Sse Plc · LSE:SSE
Sse — FY2021 Earnings Presentation
39 slides from Sse's earnings presentation, May 26, 2021
Slide 1: Powering Change: Financial Results for the Year to 31 March 2021
POWERING CHANGE FINANCIAL RESULTS FOR THE YEAR TO 31 MARCH 2021 26 May 2021
Slide 2: Disclaimer
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 financia
Slide 3: Overview: Powering change
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
Slide 4: Results to 31 March 2021: Progress
RESULTS TO 31 MARCH 2021 PROGRESS 4
Slide 5: The people behind our purpose
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 Record
Slide 6: Sharpening our net zero focus
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 Sc
Slide 7: Meeting our objectives
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 div
Slide 8: Results to 31 March 2021: Performance
RESULTS TO 31 MARCH 2021 PERFORMANCE 8
Slide 9: Financial highlights – Managing the impact of coronavirus
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 Distri
Slide 10: Financial highlights – Income Statement
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 res
Slide 11: Financial highlights – Disposals of non-core assets
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 &
Slide 12: Core businesses adjusted EBIT
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 the impact of coronavirus 267.
Slide 13: Other businesses – continuing operations
PERFORMANCE Movement Other businesses – continuing operations1 • 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 Mul
Slide 14: Reconciling adjusted and reported numbers
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 Disposa
Slide 15: Progress on investment and capital expenditure programme
PERFORMANCE Progress on investment and capital expenditure programme Adjusted Capex (£m) FY21 Share % • Includes HVDC transmission link to Shetland SSEN Transmission 435.2 33% • Asset replacement and reinforcement SSEN Distribution 350.8 26% projects, including subsea cables SSE Renewables 294.3 22%
Slide 16: Maintaining a strong balance sheet
PERFORMANCE Maintaining a strong balance sheet FY21 HY21 FY20 Adjusted net debt and hybrid capital - £m 8,899 10,622 10,466 Average debt maturity (years) 7.4 6.9 6.5 Average cost of debt at period end, inc. hybrid capital 3.75% 3.58% 3.51% Adjusted net finance costs - £m 441.6 224.4 465.0 Net debt /
Slide 17: Prudent financial management and liquidity
PERFORMANCE Prudent financial management and liquidity Largest issuer of green bonds in FTSE 100 • £500m green bond issued in March 2021 – SSE’s fourth green bond in five years • Published framework for issuing sustainability-linked bonds Ensuring a strong debt structure • Over £2bn of Eurobonds and
Slide 18: Securing value from partnering
PERFORMANCE Securing value from partnering Approach to renewables farm-downs • Allows developer premiums to be secured • Divestment typically to 30-40% spreads risk and financial exposure on large-scale projects • Avoids a large increase in non-earning net debt • Appeals to the different risk appeti
Slide 19: Remunerating shareholders
PERFORMANCE Remunerating shareholders • Strong operational performance and strategic progress • FY21 Adjusted EPS of 87.5 pence • FY21 Reported EPS of 215.7 pence Financial ContinuingContinuing to to target RPI performance in increasestarget Full year dividend in FY22RPIand line with of 81.0 pence i
Slide 20: Results to 31 March 2021: Opportunities
RESULTS TO 31 MARCH 2021 OPPORTUNITIES 20
Slide 21: Strategy and capability
OPPORTUNITIES Strategy and capability Policy backdrop SSE strategic alignment Renewable Electricity Future capacity networks technology • UK targeting 100GW • Potential for demand • Carbon capture and of offshore wind by to double by 2050 storage 2050 • Further potential • Hydrogen generation demand
Slide 22: Creating value for shareholders and society
OPPORTUNITIES Creating value for shareholders and society Inclusion in ESG rating Performance ESG indices: A- Scored as ‘Leadership’ (Feb 2021) Climate change AAA In top 7% of 143 global utilities (March 2021) 63/100 SSE scored as ‘Advanced’ (Nov 2020) Top decile SSE is a leading discloser to the WD
Slide 23: SSE Renewables – Seagreen offshore wind farm
OPPORTUNITIES SSE Renewables – Seagreen offshore wind farm Seagreen indicative construction timeline 2021 2022 Capacity 1,075MW Design phase Turbine 10MW Vestas Manufacturing Average load factor c54% Onshore substation & export cable Annual production c5TWh Offshore substation & cables SSE share 49%
Slide 24: SSE Renewables – Dogger Bank offshore wind farm
OPPORTUNITIES SSE Renewables – Dogger Bank offshore wind farm Dogger Bank A indicative Dogger Bank B construction Dogger Bank C timelines 2021 2022 2023 2024 2025 2026 Capacity 3,600MW Design phase Turbine 13 & 14MW GE Average load factor c57% Manufacturing Annual production c18TWh Onshore substatio
Slide 25: SSE Renewables – Viking onshore wind farm
