Sse Plc · LSE:SSE
Sse — H1 2009/10 Earnings Presentation
37 slides from Sse's earnings presentation, Nov 11, 2009
Slide 1: Six-month Financial Report
Six-month Financial Report 11 November 2009
Slide 2: Overview: Solid Performance
Overview: Solid Performance • H1 performance consistent with moderate, ie 'single digit' increase in adjusted FY PBT • Sector-leading service in energy supply and electricity distribution • £6.7bn investment programme delivering assets with long- term value -2
Slide 3: Overview: Strategy
Overview: Strategy To deliver sustained real growth in the dividend payable to shareholders through the efficient operation of, and investment in, a balanced range of regulated and non-regulated energy- related businesses. -3
Slide 4: Gregor Alexander, Finance Director
Gregor Alexander Finance Director -4
Slide 5: Adjusted Profit Before Tax
Adjusted Profit Before Tax Six months to 30 September 2009 2008 £m £m Adjusted profit before tax 410.5 302.6 Fair value re-measurements (IAS 39) 118.1 (123.4) Tax on JVs and Associates (14.2) (7.3) Interest on convertible debt - (0.8) Reported profit before tax 514.4 171.1 Adjusted earnings per shar
Slide 6: 2008-2009 Contrast
2008-2009 Contrast • No restrictions on Fiddler’s Ferry and Ferrybridge running hours • Good gas-fired plant performance • 31% increase in renewable energy output • 600,000 extra customers in April 2009 • Better balance in wholesale/retail prices - but falling energy demand and increased bad debts -
Slide 7: Adjusted Operating Profit By Business
Adjusted Operating Profit By Business Six months to 30 September 2009 2008 Change £m £m % Generation and Supply 227.4 101.7 123.6% Energy Networks 281.9 259.3 8.7% Telecoms 8.2 8.1 1.2% Contracting, Connections and 42.3 40.7 3.9% Metering Gas Storage 21.7 21.1 2.8% Property and Corp Services 1.6 4.0
Slide 8: Capital Expenditure
Capital Expenditure Six months to 30 September 2009 2008 £m £m Generation (thermal)* 73.1 151.3 Generation (renewable)** 320.8 297.4 Power Systems 157.9 157.4 Gas Storage 29.7 22.9 Other 49.3 70.2 Total 630.8 699.2 SSE share of SGN capex/repex 104.7 79.9 -8- *Includes 50% of Marchwood **Includes 50%
Slide 9: Cash Flow
Cash Flow Six months to 30 September 2009 2008 £m £m Cash from operating activities 1,024.4 44.7 Movement in outstanding liquid funds (190.9) 37.3 Capital expenditure acquisitions and (547.8) (701.4) investments Dividends paid (425.1) (371.0) Other 11.9 4.3 Increase in adjusted net debt (127.5) (986
Slide 10: Adjusted Net Debt
Adjusted Net Debt • Adjusted net debt: £4.95bn • Adjusted net debt of £4.82bn at March 2009 • Includes >£1bn of assets in construction • Adjusted net debt of £5.5bn forecast for March 2010 • Debt/EBITDA ratio of c3.0 forecast for March 2010 • Extra resources for credit management - 10
Slide 11: Financing Investment
Financing Investment • Strong balance sheet: ‘A-’ and ‘A3’ ratings consistent with securing funding at reasonable cost • Around £2.9bn raised in bonds and loans July 2008 to September 2009 – January 2009 placing takes new funding total to over £3.3bn • £1bn short-term funding secured for period to J
Slide 12: Key Financial Issues - Summary
Key Financial Issues - Summary • Solid financial performance in H1 – On course for moderate, ie. single digit, adjusted PBT growth for 2009/10 • Strong cash flow from operating activity – Net debt up only £127.5m • Capex up in line with five-year plan – £1.4bn capex forecast for 2009/10 • Well-finan
Slide 13: Interim Dividend 1999-2009
Interim Dividend 1999-2009 Pence per share - 13
Slide 14: Ian Marchant, Chief Executive
Ian Marchant Chief Executive - 14
Slide 15: Delivering Dividend Through Diversity
Delivering Dividend Through Diversity • While energy is at their core, SSE has a diverse range of businesses • Within those businesses, SSE has a diverse range of assets • To add to those assets, SSE has a diverse range of investment options - 15
Slide 16: Delivering Dividend Through Diversity
Delivering Dividend Through Diversity • Developing new, lower carbon power generating assets • Growing customer numbers through energy supply and energy-related services • Investing in reliability – and RAV – of energy networks • Expand gas storage and other service businesses Generation Networks -
Slide 17: Expanding Generation Portfolio - Overview
Expanding Generation Portfolio - Overview • Increase in Generation capacity to over 11GW – 363MW three-unit Uskmouth coal-fired station – 30MW of completed wind farm capacity • Marchwood (share 420MW) operational shortly • 800MW of wind farm capacity in construction • 290MW of onshore wind capacity
Slide 18: Expanding Generation Portfolio – Onshore Wind
Expanding Generation Portfolio – Onshore Wind • 1.75GW portfolio (UK and Ireland) * – 720MW in operation – 550MW in construction – 290MW in pre-construction – 190MW with consent for development • Portfolio doubled since Airtricity acquisition – Experienced team so far delivered 31 wind farms – Seven
Slide 19: Expanding Generation Portfolio – Onshore Wind
