SSE Financial Results. Full year to 31 March 2016

Transcription

1 SSE Financial Results Full year to 31 March 216

2 Richard Gillingwater Chairman 2

3 The SSE team 3

4 Safety comes first Total Recordable Injury Rate* FY15 FY16 Total Recordable Injuries FY15 FY16 Combined SSE employees and contractors *TRIR per 1, hours worked 4

5 Working towards a long-term framework Over the last year: RIIO ED1 framework confirmed UK energy policy direction clearer CMA provisional remedies published SSE strongly believes in constructive engagement with policy-makers and regulators 5

6 Well-laid foundations for future dividend growth Over the last year SSE: Delivered financial commitments on EPS and dividend Taken important steps forward in core operations Maintained progress in capital investment programme Continuing to target dividend increases of at least RPI inflation in FY17 and beyond 6

7 Gregor Alexander Finance Director Financial Overview Networks 7

8 Focusing on the key financial results FY15 m FY16 m % change Adjusted profit before tax 1, , % Fair value re-measurements (IAS 39) (15.3) (14.5) Net exceptional items (674.6) (889.9) Interest on net pension liabilities (IAS 19R) (14.) (22.3) Tax on JCEs and associates (35.6) 6.4 Reported profit before tax Adjusted earnings per share 124.1p 119.5p -3.7% Adjusted effective tax rate 14.4% 12.8% Dividend 88.4p 89.4p +1.1% Dividend cover 1.4x 1.34x 8

9 Focusing on the key financial objectives Dividend (p) Adjusted EPS (p) 2 Dividend Cover At least RPI Return to growth at least 12p x 1.34x 1.2x to 1.4x FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17-FY19 9

10 Managing performance across the SSE group Operating profit FY15 m FY16 m % change Wholesale % Networks % Retail % Corporate unallocated Total operating profit 1, , % Exceptional charges PP&E impairments m Other charges m Total m Gas Generation Coal Generation E&P Gas Storage Other (incl. disposals) Total exceptional charges

11 Benefiting from a balanced range of businesses 1.62bn capex in 215/16 7% 13% Increase in renewable output helps maintain operating profit in EPM and Generation 1% 52% Ongoing progress of large capital projects 18% leading to higher operating profit in Transmission Networks Wholesale (ex. Renewables) Other Renewables Generation Retail 11

12 Sustained investment creating value Investment* ( 1.4bn) Operating profit (c. 1.8bn average pa) 1% 15% Reported segments 7% 5% Networks Wholesale Retail Other 25% 22% 44% 44% 75% Business type Networks and Renewables EPM and Thermal Generation 1% 31% 47% 65% Retail and Other m 2, *Includes SGN 1,5 1, 5 FY11 FY12 FY13 FY14 FY15 FY16 FY11 FY12 FY13 FY14 FY15 FY16 12

13 Recycling capital to support investment Sep - 14 Nov April/May - 15 Nov - 15 March /217 SSE gas pipelines PFI street lighting contracts 1 Non-core businesses: - Ventures Langhope Rig and Blue PFI street lighting contracts % in Clyde wind farm PFI street lighting contracts 3 - Property - Develop. assets Total Proceeds: 53m Total Proceeds: 33m Total Proceeds: 15m Total Proceeds: 9m Total Proceeds: 3m Total Proceeds: 355m Includes debt reduction of 23m Includes debt reduction of 25m Total proceeds from disposal program now in excess of 1bn 13

14 Maintaining investment momentum bn capex* in 4 years to 22 c. 6.5bn capex* Disposals Networks and Renewables to account for c. 67% FY17 capex forecast c. 1.75bn FY18 capex forecast c. 1.65bn 4.3bn of committed capex 14/15 15/16 16/17 17/18 18/19 19/ bn capex* *gross Strong pipeline to support future dividend growth 14

15 Maintaining SSE s financial strength (1) m Cash-flow generation* 3, 2,5 2, 1,5 1, 5 Net operating cash-flow Disposal proceeds Hybrid Coupon Intangibles investment Operational Capex Cash Dividend Growth Capex -5 Acquis. Increase in Adjusted Net Debt -1, *Stylised view 15

16 Maintaining SSE s financial strength (2) FY15 FY16 % change Adjusted net debt and hybrid capital ( m) 7,568 8, % Average interest rate (excl. hybrid capital) 4.21% 3.73% Average interest rate (incl. hybrid capital) 4.55% 3.95% Average debt maturity (excl. hybrid capital) (years) m euro bond at 3.19% - 5m private placement at 3.1% - Raised 4.5bn over the last 3 years - A3/A- credit rating with continued focus on the current criteria for these ratings Beauly-Denny 16

17 Maintaining a platform for dividend growth - 216/17 dividend that at least keeps pace with RPI inflation - SSE is targeting a return to growth in adjusted EPS of at least 12p in 216/17 - Dividend cover range from around 1.2x to around 1.4x in the 3 years to March 219 Dividend Per Share FY (p) FY99 FY FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 Targeting dividend increases at least equal to RPI in future 17

18 Networks central to SSE s strategy Operating Profit FY15 FY16 % change Electricity Distribution % Transmission % Gas Distribution (SGN) % Networks Operating Profit % Total Networks RAV, bn (net) FY1 FY11 FY12 FY13 FY14 FY15 FY16 Transmission Electricity Distribution SGN Networks RAV increased by over 5% since April 21 to 7.96bn; and is well placed to reach almost 1bn by 22 18

