National Grid PLC (NGG) 2019 Q2 法說會逐字稿

Thank you. Good afternoon, everyone. I'm Alexandra Lewis, Group Treasurer of National Grid. This afternoon's call is to provide an update to debt investors on our half year results for fiscal year 2018-'19. I will focus on a summary of this morning's presentation, including how our businesses have performed, our priorities going forward as well as additional commentary on future debt financing. I'll talk for around 20 minutes, and after that, there will be an opportunity for you to ask questions.

There is a slide pack to accompany this update, which is available on the Presentations section of our Investors website. If you click News and Reports and then Presentations on the left-hand side, the link is then below labeled Half Year Results '18-'19 Debt Presentation.

First of all, I'd like to refer you to the cautionary statement included on the second slide. And for those of you who have not yet seen the results presentation from this morning's announcement at the London Stock Exchange, there is a replay of the webcast available on our website.

So let me begin with our financial performance for the period. Details of the results by segment are included at the end of this presentation in the appendix. On an underlying basis that is excluding the impact of timing and major storms, operating profit was down GBP 79 million at constant currency to GBP 1.3 billion. This mainly reflects the return of U.K. Gas Transmission allowances associated with Avonmouth, lower profits in the U.S. due to minor storm costs, and the impact of U.S. tax reform. This was partly offset by increased revenue from our new U.S. rates and income from legal settlements. This performance excludes 2 exceptional charges that we've taken during the first half related to the contingency workforce in Massachusetts and the efficiency program in our U.K. business, both of which I will discuss in more detail later.

During the half year period, we have invested over GBP 2.1 billion in critical infrastructure, representing an increase of 7% at constant currency. So as you can see, it has been a solid first 6 months of financial performance with strong organic asset growth.

Before I turn to the details, let me outline on the next Slide 4 strategic highlights for this half. Firstly, we've exercised the options on our remaining share in Cadent. This will complete the process of exiting gas distribution in the U.K. in May, we set out that the cash proceeds of GBP 2 billion would be reinvested in the business to support the strong organic growth we expect over the medium term.

Second, we've completed the full refresh of rates for our U.S. distribution businesses with Rhode Island Gas and Electric and Massachusetts Gas being agreed in the last 2 months. This full refresh is a significant milestone and provides us with a solid foundation from which to deliver strong returns and earnings as well as fund the increasing capital investment plans we have.

We've also progressed regulatory discussions on the phasing of bill reductions to reflect U.S. tax reform, including for the return of the deferred tax credit. I'll cover both of these in more detail later in the presentation.

Thirdly, we've started a significant cost efficiency program in the U.K. to become a leaner, more agile business. And lastly on the growth front, we've taken a final investment decision on our Viking interconnector to Denmark.

So turning next to our operational performance and the significant investments we're making. In the U.S., we've invested $1.5 billion so far this year. Our capital investment program is made up of a number of both large and small projects, including an $80 million asset replacement project in Providence, Rhode Island.

Underlying operating profit for the U.S. Regulated business was GBP 431 million, GBP 95 million lower than last year. This reflects the benefit of new rate case outcomes offset by the impact from U.S. tax reform, which as you know is offset itself on the tax line.

Together with a GBP 56 million increase in storm costs, the majority of which will be recoverable through our existing regulatory mechanisms, the higher-than-usual level of storm costs in the first half mean that this year's profitability is more weighted to the second half than usual.

We expect to offset any further headwinds of tax reform, cost inflation and IFRS 15 over the remainder of the year, driven by the natural seasonality of the business and contribution from new rates coming into effect. Excluding the Massachusetts work contingency costs, which I'll cover next, returns are expected to be at a similar level to the prior year.

On the next slide, let me give you an update on our union negotiations in Massachusetts. Many of you will be aware that we're currently in dispute with 2 of our gas unions over terms and conditions. These 2 unions represent 1,250 workers from our U.S. workforce of over 16,000. Particular issues are around employee health care contributions as well as proposals to bring future employees into a defined contribution business scheme -- pension scheme, sorry, rather than a defined benefit plan.

Over the last few years, we've agreed very similar terms with 16 other unions. We're therefore hopeful that we can reach an agreement with these 2 unions very soon. The negotiations have been ongoing for several months. And as no agreement was reached before the existing contracts expired, we implemented our contingency workforce plans from the end of June. This includes the employment of fully trained contractors, the use of workers from other parts of our business, increased supervision to ensure safe operation and the establishment of temporary work sites. As a consequence of the work stoppage, we've incurred additional costs of GBP 97 million, which we've classified as exceptional.

