SSE Financial Results. Full year to 31 March 2015

Transcription

1 SSE Financial Results Full year to 31 March 2015

2 Lord Smith of Kelvin Chairman 2

3 SSE is a great company with fantastic people Lord Smith of Kelvin Dividend growth (p/share) Capex ( bn) FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 3

4 The SSE team 4

5 Safety comes first Total Recordable Injury Rate* FY14 Total Recordable Injuries 50 FY FY14 FY15 *TRIR per 100,000 hours worked 5

6 Strategy for long-term success Our core purpose Our strategy Our financial objective Provide the energy people need in a reliable and sustainable way Efficient operation of, and investment in, a balanced range of energy businesses Annual dividend increases of at least RPI inflation for shareholders Employees Customers Politicians Regulators Great Britain Ireland 6

7 Working for a long-term framework Taking forward energy policy commitments Concluding its energy market investigation Positively contributing to emerging market 7

8 Delivering solid financial results.. Dividend (p/share) FY11 FY12 FY13 FY14 FY15 Adjusted PBT ( bn) FY11 FY12 FY13 FY14 FY15 Adjusted EPS (p/share) Capital Investment ( bn) FY11 FY12 FY13 FY14 FY FY11 FY12 FY13 FY14 FY15..while extending household energy price freeze 8

9 Gregor Alexander Finance Director Financial Overview Networks 9

10 Focusing on the key financial results FY14 m FY15 m % change Adjusted profit before tax 1, , % 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) Reported profit before tax Adjusted earnings per share 123.4p 124.1p +0.6% Adjusted effective tax rate 15.3% 14.4% Full-year dividend 86.7p 88.4p +2.0% Dividend cover 1.42x 1.40x 10

11 Summarising performance in SSE s businesses Operating Profit FY14 m FY15 m % change EPM and Generation Gas Production Gas Storage Total Wholesale % Electricity Distribution Electricity Transmission Gas Distribution (SGN)* Total Networks % Energy Supply Energy Related Services Enterprise Total Retail % Corporate Unallocated (1.9) 14.0 Total Operating Profit 1, , % Beauly-Denny *SSE share 11

12 Focusing on adjusted earnings per share Adjusted EPS FY (p) FY15 adjusted EPS in line with forecast - EPS subject to key uncertainties 100 FY14 Adjusted Dividend Cover FY SSE is currently targeting FY16 EPS which at least matches analyst expectations* - Adjusted dividend cover could range between around 1.2x to around 1.4x in the 3 years to March FY14 FY15 *c.115p at 08/05/

13 Making the right investment decisions (1) FY14 FY15 Change % Capital expenditure and investment ( m) 1,583 1, % Adjusted net debt and hybrid capital ( m) 7,643 7, % Average interest rate 4.71% 4.21% Over the last 5 years SSE: - Increased Networks RAV by 2.4bn - Completed almost 800MW* of new onshore and 350MW** of new offshore wind - Completed Great Island CCGT - Issued hybrid bonds at just 4.02% Greater Gabbard windfarm *83MW sold **SSE share 13

14 Making the right investment decisions (2) FY16 c. 1.75bn capex forecast Diverse Projects 10% 10% Networks Committed Caithness-Moray (Transmission) Clyde extension (Onshore wind) 30% 50% Wholesale Retail Other Optional Bhlaraidh (Onshore wind) Ferrybridge Multifuel 2 (Thermal generation) Beatrice (Offshore wind) 5.5bn net capex expected in the period of ; significant portfolio of projects in early development 14

15 Focusing on value from disposals Disposals and capital recycling programme Wind Recycling c. 1bn Disposal Programme Outstanding Langhope Rig (16MW) Assets Sold (c. 475m) Clyde windfarm Target proceeds and net debt reduction to be achieved 15

16 Maintaining a platform for dividend growth Dividend Per Share FY (p) FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Targeting at least RPI in future 16

17 Networks central to SSE strategy Operating Profit FY14 FY15 % change Distribution % Transmission % Gas Distribution (SGN) % Networks Operating Profit % Total Networks RAV, bn (net) FY10 FY11 FY12 FY13 FY14 FY15 Transmission Distribution SGN Networks RAV increased by almost 50% since April 2010 to 7.35bn 17

18 Keeping the lights on for Distribution customers Operating profit ( m) 550 Electricity distributed (TWh) FY14 FY15 30 FY14 FY15 Distribution capex ( m) FY11 FY12 FY13 FY14 FY15 18

19 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 framework - Achieving efficiencies - Ensuring investors receive fair return 19

