National Grid Plc · LSE:NG.
National Grid — FY2022/23 Earnings Presentation
27 slides from National Grid's earnings presentation, May 18, 2023
Slide 1: Full Year Results 2022/23
Full Year Results 2022/23 London, 18 May 2023
Slide 2: Cautionary statement
Cautionary statement This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securit
Slide 3: Highlights
Highlights
Slide 4: Significant progress
Delivering as a Responsible Business Significant progress Record Portfolio Continued support capital investment positioned for growth to our customers and communities Accelerating the energy transition • 17 major transmission projects awarded by Ofgem • $3.8bn approved in the US outside of rate case
Slide 5: Record capital investment
Record capital investment £7.7bn 1.4 GW >4,200 miles Broke ground World’s first Viking Link of gas pipeline on $600m Rewiring London T-Pylons energised interconnector replaced to date NY Smart at London Power Tunnels 75% cable laid avoiding Path Connect 134,000mt project CO2e Twice as many EV connec
Slide 6: Repositioned for growth
Repositioned for growth Strategic pivot complete • WPD, now National Grid Electricity Distribution, acquired June 2021 • Rhode Island business sale completed May 2022 • UK Gas Transmission and Metering – 60% sale completed January 2023 – Consortium option on remaining 40% Business Units positioned f
Slide 7: Supporting our customers and communities
Supporting our customers and communities Helping our Customers and Communities • Early return of £100m of interconnector revenues – In addition to the £200m already committed • £24m of our UK Energy Support fund allocated • $6m Customer Assistance Programme launched in US • Project C day of service
Slide 8: Financial performance highlights
Financial performance highlights Good delivery in 2023 Underlying operating profit Underlying EPS Return on Equity £4,582m 10% 69.7p 7% 11.0% 40bps FY22: £4,171m FY22: 65.3p FY22: 11.4% Dividend growth Capital investment Asset growth in line with policy £7,740m 8% 11.4% 270 bps 55.44p 8.77% FY22: £7
Slide 9: Safety and reliability
Safety and reliability Safety Reliability • Lost Time Injury Frequency rate: • Over 99.9% availability across 0.11 vs 0.13 in FY22 regulated networks • Excellent performance across UK and US – Winter storm Elliott in the US – Hottest temperatures on record in the UK – ESO comprehensive winter prepar
Slide 10: Progress on operational priorities: New York
New York Progress on operational priorities Underlying operational Policy and regulatory progress delivery • $2.8bn approved for Transmission • Achieved RoE 8.6% investment to enable >2GW – 96% of allowed return renewable generation • $3.0bn capital expenditure • Climate Action Council scoping plan
Slide 11: Progress on operational priorities: New England
New England Progress on operational priorities Underlying operational Regulatory progress delivery Funding approved for: • Achieved RoE 8.3% • $336m Grid Modernisation – 30bps improvement1 • $487m Advanced Metering • $2.0bn capital expenditure Infrastructure – Rate base growth2 of 6.3% • $206m appro
Slide 12: Progress on operational priorities: UK Electricity Transmission
UK – Electricity Transmission Progress on operational priorities Second year of RIIO-T2 Regulatory and policy progress • Achieved RoE 7.5% • 17 major transmission projects – 120bps outperformance awarded by Ofgem • £1.3bn capital expenditure • UK Government’s ‘Powering up Britain’ package – Networks
Slide 13: Progress on operational priorities: UK Electricity Distribution
UK – Electricity Distribution Progress on operational priorities Strong final year of RIIO-ED1 RIIO-ED2 price control • Achieved RoE: 13.2% • Average allowed return of – 360bps above allowed 5.23% real level • c.£5.9bn totex allowance – 8.99/10 Customer Satisfaction Score • £1.2bn capital expenditur
Slide 14: Progress on operational priorities: NG Ventures
