National Grid Plc · LSE:NG.
National Grid — Debt Investor Presentation (May 2021)
29 slides from National Grid's debt investor presentation, May 2021
Slide 1: Debt Investor Update Full Year Results 2020/21
Debt Investor Update Full Year Results 2020/21 Alexandra Lewis, Group Treasurer
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: Financial performance highlights
Financial performance highlights Solid delivery in 2021 Underlying operating profit Underlying EPS Return on Equity £3,283m 3% 54.2p 7% 10.6% 140bps FY20: £3,389m FY20: 58.2p FY20: 12.0% Dividend growth Capital investment Asset growth in line with policy £5,047m 4% 5.6% 340bps 49.16p 1.2% FY20: £5,2
Slide 4: COVID update
COVID update • Continuing to deliver the service customers expect • £355m adverse impact compared to guidance of £400m – Now recognised recoverability of £59m bad debt costs • Net impact of £296m on operating profit – £120m residual bad debts – £78m revenue shortfall – £28m net direct costs – £70m d
Slide 5: Safety and reliability
Safety and reliability Safety • Reduction in lost time injury frequency rates • UK best ever year of safety performance • NG Ventures small rise in minor incidents Reliability • Excellent reliability across UK regulated networks • ESO adapted to meet resilience challenges from low demand and high re
Slide 6: Progress on operational priorities: US
US Progress on operational priorities Underlying operational delivery Working to minimise storm impacts • Achieved ROE 7.2% • ROE 8.6% adjusting for impact of COVID, • Upgrading infrastructure non-deferrable storm costs and impact of rate case delays • New technology improving resilience – 92% of al
Slide 7: Progress on operational priorities: UK
UK Progress on operational priorities Successful end to RIIO-1 Highest customer satisfaction scores in T1 • >£12.5bn invested over 8 years 1 8.5 • 12.6% achieved ROE – Within target range of 200-300bp outperformance 8.0 • Invested £1.2bn in FY21 – Hinkley-Seabank connection 7.5 – London Power Tunnel
Slide 8: Progress on operational priorities: NGV & Other businesses
NGV & Other businesses Progress on operational priorities Interconnector progress • IFA2 commissioned • North Sea Link & Viking Link on track Multi-purpose interconnectors • Collaboration with Elia and TenneT Growth in US onshore renewables • >400MW operational • 600MW under construction Other • Low
Slide 9: Interest, tax and earnings
Interest, tax and earnings Finance Underlying Underlying costs effective tax rate 1 earnings 2 £942m 21.2% £1,910m 8% lower than FY20 3 Underlying tax charge: £(496)m FY20: £2,014m • Lower RPI and • 130 bps higher than • 3,523m weighted borrowing rates prior year average shares • Effective interest
Slide 10: Cash flow and net debt
Cash flow and net debt Net debt (£bn) • £4.6bn operating cash flow – Increased storm costs, lower US collections (1.1) and reduced UK revenues 2.7 29.7 28.6 (1.6) 28.6 • Raised over £5.6bn of senior debt during the year FX and Net cash non-cash outflow • COVID impact on FY21 rating metrics movements
Slide 11: FY22 guidance
FY22 guidance Transaction timing impacts to earnings outlook FY22 guidance WPD acquisition • Earnings included from point of based on current business deal completion Segmental guidance set out in • Guidance with HY22 results results statement Gas Transmission majority • Expect to launch sales proce
Slide 12: Longer term guidance
Longer term guidance 5 year outlook Capital investment £30-35bn c.£8bn c.£4-5bn UK Electricity Transmission Western Power Distribution c.£17bn c.£2-3bn US Regulated Businesses NG Ventures Group asset growth 6-8% CAGR 1 Peaks in FY22, settles above 70% Gearing Credit metrics comfortably within curren
Slide 13: Priorities & Outlook
nationalgrid Priorities & Outlook
Slide 14: Strategic repositioning
Strategic repositioning Overall timeline summary Timing of key steps Calendar 2021 Calendar 2022 WPD Q1 Q2 Q3 Q4 Q1 Q2 Q3 • Shareholders approved acquisition of WPD last month National Grid Capital Indicative shareholder Markets Day closing • Notification to the CMA accepted approval • Expected comp
Slide 15: Maintaining regulatory progress
