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James Ross Chairman, National Grid. 2 Presentation team James RossChairman, National Grid Sir John ParkerChairman and Acting Chief Executive, Lattice.

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Presentation on theme: "James Ross Chairman, National Grid. 2 Presentation team James RossChairman, National Grid Sir John ParkerChairman and Acting Chief Executive, Lattice."— Presentation transcript:

1 James Ross Chairman, National Grid

2 2 Presentation team James RossChairman, National Grid Sir John ParkerChairman and Acting Chief Executive, Lattice Roger UrwinChief Executive, National Grid Steve LucasFinance Director, Lattice

3 3 Creating a world class energy delivery group A recommended merger of equals Complementary businesses creating shareholder value No alteration of UK competitive landscape Enable further savings within UK businesses Financial strength and skills to secure opportunities overseas

4 Sir John Parker Chairman and Acting Chief Executive, Lattice

5 5 Merger details Excellent fit Unique platform for growth 0.375 National Grid share for each Lattice share Ownership split National Grid: 57.3% / Lattice: 42.7% Strong and balanced Board Dividend policy targets 5% real growth p.a. Transaction closure expected Autumn 2002

6 Roger Urwin Chief Executive, National Grid

7 7 Shared vision and strategy Enlarged UK business Implications for US business Expanded growth opportunities

8 8 Driving efficiency Timing right Both companies confident of exceeding Ofgem targets –National Grid to deliver additional 10% cost savings worth £80 million –Lattice confident more to come

9 9 Merger benefits At an annualised rate of £100 million by end of first full financial year –Consolidate head offices –Consolidate UK network headquarters –Rationalise support services –Share information systems Further savings to be quantified –Combination of UK transmission businesses –Sharing of best practice –Further financial synergies Structural flexibility from separate price controls for LDZs Integration of Towers businesses

10 10 Niagara Mohawk integration well on track On target to deliver 10.5% pre-tax nominal ROI by March 2005 Management organisation in place –Half of planned headcount reductions achieved by this summer Merger will not distract US integration activities

11 11 A platform for growth Electricity delivery costs per customer in Northeast USA Gas delivery costs per customer in Northeast USA Opportunity to leverage best practice in gas and electricity in the US Transco Regional US gas utilities NG New England Regional US electric utilities

12 12 World class energy delivery company Distinctive strategy Strong management team Enhanced financial flexibility to pursue growth opportunities Creating substantial shareholder value

13 Steve Lucas Finance Director, Lattice

14 14 A leading international utility Earnings enhancing for both companies UK RAB £18 billion, US asset base £7 billion Revenues £9 billion, operating cash flow c. £3.5 billion Market capitalisation around £15 billion Largest UK utility, FTSE top 20

15 15 Strong capital structure Financial synergies / outperformance Seek to maintain single A credit ratings Capacity for investment

16 16 Real dividend growth Policy - target 5% real growth to March 2006 –Base of 16.04p for 2001/02 National Grid shareholders –Proposed final dividend of 9.58p for year ended March 2002 Lattice shareholders –Will receive second interim dividend of 5.4p announced in February 2002 –No final dividend

17 17 Next steps and outline timetable Scheme of Arrangement UK/US regulatory approvals - initial contact made Regulatory clearances - Autumn 2002 Shareholder documentation - posted by end of June National Grid and Lattice EGMs to approve transaction - July Primary listing in London, ADS listing in New York

18 18 Financial summary Robust balance sheet Strong predictable cashflows Enhanced earnings Attractive dividend policy

19 19 2002 Timetable Announcement of National Grid results – May 30 SEC application made – May Shareholder documentation posted (circulars and listing particulars) – end of June Lattice AGM – July 15 National Grid AGM – July 23 Expected DTI, Ofgem and OFT clearance – by end July SEC clearance – autumn 2002 National Grid Transco interim results announcement – November/December

20 National Grid Transco Creating a world class energy delivery group 22 April 2002

21 Disclaimer DISCLAIMER This presentation contains certain statements that are neither reported financial results nor other historic information. These statements are forward-looking statements within the meaning of the safe-harbor provisions of the U.S. federal securities laws. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond the companies ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants and the actions of governmental regulators. Other factors that could cause actual results to differ materially from those described in this presentation include: the ability to integrate successfully Lattice Group plc within the National Grid Group plc or to realise synergies from such integration or the failure to retain Lattice Group plc management and other risk factors detailed in National Grid Group plcs reports filed with the SEC or in material furnished to the SEC by National Grid Group plc or Lattice Group plc. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. The companies do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation. This presentation is being made only to and is directly at (a) persons who have professional experience in matters relating to investments falling within Article (1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the Order) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated falling within Article 49(1) of the Order and (c) persons who receive this presentation in the course of a business which involves the dissemination through a publication of information falling within Article 47 or the Order (all such persons together being referred to as relevant persons). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation does not constitute an offer to sell or invitation to purchase any securities or the solicitation of any vote or approval. Unless otherwise determined by National Grid Group plc and Lattice Group plc and permitted by applicable law and regulation, the terms of the Merger will not be made, directly or indirectly in or into, or by the use of mails of, or by any other means or instrumentality (including, without limitation, telephonically or electronically) or interstate or foreign commerce of, or of any facility of a national securities exchange of Canada, nor will it be made in or into Australia or Japan. Accordingly, unless otherwise determined by National Grid Group plc and Lattice Group plc and permitted by applicable law and regulation, neither copies of this presentation nor any other documents relating to the Merger are being, or may be, mailed or otherwise forwarded, distributed or sent in or into Australia, Canada or Japan and persons receiving such presentation (including custodians, nominees and trustees) must not distribute or send them into, or from such jurisdiction. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions. Receipt of this presentation will not constitute an offer in those jurisdictions in which it would be illegal to make the offer and in such circumstances it will be deemed to have been sent for information purposes only.

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