Sse Plc · LSE:SSE
Sse — H1 FY2021 Earnings Presentation
32 slides from Sse's earnings presentation, Nov 18, 2020
Slide 1: Leading the Way to Net Zero: Financial Results for Six Months to 30 September 2020
LEADING THE WAY TO NET ZERO FINANCIAL RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2020 18 November 2020
Slide 2: Overview
OVERVIEW Strategic progress, strong performance and significant opportunities Part One • Delivering SSE’s clear and focussed strategy Part Two • Strong financial and operational performance Part Three • Significant opportunities to create sustainable value Questions Martin Pibworth Alistair Phillips
Slide 3: Strategic Progress Summary
Part One RESULTS TO 30 SEPTEMBER 2020 STRATEGIC PROGRESS SUMMARY SSE Financial Results for the six months to 30 September 2020 Presenter: Alistair Phillips-Davies 3
Slide 4: Strategic Progress Summary: Building a better world of energy
STRATEGIC PROGRESS SUMMARY Building a better world of energy Safety performance • Total recordable injuries reported fell to 27, versus 35 in the same period last year Delivering strategic plans • Significant progress on our £7.5bn investment plan • Delivered £1.4bn of £2bn+ disposals programme anno
Slide 5: A focused and highly complementary business mix
STRATEGIC PROGRESS SUMMARY A focused and highly complementary business mix Key roles Key roles decarbonising facilitating electricity electrification and Net Zero Renewables Transmission Distribution Mix of related Skills in large Offshore Wind | Onshore Wind North of Scotland North of Scotland busi
Slide 6: A wealth of opportunities in renewables
STRATEGIC PROGRESS SUMMARY A wealth of opportunities in renewables • Projects in development will double renewable output by 2025 • Pipeline of longer-term projects, that could treble renewable output by 2030 • Leading the development of more offshore wind than any other developer • Potential to exp
Slide 7: Summary of Performance
Part Two RESULTS TO 30 SEPTEMBER 2020 SUMMARY OF PERFORMANCE SSE Financial Results for the six months to 30 September 2020 Presenter: Gregor Alexander 7
Slide 8: Managing coronavirus impacts
PERFORMANCE Managing coronavirus impacts Financial impact of coronavirus • Renewables, Transmission and Thermal not been adversely impacted • Impact on operating profit over the first six months of around £115m • Full-year impact expected to be towards the middle of £150m-£250m range SSE Financial R
Slide 9: Results to September 2020 – Overview
PERFORMANCE Results to 30 September 2020 – Overview Continuing operations1 HY21 HY20 Key movements • Adjusted results include adverse effect of Adjusted Operating Profit - £m 418.3 491.9 coronavirus, primarily impacting Adjusted Profit Before Tax - £m 193.9 263.4 Distribution, Business Energy and En
Slide 10: Core Businesses
PERFORMANCE Core Businesses Adjusted EBIT (£m) HY21 HY20 SSEN Transmission 115.2 110.1 • Phasing of allowed revenue SSEN Distribution 109.6 150.8 • Reduced volumes due to Investment in SGN 89.4 102.1 coronavirus pandemic Total Regulated Networks 314.2 363.0 • Adverse weather conditions offset by hig
Slide 11: Other Businesses – Continuing Operations
PERFORMANCE Other Businesses – Continuing Operations1 Adjusted EBIT (£m) HY21 HY20 Total Renewables and Networks 455.8 512.9 • Strong operational performance • HY20 benefited from Capacity Thermal Generation 49.6 57.8 Market reinstatement • HY21 includes gain on sale of Gas Storage (17.9) (20.7) 50%
Slide 12: Disposals of non-core assets
PERFORMANCE Disposals of non-core assets • Over £1.4bn proceeds to date from disposal plan outlined in June 2020 • Now expected to deliver well over £2bn • Over £900m gains on disposal expected in FY21 Reported FY21 EPS Disposals Proceeds - £m Gain on sale - £m gain – pence Walney Offshore Wind Farm
Slide 13: Reconciling adjusted and reported numbers
PERFORMANCE Reconciling adjusted and reported numbers Income Statement - £m HY21 • Gains on disposal of Walney and Adjusted EBIT 418.3 MapleCo Disposals of non-core assets 260.8 • Fair value uplift on sale of 51% stake in Seagreen Other non-cash exceptional items 66.2 • Fair value uplift on sale of
Slide 14: Progress on capex programme
PERFORMANCE Progress on capex programme Adjusted Capex (£m) HY21 SSEN Transmission 224.4 • £59m Shetland Link SSEN Distribution 167.9 • £80m share of Dogger Bank SSE Renewables 176.4 • £28m share of Seagreen • £28m Viking Thermal Energy 41.9 Other 69.9 • £25m Keadby 2 Total Group gross capex 680.5 •
Slide 15: Maintaining a strong balance sheet
PERFORMANCE Maintaining a strong balance sheet HY21 FY20 HY20 Adjusted net debt and hybrid capital - £m 10,622 10,466 10,339 Average cost of debt at period end, incl. hybrid capital 3.58% 3.51% 3.60% Adjusted net finance costs - £m 224.4 465.0 228.5 • Over £2bn Eurobonds and hybrid securities issued
Slide 16: Financing and partnering for growth
PERFORMANCE Financing and partnering for growth Approach to renewables farm-downs Financing offshore projects • Allows developer premiums to be secured Early • Divestment typically to 30-40% spreads risk and development financial exposure on large-scale projects of site • Avoids a large increase in
