National Grid Plc · LSE:NG.
National Grid — Debt Investor Presentation (November 2020)
28 slides from National Grid's debt investor presentation, Nov 12, 2020
Slide 1: Debt Investor Update Half Year Results 2020/21
Debt Investor Update Half Year Results 2020/21 12 November 2020
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: COVID: Proud of our response
COVID: Proud of our response • Continue to deliver safe, reliable networks despite new COVID regulations and restrictions • Delivering on our substantial investment program • Outstanding response to a greater number of US storms • Maintained cost discipline – mitigating some COVID cost pressures • P
Slide 4: A strong performance in the first half
A strong performance in the first half • COVID HY21 cost impact of £117m in line with expectations Underlying operating profit – full year c.£400m impact remains unchanged £1,147m 11% • Capital investment of £2.6bn in critical infrastructure HY20: £1,294m – large capital programs in UK Electricity T
Slide 5: Strong safety performance
Strong safety performance Continued to deliver good performance, despite unique safety challenges faced in 20/21 • Overall safety performance remains strong, with lost time frequency rates trending down • Safety challenges required us to adapt our processes • COVID-19 Health and Safety Plan allowed
Slide 6: Maintained reliability
Maintained reliability Successfully managed: • Low levels of demand – new flexibility tool developed by UK Electricity System Operator • US Storms – 18 major storms in HY21 versus 8 in HY20 – one of our biggest ever in October 2020 • Well prepared for winter in both the UK and US 6 National Grid plc
Slide 7: Delivering US operational performance
Delivering US operational performance Capital investment Regulation New Rates • £1.6bn in the period, majority • New York progress: • Niagara Mohawk filing on safety and reliability – KEDNY and KEDLI proposes: discussions ongoing – capital investment of • Gas; pipe replacement expected to reach full
Slide 8: UK operational performance
UK operational performance • Capital investment remains robust • London Power Tunnels 2 and Hinkley Point progressing well • Feeder 9 pipeline nearing commissioning • RIIO-2 Draft determination response; – provided detailed evidence to support investment levels – proposed modifications to the regula
Slide 9: NG Ventures & Other
NG Ventures & Other Continuing investment in our interconnector projects North Sea Link • IFA2 go-live by the end of this year FY2021 2022 2024 • North Sea Link and Viking expected completion in FY22 and FY24 respectively IFA2 Viking Developing clean energy projects • TenneT agreement – connecting D
Slide 10: COVID-19 update
COVID-19 update • £117m impact to year on year underlying operating profit from – £56m bad debt provision increase – revenue shortfall of £41m – net COVID-19 costs of £20m • Delay to updating rates in KEDNY and KEDLI of net £24m • Maintain full year guidance – £400m impact to expected operating prof
Slide 11: Interest, tax and earnings
Interest, tax and earnings Finance Underlying Underlying costs effective tax rate 1 earnings 2 £468m 16.5% £604m 15% lower than HY20 Underlying tax charge: £(112)m HY20: £685m • Lower rates and RPI • 330 bps higher than • 3,513m weighted prior year average shares • Lower hybrid costs • Reduced value
Slide 12: Cash flow and net debt
Cash flow and net debt Net debt (£bn) • Outlook on Group’s credit rating from Moody’s and S&P moved to negative after Ofgem’s draft determination published 2.0 30.1 28.6 (0.5) Net cash • First green financing report to be issued within the FX and ouflow next couple of months non-cash movements Openi
Slide 13: Priorities & Outlook
nationalgrid Priorities & Outlook
Slide 14: Responsible Business
Responsible Business 01 02 03 04 05 Environment Communities People Economy Governance • Net Zero for • Skills development • Safety and • Commit $250m in • Achieve 50% scope 1 and 2 by for 45,000 people wellbeing is our smarter energy diversity in our 2050 by 2030 top priority technology Group Exec •