And now to the U.K. We've invested GBP 650 million in our U.K. transmission businesses in the first half, slightly down from last year. Operationally, both our Electricity and Gas Transmission businesses have continued to deliver good levels of performance. For example, in our Electricity Transmission business, RIIO-T1 includes allowances and targets for maintaining the health of our assets, and I'm pleased that we're forecast to meet all our targets. We've done this at a cost below our allowance, which is delivering real value for customers and shareholders.

Underlying operating profit for the electricity transmission business was GBP 556 million, up 3% compared with the first 6 months of last year, reflecting higher regulated revenues.

For the full year, we expect to deliver stronger totex outperformance in part due to the increased allowances available to us for data centers and cybersecurity from the September reopener filings. The contribution from other incentives and legacy allowances will be broadly consistent with the prior year. As a result, we expect outperformance above the 200 to 300 basis point range for Electricity Transmission.

And in Gas Transmission, we're making good progress on Feeder 9 with the tunneling under the Humber estuary. This is an important project to safeguard the security of supply for a pipeline that transports 20% of the U.K.'s annual gas needs.

Underlying operating profit in Gas Transmission was GBP 91 million. This is GBP 53 million lower than the prior period, primarily reflecting the expected return of Avonmouth pipeline revenues. As a reminder, this is one of the vagaries of the way the RIIO regulatory model flows through our IFRS results, and these adjustments will have no impact on returns as the allowances have already been excluded from these calculations.

The September reopener filings, which I'll discuss on the next slide, resulted in reduced allowances for the upgrade of our compressor fleet and for Feeder 9. These lower allowances will be reflected in the current year return on equity, which we now expect to be slightly lower than the allowed level of 10%.

Now to the next slide and regulatory developments in the U.K. There have been 3 areas focused in the period: Hinkley-Seabank, RIIO-T1 reopeners, and most importantly, the RIIO-T2 framework, which I'll cover later.

On Hinkley as we've previously communicated, Ofgem's final decision was broadly consistent with its initial view. As a consequence, we'll consider all our options when Ofgem introduce changes to our license at the end of this year or early in 2019.

Secondly, in September, Ofgem reached a final decision on funding for certain projects and programs of work, which was subject to reopeners as we entered RIIO-T1. These included additional allowances for physical and cybersecurity, investments in our gas transmission compressor fleet to meet European emission standards, asset health costs for the Feeder 9 pipeline and funding for a Visual Impact Provision scheme in Dorset.

We were pleased that Ofgem allowed the necessary funding for the investments we need to make on physical and cybersecurity. However, we were disappointed not to get funding for the compressor works. As a consequence, we're now reviewing our approach to meeting the required emission standards, including whether to progress with the second units of Peterborough and Huntingdon in RIIO-T1 and deferring entirely the work at St Fergus and Hatton.

On Feeder 9, Ofgem changed their initial decision on the needs case, awarding us GBP 111 million to continue this project. And the funding for the Dorset project of GBP 116 million is a great example of listening to what stakeholders want and designing solutions to meet them in the most cost-efficient way.

Finally, turning on the next slide to National Grid Ventures and our property business. Capital investment increased to GBP 338 million compared to GBP 233 million last year. We continued to make good progress on the 3 interconnectors we have under construction. All 3, Nemo to Belgium, North Sea Link to Norway, and IFA2 to France remain on track with some important milestones over the last 6 months met.

Our existing interconnectors, Grain LNG and metering businesses continue to perform well, delivering similar levels of profitability to the prior year at GBP 131 million.

Our property business has also continued to perform well. I'm pleased that in October, Hammersmith and Fulham Council gave preliminary planning approval for our Fulham development. And at the half year, operating profit from the Property business was GBP 38 million, which is GBP 15 million lower than last year.

Corporate center and other profit contributed GBP 38 million at the half year point, including GBP 94 million of benefit from legal settlements to recover costs associated with the U.S. systems implementation.

Turning now to our U.K. cost efficiency program. We're responding to the rapid changes we're seeing in our industry, embracing new opportunities and technologies to better meet the needs of our customers and also create greater value for all our stakeholders. In this context, we focus very hard on our cost base to ensure that our U.K. business is as efficient as possible and well positioned for the future.

