forecast to more than offset a significant increase in depreciation charges,
a decrease in incentive profits, timing on the recovery of US pension costs
and higher shrinkage gas costs.
    As expected, net debt is anticipated to be around GBP11 billion,
excluding certain mark-to-market effects.
    * Results are measured on a Business Performance basis. Business
Performance results are the primary financial performance measure used by the
Group, being the results for continuing operations before exceptional items
and certain non-cash mark-to-market re-measurements of commodity contracts
and financial instruments that are held for economic hedging purposes but
which do not achieve hedge accounting.
    ** The number of ordinary shares in issue is expected to decrease by 12%,
from 3.1 billion at 31 March 2005 to 2.7 billion at 31 March 2006 as a result
of the share consolidation.

    Audited comparative data for the year ended 31 March 2005 under IFRS

                                                            GBPm
    Underlying results* for continuing operations
    Operating profit                                        2,443
    Pre-tax profit                                          1,740
    Earnings                                                1,303
    Earnings per share                                      42.3p
    Statutory results
    Operating profit - continuing operations                2,142
    Pre-tax profit - continuing operations                  1,439
    Earnings - continuing operations                        1,120
    Earnings                                                1,424
    Earnings per share                                      46.2p

    Note:
    As previously reported, the adoption of International Financial Reporting
Standards (IFRS) will lead to greater volatility on both underlying and
statutory reported earnings due to the effects IFRS has on the accounting
treatment of US regulatory assets as compared with UK GAAP and the adoption
of International Accounting Standard 39: Financial Instruments, Recognition
and Measurement, which the Group adopted with effect from 1 April 2005. While
this may cause the reported results for any given period to be more volatile
than those reported under UK GAAP, this change in treatment does not impact
the performance of the Group or its current or future cash flows.
    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'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, 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 obtain, delays in obtaining or adverse conditions
contained in regulatory approvals or other consents to acquisitions made by
or mergers with National Grid, the ability to integrate these businesses once
acquired or merged or to realise the expected synergies from such
transactions, the failure for any reason to achieve anticipated 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's pension
schemes and the regulatory treatment of pension costs and any adverse
consequences arising from outages on or otherwise affecting energy networks
owned and/or operated by National Grid.
    For a more detailed description of these assumptions, risks and
uncertainties, together with any other` risk factors, please see National
Grid's filings with and submissions to the US 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 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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