Maintaining regulatory progress UK Networks Expected regulatory timeline • RIIO-T2: appeal to the CMA on cost of equity and outperformance wedge • RIIO-ED2: we look to submit a business plan that END OF SUMMER 2021 – Supports innovation Settlement for NIMO – Delivers efficiently for our customers OC
Slide 16: The heart of the energy transition
In the US In the UK • Pathways to a Carbon-Neutral New York City joint report We are expecting: – Critical need for continued investment in gas networks • Transport decarbonisation plan • Future of Heat with the Massachusetts regulator • Publication of UK’s hydrogen strategy – Developing gas distrib
Slide 17: Principal partner at UN COP26
Principal partner at UN COP26 • Ambition to enable the energy transition for all • Using our voice to influence climate change action Green Light Signal Smart Bulb 17 National Grid plc Full FullYear YearResults Results2020/21 2020/21 May May2021 2021
Slide 18: Responsible Business commitments
Strengthening our Responsible Business commitments Responsible Business Charter New Scope 3 launched in 2020 Emissions Target Publication of our first aligned to the Responsible Business Report Science Based this summer, tracking our progress Target initiative to the goals we set out reduce Scope 3
Slide 19: Debt Funding
Debt Funding 19 National Grid plc Full Year Results 2020/21 May 2021
Slide 20: Green Financing
Green Financing November January / April 2020 June 2020 December 2019 February 2020 2020 • Publication of • Issuance of 4 • Execution of the • Issuance of a • Publication of our Green green bonds for first ever multi green bond for our first Green Financing National Grid export credit Niagara Mohawk
Slide 21: Debt funding
Debt funding 2020/21 • c. £5.6bn of senior long-term debt raised in 2020/21, including 17 bonds: o Slightly under two thirds of it was raised in the UK through GBP and EUR public bonds for NGET, NGG and NG plc, and a number of EMTN private placements across AUD/EUR/GBP for NGET o The remaining third
Slide 22: Summary
Summary • A defining year ahead – Strategic pivot towards electricity – Continued regulatory progress – Furthering net zero roadmaps – Calling for further climate change action at COP26 • Geographic and regulatory diversity - stability and a platform for growth • Attractive asset growth driving sust
Slide 23: Q&A
Q&A 23 National Grid plc Full Year Results 2020/21 May 2021
Slide 24: Appendix
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Slide 25: UK Electricity Transmission
UK UK Electricity Transmission Underlying operating profit (£m) Return on equity • Exceeded £100m 7 efficiency savings target 240bps 23 (38) • Capital investment higher Totex incentive 1,174 Controllable Depreciation (24) costs (20) than FY20 Net COVID revenue Other 30bps 1,122 • RAV growth of 3.1%
Slide 26: UK Gas Transmission
UK UK Gas Transmission Underlying operating profit (£m) Return on equity • Higher revenues and further 6 efficiency savings (10) (3) (90)bps 37 Depreciation COVID • Lower capex reflecting Totex incentive Other 438 several large projects 6 reaching completion 90bps Other incentives 402 Controllable c
Slide 27: US Regulated
US US Regulated Underlying operating profit (£m) FY21 • Higher net revenues from (99) new rate cases Return on equity 216 (68) excluding COVID, • Higher controllable costs Controllable (71) (36) non-deferrable Net Costs (26) • Higher depreciation 1,570 storm costs and revenue COVID impact of rate ca
Slide 28: NG Ventures
NGV NG Ventures Year ended 31 March 31 March Operating profit (£m) 2021 2020 Capital investment (£m) Metering 154 158 Grain LNG 104 78 Geronimo Interconnectors 60 61 195 acquisition Other (20) (28) 604 298 269 509 Post tax share of JVs (£m) Interconnectors¹ 26 29 Millennium 22 22 Other 8 16 56 67 FY
Slide 29: Other activities
Other Other activities Year ended 31 March 31 March Operating profit (£m) 2021 2020 • Operating profit lower, reflecting fewer property sales Property 22 63 (90) • Total capex includes NG Partners, property and Corporate & other (83) corporate (61) (27) Capital investment1 £67m Post tax share of JVs
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