Slide 17: Clear plan for longer term funding
PERFORMANCE Clear plan for longer term funding • Disposals programme to secure well in excess of £2bn • Five year £7.5bn investment plan consistent with net debt/EBITDA target within existing capital structure • S&P rating remains BBB+ stable outlook; Moody’s rating Baa1 negative outlook FY20 Net de
Slide 18: Ongoing disposals programme
PERFORMANCE Ongoing disposals programme COMPLETED IN PROGRESS POTENTIAL • Walney Offshore • Contracting and Rail • Scotia Gas Networks Wind Farm • Gas Production • MapleCo smart Assets meters • Multifuel Energy Exploring divestment of interest in SGN • Appointed banks to consider sale of all or part
Slide 19: Renewable projects contribution to EPS growth
PERFORMANCE Renewable projects contribution to EPS growth • Total equity and capex contribution out to 2024/25 expected to be around £2bn • Expect these key renewables projects alone to add around 10 pence per share by 2026/27 Key wind projects (assumed SSE ownership) – EPS contribution1 12 10 8 6 4
Slide 20: Remunerating shareholders
PERFORMANCE Remunerating shareholders • Strong operational performance and strategic progress • Financial performance in year to date broadly in line with Board’s expectations • Expect FY21 adjusted EPS to be in the range 75 - 85 pence1 • Expect FY21 reported EPS to be in excess of 150 pence Intend
Slide 21: Opportunities
Part Three RESULTS TO 30 SEPTEMBER 2020 OPPORTUNITIES SSE Financial Results for the six months to 30 September 2020 Presenter: Alistair Phillips-Davies 21
Slide 22: Creating value in the net zero transition
OPPORTUNITIES New electricity demand to meet net Creating value in the net zero transition zero by 2050 (TWh) 1200 1000 Opportunities presented by transition to net zero • UK Government Targets 800 • Trebling of renewable capacity expected by 600 2050 • Potential to treble electricity demand by 2050
Slide 23: A platform for renewables growth
OPPORTUNITIES A platform for renewables growth HYDRO PUMPED STORAGE WIND 78 power stations with 128 Foyers can supply electricity in 224 offshore wind turbines and turbine units less than 30 seconds 1,191 onshore wind turbines 300km of tunnel systems and Foyers can discharge over 400 56% of onshore
Slide 24: A growing list of wind projects
OPPORTUNITIES A growing list of wind projects Current SSE Assumed SSE Project Capacity ownership ownership* Seagreen 1,075MW 49% 49% Dogger Bank A & B 2,400MW 50% 40% Viking 443MW 100% 100% Dogger Bank C 1,200MW 50% 40% Seagreen 1A 360MW 49% 49% Berwick Bank Up to 2,300MW 100% 40% Marr Bank Up to 1,
Slide 25: Doubling wind capacity by 2025
OPPORTUNITIES Doubling wind capacity by 2025 Seagreen 1,075MW • 10MW Vestas turbines • Average load factor of c54% • Around 5TWh average annual production Dogger Bank 3,600MW • 13MW GE turbines • Average load factor of c57% • Around 18TWh average annual production Viking 443MW • 4.2MW Vestas turbine
Slide 26: A strong and growing pipeline
OPPORTUNITIES A strong and growing pipeline Project 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Key Seagreen 1A Development Construction 360MW Bid Phase Berwick Bank Development Construction Development Phase SEABED SECURED – SEEKING CONSENT Up to 2300MW Target Consent Achieved Marr Bank
Slide 27: To quadruple wind output by 2030
OPPORTUNITIES To quadruple wind output by 2030 Target to quadruple wind Renewable Capacity & Output output by 2030 Target annual renewable output (RHS) Potential additions from key projects1 Capacity additions (LHS) Offshore Onshore >30TWh target 40 12 37 36 35 Key driver for 10 28 30 26 27 target t
Slide 28: A key role for low-carbon thermal
OPPORTUNITIES A key role for low-carbon thermal • Low carbon thermal provides UK and Ireland with flexible capacity at scale to balance variability of increasing renewable output • Construction of Keadby 2 CCGT continued though pandemic Looking to the future • Keadby 2 most efficient CCGT in Europe
Slide 29: A Transmission network for net zero
Potential 2030 Network and Growth Drivers OPPORTUNITIES A Transmission network for net zero Shetland HVDC Renewables/Reliability Orkney HVAC Renewables • The North of Scotland’s massive potential for renewable Caithness Offshore Wind energy production puts SSEN Transmission in a unique Western Isles
Slide 30: Distribution's part in an electric future
OPPORTUNITIES Distribution’s part in an electric future Decarbonising streets and homes • Electric vehicle ownership expected to rise to 5 million by 2050 in SSEN Distribution’s operating areas • Heat pumps installations also expected to accelerate Investment during RIIO-ED2 should provide platform
Slide 31: Conclusion
CONCLUSION Strategic progress, strong performance and attractive opportunities • Demonstrating resilience with robust financial and operational performance • Good progress towards refocussing the group around networks and renewables • Executing on an enviable development pipeline and looking to capi
Slide 32: Thank You
THANK YOU Questions For a better world of energy @sse