Expanding Generation Portfolio – Onshore Wind • Clyde (350MW) – Agreement reached on primary radar – Turbine contract signed – Work at site under way – £500m cost – >1TWh annual output – First power in 2011; completion planned for 2012 - 19
Slide 20: Expanding Generation Portfolio – Offshore Wind
Expanding Generation Portfolio – Offshore Wind • Greater Gabbard (500MW; SSE share 50%) – Quality issues on initial batches of foundation monopiles – Contractor confident of progress in coming months – On course for 2012 finish – >40% load factor/1.9TWh annual output/1.5 ROCs - 20
Slide 21: Expanding Generation Portfolio – Offshore Wind
Expanding Generation Portfolio – Offshore Wind • 1.9GW (net) with consent for development off Netherlands, Ireland and Germany • Part of two consortia to win development rights from Crown Estates’ Round 3 • Exclusive rights to develop 2,700MW in Scottish territorial waters • Greater Gabbard comes fi
Slide 22: Expanding Generation Portfolio – Project Management
Expanding Generation Portfolio – Project Management • Glendoe likely to be out of service until 2011/12 • Long-term value of hydro complementing wind remains • Review of way major developments are managed – Significant experience built up – Recruitment of additional expertise – Key disciplines in pl
Slide 23: Expanding Generation Portfolio – Hydro
Expanding Generation Portfolio – Hydro • Planning application to put 60MW pumping capacity at Sloy – Output around 100GWh/year • Formal pre-planning work under way on two large-scale pumped storage schemes in Great Glen – Planned output 1,000Gwh/year each – Planning applications scheduled for submis
Slide 24: Expanding Generation Portfolio – Gas
Expanding Generation Portfolio – Gas • Marchwood CCGT operational shortly – Net thermal efficiency >58% – c.£475/kw cost • CCGT technology likely to remain benchmark • Three main options for development – Keadby: effective consent for 710MW – Abernedd: seeking consent for two 420MW units – Barking:
Slide 25: Expanding Generation Portfolio – Coal
Expanding Generation Portfolio – Coal • Uskmouth bought for < £50/kw, excluding cash • Targeting 50% reduction in carbon intensity 2006-2020 • Coal reduces reliance on imported gas • Studying SCR for Fiddler’s Ferry and Ferrybridge • Carbon Capture trial at Ferrybridge - 25
Slide 26: Expanding Generation Portfolio – Nuclear
Expanding Generation Portfolio – Nuclear • SSE/Iberdrola/GDF SUEZ consortium • Development rights at Sellafield • Complements core investment in renewables • Cost/consent–able MW half of next cheapest site • < £5m = place in UK’s new build programme - 26
Slide 27: Growing Customer Base
Growing Customer Base | = Million supply customers = GW generation capacity 2005 (aT ce 0 5 10 15 -27-
Slide 28: Growing Customer Base - Supply Customer Numbers (GB)
Growing Customer Base - Supply Customer Numbers (GB) 9.15m Number of GB e ectricity and gas customer accounts 4.5m Sept 01 Sept 09 - 28
Slide 29: Growing Customer Base in Ireland with the Airtricity Family
Growing Customer Base in Ireland with the Airtricity Family - 29
Slide 30: Growing Customer Base – Energy-Related Services
Growing Customer Base – Energy-Related Services • 370,000 Telecoms and Home Services accounts • Maintaining street lights for over 100 local authorities in UK and Ireland • 8,500 public sector and commercial Contracting and Connections customers • 300 public sector and commercial Telecoms network cu
Slide 31: Enhancing RAV for Energy Networks
Enhancing RAV for Energy Networks Electricity Transmission Electricity Distribution Gas Distribution - 31
Slide 32: Enhancing RAV for Energy Networks – Electricity Distribution
Enhancing RAV for Energy Networks – Electricity Distribution • SSE still at the operational cost efficiency frontier • Three issues in DPCR5 Final Proposals set for December – weighted average cost of capital – scope for earning extra revenue – treatment of pension costs • Extra capital investment f
Slide 33: Enhancing RAV for Energy Networks – Electricity Transmission
Enhancing RAV for Energy Networks – Electricity Transmission • Funding for three transmission upgrades (£200m) • Beauly-Denny upgrade (>£300m) • Western Isles and Shetland links • Transformation of scale and value of transmission assets - 33
Slide 34: Enhancing RAV for Energy Networks
Enhancing RAV for Energy Networks • SGN acquisition to maintain balance in regulated/non-regulated sources of profit • Major scope for incremental investment in all energy networks businesses • Acquisition opportunities considered carefully - but no departure from disciplined approach - 34
Slide 35: Developing New Gas Storage Capacity
Developing New Gas Storage Capacity • First 60mcm capacity available since June • Further 55mcm capacity available by end March 2010 • Development finished in 2012 • Decision on Aldbrough 2 in 2010 - 35
Slide 36: Biggest and Broadest-Based Energy Company
Biggest and Broadest-Based Energy Company • Balanced range of regulated and non-regulated businesses • Enhancing Network RAVs • Growing customer base • Expanding Generation capacity • Opportunities in other service businesses
Slide 37: Delivering the Dividend
Delivering the Dividend Full year: Pence per share Forecast - 37