NG Ventures Progress on operational priorities Capital investment £906m Interconnectors Operational progress • Viking Link: 75% cable laid, • Record year of utilisation at commissioning December 2023 Isle of Grain LNG • North Sea Link first full year of • Community Offshore Wind operations JV submit
Slide 15: Interest, tax and earnings
Interest, tax and earnings Finance Underlying Underlying costs effective tax rate 1 earnings 2 £1.5bn 23.1% £2,549m 33% higher than FY22 Underlying tax charge: £709m FY22 : £2,350m • Higher impact from • 120 bps lower than • 69.7p/share – up 7% inflation on index linked prior year • In line with gui
Slide 16: Cash flow and net debt
Cash flow and net debt Cash generated Net debt (£bn) from operations 1 1.6 £6.4bn 1.9 Other Dividend FY22: £5.8bn Net cash (7.6) interest & (6.6) accretions Rhode Net cash outflow 2 Op cash Capital Island, UK Gas & investment £3.1bn flow & post tax JV income Millennium disposal4 FY22: £1.6bn Net Deb
Slide 17: Debt structure
Debt structure Net debt profile at 31 March 2023 (£bn) • Around 70% of our debt sits in the regulated operating Floating Rate companies 10% ‒ High degree of regulatory protection Fixed Rate Index linked 79% ‒ Debt book average maturity of 11 years 11% • Strong access to debt capital markets Net Debt
Slide 18: FY24 Guidance
FY24 Guidance Capital allowances impact Full Year 2024 expectations… is economically neutral • Another good year of expected earnings growth within our 5 year 6-8% CAGR Capital allowances impact (illustrative) …offset by Capital Allowances impact UK Regulated Revenues • Now expect underlying EPS to
Slide 19: 5 Year Outlook reconfirmed
5 Year Outlook reconfirmed FY2022 - 2026 FY24 Capital investment Up to £40bn – c.£29bn green1, aligning to EU taxonomy • Underlying EPS expected to be modestly lower 3 than our c.£9bn c.£12bn reported underlying FY23 EPS UK Electricity Transmission New York Regulated c.£6bn c.£9bn UK Electricity Dis
Slide 20: Financing National Grid's Operations
Financing National Grid’s Operations Debt issuance Issuance programmes National Grid National Grid National Grid National Grid • External debt is raised by our operating plc (NG) North Electricity Electricity companies, intermediate holding companies and America Transmission Distribution by the grou
Slide 21: Green Financing Approach
Green Financing Approach Green Financing Reference Green Bonds issued to date: £2.9bn across NG plc, NGET and NIMO 1 • Green Financing Framework – updated July 2021. The framework is aligned with the ICMA Green Bond Principles (2021) and Green Loan Principles (2021). Projects are also expected to be
Slide 22: Priorities & Outlook
Priorities & Outlook
Slide 23: UK Priorities
UK Priorities Advocating for regulatory and policy change 1. Streamline planning and consenting 2. New regulatory and governance frameworks – Expand Ofgem’s mandate to include net zero – Enable anticipatory investment at scale – Competition legislation – Create the Future System Operator 3. Transfor
Slide 24: UK Priorities
UK Priorities Strategic Infrastructure Business Unit • Programmatic approach to ASTI major projects • Develop new contractual framework with supply chain Reduce connection wait times • UK Electricity Transmission optimising connection offer process • ESO initiatives for pipeline management UK Electr
Slide 25: US Priorities
US Priorities Policy our • Clean Energy Vision advocacy Clean Energy • Working with policymakers on pathways to decarbonisation Vision • Federal and state permitting and siting reform Regulatory • Transmission projects – CLCPA Phase 1 & 2 transmission projects – NY Propel Project Delivering hybrid c
Slide 26: Summary
Summary Record Strategic pivot Strong visibility capital investment complete of growth WPD acquisition complete Sale of Rhode Island complete Sale of majority stake in UK Gas Transmission complete Delivering a clean, fair, and affordable energy transition for all 26 Full Year Results 2022/23
Slide 27: Q&A
Q&A