National Grid Plc · LSE:NG.
National Grid — Debt Investor Presentation (November 2019)
30 slides from National Grid's debt investor presentation, Nov 14, 2019
Slide 1: Debt Investor Update Half Year Results 2019/20
Debt Investor Update Half Year Results 2019/20 14 November 2019
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: Our contribution to net zero by 2050
Our contribution to net zero by 2050 • New target of net zero for own emissions by 2050 – accelerating previous 80% commitment • Achieved 68% reduction by March 2019 • Several initiatives to reduce own emissions • Taking a leading role to influence industry wide transition 3 Half Year Results 2019/2
Slide 4: Our contribution to net zero by 2050: actions we are taking
Our contribution to net zero by 2050 Actions we are taking Reducing our own emissions Leading to influence industry-wide energy system decarbonisation • Pipeline replacement programme to reduce leakage • Electricity System Operator developing plans to operate zero carbon system by 2025 • Reducing us
Slide 5: A solid performance in the first half
A solid performance in the first half Underlying operating profit • Record capital investment on safety, reliability and £1,301m 1% modernisation of networks HY19: £1,285m – supports asset growth at top end of 5-7% range Underlying EPS • Good regulatory progress – new rates in place for Massachusett
Slide 6: Strong reliability performance maintained
Strong reliability performance maintained • UK power outage a rare and exceptional event – we don’t underestimate the disruption and inconvenience it caused • Our investigation concluded the electricity system operator and transmission network operated as designed • Continue to work closely with Ofg
Slide 7: US operational performance
US US operational performance • Significant capital investment maintains strong $2.0bn organic growth growing capital investment to maintain – £1.6bn in the period safety and reliability – 80% driven by mandated safety and reliability Investment split H1 vs H2 requirements ($m) 3,500 – MRI and Garde
Slide 8: Consistent delivery in the UK
UK Consistent delivery in the UK • Capital investment remains consistent – Feeder 9 tunnelling complete under the Humber estuary – transports up to 20% of UK’s gas capacity – awarding contracts for London Power Tunnels 2 • Cost efficiency programme on track • Helpful stakeholder feedback on RIIO-2 b
Slide 9: Strong progress for NG Ventures & Other
NGV & Other Strong progress for NG Ventures & Other • Interconnector construction progressing well – IFA2: large majority of cable laid and good progress on converter stations – NSL: over 650km cable laid so far – Viking: EPC contracts awarded and pre-construction work on track • Completed Geronimo
Slide 10: Interest, tax and earnings
Interest, tax and earnings Finance Underlying Underlying costs effective tax rate 1 earnings 2 £553m 13.2% £685m 12% higher than HY19 Underlying tax charge: £(99)m HY19: £662m • US long-term debt • 610 bps lower than • 3,430m weighted issuances and hybrid prior year average shares buy-back costs, of
Slide 11: Cash flow and net debt
Cash flow and net debt Six months ended Net debt (£bn) 30 Sept £m 2019 0.5 1.3 Underlying operating profit 27.8 1,301 IFRS 16 26.5 0.5 Lease Depreciation & amortisation 833 FX and accounting Net non-cash Exceptional items (28) cash movements inflow¹ Working capital, timing & other (1) Cash generated
Slide 12: Sustainable long-term growth
Sustainable long-term growth • Step change in total group capital investment from Capital investment by segment (£bn)1 £3.3bn in FY15 to around £5bn this year 6 • US regulated 5 ~9% CAGR – 85% capex already funded through rate plans 4 – ~8% annual asset growth in the medium term 3 • UK regulated 2 –
Slide 13: Efficiently funding growth
Efficiently funding growth • Continued strong growth prospects across Assets (£bn)1 Gearing (%) 50 100 the Group ~7% • Growth being funded through 40 6% 80 CAGR – mix of debt at attractive rates 30 60 – internally generated cash flows – scrip utilisation 20 40 – Cadent proceeds 10 20 • Green Financi
Slide 14: Priorities & Outlook
Priorities & Outlook 14 Half Year Results 2019/20 November 2019
Slide 15: US priorities & outlook
