Powering Change
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POWERING CHANGE FINANCIAL RESULTS FOR THE YEAR TO 31 MARCH 2021 26 May 2021 DISCLAIMER This presentation contains forward-looking statements about financial and operational matters. Because they relate to future events and are subject to future circumstances, these forward-looking statements are subject to risks, uncertainties and other factors. As a result, actual financial results, operational performance and other future developments could differ materially from those envisaged by the forward-looking statements. SSE plc gives no express or implied warranty as to the impartiality, accuracy, completeness or correctness of the information, opinions or statements expressed herein. Neither SSE plc nor its affiliates assume liability of any kind for any damage or loss arising from any use of this presentation or its contents. This presentation does not constitute an offer or invitation to underwrite, subscribe for, or otherwise acquire or dispose of any SSE shares or other securities and the information contained herein cannot be relied upon as a guide to future performance. 2 OVERVIEW Powering change £7.5bn capex plan Regulated businesses • Construction well under way on Seagreen, • Around £2.8bn Transmission totex in T2 with Viking and Dogger Bank significant potential for further growth • Leading construction of more offshore wind • Distribution business plan including net zero than anyone else in the world generated growth, to be submitted July 2021 £2bn+ disposals programme Developing growth options • Agreed transactions will yield over £1.5bn • Pipeline of domestic offshore opportunities proceeds with international options • Expect total to be well in excess of £2bn • Opportunities in pumped storage, CCS, target on completion of prospective SGN sale hydrogen and batteries SSE Financial Results for the year to 31 March 2021 3 Presenter: Alistair Phillips-Davies RESULTS TO 31 MARCH 2021 PROGRESS 4 PROGRESS The people behind our purpose Coronavirus • Supported the safe and reliable supply of electricity • Played our part in national pandemic effort • No rates relief received or employees furloughed • Implemented measures to provide flexible and safe working Safety performance • 47 Total Recordable Injuries reported versus 55 in the previous year SSE Financial Results for the year to 31 March 2021 5 Presenter: Alistair Phillips-Davies PROGRESS Sharpening our net zero focus Recycling capital into low-carbon electricity businesses and streamlining SSE’s asset portfolio Key roles Key roles facilitating decarbonising electrification and Net electricity Zero Renewables Transmission Distribution Offshore Wind | Onshore Wind North of Scotland North of Scotland Regulated assets Hydro Skills in large provide portfolio South of England capital projects and stability asset management Common skills Understanding and (e.g. asset management, managing market and stakeholder engagement, regulatory risks regulation) Flexible thermal complements wind variability Delivering clean and distributed energy (e.g. EV, heat pumps) to customers Thermal Customer businesses Enterprise Gas generation | Gas storage Airtricity Distributed Energy Gas CCS* | Hydrogen* Business Energy EPM * Future options Route to market Access to market SSE Financial Results for the year to 31 March 2021 6 Presenter: Alistair Phillips-Davies PROGRESS Meeting our objectives Building a better world of energy • SSE Greenprint published May 2020 • Supporting increasingly ambitious climate action targets • Principal Partner for COP26 Remunerating shareholders • 81p DPS in line with plan • Reiterating commitment to delivering remainder of dividend plan to FY23 SSE Financial Results for the year to 31 March 2021 7 Presenter: Alistair Phillips-Davies RESULTS TO 31 MARCH 2021 PERFORMANCE 8 PERFORMANCE Financial highlights – Managing the impact of coronavirus No material adverse impact on financial performance of Renewables, Transmission or Thermal 2020/21 Estimated Estimated EBIT • Reduced demand for electricity mainly Gross Impact % Impact affecting DUoS (of which £34m is SSEN Distribution £40m 10% recoverable in future periods) Customer businesses £80m 80% • Excess electricity hedges with negative mark to market valuations Enterprise £40m 180% • Higher level of customer bad debt SGN £5m 5% • Reduced customer demand for Corporate unallocated £5m - electricity and related services Total £170m 10% Impact of coronavirus is reflected within adjusted operating profit, with estimated 13 pence impact on adjusted EPS SSE Financial Results for the year to 31 March 2021 9 Presenter: Gregor Alexander PERFORMANCE Financial highlights – Income Statement (continuing operations1) Adjusted 1 FY21 FY20 Key movements • Adjusted EPS in the middle of the expected Operating Profit - £m 1,506.5 1,488.4 range provided in closed period notice Profit Before Tax - £m 1,064.9 1,023.4 • Adjusted and reported results include: • Adverse effect of coronavirus of £170m EPS - pence 87.5 83.6 • Developer profits on Seagreen and Dogger Bank A&B equity disposals Reported 1 FY21 FY20 • Reported results include: Operating Profit - £m 2,743.5 963.4 • £877.8m of net exceptional gains from disposal of non-core assets Profit Before Tax - £m 2,516.4 587.6 • Positive mark-to-market movements of £590.1m on commodity contracts and EPS – pence 215.7 40.6 £55.7m on financial derivatives. 