Sse Plc · LSE:SSE
Sse — FY2015 Earnings Presentation
38 slides from Sse's earnings presentation, May 2015
Slide 1: SSE Financial Results
SSE Financial Results Full year to 31 March 2015
Slide 2: Lord Smith of Kelvin, Chairman
Lord Smith of Kelvin Chairman 2
Slide 3: SSE is a great company with fantastic people
“SSE is a great company with fantastic people” Lord Smith of Kelvin Dividend growth (p/share) 100 80 75.0 80.1 84.2 86.7 88.4 60 66.0 70.0 40 55.0 60.5 42.5 46.5 20 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Capex (£bn) 1.8 1.5 1.71 1.2 1.44 1.49 1.58 1.48 1.28 1.32 0.9 0.6 0.81 0.66 0
Slide 4: The SSE team
The SSE team 4
Slide 5: Safety comes first
Safety comes first Total Recordable Injury Rate* 0.16 0.12 0.12 0.12 0.08 0.04 FY14 FY15 Total Recordable Injuries 50 40 40 42 30 20 FY14 FY15 *TRIR – per 100,000 hours worked 5
Slide 6: Strategy for long-term success
Strategy for long-term success Our core purpose Our strategy Our financial objective Provide the energy people need in a Efficient operation of, and investment Annual dividend increases of at least RPI reliable and sustainable way in, a balanced range of energy inflation for shareholders businesses
Slide 7: Working for a long-term framework
Working for a long-term framework Taking forward energy Concluding its energy Positively contributing policy commitments market investigation to emerging market 7
Slide 8: Delivering solid financial results..
Delivering solid financial results.. Dividend (p/share) Adjusted EPS (p/share) 100 130 90 120 124.1 123.4 80 84.2 86.7 88.4 110 118.5 80.1 113.2 112.9 70 75.0 100 60 90 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 Adjusted PBT (£bn) Capital Investment (£bn) 1.6 1.8 1.5 1.55 1.56 1.6 1.71 1.4 1.
Slide 9: Gregor Alexander, Finance Director
Gregor Alexander Finance Director ₋ Financial Overview ₋ Networks 9
Slide 10: Focusing on the key financial results
Focusing on the key financial results FY14 £m FY15 £m % change Adjusted profit before tax 1,551.1 1,564.7 +0.9% Fair value re-measurements (IAS 39) (212.0) (105.3) Exceptional items (747.2) (674.6) Interest on net pension liabilities (IAS 19R) (28.2) (14.0) Tax on JCEs and associates 11.6 (35.6) Rep
Slide 11: Summarising performance in SSE's businesses
Summarising performance in SSE’s businesses Operating Profit FY14 £m FY15 £m % change EPM and Generation 496.1 433.3 Gas Production 130.2 36.6 Gas Storage 8.3 3.9 Total Wholesale 634.6 473.8 -25.3% Electricity Distribution 507.0 467.7 Electricity Transmission 136.7 184.1 Gas Distribution (SGN)* 276.
