National Grid Plc · LSE:NG.
National Grid — Debt Investor Presentation (November 2021)
21 slides from National Grid's debt investor presentation, November 2021
Slide 1: Debt Investor Update
Debt Investor Update Half Year Results 2021/22 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: Key takeaways
Key takeaways Transactions • WPD acquisition complete • Rhode Island sale on track • UK Gas Transmission sales process launched Our businesses • Now moved to new operating model • >£400m pa cost efficiency programme by the end of 3 years • Targeting – At least 95% of US allowed returns – 100bp outpe
Slide 4: Financial performance highlights
Financial performance highlights¹ Underlying operating profit Underlying EPS £1,407m 52% 22.8p 66% HY21: £924m HY21: 13.7p Capital investment Dividend growth in line with policy £2,840m 22% 17.21p HY21: £2,320m HY21: 17.0p ¹ Excluding UK Gas Transmission which is classified as a discontinued operati
Slide 5: Safety and reliability
Safety and reliability • Good safety performance with lost time injury frequency rate maintained at 0.11 • Reliability was excellent – 95% of customers restored within 19 hours from Hurricane Elsa and Henri in the US – UK managed well through summer periods of low wind generation • Winter outlook 6.
Slide 6: UK Electricity Distribution - WPD
UK Electricity Distribution - WPD Opportunities • Long term highly visible growth • Pivots the group towards electricity • Sharing best practice Performance • £315m investment in 3.5 months RIIO – ED2 • Taken on board stakeholder and customer feedback • Deliver investment to support electric vehicle
Slide 7: UK Electricity Transmission
UK Electricity Transmission Performance • £587m investment • Higher maintenance spend • Continued progress on Hinkley and LPT2 Regulation • Successfully challenged outperformance wedge Policy • Critical to have a regulatory framework that meets challenges of net zero 7 National Grid plc Half Year Re
Slide 8: UK Gas Transmission
UK Gas Transmission Majority stake sale • Sales process launched • Now reported as discontinued operation Capital investment • £131m investment • Higher spend on asset health Performance • Targeting 100bps outperformance in T2 8 National Grid plc Half Year Results 2021/22 November 2022
Slide 9: New York
New York Investment • £851m, up 10% • Delivered 171 miles of leak prone pipe replacement • 2GW New York Energy Solutions project brings renewable energy into the State Regulation • Target 95% of allowed returns KEDNY / KEDLI rate settlement • 8.8% RoE / $3.3bn capex allowance Niagara - Mohawk rate c
Slide 10: New England
New England Investment • £700m • Higher levels in MA - lifting of COVID restrictions • Delivered 85 miles of leak prone pipe replacement Regulation • MA gas new rate case with I-X formula • 9.7% RoE • Additional operating expenses of $65m • Around $3.5bn capex 10 National Grid plc Half Year Results
Slide 11: NG Ventures
NG Ventures Performance • Investment of £282m focused on delivery of interconnectors • North Sea Link commissioned early • Viking Link remains on track for completion in 2024 • Onshore US renewables business completed Prairie Wolf 200MW solar project 11 National Grid plc Half Year Results 2021/22 No
Slide 12: Cost efficiency programme
Cost efficiency programme Cost efficiency target Growing regulated >£300m c.£100m from UK asset base >20% from New York and Electricity >£400m p.a. while holding New England Transmission and across the group controllable costs flat businesses NG Ventures by end of 3 years 12 National Grid plc Half Y
Slide 13: Interest, tax and earnings
Interest, tax and earnings Underlying Finance costs effective tax rate 1 Underlying earnings 2 £475m 19.0% £812m £73m higher than HY21 3 Underlying tax charge: £177m HY21: £482m • First time inclusion • 330 bps higher • 22.8 p/share of WPD debt than prior year • EPS up 66% on • Funding of bridge the
Slide 14: Cash flow, net debt and ratings
Cash flow, net debt and ratings Cash generated Net debt (£bn) £2bn • Net debt increase following WPD (5.0) 0.5 1.0 acquisition 27% higher 8.2 compared to prior year Re-class to Held for sale Financing, 41.5 • For full year, net debt is expected 7.9 tax & other to remain consistent with the level 0.4
Slide 15: Impact of inflation
Impact of inflation • Moderately higher inflation is a positive over the Example: long-term UK – Impact of higher inflation • Protection of real returns • Inflation protection £23bn – UK revenues and Real Price Effects 100bps change to adjustment for labour and materials inflation – Massachusetts an
Slide 16: Impact of interest rates
Impact of interest rates UK • Annual update to UK cost of debt allowances • Revenue allowances over time offset higher interest costs US • Fixed rate and long-term debt with pass through of costs 16 National Grid plc Half Year Results 2021/22 November 2022
Slide 17: Debt Funding
Debt Funding London, 18 November 2021
Slide 18: Green Financing
Green Financing • Green Financing Framework updated in July 2021 – aligned with the ICMA Green Bond Principles published in June 2021 and the LMA Green Loan Principles published in February 2021 – aligned as closely as possible with the EU Taxonomy Regulation and the EU Taxonomy Delegated Acts on Cl
Slide 19: Debt Funding
Debt Funding 2020/21 so far • c. £2.0bn of senior long-term debt raised across 7 bonds – Majority through public bonds for NGET in CAD, and NG plc in EUR. Remainder through a series of EMTN private placements across AUD, EUR and GBP for NGET, and ECA facility drawdowns. Second half of 2020/21 • We e
Slide 20: First half year achievements
First half year achievements • FY22 EPS expected to be significantly ahead of 5-7% growth range • WPD acquisition completed early • Now moved to new operating model • >£400m cost efficiency programme • Strong start to RIIO-T2 • Balance sheet remains strong • Full refresh of new rates across New York
Slide 21: Q&A
nationalgrid Q&A
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