Expert Corporate Governance Service (ECGS)
EUR 1000.00 For Business Accounts Only

National Grid - AGM 27 July 2020

Item 2: Final dividend

The proposed increase in dividend raises several concerns: the dividend is neither covered by FCF nor by EPS. The increase in the dividend is not justified by the group's results. We do not consider sustainable the dividend distribution exceeding the earnings for several consecutive years. Given the recent events relating to Covid-19, ECGS is in favour of postponing decisions on the dividend, reductions or suspensions that would allow companies to avoid liquidity risks or not generate risk for their survival. We also see no reason to increase the dividend while at the same time the Board proposes to raise the borrowing limit.

Item 22: Approval of increased borrowing limit

The Board proposes to amend the borrowing limit from £35bn to £45bn. Based on the FY19/20 figures, the proposed limit would increase the net debt by 57% and the gearing up to 230%. The new limit equals 135% of the company's market capitalisation. Debt to EBITDA ratio would reach 10.1. The Company has not provided sufficient justification for the increase. We consider imprudent to increase the debt burden considering the current level of the group's indebtedness and unsustainable dividend policy.

National Grid

National Grid is a holding company. Through its subsidiaries, Co. owns and operates regulated electricity and gas infrastructure networks in the U.K. and the U.S. Co. operates through five business segments: U.K. Electricity Transmission, U.K. Gas Transmission, U.K. Gas Distribution, U.S. Regulated, and Other Activities, primarily relating to non-regulated businesses and other commercial operations not included within the above segments, including: the Great Britain-France electricity interconnector; U.K. based gas metering activities; U.K. property management; a U.K. LNG import terminal; U.S. LNG operations; and U.S. unregulated transmission pipelines, together with corporate activities.


Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

Proxinvest main services are :

  • ​Proxy reports
  • Definition and monitoring of client customized voting guidelines
  • Corporate Governance Data and Rating
  • Thematic research
  • Engagement support

Proxinvest has been a pioneer and champion of good corporate governance and has grown into a recognised expert in the field.

Proxinvest is independently-owned and only works for investors : Proxinvest does not provide consulting services to the companies it covers, mitigating related risks to its clients and ensuring the independence of our analysis. As a result Proxinvest is able to take a robust, independent, engaged and unconflicted view of the companies in which our clients invest.

As Managing Partner of Expert Corprate Governance Service Ltd (ECGS), Proxinvest has built a large network of corporate governance experts to support clients in corporate governance analysis worldwide. 

Expert Corporate Governance Service (ECGS)

Other Reports on these Companies
Other Reports from Proxinvest
Other Reports from these Analysts

ResearchPool Subscriptions

Get the most out of your insights

Get in touch