Segmental analysis

This note sets out the financial performance for the year split into the different parts of the business (operating segments). The performance of these operating segments is monitored and managed on a day-to-day basis. Revenue and the results of the business are analysed by operating segment, based on the information the Board of Directors uses internally for the purposes of evaluating the performance of each operating segment and determining resource allocation between them. The Board is National Grid’s chief operating decision maker (as defined by IFRS 8 ‘Operating Segments’) and assesses the profitability of operations principally on the basis of operating profit before exceptional items and remeasurements (see note 5). As a matter of course, the Board also considers profitability by segment, excluding the effect of timing. However, the measure of profit disclosed in this note is operating profit before exceptional items and remeasurements as this is the measure that is most consistent with the IFRS results reported within these financial statements.

The results of our three principal businesses are reported to the Board of Directors and are treated as reportable operating segments. The following table describes the main activities for each reportable operating segment:



UK Electricity Transmission	The high-voltage electricity transmission networks in England and Wales and independent Great Britain system operator.
UK Gas Transmission	The high-pressure gas transmission networks in Great Britain and system operator in Great Britain.
US Regulated	Gas distribution networks, electricity distribution networks and high-voltage electricity transmission networks in New York and New England and electricity generation facilities in New York.

The UK Electricity Transmission segment also includes the independent Electricity System Operator (ESO). Although there is a separate governance structure (including a separate Executive Committee), the Board receives financial information on an aggregated UK Electricity Transmission basis, which includes the results of the ESO, and accordingly the ESO is included within the reportable segment.

National Grid Ventures (NGV) is our only other operating segment. It does not currently meet the thresholds set out in IFRS 8 to be identified as a separate reportable segment and therefore its results are not required to be separately presented. Instead, NGV’s results are reported alongside the results of all other operating businesses on an aggregated basis as “NGV and Other”, with certain additional disclosure included in footnotes.

NGV represents our key strategic growth area outside our regulated core business in competitive markets across the US and the UK. The business comprises all commercial operations in metering, LNG at the Isle of Grain in the UK, electricity interconnectors and our new investments in Geronimo Energy LLC (Geronimo) and Emerald Energy Venture LLC (Emerald). Geronimo is a developer of wind and solar generation based in Minneapolis in the US. The acquisition is National Grid’s first ownership stake in wind generation and an expansion of our activities in solar generation.

Other activities that do not form part of any of the segments in the above table or NGV primarily relate to our UK property business together with insurance and corporate activities in the UK and US and the Group’s investments in technology and innovation companies through National Grid Partners.

The segmental information is presented in relation to continuing operations only and therefore does not include the profits and losses relating to our interest in Quadgas for any period presented (see note 10).

(a) Revenue

Revenue primarily represents the sales value derived from the generation, transmission and distribution of energy, together with the sales value derived from the provision of other services to customers. Refer to note 3 for further details.

Sales between operating segments are priced considering the regulatory and legal requirements to which the businesses are subject. The analysis of revenue by geographical area is on the basis of destination. There are no material sales between the UK and US geographical areas.



	2020				2019				2018
	Total sales £m	Sales between segments £m		Sales to third parties £m	Total sales £m	Sales between segments £m		Sales to third parties £m	Total sales £m	Sales between segments £m		Sales to third parties £m
Operating segments – continuing operations:
UK Electricity Transmission	3,702	(8	)	3,694	3,351	(20	)	3,331	4,154	(28	)	4,126
UK Gas Transmission	927	(16	)	911	896	(12	)	884	1,091	(9	)	1,082
US Regulated	9,205	—		9,205	9,846	—		9,846	9,272	—		9,272
NGV and Other¹	736	(6	)	730	876	(4	)	872	776	(6	)	770
Total revenue from continuing operations	14,570	(30	)	14,540	14,969	(36	)	14,933	15,293	(43	)	15,250

Split by geographical areas – continuing operations:
UK				5,282				5,045				5,938
US				9,258				9,888				9,312
				14,540				14,933				15,250


1.	Included within NGV and Other is £608 million (2019: £597 million; 2018: £593 million) of revenue relating to NGV.

2. Segmental analysis continued

(b) Operating profit

A reconciliation of the operating segments’ measure of profit to profit before tax from continuing operations is provided below. Further details of the exceptional items and remeasurements are provided in note 5.



