National Grid Plc · LSE:NG.
National Grid — FY2016/17 Earnings Presentation
21 slides from National Grid's earnings presentation, May 18, 2017
Slide 1: 2016/17 Full Year Results
2016/17 Full Year Results 18 May 2017 Bring Energy to Life
Slide 2: Cautionary statement
Cautionary statement This announcement 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: FY 2016/17 financial performance
FY 2016/17 financial performance OPERATING PROFIT EARNINGS PER SHARE CAPITAL INVESTMENT £4.7bn 73.0p £4.5bn FY16 £4.3bn FY16 63.2p* FY16 £4.2bn RETURN ON EQUITY ASSET GROWTH** VALUE ADDED 11.7% 5% £1.9bn FY16 12.3% FY16 4% FY16 £1.8bn Capital investment includes investment in joint ventures and asso
Slide 4: Successful completion of UK Gas Distribution sale
Successful completion of UK Gas Distribution sale Large, complex transaction Premium valuation secured to realise value for shareholders Returning £4bn to shareholders Potential to secure further value in the future through 14% option Portfolio rebalanced towards higher growth 4 2016/17 Fu
Slide 5: US rate filings supporting improved performance
US rate filings supporting improved performance Three rate filings successfully completed Increased levels of funded-investment drive strong US growth New rates for ~40% of rate base start to support improved performance − Achieved US RoE of 8.2% 5 2016/17 Full Year Results May 2017
Slide 6: UK Electricity Transmission
UK Electricity Transmission 10.2% + 190bps + 70bps Base return Totex incentive Other incentives + 80bps Additional allowances = ACHIEVED RETURN 13.6% FY16 13.9% OPERATING PROFIT CAPITAL INVESTMENT REGULATED ASSET VALUE £1.4bn +17% £1.0bn £12.5bn FY16 £1.2bn FY16 £1.1bn FY16 £11.8bn Adjusted results,
Slide 7: UK Gas Transmission
UK Gas Transmission 10.0% + (80)bps + 110bps + 50bps Base return Totex incentive Other incentives Additional allowances = ACHIEVED RETURN 10.8% FY16 12.5% OPERATING PROFIT CAPITAL INVESTMENT REGULATED ASSET VALUE £511m +5% £214m £5.8bn FY16 £486m FY16 £186m FY16 £5.6bn Adjusted results, excluding ex
Slide 8: UK Gas Distribution
UK Gas Distribution 9.9% Base return + 280bps + 120bps Totex incentive Other incentives + 10bps Additional allowances = ACHIEVED RETURN 14.0% FY16 13.0% OPERATING PROFIT CAPITAL INVESTMENT REGULATED ASSET VALUE £898m +2% £558m £9.0bn FY16 £878m FY16 £549m FY16 £8.7bn Adjusted results, excluding exce
Slide 9: US Regulated
US Regulated 8.4% New York + 6.0% Massachusetts + 7.7% Rhode Island + 11.3% FERC = ACHIEVED RETURN 8.2% CY15 8.0% OPERATING PROFIT CAPITAL INVESTMENT RATE BASE £1.7bn +25% $2.9bn $19.3bn FY16 £1.4bn FY16 $2.7bn FY16 $18.3bn Operating profit calculated at constant currency Adjusted results, excluding
Slide 10: Other Activities & JVs
Other Activities & JVs 161m 74m 72m 65m £173m OTHER £ £ £ £ OPERATING ACTIVITIES PROFIT Metering Grain LNG IFA Property FY16 £377m JVs £ 53m £ 15m £ (5)m POST TAX SHARE £63m BritNed Millennium St. William FY16 £61m TOTAL INVESTMENT OTHER COSTS £100m £404m* INCREASE YEAR ON YEAR (included in operatin
Slide 11: Interest, tax and earnings
Interest, tax and earnings FINANCE EFFECTIVE EARNINGS COSTS TAX RATE £1,175m 22.7% £2,748m 6% higher than 2016 at £(808)m PY £2,386m Effective interest rate Tax rate 130bps lower than 3,763m weighted average of 3.9% 2016 shares Higher average net debt and Tax charge £55m higher than 73p/
Slide 12: Cash flow and Net debt
Cash flow and Net debt £m Period ended 31 March 2017 Operating profit 4,667 Depreciation & amortisation 1,698 Pensions (801) Working capital & other 50 Net operating cash flow 5,614 Net debt (19,274) Credit metrics reported using Moody’s methodology Adjusted results, excluding exceptional items and
Slide 13: Closing net debt
Closing net debt + £5.3bn from weaker sterling, normal Movement in net debt (£bn) business activity, liability management and 35 transaction costs LM and Business transaction 30 - £11.3bn from Gas Distribution FX impacts activity deconsolidation and gross proceeds 25 Net proceeds of £4bn to be ret
Slide 14: Cash flow and Net debt
Cash flow and Net debt £m RCF / NET DEBT EXCL. SALE IMPACT 15.8% 11.1% Period ended 31 March 2017 Operating profit 4,667 Depreciation & amortisation 1,698 FFO / NET DEBT EXCL. SALE IMPACT Pensions (801) 23.3% 16.1% Working capital & other 50 INTEREST COVER EXCL. SALE IMPACT Net operating cash flow 5
Slide 15: Maintaining investment levels under RIIO
Growth Maintaining investment levels under RIIO Investment in second-half of RIIO comparable to first-half UK Regulated Capital Investment (£bn) 2,000 ET spend driven by non-load related investments 1,500 GT investment expected to increase to support asset health 1,000 Started early for prep
Slide 16: Delivering high-quality, organic growth
Growth Delivering high-quality, organic growth US Total Capex By type Jurisdictional split >$3bn $2.7bn $2.9bn $2.4bn Gas NY Electric MA Transmission RI FERC FY15 FY16 FY17 FY18 Increased capital investment funded through rate agreements 7% organic growth rate expected in the medium-term 16 2016
Slide 17: National Grid Ventures
Evolve for the future National Grid Ventures New division to enhance value through investing in closely-linked businesses Utility scale − Interconnectors, Metering, Grain LNG opportunities − Business development and strategy New and evolving Currently a small asset base but with high technologie
Slide 18: Progress on committed capex and new projects
Evolve for the future Progress on committed capex and new projects Projects under construction NEMO link to Belgium on track for commissioning in 2019 North Sea Link to Norway on track for commissioning in late 2021 Progressing on development pipeline Final investment decision on IFA 2 Partn
Slide 19: Debt Financing
Debt Financing Focus on US funding in 2017/18 UK operating companies not expected to issue in 2017/18 £5bn of committed bank facilities, giving sufficient group liquidity 19 2016/17 Full Year Results May 2017
Slide 20: Summary – Continuing operations
Summary – Continuing operations Strong financial performance OPERATING PROFIT PROFORMA EPS* £3.8bn 59.2p Increasing capital investment Financial position robust CAPITAL INVESTMENT DIVIDEND PER SHARE £3.9bn 44.27p DIVIDEND POLICY: Growth at least in line with RPI * Continuing operations proform
Slide 21: Webex Q&A
Webex Q&A 21 2016/17 Full Year Results May 2017 21