We've recognized exceptional costs of GBP 127 million in the first half. Approximately half of this will be a cash outflow this year, with the remainder over the next 2 years. And this program is designed to generate OpEx savings of approximately GBP 50 million next year and at least GBP 100 million per year from 2021 -- from 2020-'21 onwards, with cash flow benefits in the next 2 years. We continue to expect to deliver outperformance of 200 to 300 basis points this year and in each of the remaining years of RIIO-T1.

Turning to the next slide and to the latest on U.S. tax reform. As we previously discussed, the reduction in the federal tax rate from 35% to 21% will be significantly beneficial to customers. It will be economically neutral for utilities, but will reduce cash flows in the near term. There are 3 areas that I'd like to update you on.

Firstly, we now have clarity on bill reductions for all our operating companies, including updates for KEDNY, KEDLI and Massachusetts Electric since our full year results in May.

Secondly, the return of the $2.2 billion deferred tax balance. This will now be returned over an average period of up to 50 years, significantly longer than the initial view of 20 to 30 years.

Thirdly, rate base growth will increase due to the lower buildup of deferred taxes in the future, largely as a result of bonus depreciation ending for utilities. Over this time, this will be beneficial to operating profit and cash flow.

So now let me discuss how these items collectively flow through the income statement over the next couple of years. 2018-'19 will see a partial impact on operating profit of $210 million. This is more than offset by the full year effect of the lower tax charge, which will represent a small benefit to earnings.

2019-'20 will have an additional impact to operating profit of around $110 million. There will not be a significant in-year impact on earnings as the overall operating profit impact will be offset by the lower tax rate.

So moving to the next slide on interest, tax and earnings. Finance costs were GBP 494 million, down 9%. We've benefited by nearly GBP 50 million, including lower pension interest and a higher rate of capitalized interest, offsetting the underlying increase from the growth in net debt. The second half interest charge will be higher as some of the benefits will lessen in the second half. The underlying effective tax rate before joint ventures was 19.3%, down 360 basis points from last year, primarily due to the lower U.S. tax rate.

On the next slide, operating cash flow was GBP 1.9 billion, broadly in line with last year. Net debt increased by GBP 2.6 billion to GBP 25.6 billion. The increase includes ongoing business requirements of GBP 1.2 billion and GBP 1.4 billion exchange rate impacts as the dollar has strengthened since the year-end, it was $1.4 to the pound of 31 March this year. As we indicated in May, for the full year excluding the impact of exchange rates, we continue to expect ongoing business requirements to increase net debt by approximately GBP 2.5 billion.

Turning now to our focus on the efficient funding of growth. Over the last 5 years, our asset portfolio has grown by 5% on average, adjusting for the gas distribution disposal. We've maintained strong credit ratings across the group, with gearing steady at around 65% at constant currency. This has enabled us to raise debt cost-effectively with access to a wide range of debt sources.

As you know, with the combination of U.S. organic growth and interconnector investment, our portfolio is enjoying particularly strong asset growth. We're efficiently funding this growth through a mix of debt, internally generated cash flows, and by utilizing the scrip option. In addition, we'll be retaining the proceeds from the disposal of our remaining 39% share in Cadent for reinvestment in the business.

Putting this all together, with the strong CapEx visibility that we have, we expect gearing to be around the 65% level by 2021 on a constant currency basis. For this coming year, we expect gearing to be a couple of percentage points higher at the year-end as we won't receive the Cadent proceeds until June 2019. From 2022 onwards, the majority of our in-flight interconnector CapEx will be complete, and the EBITDA generated from these businesses will benefit the group from that point forward.

So on the next slide, I'll move on to our major priority for the second half, looking through the lens of our 3 strategic priorities. To remind you, these are: optimizing the performance of our core business, seeking out growth opportunities in a disciplined way and evolving the business for the future.

So on the next slide, first of all, looking at performance optimization and the U.K. where we're in discussion with Ofgem on the RIIO-T2 price control and on competition. On RIIO-T2, the framework decision document that was published at the end of July provides a solid foundation for this. There are, however, many areas that we'll continue to discuss with Ofgem, including achieving a fair return on equity that's reflective of the level of risk in transmission networks.

Ofgem will publish the sector-specific consultation in December, which will provide further detail on the cost of capital, incentives, outputs and other financial parameters for our transmission businesses. This consultation will conclude in the second quarter of calendar 2019.

