Slide 1: Acquisition of Central Networks: Strategic and Immediately Accretive Transaction
Title Presenter PPL Corporation Nov. 18, 2010 Acquisition of Central Networks Strategic and Immediately Accretive Transaction PPL Corporation March 2, 2011
Slide 2: Cautionary Statements and Factors That May Affect Future Results
2 Cautionary Statements and Factors That May Affect Future Results Any statements made in this presentation about future operating results or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Actual results ma
Slide 3: Agenda
3 Agenda Introduction Jim Miller Chairman, President & CEO, PPL Business Overview Robert Symons CEO, WPD Transaction Overview Paul Farr Executive Vice President & CFO, PPL Concluding Remarks Jim Miller Chairman, President & CEO, PPL
Slide 4: Transaction Overview
Transaction Overview 4 Transaction Regulatory Approvals Timing Purchase price of £4.0 billion ($6.4 billion); £3.5 billion ($5.6 billion) cash and £500 million ($800 million) assumed debt $1.70 - $1.90 billion of PPL common stock $750 - $950 million of convertible equity units $2.95 - $3.25 billion
Slide 5: Highly Strategic Transaction
5 Highly Strategic Transaction PPL achieves a highly regulated business mix Project 75% of EBITDA from regulated businesses by 2013 U.K. electric distribution networks compare favorably to FERC- regulated independent transmission Regulator-approved 5-year forward-looking revenues based on pre- appro
Slide 6: Compelling for Shareholders
6 Compelling for Shareholders Delivers immediate and significant benefits to PPL shareholders Immediately and significantly accretive (1) 2011 - $0.10 - $0.15 per share 2012 - $0.23 - $0.27 per share 2013 - $0.32 - $0.38 per share Strong value for shareholders Attractive valuation Unique ability to
Slide 7: Increasing 2011 Earnings Guidance
Increasing 2011 Earnings Guidance 7 Note: Excludes special items related to the transaction, does not reflect final determination of purchase accounting and assumes transaction close in early April 2011 (performance and shares on partial year basis). (1) Based on midpoint of guidance range. (1) (1)
Slide 8: Increased Scale with Attractive Growth
Increased Scale with Attractive Growth 8 ($ in billions) (1) Represents capitalization for LKE since LG&E and KU rate constructs are based on capitalization. Represents Regulatory Asset Value (RAV) for WPD and Central Networks. (2) Figures based on assumed exchange rate of $1.60 / GBP and are as of
Slide 9: Real-Time Recovery of Majority of Regulated Capex Spending
Real-Time Recovery of Majority of Regulated Capex Spending 9 Note: $ in billions. (1) Figures based on assumed exchange rate of $1.60 / GBP. (2) Assumes approximately 85% of Environmental Capex of LKE runs through the ECR mechanism. Approximately two-thirds of regulated capital expenditures earn ret
Slide 10: EBITDA Projection and Predominantly Regulated Business Mix
EBITDA Projection (1) 10 Predominantly Regulated Business Mix Regulated Cash Flow (2) Approximate projections. "Does The Shale Gas Glut Pose A Threat To U.S. Integrated Power Merchants' Credit Quality?" Standard & Poor's, October 22, 2010. Based on EBIT estimate from company presentation. PPL estima
Slide 11: International Regulated Overview
International Regulated Overview 11
Slide 12: U.K. Networks Overview
U.K. Networks Overview 12 ($ in billions) Regulated Asset Value(1) ($ in billions) Service Territory Note: Based on $1.60 / GBP exchange rate. (1) Figures as per Office for Gas and Electric Markets ("Ofgem") final proposals, adjusted for inflation, year-end 3/31/2011. Transaction
Slide 13: Performance Incentive-Based U.K. Electricity Distribution Regulation
Performance Incentive-Based U.K. Electricity Distribution Regulation 13 The U.K.'s Office of Gas and Electricity Markets (Ofgem) determines rates for a 5-year period on the basis of: Efficiently incurred operating costs A 5-year forward assessment and funding of capital expenditures A return on and
Slide 14: WPD: Best-in-Class U.K. Performance
WPD: Best-in-Class U.K. Performance Best reliability among 14 distribution companies Highest incentive payments for surpassing regulatory targets Most capital efficient in sector Awarded $250m efficiency allowance in DPCR5 6 years with no customer complaints to regulator Awarded the U.K. Customer Ex
Slide 15: Management's Record of Delivery
Management's Record of Delivery The same management team brought about the successful merger of South Wales and South West within the same timeframes Synergies are a direct parallel to the South Wales transaction Assessment of efficiencies lie within known boundaries 15 Robert Symons Chief Executive
Slide 16: WPD is the Best-In-Class Operator
WPD is the Best-In-Class Operator 16 U.K. Electric Distribution Network Operator Rankings Source: Ofgem. (1) Return on Regulated Equity. (2) Based on average across all categories.
