Sse Plc · LSE:SSE
Sse — H1 2024/25 Earnings Presentation
55 slides from Sse's earnings presentation, Nov 13, 2024
Slide 1: Powering Net Zero: 2024/25 Interim Results Presentation
POWERING NET ZERO 2024/25 Interim Results Presentation 13 November 2024
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by SSE plc solely for use on 13 November 2024 during the presentation of the Company’s interim results for the period to 30 September 2024. This presentation may not be disclosed or published, nor used by any other person or entity, for any purpose othe
Slide 3: Safety first
Safety first Continuing our focus on improving safety performance Building a safer work environment Safety performance • 30%+ improvement in contractor injury rates with Total recordable TRIR1 heightened numbers of site visits, updates and safety injuries events. 50 0.24 38 Immersive Training Update
Slide 4: Agenda
AGENDA 13 November 2024 Interim Results to 30 September 2024 Part 1: Overview Part 2: Financial Results Part 3: Operating Review Part 4: Summary Q&A Bhlaraidh onshore windfarm 3
Slide 5: SSE plc: At The Heart Of The Energy Transition
SSE PLC: At The Heart Of The Energy Transition ~£20BN1 INVESTMENT PLAN FOCUSED ON LONG-TERM VALUE CREATION RENEWABLES FLEXIBILITY NETWORKS Value-Creating Growth Volatility Option Value High Quality Accelerator Up to 9GW >£16bn2 6.2GW >15% ~2.5GW Installed capacity Gross RAV CAGR ~1GW ~40% of the UK’
Slide 6: A Strengthening Policy Landscape
A Strengthening Policy Landscape Policy action supports unlocking investment in SSE’s UK pipeline of opportunities CLEAN POWER MISSION UK GOVERNMENT 2030 ACTION SSE PIPELINE OPPORTUNITIES Planning & Infrastructure Bill – TRANSMISSION DISTRIBUTION reforming national planning policy RIIO-T3 Business S
Slide 7: Value Accretive Investment Plan
Value Accretive Investment Plan Execution of investment plan provides confidence in high quality earnings growth 5 YEAR INVESTMENT PLAN INCREASING EARNINGS VISABILITY CONFIDENCE IN GROWTH Economically- FY27 Projected earnings bridge regulated 94% businesses debt at fixed rates1 ~55% 175 – 200p ~£20b
Slide 8: Powering Net Zero
Powering Net Zero Focused on delivering high quality assets across clean energy value chain DELIVERING ON BALANCED LONG-TERM NET ZERO BUSINESS MIX VALUE INVESTMENT PROVIDES CREATION OPTIONALITY Mid-point of ~£20bn Evolving policy landscape Disciplined investment in five-year strategic plan creates w
Slide 9: Agenda
AGENDA 13 November 2024 Interim Results to 30 September 2024 Part 1: Overview Part 2: Financial Results Part 3: Operating Review Part 4: Summary Q&A SSEN Transmission Kintore Substation 8
Slide 10: Financial Results – Overview
Financial Results – Overview Six months ended 30 September 2024 Adjusted operating profit movement from prior year Adjusted capital investment Doubling in EBIT contribution from networks and renewables ~90% invested in networks & renewables 1,200 248.8 Transmission Renewables 1,000 226.2 36.9 860.2
Slide 11: Financial Results – SSEN Transmission
Financial Results – SSEN Transmission Six months ended 30 September 2024 SSEN Transmission adjusted EBIT (75% SSE share) Operating profit review 300 Underlying earnings growing in line with 48 investment programme 250 215.6 Benefit from “full expensing” accelerated tax allowances netted off 200 reve
Slide 12: Financial Results – SSEN Distribution
Financial Results – SSEN Distribution Six months ended 30 September 2024 SSEN Distribution adjusted EBIT Operating profit review 400 33 Multi-year cost inflation catch-up reflected 346.3 in FY25 revenues, as tariffs set in advance 350 221 (18) (10) Small over-recovery expected versus an 300 under-re
Slide 13: Financial Results – SSE Renewables
Financial Results – SSE Renewables Six months ended 30 September 2024 SSE Renewables adjusted EBIT Operating profit review 400 +1GW¹ year-on-year operating capacity 350 reflecting delivery of Viking, a full contribution 54 1 335.6 from Seagreen in the period, and delivery of 300 Salisbury 95 250 ~45
Slide 14: Financial Results – SSE Thermal
Financial Results – SSE Thermal Six months ended 30 September 2024 SSE Thermal adjusted EBIT Operating profit review 250 Benefit from capacity addition in August 226.2 4 2024 with 55MW Slough Multifuel 200 Significant decrease in market income 150 reflects lower spark spread prices, as the stable ma