Moving on to the next slide. The second area of the U.K. regulatory focus for us is the proposed introduction of increased competition. We support the principle of onshore competition, and we'll work with Ofgem to develop a framework that delivers value for both customers and shareholders. We'll be responding to the consultation on the special purpose vehicle model shortly, where together with the competition proxy model, Ofgem plans to introduce license modifications in the next 6 months.

Turning to the next slide and the regulatory frameworks in the U.S., where we have a number of near-term priorities. With the completion of the refresh of our rates for our distribution companies, we now have rates that allow us to invest appropriately to meet safety and reliability targets. For our next filings, we're proposing to evolve the regulatory frameworks. We'll do this while providing more options for regulators to meet policy outcomes on decarbonization and changing customer needs.

An example of this will be Massachusetts Electric, where we'll be filing later this month. As part of this filing, we'll be proposing a 5-year forward-looking incentive-based framework. And in addition, although currently small, I'm pleased that incentivization is now a regulatory feature of many of our rate plans, and one we aim to expand further into the future.

And our forthcoming Massachusetts Electric filing will include a request to significantly expand the rollout of electric vehicle charging infrastructure. This could provide over 17,000 new charging points across the state. We're also working on a filing in New York for advanced metering infrastructure implementation, which follows a collaborative stakeholder process. And finally, on our U.S. regulatory priorities, we've also started reviewing the next steps for KEDNY and KEDLI, where the current 3-year plan concludes at the end of calendar 2019.

Moving to the next slide and the next strategic priority of growth. Let me spend a few moments talking about our interconnector projects. As I said at the start of this presentation, one of the strategic highlights for the last 6 months was the final investment decision on Viking Link, subject to resolution of a number of minor issues. Our investment will be GBP 850 million. And when it goes live in 2023, it's expected to eventually contribute around GBP 100 million of EBITDA as well as importing over 80% clean energy.

In the next 6 months, our priorities will be to progress with Viking as well as the continued efficient delivery of our other 3 interconnector projects under construction. These represent in total a combined investment of GBP 2.1 billion through to 2023. This is a valuable growth driver to the group, contributing an expected GBP 250 million of EBITDA when they're all fully operational by the mid-2020s.

On the next slide and again on our second strategic priority, for our core regulated networks, given the age of our assets in both the U.S. and U.K., asset health investment for safety and reliability remains a key growth driver. In the U.S., new customer-focused investment drivers provide us with further potential in the medium term. And in the U.K as I mentioned a few moments ago, we'll be working closely with the stakeholder panels as part of the RIIO-T2 process to make sure we're planning the right investments to meet customer needs from 2021.

So our committed interconnector Capex, clarity on investment under RIIO-T1 and the completion of our rate filing refresh in the U.S. provide significant visibility for group capital investment through to 2021 and beyond. These all combine to give high-quality asset growth of at least 7% for the next 2 years and at the top end of our 5% to 7% range in the medium term.

Moving now to the third strategic priority: evolving the business for the future. Beyond our core regulated networks and interconnector investments, we're also developing other opportunities. In particular, we're investing in opportunities arising from the growth in large-scale renewable generation. We have a small but growing portfolio of renewables, with almost 30 megawatts of installed solar and storage in the U.S. and more under construction. The long-term contracted nature, regulatory underpinning, makes renewables well suited to the risk/reward profile of our portfolio. This is because they leverage many of our core capabilities in engineering, project development, asset management and financing. For these reasons, in the coming months, we'll continue to look for opportunities in the U.S. renewable space.

We're also progressing wind generation opportunities. These include Deepwater Wind, a National Grid Ventures partner, that was awarded contracts to install 400 megawatts of offshore wind generation by Rhode Island and 200 megawatts by Connecticut. We'll be advising Deepwater on the subsea cable construction and have options to purchase the subsea links when commissioned. So overall, we're well positioned to take advantage of opportunities that arise from the ongoing energy transition.

Finally, I'll discuss our recent capital markets activity and future plans for the rest of this financial year. So far in the financial year, we've raised over $1.3 billion of new long-term debt in the capital markets, all of which has been for the U.S. business. At the holding company level, we issued a benchmark EUR 500 million bond for National Grid North America, NGNA, as well as a number of private placements from our EMTN program.

At the operating company level, we issued a USD 350 million, 10-year bond for our Rhode Island utility, Narragansett Electric, securing funding ahead of new rates coming into effect. And thank you for your continued support across these transactions.

