Financial communication in power and utilities

Transcription

1 Financial communication in power and utilities As European power and utility companies (P&Us) prepare for the end of the year s second quarter, we thought it would be timely to P&Us communicate to the markets. Louis-Mathieu Perrin reports. results presentations of some of Europe s leading P&U companies, trying to assess the nature of the ratio they highlight and identify key trends in current qualitative and quantitative communication.

2 Different indicators and aggregates Category Number of aggregate/ indicator List of aggregates/indicator used Debt 6 Dividend Dividend, payout ratio 5 net investments, divestments 4 Financial communication in power and utilities

3 performance between the various companies. its ability to enable a benchmark with competitors. Communicating about debt companies communicate about debt. While not all the companies strict benchmark. Financial debt = Total liquids funds and non-current securities (1) companies and other shareholdings = Economic net debt held for sales Financial communication in power and utilities

4 credit institutions = Total interest-bearing liabilities Talking about income We see similar issues surrounding communication relating to net In M the lifespan of certain assets on the renewal provision = Adjusted gross debt Alpiq impairment Total non-recurring items net of tax -459 disclosure is, at best, partial. = Adjusted net debt Financial communication in power and utilities

5 Describing past performance are sometimes necessary to compare initial targets and achieved performance. Category Number of aggregate/ indicator List of aggregates/indicator used 5 income group share, recurring net income Debt 6 reduction in net debt Dividend Dividend, payout ratio 4 Financial communication in power and utilities 4

6 Operational targets operational targets including nuclear or conventional thermal in installed renewable capacity, health and safety, biodiversity, diversity and training. Common trends But while these differences make comparison challenging, identifying areas of convergence offers insights into what issues 1. The structure of the balance sheet still appears to be a concern either through an absolute debt number or via a ratio (gearing future, with most using a ratio but some companies, particularly southern European utilities, using a strict net debt reduction target. 2. Cost reduction has become a key pillar of progress on current cost reduction plans or on new cost latest strategic update, sets out a target of reducing operational 3. Strong commitment to capital discipline communications underlines the ongoing precise monitoring 4. Dividends remain a central element of a company s value proposition Almost all P&U companies put their level of dividend or factors, not all which are under the control of the company. 5. Regulation is still a concern to detailing the recent regulatory measures and their impact or upcoming effects on the company and its peers. We are also Common concerns highlight challenges performance of Europe s P&Us, an awareness of these different types of communication can help to understand results, as well as to identify where companies priorities lie. And while differences abound, several points of convergence highlight the common transformation for the sector. 5 Financial communication in power and utilities

7 Louis-Mathieu Perrin Assurance sector resident, supports clients across a range of areas diligence, asset valuations and reviews of internal systems. He works with many of Europe s leading utilities and

8 EY About EY in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our working world for our people, for our clients and for our communities. About EY s Global Power & Utilities Center environmental challenges, utility companies need to maintain a secure and reliable supply, while anticipating change and reacting to it quickly. works to anticipate market trends, identify the implications and develop points of view on relevant sector issues. Ultimately it enables us to help you meet your goals and compete more effectively. has been printed on paper with a high recycled content. ey.com