Slide 15: Priorities & Outlook
Priorities & Outlook Clean Infrastructure Future of Gas RIIO-2 & Efficiencies RIIO T2 Enabling networks to Enabling cleaner gas, Getting the right RIIO-2 support decarbonised and decarbonisation framework and electricity of heat identifying efficiency opportunities 15 National Grid plc Half Year Res
Slide 16: Clean Infrastructure
Clean Infrastructure Targets1 Energy Transition UK Smart Metering Offshore Wind net zero by 2050 • $650m funding request in NY • Infrastructure policies to • $200m RI filing support 40GW UK offshore wind by 2030 New York net zero • Exploring concept of fully by 2050 connected North Sea Grid Massachu
Slide 17: Future of Gas
Future of Gas gas used for heating in Newtown Creek will generate energy to heat >22 million homes 5,000 homes in the UK using RNG Renewable Natural Gas Decarbonisation of heating • Exploring ways to use hydrogen in existing infrastructure – US: hydrogen blending project – UK: hydrogen transmission
Slide 18: RIIO-2 Framework and Efficiencies
RIIO-2 Framework and Efficiencies Dec 20 Final Determinations Need a RIIO-2 final settlement that has: • Incentives to drive innovative solutions Statutory Licence • The right framework to deliver required investment Consultation 28 Days Dec 20-Jan 21 • A fair base level of return Efficiencies: Lice
Slide 19: Debt
nationalgrid Debt
Slide 20: Debt funding
Debt funding 2020/21 half-year to 30 September • c. £3.5bn of senior long-term debt raised, including 10 bonds: o c. £1.6bn raised at NGET: EUR/GBP public bonds and three private placements o NG plc’s first senior bond since 2011: a €500m 9yr o $1.7bn raised by our US OpCos: Narragansett Electric ($
Slide 21: Summary
Summary • Strong first half operational performance • Overcome COVID challenges – well prepared for any further challenges • Well placed as an enabler for the energy transition, whether it be: – Decarbonisation of power – Decarbonisation of transport – Decarbonisation of heat 21 National Grid plc Ha
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Slide 23: Appendix
nationalgrid Appendix
Slide 24: UK Electricity Transmission
UK UK Electricity Transmission OUTLOOK Underlying operating profit (£m) FY20 FY21 • Adverse MOD adjustments 6 (18) • Capital investment higher 250bps 583 Controllable costs Net than FY20 Totex incentive (20) revenue Depreciation (12) • Expect RoE 10bps COVID-19 (15) outperformance to be Other incent
Slide 25: UK Gas Transmission
UK UK Gas Transmission OUTLOOK Underlying operating profit (£m) FY20 FY21 4 • Higher net revenue and favourable MOD 40 Depreciation (6) (2) 108 adjustments (70)bps COVID-19 Other Totex incentive 6 • Lower capex reflects lower 66 Controllable asset health work and 110bps costs Net completion of Feede
Slide 26: US Regulated
US US Regulated OUTLOOK Underlying operating profit (£m) FY20 FY21 • Higher net revenues from 111 (10) (81) (8) new rate cases Achieved Depreciation 518 Net (102) (25) • Higher controllable costs return revenue COVID-19 9.3% Controllable Bad Storms 403 • Higher bad debts and Costs debts and Other de
Slide 27: NG Ventures
NGV NG Ventures Six months ended 30 Sep 30 Sep Operating profit (£m) 2020 2019 Capital investment (£m) Metering 79 81 Grain LNG 48 39 Interconnectors 19 21 206 Geronimo acquisition Other (4) (13) 142 128 261 Post tax share of JVs (£m) 223 Interconnectors¹ 13 10 Millennium 12 11 Other 8 4 33 25 HY20
Slide 28: Other activities
Other Other activities Six months ended 30 Sep 30 Sep Operating profit (£m) 2020 2019 • Operating profit lower than prior year due to lower Property 25 46 land sales Corporate & other (55) (47) • Lower St William contribution reflecting timing of (30) (1) sales from development sites Capital investm
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