Over the second half of our financial year, we expect further issuance for our U.S. business predominantly at the operating company level, but possibly also at holding company level for NGNA. In the U.K., we may issue from National Grid Electricity Transmission.

In terms of available facilities across the group, we continue to maintain significant levels of committed bank lines to ensure sufficient liquidity. We currently have undrawn committed general liquidity loans throughout the group of around GBP 5.5 billion from our group of core relationship banks.

Finally, I'd like to draw attention to our strong credit ratings, where there has been no change in rating or outlook since our full year results in May. Our ratings remain at A category for our U.K. operating companies and the majority of our U.S. operating companies.

So in summary, we've delivered solid financial performance in the first half, with strong strategic progress whilst continuing to grow the portfolio. We're influencing the evolution of our regulatory frameworks in both the U.S. and U.K. And significant activity is underway to make us a more agile organization. We'll continue to take a disciplined approach to the many growth opportunities we see across the group. And coupled with efficient delivery, this will create long-term value for our customers and shareholders.

And with that, I would like to thank you all for listening. I'll now hand over to the operator for questions. If at the end of the call you have any outstanding questions, please send them to our dedicated debt investor email, which is debtinvestors@nationalgrid.com.

Operator, please continue.

(Operator Instructions) We have a question from the line of Andrew Moulder of CreditSights.

I just wanted to be clear on the net debt at the end of the year. Are you saying it's going to be GBP 2.5 billion higher than it is now at the first half results? Or is it just GBP 2.5 billion higher than it was at the end of last financial year?

And maybe just a question related to that. You said that, that would mean an uptick in your gearing level. You said about 2 percentage points, so I'm assuming to about 67%. Is that going to reduce back down to 65% with the sale of Cadent and the retention of the GBP 2 billion proceeds?

Yes. Andrew, thanks for your question. On net debt, so if -- closing net debt at 31 March 2018 was GBP 23 billion, and we expect GBP 2.5 billion more of that from business requirements to the end of March 2019. That doesn't take account of FX movements. So we've already seen as at 30th of September an additional GBP 1.4 billion coming from the strengthening of the dollar. So at the moment, net debt is already at GBP 25.6 billion, but GBP 1.4 billion of that comes from translation of U.S. dollar debt into sterling.

Right.

Does that answer your question?

Yes, it does actually. Can I just ask a related question? Is that, the dollar debt, actually hedged back into sterling? So when it matures, we actually get some -- an offsetting effect? Or is it just plain dollar exposure?

No, no. The dollar debt is dollar exposure to sum the dollar business. So we see -- we will have seen an uptick in the value of our dollar assets as well from the strengthening of the dollar over the 6-month period.

And on your question about -- sorry, so your question about gearing. Yes, we're expecting that to tick up a couple of points at 31 March 2019. That's before the GBP 2 billion comes in from Cadent sale over the summer of 2019. And then we expect in the medium term to be back down at around 65%.

All right. So are you saying you expect to be back to 65% by the end of -- by 2020 with the Cadent proceeds? Or do you need to do more to get back to your 65% by 2021?

We're actually forecasting 65% at 2021.

Right. Sorry, can I just ask that again then? So at the end of 2020, is it going to be above 65%?

Yes, I expect it will be. So it will be a couple of basis points up from 65% at 31 March 2019, and we're expecting it to fall over the next 2 years. A big part of that is coming from Cadent proceeds in the summer of '19.

(Operator Instructions) We have a follow-up question from the line of Andrew Moulder of CreditSights.

Sorry, obviously no one else with burning questions. I wanted perhaps a bit more clarity on the situation with the strike at the Massachusetts Gas. I mean I guess the first thing is you've reached agreement with a lot of other unions. Why is Massachusetts different? I mean what's the problems there that they won't agree to something that obviously a lot of the other unions seem to be happy with?

And also on that situation, which workers is this? I mean is it the maintenance workers who are repairing the pipes and things? Or is it people sort of operating the actual, I don't know, the computers that tell you where to send the gas to? Can the business continue operating if these workers stay on strike? And what happens if they won't agree?