Slide 12: Focusing on adjusted earnings per share
Focusing on adjusted earnings per share Adjusted EPS FY (p) 130 - FY15 adjusted EPS in line with forecast 120 123.4 124.1 - EPS subject to key uncertainties 110 100 - SSE is currently targeting FY16 EPS which at least FY14 FY15 matches analyst expectations* Adjusted Dividend Cover 1.50 - Adjusted di
Slide 13: Making the right investment decisions (1)
Making the right investment decisions (1) FY14 FY15 Change % Capital expenditure and investment (£m) 1,583 1,475 -6.8% Adjusted net debt and hybrid capital (£m) 7,643 7,568 -1.0% Average interest rate 4.71% 4.21% Over the last 5 years SSE: - Increased Networks RAV by £2.4bn - Completed almost 800MW*
Slide 14: Making the right investment decisions (2)
Making the right investment decisions (2) FY16 c. £1.75bn capex forecast Diverse Projects Committed 10% − Caithness-Moray (Transmission) 10% − Clyde extension (Onshore wind) Networks Wholesale 50% Retail Optional Other − Bhlaraidh (Onshore wind) 30% − Ferrybridge Multifuel 2 (Thermal generation) − B
Slide 15: Focusing on value from disposals
Focusing on value from disposals Disposals and capital ‘recycling’ programme Wind ‘Recycling’ Disposal Programme Outstanding c.£1bn Langhope Rig (16MW) Assets Sold (c.£475m) Clyde windfarm Target proceeds and net debt reduction to be achieved 15
Slide 16: Maintaining a platform for dividend growth
Maintaining a platform for dividend growth 88.4 84.2 86.7 Dividend Per Share FY (p) 80.1 75.0 70.0 66.0 60.5 55.0 46.5 42.5 35.0 37.7 27.5 30.0 32.4 25.7 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Targeting at least RPI in future 16
Slide 17: Networks central to SSE strategy
Networks central to SSE strategy Operating Profit FY14 FY15 % change Distribution 507.0 467.7 -7.8% Transmission 136.7 184.1 +34.7% Gas Distribution (SGN) 276.6 285.0 +3.0% Networks Operating Profit 920.3 936.8 +1.8% Total Networks RAV, £bn (net) 8 6 4 2 0 FY10 FY11 FY12 FY13 FY14 FY15 Transmission
Slide 18: Keeping the lights on for Distribution customers
Keeping the lights on for Distribution customers Operating profit (£m) Electricity distributed (TWh) 550 45 500 507 40 40.4 39.6 450 468 35 400 30 FY14 FY15 FY14 FY15 Distribution capex (£m) 400 300 328 289 308 260 200 212 100 FY11 FY12 FY13 FY14 FY15 18
Slide 19: Working for customers in ED-1
Working for customers in ED-1 - New Distribution price control - Delivering an underlying reduction in household distribution costs - Stable and transparent regulatory framework - Base revenues set for 2015/16 despite CMA ED1 appeal - SSE is focused on: - Supporting stable and transparent regulatory
Slide 20: Increasing the asset base in Transmission
Increasing the asset base in Transmission Operating Profit (£m) Transmission RAV (£bn) 200 2 150 184 1.5 1.73 100 137 1 50 0.5 0.52 0 0 FY14 FY15 FY11 FY15 Transmission capex (£m) 500 400 467 300 334 349 200 229 100 117 0 FY11 FY12 FY13 FY14 FY15 20
Slide 21: Achieving efficiencies in Gas Distribution
Achieving efficiencies in Gas Distribution Operating Profit* (£m) RAV* (£bn) 300 2.50 275 285 2.45 2.46 277 2.44 250 2.40 225 2.35 200 2.30 FY14 FY15 FY14 FY15 SGN capex* (£m) 300 200 200 202 199 161 170 100 0 FY11 FY12 FY13 FY14 FY15 *SSE share 21
Slide 22: Alistair Phillips-Davies, Chief Executive
Alistair Phillips-Davies Chief Executive ₋ Business and Political Environment ₋ Retail ₋ Wholesale ₋ Outlook 22
Slide 23: Ensuring SSE is well-positioned for the future
Ensuring SSE is well-positioned for the future SSE 2014/15 goals Challenges SSE faced in 2014/15 - Deliver good operational - Electricity distribution price performance control - Deliver solid financial results - Auction for generation capacity - Ensure SSE is well positioned to - CMA energy market
Slide 24: Working in the interest of customers and investors alike
Working in the interest of customers and investors alike Taking forward energy Completing interim Seeking to secure a policy commitments findings which will be coherent and enduring subject to more analysis framework 24
Slide 25: Managing issues in Energy Supply
Managing issues in Energy Supply Customer numbers (m) Operating profit (£m) FY14 FY15 % change 10 9.7 9.6 9.5 9.1 8 8.6 Energy Supply 246.2 368.7 +49.8% 6 Energy Related Services 24.1 17.7 -26.6% 4 FY11 FY12 FY13 FY14 FY15 Enterprise 56.8 70.4 +23.9% Aged debt (£m) 150 118 Total Retail 327.1 456.8 +