Slide 15: Financial Results – Customers
Financial Results – Customers Six months ended 30 September 2024 Energy Customer Solutions adjusted EBIT Operating profit review 180 SSE Airtricity supply margins reflect return 38 to more sustainable levels, whilst 160 implementing consumer tariff decreases in 140 addition to providing existing cus
Slide 16: Financial Results – Other Businesses
Financial Results – Other Businesses Six months ended 30 September 2024 Adjusted EBIT (£m) Operating profit review Movement HY25 HY24 SSE Energy Markets trading optimisation activities benefited from gains in trading SSE Energy Markets 14.1 9.0 positions across power and gas markets Reorganisation
Slide 17: Financial Results – Net Income
Financial Results – Net Income Six months ended 30 September 2024 Adjusted net income (£m) Net income review Higher adjusted net finance costs, HY25 HY24 reflecting interest on project financing in Seagreen offshore commissioned in October Total operating profit 860.2 693.2 2023 Net finance costs (
Slide 18: Financial Results – Dividend
Financial Results – Dividend Six months ended 30 September 2024 DECLARING INTERIM DIVIDEND OF 21.2 PENCE PER SHARE • Interim dividend reflects an increase of 6% on HY24 • Final dividend recommendation in May, alongside results publication REITERATING EXISTING DIVIDEND COMMITMENT TO FY27 FY25 to FY27
Slide 19: Financial Results – Balance Sheet
Financial Results – Balance Sheet Strength and stability of balance sheet enables investment in growth opportunities STRENGTH STABILITY Adjusted Net Debt and Hybrid Capital bridge 12 £9.4bn £9.8bn 10 Fixed 8 Floating £bn Indexed 6 Loans and Hybrid 4 Equity1 2 FY24 Cash flow Working Net Dividend Fina
Slide 20: Outlook – Reaffirming Earnings Outlook
Outlook – Reaffirming Earnings Outlook Unchanged business unit operating profit expectations for short and medium term Adjusted EBIT FY24 FY25 FY27 Actuals Expectations Medium Term Guidance Less than FY24 - “Full-expensing” tax relief benefiting FY24 is passed More than £500m p.a. average Transmissi
Slide 21: Outlook – Sustainable Earnings Growth
Outlook – Sustainable Earnings Growth Disciplined investment in premium assets drives sustainable, high-quality value creation COMMITTED INVESTMENT PLAN DRIVING DISCIPLINED RETURNS INCREASING EARNINGS QUALITY ~80% of investment plan is committed1 Clear investment hurdle rates Higher quality earnings
Slide 22: Agenda
AGENDA 13 November 2024 Interim Results to 30 September 2024 Part 1: Overview Part 2: Financial Results Part 3: Operating Review Part 4: Summary Q&A Seagreen offshore windfarm 21
Slide 23: Our Market Environment
Our Market Environment Balanced portfolio of market-based businesses, able to maximise generation value Long-term power prices remain above NZAP assumptions Continuing to secure future value through hedging 100 GB baseload power price for renewables GB Renewables merchant volumes and prices hedged1
Slide 24: SSE Renewables – Delivery
SSE Renewables – Delivery Ongoing project delivery increasing renewables output PROJECT DELIVERY PIPELINE IN CONSTRUCTION SUSTAINABLE VALUE CREATION Year-on-year output¹ Expected Breakdown of FY27 Output ~20% +45% Fully merchant ~50% Ultimately >20 fixed price TWh ~30% HY24 HY25 Merchant Hydro Offsh
Slide 25: SSE Renewables – Viking
SSE Renewables – Viking From ambition to action to delivery CONSTRUCTION COMMENCED FULL OPERATIONS SUSTAINABLE VALUE AUTUMN 2020 AUGUST 2024 CREATION On time and on budget 443MW at high ~48%² load factor Index linked 100% ~£600m capex investment 443MW capacity from 103 Vestas turbines CfD SSE
Slide 26: SSE Renewables – Dogger Bank
SSE Renewables – Dogger Bank Continuing to progress construction of the world’s largest offshore wind farm Project Focus: working with key suppliers to drive rate of turbine installations Strong project fundamentals Installation update Dogger Bank A 57% 100% Monopiles and transition pieces 31 Turbin
Slide 27: SSE Renewables – Sustainable Growth
SSE Renewables – Sustainable Growth Significant capacity under construction with strong long-term pipeline ~2.5GW under construction Over 80% of FY27 target “up to 9GW” is either already delivered or under construction Building with discipline Focus remains on value over volume, with clear hurdle ra