Performance optimisation US priorities & outlook Addressing downstate New York gas constraint • Working with all parties to find short and long term solutions Efficiently maximise • Decade long plan for incremental gas supply safety, reliability and into region resilience – large number of investmen
Slide 16: US priorities & outlook
Performance optimisation US priorities & outlook Progress regulatory filings • Delivering fair and progressive regulation – KEDNY/KEDLI rate case settlement Customer affordability – requested RoE of 9.65% & experience – annual capex of $1.5bn to improve safety and reliability • Next stage – hearings
Slide 17: US priorities & outlook
Performance optimisation US priorities & outlook Regulatory frameworks driving decarbonisation • Other regulatory priorities to drive decarbonisation of energy system Enabling decarbonisation • Massachusetts grid modernisation plan – $50m energy storage proposal, as well as advanced metering and EV
Slide 18: UK priorities & outlook
Performance optimisation UK priorities & outlook Fair regulatory outcome remains key • Advancing RIIO-2 discussions with draft Summary of plans submitted October business plans Deliver an Efficiently maximise – overall financial package remains key environmentally sustainable network Maintain a safe
Slide 19: UK priorities & outlook
Performance optimisation UK priorities & outlook Deliver further customer benefits • Driving customer benefits through delivering our digital ambitions Deliver digital, – ‘ConnectNow’ digital platform smarter networks for ET customers – focus on smaller solar, storage, EV and data centre customers –
Slide 20: NGV priorities & outlook
Performance optimisation NGV priorities & outlook Interconnectors and renewables the focus • Continue to successfully deliver interconnector projects Invest in diverse talent – IFA2 build completion with and evolve our operating model commissioning in summer 2020 – NSL on track to commence operation
Slide 21: Debt Funding
Debt Funding 21 Half Year Results 2019/20 November 2019
Slide 22: Debt funding
Debt funding • National Grid has raised c. £2.4bn of new long term debt so far in 2019/20: o Boston Gas issued a $500m 10-year bond in July o National Grid Electricity Transmission (NGET) issued £700m in September, across 7-year and 19-year tranches o We fully redeemed and refinanced our €1.25bn hyb
Slide 23: Summary
Summary • Power and gas networks at the heart of the energy system – new net zero greenhouse gas emissions target by 2050 • Confident in addressing issues in New York • Solid financial performance in the first half – continued to deliver strong, efficient organic growth • Good progress on strategic
Slide 24: Q&A
Q&A 24 Half Year Results 2019/20 November 2019
Slide 25: Appendices
Appendices 25 Half Year Results 2019/20 November 2019 25
Slide 26: UK Electricity Transmission
UK UK Electricity Transmission OUTLOOK Underlying operating profit (£m) FY19 FY20 • Higher base revenues 11 (3) 230bps 19 Controllable Depreciation 583 • Capital investment broadly Totex incentive costs & other in line with last half year 556 Net revenue • Expect RoE 50bps outperformance to be Other
Slide 27: UK Gas Transmission
UK UK Gas Transmission OUTLOOK Underlying operating profit (£m) FY19 FY20 • Lower net revenue driven 91 (17) by reduced capacity (110)bps Net (8) charge (Avonmouth) Totex incentive revenue Depreciation 66 & other • Increased capex reflects 120bps higher compressor Other incentives expenditure, offse
Slide 28: US Regulated
US US Regulated OUTLOOK Underlying operating profit (£m) FY19 FY20 3 • Higher revenues from 97 (7) 21 (20) 525 new rate cases and Achieved Net Depreciation lower storm costs 431 FX revenue return Controllable Minor storms, • Capex driven by higher 8.8% costs bad debt & other New York investment and
Slide 29: NG Ventures
NGV NG Ventures Six months ended 30 Sep 30 Sep Operating profit (£m) 2019 2018 Capital investment (£m) Metering 81 78 Grain LNG 39 37 Interconnectors 21 34 432 Other (13) (18) 128 131 Post tax share of JVs (£m) 212 Interconnectors¹ 10 13 Millennium 11 8 Other 4 10 25 31 HY19 HY20 Total NGV 153 162 •
Slide 30: Other activities
Other Other activities Six months ended 30 Sep 30 Sep Operating profit (£m) 2019 2018 Property 46 38 • Operating profit lower than prior year Corporate & other (47) 38 – no repeat of legal settlements (1) 76 • Property operating profit driven by land sales • Increased profits at St William through s
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