Slide 26: Putting customers first for the long term
Putting customers first for the long term 2 Price Cuts in Price Freeze Industry-leading Brand building 15 Months until July 2016 broadband offer ‘Treating Customer Fundamental £110m Customers service digital channels Investment in Fairly’ principles improvement overhaul Energy Supply 26
Slide 27: Building a new business - Enterprise
Building a new business - Enterprise - Dedicated relationship management - ESG acquisition - Potential to attract significant and sustainable growth Profit Growth (£m) Revenue Growth (£m) 80 800 60 70* 600 595 651 40 57 400 20 200 0 0 FY14 FY15 FY14 FY15 *includes £15.3m gas pipelines disposal 27
Slide 28: Managing Wholesale business in response to long term trends
Managing Wholesale business in response to long term trends Gas- and oil-fired output (TWh) Renewable output (TWh) Operating profit FY14 FY15 % change 40 10 30 8 9.0 8.5 29.3 7.6 7.3 EPM and Generation 496.1 433.0 -12.7% 20 6 21.6 10 4 4.4 8.7 10.1 9.8 Gas Production 130.2 36.6 -71.9% 0 2 FY11 FY12
Slide 29: Taking the right decisions in Generation – coal
Taking the right decisions in Generation – coal - Difficult decision to: - Not reopen Unit 4 at Ferrybridge - Close Unit 3 at Ferrybridge by the end of FY16 - Options for Fiddler’s Ferry to be reassessed following next capacity auction Baseload Dark Spreads (£/MWh) 25 20 15 10 5 0 S-07 S-08 S-09 S-1
Slide 30: Taking the right decisions in Generation – gas
Taking the right decisions in Generation – gas Investments and investment decisions - £15m in Peterhead to improve flexibility - Over £100m in Medway and Keadby – improved flexibility and reliability - Bring Keadby out of deep mothball Peterhead CCGT - No further new CCGT development at present Inve
Slide 31: Taking the right decisions in Generation – renewables (1)
Taking the right decisions in Generation – renewables (1) In the last 5 years SSE added: - Just under 800MW* of new onshore wind - 350MW** of new offshore wind Total Renewable Capacity (MW) 4,000 3,357 2,941 3,161 3,289 3,000 2,365 2,295 2,000 1,000 0 FY10 FY11 FY12 FY13 FY14 FY15 Walney offshore wi
Slide 32: Taking the right decisions in Generation – renewables (2)
Taking the right decisions in Generation – renewables (2) Decisions take account of: Total Renewable Output (TWh) - Disciplined approach to capital investment 10 - Avoiding dependency on particular 8 15% fuels/technologies 14% 6% - Introduction of competition for CfDs 14% 6 44% 51% 51% 49% Plans and
Slide 33: Completing new assets in Ireland
Completing new assets in Ireland - Great Island CCGT - Now in full commercial operation - Completion costs out-turned on budget - Cleanest, most efficient and reliable gas power plant on Irish grid - Reform of Single Electricity Market (SEM) - Published September 2015 - Dublin based SSE team - Fully
Slide 34: Maintaining Gas Production assets
Maintaining Gas Production assets - 5 years since SSE first invested in gas production assets - Portfolio estimated reserves in excess of 2.2bn therms - SSE will look at opportunities to increase reserve base Gas production profit (£m) Gas production output (m therms) 150 500 120 130 400 414 398 90
Slide 35: Laying foundations and making progress
Laying foundations and making progress Uncertainty continues - CMA appeals of RIIO-ED1 price control - New government’s energy policies - Findings and potential remedies from CMA Energy Market investigation Our priority has been – and continues to be – to ensure SSE is in a good position for the lon
Slide 36: Doing the right things for the long term
Doing the right things for the long term - Securing £100m of operational efficiencies - Extending our energy price freeze - Completing disposals totalling £475m - Investing in energy supply business - Taking difficult decisions in generation - Launching SSE Enterprise - Commissioning Great Island CC
Slide 37: Delivering dividend growth for the long-term
Delivering dividend growth for the long-term 88.4 RPI* 84.2 86.7 Dividend Per Share FY (p) 80.1 75.0 70.0 66.0 60.5 55.0 46.5 42.5 35.0 37.7 30.0 32.4 25.7 27.5 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 *forecast, at least RPI 37
Slide 38: Value for customers and value for investors – Q and A
Value for customers and value for investors Q and A 38