20 Increasing the asset base in Transmission Operating Profit ( m) Transmission RAV ( bn) FY14 FY15 FY11 FY15 Transmission capex ( m) FY11 FY12 FY13 FY14 FY15 20

21 Achieving efficiencies in Gas Distribution Operating Profit* ( m) FY14 FY15 SGN capex* ( m) 300 RAV* ( bn) FY FY FY11 FY12 FY13 FY14 FY15 *SSE share 21

22 Alistair Phillips-Davies Chief Executive Business and Political Environment Retail Wholesale Outlook 22

23 Ensuring SSE is well-positioned for the future SSE 2014/15 goals - Deliver good operational performance - Deliver solid financial results - Ensure SSE is well positioned to succeed Challenges SSE faced in 2014/15 - Electricity distribution price control - Auction for generation capacity - CMA energy market investigation - UK general election 2015 an important year for energy businesses 23

24 Working in the interest of customers and investors alike Taking forward energy policy commitments Completing interim findings which will be subject to more analysis Seeking to secure a coherent and enduring framework 24

25 Managing issues in Energy Supply Operating profit ( m) FY14 FY15 % change Energy Supply % Energy Related Services % Enterprise % Total Retail % Energy Customer Accounts (m) % Customer numbers (m) FY11 FY12 FY13 FY14 FY15 Aged debt ( m) Aged Debt ( m) % 0 FY11 FY12 FY13 FY14 FY15 GB Ireland Energy Supply profit margin was 4.6%, equating to 69 on a typical duel-fuel bill 25

26 Putting customers first for the long term 2 Price Cuts in 15 Months Price Freeze until July 2016 Brand building Industry-leading broadband offer Treating Customers Fairly principles Customer service improvement Fundamental digital channels overhaul 110m Investment in Energy Supply 26

27 Building a new business - Enterprise - Dedicated relationship management - ESG acquisition - Potential to attract significant and sustainable growth Profit Growth ( m) * 20 0 FY14 FY15 Revenue Growth ( m) FY14 FY15 *includes 15.3m gas pipelines disposal 27

28 Managing Wholesale business in response to long term trends Operating profit FY14 FY15 % change EPM and Generation % Gas Production % Gas- and oil-fired output (TWh) FY11 FY12 FY13 FY14 FY15 Renewable output (TWh) FY11 FY12 FY13 FY14 FY15 Gas Storage % Total Wholesale % Exceptional Charges (584.9) (685.9) 0 Coal-fired output (TWh) FY11 FY12 FY13 FY14 FY15 Gas production output (m therms) FY12 FY13 FY14 FY15 28

29 W-06 S-07 W-07 S-08 W-08 S-09 W-09 S-10 W-10 S-11 W-11 S-12 W-12 S-13 W-13 S-14 W-14 S-15 W-15 S-16 W-16 S-17 W-17 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) Actuals Forward Curve* *as at 8 th May 2015 Ferrybridge power station 29

30 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 - No further new CCGT development at present Investment in Thermal Generation ( m) FY11 FY12 FY13 FY14 FY15 Peterhead CCGT New gas turbine - Medway 30

31 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 3,000 2,000 1,000 2,941 3,161 3,289 3,357 2,295 2,365 0 FY10 FY11 FY12 FY13 FY14 FY15 Hydro Onshore wind Offshore wind Walney offshore windfarm *83MW sold **SSE share 31

32 Taking the right decisions in Generation renewables (2) Decisions take account of: - Disciplined approach to capital investment - Avoiding dependency on particular fuels/technologies - Introduction of competition for CfDs Plans and options include: - Recycling capital - Over 280MW of onshore wind under construction - Beatrice offshore wind farm Total Renewable Output (TWh) % 14% 6% 14% 6 44% 51% 51% 49% 4 44% 2 56% 50% 37% 34% 35% 0 FY11 FY12 FY13 FY14 FY15 Offshore Wind - 2x ROCs UK onshore wind and hydro - 1x ROCs Non-ROCable renewable output 32

33 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 Dublin based SSE team - Fully engaged in regulatory and policy process Great Island CCGT 33

34 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) FY12 FY13 FY14 FY15 Gas production output (m therms) FY12 FY13 FY14 FY15 Sean gas platform 34

35 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 long term 35

36 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 CCGT - Maintaining strong options for future investment - Reconnecting with Distribution customers - Reducing level and cost of our net debt - Securing approval for Caithness-Moray link 36

37 Delivering dividend growth for the long-term Dividend Per Share FY (p) RPI* FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 *forecast, at least RPI 37

38 Value for customers and value for investors Q and A 38