Sse Plc · LSE:SSE
Sse — FY2014 Earnings Presentation
33 slides from Sse's earnings presentation, May 2014
Slide 1: Financial Results Year Ended 31 March 2014
SSE Financial Results Year Ended 31 March 2014
Slide 2: Lord Smith of Kelvin, Chairman
Lord Smith of Kelvin Chairman 2
Slide 3: Today's SSE team
Today’s SSE team Lord Smith of Kelvin Alistair Phillips-Davies Gregor Alexander Chairman Chief Executive Finance Director Martin Pibworth Brandon Rennet MD, Wholesale MD, Finance 3
Slide 4: Safety comes first
Safety comes first Total Recordable Injury Rate* Total Recordable Injuries 0.16 55 0.14 50 47 0.14 45 0.12 40 0.12 40 0.1 35 30 0.08 25 0.06 20 FY13 FY14 FY13 FY14 *TRIR – per 100,000 hours worked 4
Slide 5: Strategy for long-term success
Strategy for long-term success Our Core Purpose Our Strategy Our Financial Objective Efficient operation of, Provide the energy and investment in, a Annual dividend people need in a balanced range of increases of at least RPI reliable and sustainable economically-regulated inflation way and market-b
Slide 6: Gregor Alexander, Finance Director
Gregor Alexander Finance Director ‒ Financial Overview ‒ Networks 6
Slide 7: 2013/14 results in line with expectations (1)
2013/14 results in line with expectations (1) FY13 FY14 % change £m £m restated Adjusted profit before tax +9.6% 1,551.1 1,415.1 Fair value re-measurements (IAS 39) (212.0) (199.7) Exceptional items (747.2) (584.7) Interest on net pension liabilities (IAS 19R) (28.2) (34.9) Tax on JCEs and associate
Slide 8: 2013/14 results in line with expectations (2)
2013/14 results in line with expectations (2) % FY14 FY 13 Operating Profit change £m £m* Networks +9.3% 955.4 874.2 Retail -28.6% 292.0 409.1 Wholesale +24.8% 634.6 508.6 Corporate Unallocated (1.9) (12.9) Total Operating Profit +5.7% 1,880.1 1,779.0 * Restated Operating profit by business segment,
Slide 9: Focusing on adjusted earnings per share
Focusing on adjusted earnings per share Adjusted EPS FY (p) Dividend Cover 130 1.45 123.4 1.42 1.41* 120 118.5* EPS in 14/15 expected 1.4 to be around or slightly higher than 13/14 1.35 110 100 1.3 FY13 FY14 FY13 FY14 Sector Issues: market conditions, geopolitical developments, legislative, regulato
Slide 10: Making the right investment decisions (1)
Making the right investment decisions (1) FY14 FY13 % change £m £m Capital expenditure and investment +6.5% 1,582.5 1,485.5 Adjusted net debt and hybrid capital +4.2% 7,659.2 7,347.7 Average interest rate* 4.71% 5.26% Investment Investmentand and Capital Expenditure Capital Expenditure Increase in n
Slide 11: Making the right investment decisions (2)
Making the right investment decisions (2) Split of 14/15 £1.6bn capex forecast 4 years to March 2018 - total expected net capex c.£5.5bn 1800 9% 1500 5% 1200 30% 56% 900 600 300 0 FY15 Gross capex 15-18 Gross capex pa 15-18 Disposals pa 15-18 Net capex pa Networks Wholesale Retail Other Committed Ex
Slide 12: Focusing on value in capital expenditure
Focusing on value in capital expenditure Target £1bn proceeds and net debt reduction from disposal of assets and businesses over next 4 years Disposal ‘Recycling’ programme Capital Expertise in SSE is expecting developing and PFIs building onshore to achieve wind £500m from disposals and Gas £500m f
Slide 13: Focusing on the dividend
Focusing on the dividend Dividend Per Share FY (p) 86.7 84.2 80.1 75.0 70.0 66.0 60.5 55.0 46.5 42.5 37.7 35.0 32.4 30.0 25.7 27.5 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 At least RPI in future 13
Slide 14: Networks central to SSE Strategy (1)
Networks central to SSE Strategy (1) Balanced Operating Profit, £m Total Networks RAV, £bn (net) Economically-regulated Market-based 8 Transmission Distribution SGN 2000 1800 7 1600 6 1400 5 1200 1000 4 800 3 600 2 400 200 1 0 0 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 14
Slide 15: Networks central to SSE strategy (2)
Networks central to SSE strategy (2) % FY14 FY13 Total Networks RAV, £bn (net) Operating Profit change £m £m* 7 Distribution -0.9% 507.0 511.6 6.5 6 Transmission +47.6% 136.7 92.6 5.5 Gas Distribution (SGN) +18.2% 276.6 234.1 5 4.5 Other Networks -2.2% 35.1 35.9 4 FY09 FY10 FY11 FY12 FY13 FY14 Netwo
Slide 16: Working for customers in challenging conditions
Working for customers in challenging conditions Distribution RAV, £bn Distribution Operating Profit, £m Distribution CAPEX, £m 520 320 308 3.1 3.05 512 507 3.0 300 289 2.92 500 2.9 280 2.8 480 260 FY13 FY14 FY13 FY14 FY13 FY14 Working for Cost Efficiency Customers Priorities Price Control package Cu
Slide 17: Increasing the asset base in Transmission