Slide 17: WPD Performance Rewards Top in Industry
WPD Performance Rewards Top in Industry 17 Aggregate Total Award / Penalty ($ in millions) 12.3% 7.1% 1.4% 0.8% 1.0% 0.4% (3.9%) Aggregate as % of DPCR4 Revenue Source: Ofgem data. Note: Figures based on assumed exchange rate of $1.60 / GBP. Improvement Opportunity
Slide 18: Significant Synergy Opportunity
Significant Synergy Opportunity 18 100% Synergies retained through end of current rate period (1); 47% in following rate period (2) Estimated Annual Pre-Tax Synergies Opex Synergies by Category $ in millions Note: Figures based on assumed exchange rate of $1.60 / GBP. (1) Ends in March 2015. (2) Exp
Slide 19: Transaction Overview and Timing
Transaction Overview and Timing 19
Slide 20: Transaction Financing / Structure and Timing
Transaction Financing / Structure 20 Timing Committed Acquisition Facility Permanent Financing Expected to close early April 2011 Committed acquisition facility from Bank of America Merrill Lynch and Credit Suisse Expected to be drawn in full at closing to fund acquisition Plan to complete equity ca
Slide 21: Financial Impact
Financial Impact 21 Earnings Credit Immediately and significantly accretive (1) 2011 - $0.10 - $0.15 per share 2012 - $0.23 - $0.27 per share 2013 - $0.32 - $0.38 per share Significantly greater earnings accretion expected as efficiencies and financial benefits of the transaction are fully realized
Slide 22: Favorable U.K. Regulatory Framework
Favorable U.K. Regulatory Framework 22 U.K. regulation compares favorably to FERC-regulated independent transmission
Slide 23: Estimated Equity Returns for an Efficient U.K. Operator vs. FERC
Estimated Equity Returns for an Efficient U.K. Operator vs. FERC 23 (1) Assumes 3% of inflation per annum; inflation adjustment figured off of HM Treasury publication on a rolling basis (2) Based on efficiency levels achieved by SSE and WPD. § 4.10 of DPCR5 Final Proposals decision document dated 12
Slide 24: Significant Growth in International Regulated Earnings
Significant Growth in International Regulated Earnings 24 Note: Figures based on assumed exchange rate of $1.60 / GBP. (1) PPL business plan allocates certain corporate expenses to International Regulated Segment; future allocation of expenses may increase but will have no impact on consolidated ear
Slide 25: Concluding Remarks
Concluding Remarks 25
Slide 26: Concluding Remarks
Concluding Remarks Immediately accretive to earnings and valuation Significant achievable synergies Complementary business in highly favorable regulatory framework U.K. regulation compares favorably to FERC-regulated independent transmission Leverages PPL's best-in-class U.K. management team Highly
Slide 27: ‘© PPL Corporation 2011 a
‘© PPL Corporation 2011 a
Slide 28: Pro Forma Corporate Structure
Pro Forma Corporate Structure PPL Electric Utilities Corp. PPL Corporation PPL Energy Funding Corp. PPL Energy Plus, LLC PPL Generation, LLC WPD Holdings, LTD Louisville Gas & Electric Company Kentucky Utilities Company PPL Capital Funding, Inc. LKE WPD South West WPD South Wales U.K. Holdings Co. C
Slide 29: Capital Expenditures by Segment
Capital Expenditures by Segment ($ in billions) 29 (1) Figures based on assumed exchange rate of $1.60 / GBP. (2) Assumes approximately 85% of Environmental Capex of LKE runs through the ECR mechanism.
Slide 30: Forward-Looking Information Statement
30 Forward-Looking Information Statement Statements contained in this presentation, including statements with respect to future events and their timing, including the acquisition ("Acquisition") by PPL Corporation of Central Networks East plc and Central Networks West plc (Collectively, "Central Net
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