OPPORTUNITIES SSE Renewables – Viking onshore wind farm Viking indicative construction timeline 2021 2022 2023 2024 Capacity 443MW Civil engineering works Turbine 4.3MW Vestas Manufacturing Average load factor c48% Onshore substation Annual production Almost 2TWh HVDC cable to mainland SSE share 100
Slide 26: SSE Renewables – domestic growth
OPPORTUNITIES SSE Renewables – domestic growth Target to Renewable capacity and output quadruple wind Target annual renewable output (RHS) Potential additions from key projects1 Capacity additions (LHS) Offshore Onshore output by 2030 >30TWh target 40 12 37 38 35 10 27 30 Key driver for 8 23 25 26 2
Slide 27: SSE Renewables – Domestic growth
OPPORTUNITIES SSE Renewables – Domestic growth DUE FID OR IN CONSTRUCTION CONSENTED REQUIRING CONSENT FUTURE PROSPECTS* Seabed lease fees 1.9GW operational MW MW MW MW ONSHORE Viking 443 Yellow River 105 Strathy South 208 Other GB c250 Berwick Bank Tangy 57 Cloiche 155 Other ROI c250 Seabed lease fe
Slide 28: SSE Renewables – Irish growth
OPPORTUNITIES In development SSE Renewables – Irish growth In construction Drumnahough Climate Action Plan 2019 Lenalea • Sixth progress report, March 2021 • Targets a doubling of onshore capacity to 8GW by 2030 • Targets 5GW of offshore wind by 2030 Braymore Renewable Electricity Support Scheme (RE
Slide 29: SSE Renewables – International growth
OPPORTUNITIES SSE Renewables – International growth Potential additions to pipeline • Diversification to unlock further renewables growth • Focus on growth markets and strategic local partnerships Iberian Peninsula Denmark • Acciona partnership • Partnership with CIP and • Targeting emerging Spanish
Slide 30: Deliverable options
OPPORTUNITIES Deliverable options Project 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Key Seagreen 1A Development Construction 360MW Bid Phase Berwick Bank Development Construction Development Phase SEABED SECURED – SEEKING CONSENT Up to 2300MW Target Consent Achieved Marr Bank Development Con
Slide 31: SSE Renewables – Hydro
OPPORTUNITIES SSE Renewables – Hydro • 78 hydro stations providing clean, flexible power • Strong performance in balancing market Hydro profitability FY21 FY20 FY19 Conventional hydro EBITDA - £m 235.9 207.8 195.6 Foyers EBITDA - £m 33.4 15.1 24.4 Total EBITDA - £m 269.3 222.9 220.0 Conventional hyd
Slide 32: SSE Renewables – Pumped storage
OPPORTUNITIES SSE Renewables – Pumped storage Nature’s battery • Coire Glas could be UK’s largest pumped storage project • Consented 1.5GW site • 30GWh of storage potential • £1.2 – £1.5bn estimated capital expenditure • System benefits • Reduction in wind curtailment • Contributing to grid stabilit
Slide 33: Low-carbon thermal – A key transitional technology
OPPORTUNITIES Low-carbon thermal – A key transitional technology Accelerating progress to net zero Electricity generation emissions • Existing plant transitioning from providing 25 baseload to providing flexibility services Scope 1 generation emissions (MtCO2e) • Highly efficient Keadby 2 CCGT comin
Slide 34: SSEN Transmission – Getting on with RIIO-T2
OPPORTUNITIES Major SSEN Transmission projects Major SSEN Transmission Projects SSEN Transmission – Getting on with RIIO-T2 RAV Growth – The Certain View Shetland HVDC 7 Regulated Asset Value (£bn) T2 totex of around 6 £2.8bn 5 1 comprising Final Determinations plus North East Shetland2 4 reinforcem
Slide 35: SSEN Transmission – Uncertainty mechanisms
OPPORTUNITIES Major SSEN Transmission projects Major SSEN Transmission Projects SSEN Transmission – Uncertainty mechanisms RAV Growth – U/Ms Shetland HVDC 7 Regulated Asset Value (£bn) Additional potential T2 6 totex of 5 1 £1bn+ taking total T2 totex to Skye North East 4 around £4bn2 reinforcement
Slide 36: SSEN Transmission – Further potential growth
OPPORTUNITIES Major SSEN Transmission Projects Major SSEN Transmission Projects SSEN Transmission – Further potential growth Additional potential investment in RIIO-T2 and beyond Orkney HVAC • Western Isles and Orkney island links • ScotWind could unlock 10GW of wind, creating need for further upgra
Slide 37: SSEN Distribution – looking to ED2
OPPORTUNITIES SSEN Distribution – looking to ED2 Finalising business plan for the five years to FY28 • Prioritising strategic investment in infrastructure and technology • Providing a valued and trusted service for customers and communities • Creating smart, flexible, local energy networks using col
Slide 38: SSE Group – Every step of the way to net zero
OPPORTUNITIES SSE Group – Every step of the way to net zero CCS and hydrogen Investment potential in battery Pumped technology storage Electricity option networks Renewables investment capacity growth SSE Financial Results for the year to 31 March 2021 38 Presenter: Alistair Phillips-Davies
Slide 39: Thank you
e power W oh THANK YOU Questions OUR ROAD «a TO GLASGOW 2021 @sse | @ HE