Increasing the asset base in Transmission Operating Profit Growth, £m 150 137 93 100 Advanced planning 50 0 FY13 FY14 Under construction Transmission RAV Growth, £bn • Beauly-Denny 1.5 1.33 1.05 • Beauly-Blackhillock-Kintore 1 • Beauly-Mossford • Kintyre-Hunterston 0.5 0 FY13 FY14 Advanced Developme
Slide 18: Achieving efficiencies in Gas Distribution
Achieving efficiencies in Gas Distribution Target efficiencies Operating Profit Growth*, £m SGN RAV Growth*, £bn 2.50 300 276.6 2.44 2.39 250 234.1 2.40 200 2.30 FY13 FY14 FY13 FY14 *SSE share 18
Slide 19: Alistair Phillips-Davies, Chief Executive
Alistair Phillips-Davies Chief Executive ‒ SSE balanced range of businesses ‒ Retail ‒ Wholesale ‒ Long-term Outlook 19
Slide 20: Maintaining a balanced range of energy businesses to achieve dividend growth
Maintaining a balanced range of energy businesses to achieve dividend growth NI Scotland 3,720MW (32%) 88MW (1%) 1.1m Customers (12%) 0.3m Customers (3%) £3.08bn RAV (45%) ROI Wales England 6,334MW (54%) 1,524MW (13%) 1.0m Customers (11%) 6.2m Customers (68%) 0.5m Customers (6%) £3.74bn RAV (55%) 20
Slide 21: Ensuring SSE is well-positioned for the future
Ensuring SSE is well-positioned for the future Simplifying business and Focusing on value and securing efficiencies investment decision making 2020 and beyond Price freeze to 2016 Appetite for reform and a voice in UK energy market debate 21
Slide 22: Demonstrating SSE's appetite for reform
Demonstrating SSE’s appetite for reform Energy industry is complex Trade all Free credit electricity on Customer Service End of cold Wholesale/Retail commitment for external Guarantee calling legal separation small suppliers exchange Proposed CMA referral provides the opportunity to aim for stabilit
Slide 23: Freezing GB prices for the benefit of customers
Freezing GB prices for the benefit of customers % change FY14 FY13* Energy Supply Profit Margin 2.9% 4.2% Aged Debt - £m 117.8 90.4 Energy Customer Accounts - m -3.9% 9.10 9.47 Operating profit £m £m Energy Supply -32.2% 246.2 363.2 Energy-related services 45.8 45.9 Retail Segment Operating -28.6% 2
Slide 24: Evolving the retail business for the long term (1)
Evolving the retail business for the long term (1) Actual Consumption 5,500 5,233 800 5,000 4,875 4,834 4,748 4,465 700 Strong 4,432 4,500 687 4,299 foundations therms 4,113 3,991 600 kWh 4,000 594 598 582 563 500 558 544 3,500 3,000 451 465 400 Sector leading customer 2,500 300 FY06 FY07 FY08 FY09
Slide 25: Evolving the retail business for the long term (2)
Evolving the retail business for the long term (2) Digitally billed customer accounts (m) 2.3 2.21 2.2 2.1 2 1.89 1.9 1.8 1.71 1.7 1.6 1.5 1.4 FY12 FY13 FY14 Sustainable retail business for the long-term 25
Slide 26: Operating a sustainable wholesale business
Operating a sustainable wholesale business Gas production output m therms Renewable output TWh FY14 FY13 Operating profit % change £m £m* 500 414 10 9.1 400 7.6 7.3 8 EPM and 300 6 4.4 496.1 450.6 177 184 Generation 200 4 100 2 0 0 FY12 FY13 FY14 Gas Production 130.2 39.6 FY11 FY12 FY13 FY14 Gas- an
Slide 27: Playing our part in keeping the lights on (1)
Playing our part in keeping the lights on (1) Scotland Gas Wind 1,317MW (25%) 951MW (50%) Northern Ireland Hydro 1,450MW (100%) Wind 88MW (5%) England Republic of Ireland Gas Wind & Biomass 2,946MW (55%) 380MW (20%) Gas & Oil 1,068MW (20%) Coal 3,009MW (100%) Wind 456MW (25%) Total generation capaci
Slide 28: Playing our part in keeping the lights on (2)
Playing our part in keeping the lights on (2) Fiddler’s Ferry Ferrybridge units 3 & 4 4 units in operation Multi-fuel plant Medway Peterhead £48m invested Voltage response contract 28
Slide 29: Playing our part in keeping the lights on (3)
Playing our part in keeping the lights on (3) Pumped storage - Over 1,000MW of hydro Wind e.g. 1.92TWh* from 300MW (Foyers) stored behind dams Greater Gabbard in 13/14 *100% (SSE share 961GWh) 29
Slide 30: Making the right investment decisions in renewables
Making the right investment decisions in renewables Renewable energy capital expenditure - £m Renewable energy capital expenditure as % of total investment 1000 852 56% 813 60% 51% 50% 800 667 41% 526 45% 600 383 26% 340 30% 22% 400 16% 200 133 15% 0 0% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY08 FY09 F
Slide 31: Focusing on our responsibilities
Focusing on our responsibilities A balanced range of businesses Operational Strong and financial investment management efficiency 31
Slide 32: Delivering dividend growth for the long-term
Delivering dividend growth for the long-term Dividend Per Share FY (p) 86.7 84.2 80.1 75.0 70.0 66.0 60.5 55.0 46.5 42.5 37.7 35.0 32.4 30.0 25.7 27.5 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 32
Slide 33: Value for customers and value for investors, Q and A
Value for customers and value for investors Q and A 33