1FY21 discontinued operations: Gas Production assets adjusted and reported operating profit £33.0m (FY20 - £25.8m adjusted / £(265.5)m reported) SSE Financial Results for the year to 31 March 2021 10 Presenter: Gregor Alexander PERFORMANCE Financial highlights – Disposals of non-core assets 1 Headline Consideration FY21 Reported Gain / Agreed Disposals £m (Loss) on Sale £m Walney offshore wind farm 350.0 188.7 MapleCo meter asset provider 95.3 70.4 Multifuel Energy 995.0 669.9 Gas Production assets 2 120.0 - Contracting & Rail 3 22.5 (51.2) Total 1,582.8 877.8 1 Disposals of non-core assets excludes disposals during the year in Dogger Bank, Seagreen and Slough Multifuel. 2 Upfront consideration of £25m, with a £95m (adjusted for certain items) loan note repayable in 2024 and excludes up to £40m contingent upon future gas prices. 3 Upfront consideration of £17.5m (adjusted for certain items), a £5m loan note repayable in 2026 and excludes up to £5m contingent upon achieving FY22 EBITDA performance Agreed disposals represent approximately 3 pence dilution to adjusted EPS on a normalised basis Financial stake in SGN • Highly successful investment for the group • Plan to divest all of remaining investment • Synergies with low-carbon electricity less clear • Expect to commence formal process mid-summer SSE Financial Results for the year to 31 March 2021 11 Presenter: Gregor Alexander PERFORMANCE Movement Core businesses (inc. investment in SGN) • Increased revenue activity offset by increased operational costs and Adjusted EBIT (£m) FY21 FY20 depreciation charges SSEN Transmission 220.9 218.1 • Mainly reduced demand as a result of SSEN Distribution 267.3 356.3 the impact of coronavirus Investment in SGN 173.0 202.3 • Reduction in non-recurring commercial income and increase in system costs Total regulated networks 661.2 776.7 from change in charging methodology Hydro (inc. pumped storage) 238.3 191.1 • Higher availability on pumped storage and price capture offsetting lower Onshore wind 149.4 201.4 volume Offshore wind 344.1 174.8 • Reduced volumes due to weather Total SSE Renewables 731.8 567.3 • Developer profits of £226m on Seagreen and Dogger Bank Total core businesses (inc. SGN) 1,393.0 1,344.0 • Volumes down reflecting Walney disposal and weather conditions. SSE Financial Results for the year to 31 March 2021 12 Presenter: Gregor Alexander PERFORMANCE Movement 1 Other businesses – continuing operations • Strong operational performance • FY20 included non-recurring GB Adjusted EBIT (£m) FY21 FY20 Capacity Market reinstatement income • FY21 includes developer profit on sale Total core businesses 1,393.0 1,344.0 of 50% stake in Slough Multifuel SSE Thermal 160.5 152.7 • Reflecting market conditions Gas Storage (5.7) 3.7 Business Energy (24.0) 9.2 • FY21 loss reflects coronavirus impacts • FY20 profit impacted by higher bad Airtricity 44.0 48.8 debts and non-commodity costs. EPM (inc. Gas Production contracts) 18.4 (60.3) • FY20 losses reflect the tail end of issues in 2018 Enterprise (21.3) 8.1 • Small operating profit now expected each year Total other businesses 171.9 162.2 • Contracting & Rail business Corporate unallocated (58.4) (17.8) significantly impacted by coronavirus SSE Group 1,506.5 1,488.4 • Change in recovery, following Energy 1FY21 discontinued operations: Gas Production assets adjusted and reported operating profit Services disposal in January 2020 £33.0m (FY20 - £25.8m adjusted / £(265.5)m reported) SSE Financial Results for the year to 31 March 2021 13 Presenter: Gregor Alexander PERFORMANCE • Gains on disposal of Walney, Reconciling adjusted and reported numbers MapleCo, Multifuel and expected loss on disposal of Contracting & Rail Income Statement - £m FY21 • £590.1m MTM gains on out-of-the Adjusted EBIT 1,506.5 money commodity contracts and £8.5m stock revaluation Disposals of non-core assets 877.8 • Fair value uplifts on sale of 51% in Seagreen and 50% in Slough Multifuel, IFRS 9 commodity remeasurements 598.6 offset by depreciation on historic fair value uplifts Net fair value adjustments on disposals 26.4 • True-up adjustments on prior year exceptional transactions and charges Prior year disposals and true-ups (43.0)