	Before exceptional items and remeasurements			After exceptional items and remeasurements
	2020	2019	2018	2020	2019	2018
	£m	£m	£m	£m	£m	£m
Operating segments – continuing operations:
UK Electricity Transmission	1,320	1,015	1,041	1,316	778	1,041
UK Gas Transmission	348	303	487	347	267	487
US Regulated	1,397	1,724	1,698	880	1,425	1,734
NGV and Other^1,2	242	400	231	237	400	231
Total operating profit from continuing operations	3,307	3,442	3,457	2,780	2,870	3,493

Split by geographical area – continuing operations:
UK	1,925	1,695	1,840	1,915	1,422	1,840
US	1,382	1,747	1,617	865	1,448	1,653
	3,307	3,442	3,457	2,780	2,870	3,493

Below we reconcile total operating profit from continuing operations to profit before tax from continuing operations. Total operating exceptional items and remeasurements of £527 million charge (2019: £572 million charge; 2018: £36 million gain) are detailed in note 5. This is comprised of a £4 million charge (2019: £237 million charge; 2018: £nil) attributable to UK Electricity Transmission; £1 million charge (2019: £36 million charge; 2018: £nil) to UK Gas Transmission; £517 million charge (2019: £299 million charge; 2018: £36 million gain) to US Regulated; and £5 million charge (2019: £nil; 2018: £nil) to NGV and Other.



Reconciliation to profit before tax:
Operating profit from continuing operations	3,307		3,442		3,457		2,780		2,870		3,493
Finance income	70		73		127		54		88		127
Finance costs	(1,119	)	(1,066	)	(1,128	)	(1,167	)	(1,157	)	(1,009	)
Share of post-tax results of joint ventures and associates	88		40		44		87		40		49
Profit before tax from continuing operations	2,346		2,489		2,500		1,754		1,841		2,660


1.	Included within NGV and Other is £269 million (2019: £263 million; 2018: £234 million) of operating profit before exceptional items and remeasurements and £268 million of operating profit after exceptional items and remeasurements (2019: £263 million; 2018: £234 million), relating to NGV.


2.	In 2019, NGV and Other included gains of £95 million in relation to cash received in respect of two legal settlements.

Capital expenditure represents additions to property, plant and equipment and non-current intangibles but excludes additional investments in and loans to joint ventures and associates. In 2020, we transferred certain software assets and properties which are held outside the US rate base and operate for the benefit of our US Regulated businesses, that were previously included within the NGV and Other segment, to the US Regulated segment. See footnote 2.



	Net book value of property, plant and equipment and other intangible assets			Capital expenditure			Depreciation, amortisation and impairment
	2020	2019	2018	2020	2019	2018	2020		2019		2018
	£m	£m	£m	£m	£m	£m	£m		£m		£m
Operating segments:
UK Electricity Transmission	13,788	13,288	13,028	1,043	925	999	(469	)	(628	)	(475	)
UK Gas Transmission	4,513	4,412	4,280	249	308	310	(171	)	(181	)	(194	)
US Regulated²	29,623	24,542	20,953	3,228	2,650	2,424	(855	)	(700	)	(635	)
NGV and Other^1,2	2,141	2,755	2,491	559	438	341	(145	)	(226	)	(226	)
Total from continuing operations	50,065	44,997	40,752	5,079	4,321	4,074	(1,640	)	(1,735	)	(1,530	)

Split by geographical area – continuing operations:
UK	20,427	19,343	18,772	1,847	1,584	1,527	(784	)	(931	)	(804	)
US	29,638	25,654	21,980	3,232	2,737	2,547	(856	)	(804	)	(726	)
	50,065	44,997	40,752	5,079	4,321	4,074	(1,640	)	(1,735	)	(1,530	)
Asset type:
Property, plant and equipment	48,770	43,913	39,853	4,727	4,015	3,901	(1,464	)	(1,560	)	(1,392	)
Non-current intangible assets	1,295	1,084	899	352	306	173	(176	)	(175	)	(138	)
Total from continuing operations	50,065	44,997	40,752	5,079	4,321	4,074	(1,640	)	(1,735	)	(1,530	)


1.	Included within NGV and Other are assets with a net book value of £2,080 million (2019: £1,635 million; 2018: £1,454 million), capital expenditure of £550 million (2019: £317 million; 2018: £186 million) and depreciation, amortisation and impairment of £124 million (2019: £114 million; 2018: £143 million) relating to NGV.

In 2020, US Regulated includes certain software assets and properties in the US which are outside the US rate base and operate for the benefit of our US regulated businesses. These assets were included within NGV and Other in 2019 and 2018. The assets had a net book value of £1,062 million in 2019 and £998 million in 2018, capital expenditure of £87 million in 2019 and £161 million in 2018 and depreciation, amortisation and impairment of £102 million in 2019 and £80 million in 2018.

Total non-current assets other than financial instruments and pension assets located in the UK and US were £31,780 million and £25,867 million respectively as at 31 March 2020 (31 March 2019: UK £30,072 million, US £21,787 million; 31 March 2018: UK £20,816 million, US £27,663 million).