So I'm not sure I can necessarily answer the question as to why this union isn't accepting the deals that other unions have accepted. All I can say is that this is 1,250 workers. It's a mix of workers in terms of what they do. But the 1,250 out of the 16,069 workforce in the U.S. 16 other unions have accepted the deal of similar terms. So we are of the view that we need to obviously try to sit down and settle this as soon as possible. We continue to negotiate, continue to have very, very frequent [meeting]. But our expectation is that we will settle this, that it would not be the right thing to do to give in to requests that they're putting in. Because as I said, the other unions have all accepted the deals. It's not something we can do.

Right. And in terms of the extraordinary expenses you had there, you said it was GBP 97 million. Will you get that back through your rate filings? Or is that kind of just a sunk cost and that's gone already?

No, we don't expect that we will get that back. But for us, it's about operating costs going forward. It's about costs that we are then charging on to customers. It's about being efficient. We, therefore, need to look to achieve a fair settlement with them, but we don't expect to be giving up on our requests.

Okay. And one other question on the U.S. You talked about EV filing, so I mean electric vehicles, so charging points. I mean does that mean that in the U.S., the charging points are included within the rate base? Is that what you're trying to do?

Yes, that's right. So it's a request that's going in, in Massachusetts as part of the Mass Electric rate filing. We don't have the agreement as yet, but it would be part of the regulated asset base.

Okay. Right. And maybe I can ask just one more question. On the U.S. tax reform, I'm not exactly clear. You gave a lot of information about what the effects are at the P&L level, but it seems like there -- the P&L level is not necessarily reflective of the actual cash impacts. Could you just detail that the cash impacts in the same way in terms of what you're expecting in '20 -- and for the rest of this year and 2019 and '20?

Yes. So the operating profit impact that I've talked about for FY '19 and FY '20 will, in effect, be the same as the cash impact because we are not paying U.S. tax at the moment. So the earnings offset you get by a lower tax rate isn't seen in cash saved.

And to be explicit, therefore, in FY '19 we're expecting an operating profit and cash impact of $210 million. And in FY '20, we're expecting an operating profit and cash impact of $320 million. That negative cash impact will reverse as we start to pay tax again in the middle of 2020.

There are no additional questions waiting from the phone line. We do have a question from the line of Ryan Phillips of Janus Henderson.

Sorry for the late addition. I was just wondering what the projected scale and timing of any equity contributions, if there are actually any, going forward for the development of the Fulham property portfolio.

Sorry, when you mean equity contributions in relation to Fulham, can you just explain that to me?

Do you need to make a cash contribution? Does Nat Grid need to make cash contribution for the development of that property?

No...

Any equity into the JV is what I'm saying.

Yes. No. So no. We would -- the intention is that we get planning permission and all the consents required. So planning permission has come through. The remaining consents, we'll be looking to get during the rest of this financial year. And then the intention would be to transfer that asset into the joint venture portfolio.

Okay. So you're not making any contributions to the actual JV.

And then just the increase of debt. Are you due to talk to the rating agencies anytime soon? It just looks like they're expecting a strengthening of metrics in 2019, whereas perhaps it sounds like the gearing at least is not expected to improve until perhaps 2020, 2021.

Yes. So we have our normal annual credit rating review meetings coming up in the first quarter of 2019. As you say, we are expecting a tick up in gearing at the end of March 2019, but we'll be presenting them with the full business plan for the normal 5-year period at that time.

Our next question comes from the line of Dan Klinger of BNY Mellon.

Thanks for the thorough update here this morning, U.S. time. My question was geared towards NGNA and your current thinking about incremental financing there. Obviously, you got an attractive transaction off -- in the euro market. Is your thinking to go back to that market for additional capital? Or would you -- is your thoughts looking at the United States? And then here, would you continue to look through the EMTN program or would you consider a larger, broadly syndicated transaction there?

We will look at best pricing and best execution in terms of where we decide to go, if we decide to go for NGNA. We certainly do expect more operating company issuance this year. There may be further issuance out of NGNA, but that's not confirmed.

And just generally, what's the use of proceeds at NGNA? Is that just sort of -- does that get flowed back to the U.K.? Or is that just some double gearing in the U.S.?

So there's some refinancing of existing debt obviously at NGNA, and then it's the equity contributions down into the operating company.

There are no additional questions waiting from the phone lines.

Okay. So thank you very much indeed for listening. And as I said, if you do have any other questions that occur to you, please use our dedicated debt investor email, which is debtinvestors@nationalgrid.com. Thank you very much for listening. Bye-bye.

Thank you. This now concludes the conference. Enjoy the rest of your day.