19 Powering communities North and South (1) Distribution RAV ( bn) FY11 FY16 Distribution capex ( m) 4 Operating profit ( m) FY FY FY11 FY12 FY13 FY14 FY15 FY16 19

20 Powering communities North and South (2) Prioritising improvements in customer service Adoption of restore first, repair second method Continued investment to deliver positive financial incentives The best-ever performance in 15/16 is likely to deliver c. 23m incentives income Customer Minutes Lost (CML) FY11 FY12 FY13 FY14 FY15 FY16 Customer Interruptions (CI) SHEPD SEPD FY11 FY12 FY13 FY14 FY15 FY16 2

21 Increasing the asset base in Transmission (1) Transmission RAV ( bn) Operating Profit ( m) FY11 FY16 FY15 FY16 Transmission capex ( m) FY11 FY12 FY13 FY14 FY15 FY16 21

22 Increasing the asset base in Transmission (2) Caithness-Moray 35m invested in the year to March 216 The largest capital project undertaken by SSE First revenues have already been received Transmission RAV to reach 3bn in 218 Well placed to build on significant development and construction capability Caithness-Moray 22

23 Securing value from Gas Distribution Operating Profit* ( m) FY15 Investment in SGN FY16 SGN RAV* ( bn) FY FY16 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 RAV growth since Cash returns Equity investment 25 Robotic technology to monitor and repair live gas mains 23

24 Alistair Phillips-Davies Chief Executive Business and Political Environment Wholesale Retail Outlook 24

25 Working within the emerging policy and regulatory framework Over the last year: RIIO ED1 framework confirmed UK energy policy direction clearer CMA provisional remedies published Energy sector to feature: Robust economic regulation for Networks Effective remuneration for generation capacity Degree of consensus about the future of the retail market 25

26 Maintaining our commitment to sustainable dividend growth - 216/17 dividend that at least keeps pace with RPI inflation - Dividend cover range from around 1.2x to around 1.4x in the 3 years to March bn capex* - SSE is targeting a return to growth in adjusted EPS of at least 12p in 216/17 14/15 15/16 16/17 17/18 18/19 19/ bn capex* Net Capex Disposals *gross 26

27 Maintaining operating profit in key areas in Wholesale Operating profit ( m) FY15 FY16 % change EPM and Generation % Gas Production % Gas Storage % Total Wholesale % Gas- and oil-fired output (TWh) FY12 FY13 FY14 FY15 FY16 Coal-fired output (TWh) FY12 FY13 FY14 FY15 FY16 Renewable output (TWh) FY12 FY13 FY14 FY15 FY16 Gas production output (m therms) * FY12 FY13 FY14 FY15 FY16 *does not include liquids production of.13mn boe 27

28 Securing further growth in renewable energy Portfolio of 783MW of wind farms in construction Renewable generation project development 428MW* of RO-qualifying onshore wind to be constructed by MW* of onshore wind in construction in ROI 235MW* Beatrice** offshore wind project Slieve Divena 2 Dunmaglass Bhlaraidh 94MW 19MW 18MW Renewable generation TWh FY11 FY12 FY13 FY14 FY15 FY16 Output Capacity 4 GW Clyde ext. Tievenameenta Galway Beatrice** 172*MW 35MW 12MW* 235MW* *SSE share **Project financed and subject to FC 28

29 Contributing to the GB electricity system the volume of capacity procured needs to rise and the clearing price needs to increase. UK Government, Capacity Market Consultation, March 216 DECC consultation on Capacity Market confirmed: Buy more capacity, and buy it earlier Tighten delivery incentives New auction for winter 217/18 29

30 Demonstrating the benefits of a diverse portfolio SSE maintains: Open and constructive relationship with government A diverse portfolio of assets, contracts and investment options: Fiddler s Ferry - Coal Fiddler s Ferry - Gas Keadby 2 - Multi-fuel Ferrybridge Multifuel 2 Ferrybridge Multifuel 3

31 Maintaining Gas Production assets Greater Laggan asset acquisition Natural complement to existing gas production assets Shetland Gas Plant 2P reserves* FY15 FY16 Total E&P - bn th Total E&P - mn boe *Estimate as per independent audit E&P gas** production profile (m th) Long-term assets Further diversity to SSE investment programme 5 Existing Assets Greater Laggan Area Assets **excludes liquids production 31

32 Managing issues in Energy Supply Operating profit ( m) FY15 FY16 % change Energy Supply % Energy Related Services % Enterprise % Total Retail % Energy Customer Accounts (m) Aged Debt ( m) Home Services Accounts (m) months of falling household prices Domestic energy supply margins maintained at fair levels Growth in I&C sector Underlying consumption (standard weather) 11% 1% 9% 8% 7% 6% FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 Gas Electricity 32

33 Transforming SSE s Retail business Key initiatives Optimising smart meter roll-out Upgrading customer-facing digital channels Diversifying the products and services Energy Supply and Energy Related Services capex ( m) FY12 FY13 FY14 FY15 FY16 33

34 Laying foundations for the long term This morning SSE has: Demonstrated ability to deliver Reaffirmed commitment to dividend growth Confirmed targeted return to growth in EPS of at least 12p Extended dividend cover outlook to 219 Set out the shape of capex plans to 22 Showed continuing investment opportunities in Networks and Renewables Highlighted opportunities in generation Shown progress in modernising Energy Supply 34

35 Delivering dividend growth for the long term Dividend Per Share FY (p) RPI* FY99 FY FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 *forecast, at least RPI 35