Slide 28: SSE Thermal – Critical Flexibility
SSE THERMAL – CRITICAL FLEXIBILITY Optimising existing 6.1GW thermal generation fleet whilst progressing c.4GW pipeline Optimising existing asset base • Maximise commercial optimisation and engineering excellence • Commissioned 55MW Slough Multifuel Joint Venture • Ensure assets are capable of suppo
Slide 29: Energy Customer Solutions
Energy Customer Solutions Route to market for generation, renewable products and low-carbon energy solutions Transition to net zero driving customers’ evolution • Macro conditions and consumer preferences driving increased demand for low-carbon solutions • Growing demand for green certificates, CPP
Slide 30: SSEN Transmission – Delivery Accelerating
SSEN Transmission – Delivery Accelerating Cutting-edge assets being delivered across the network to meet sprint to net zero 1 Shetland link energised on time and on budget Eastern Green Link 2 (EGL2) enters construction Shetland Orkney 2 • Final approval for an expected nominal investment of around
Slide 31: SSEN Transmission – Pioneering HVDC
SSEN Transmission – Pioneering HVDC Caithness-Moray-Shetland High Voltage Direct Current system first of its kind in Europe £660m Shetland HVDC investment delivered on time and on budget • Shetland link the latest reinforcement added to holistic design which transports renewables in the north of Sco
Slide 32: SSEN Transmission – RIIO-T3 In Focus
SSEN TRANSMISSION – RIIO-T3 IN FOCUS Investable price control critical to delivery of nationally important infrastructure Financial framework critical to attracting global investment into the UK, with Ofgem’s Sector Specific Methodology Decision leaving door open for key SSE asks: • Aim up from the
Slide 33: SSEN Distribution – Investing in ED2
SSEN Distribution – Investing in ED2 Focus on capex delivery, unlocking additional investment and deploying flexibility RAMPING UP CAPEX DELIVERY EARLY SUCCESS SECURING ADDITIONAL FUNDING SSEN Distribution Adj Capex (£M) Illustrative phasing 1000 • >£130m Uncertainty ~£3.5bn NZAP+ Mechanism spend ap
Slide 34: SSEN Distribution – Foundations For Growth
SSEN Distribution – Foundations For Growth A clear plan for proactive reinforcement to optimise investment decision-making • Clean Power 2030 Pathways show significant role for Distribution • Sharp rise in expected solar, onshore wind, and large demand in licence areas LEADING DEVELOPMENT OF STRATEG
Slide 35: SSE Networks – Premium Asset Growth
SSE Networks – Premium Asset Growth Multi-decade structural growth opportunity offered by premium pipeline HIGHLY-VISIBLE TRAJECTORY TO 2027 HUGE GROWTH REQUIRED TO 2030 AND WELL BEYOND NESO-recommended SSEN RAV Growth Forecast (nominal)1 Transmission critical to connecting and reinforcements transp
Slide 36: Agenda
AGENDA 13 November 2024 Full Year Results to 30 November 2024 Part 1: Overview Part 2: Financial Results Part 3: Operating Review Part 4: Summary Q&A SSEN Distribution Overhead Line 35
Slide 37: Powering Net Zero
Powering Net Zero Focused on delivering high quality assets across clean energy value chain DELIVERING ON BALANCED LONG-TERM NET ZERO BUSINESS MIX VALUE INVESTMENT PROVIDES CREATION OPTIONALITY Mid-point of ~£20bn Evolving policy landscape Disciplined investment in five-year strategic plan creates w
Slide 38: Thank you
Thank you For more information, contact: ir@sse.com
Slide 39: Appendix
APPENDIX 38
Slide 40: SSE plc – Recent Updates To ESG Ratings
SSE PLC – Recent Updates To ESG Ratings rating Score range Sector Rating provider SSE score (minimum to maximum) ranking1 Top 12 percent CCC AAA AAA (Oct 2024) 90th percentile 0 100 71 Corporate sustainability (Nov 2024) Assessment Severe Negligible 17.0 93rd percentile risk risk (low risk) (Jun 202
Slide 41: SSE Pathway To Net Zero
SSE Pathway To Net Zero Key Levers Driving SSE's Decarbonisation Efforts for Scope 1 and 2 Emissions SSE Decarbonisation Levers : • Reducing load factors, integrating low-carbon hydrogen in new CCGT plants, and phasing out high- carbon gas stations. • Transitioning to a flexible, low-carbon thermal
Slide 42: Net Zero Transition Plan On A Page
Net Zero Transition Plan On A Page SSE’s short-, medium- and long-term carbon targets, alongside key actions to achieve them 41
Slide 43: SSE's Carbon Performance
SSE’s Carbon Performance SSE’s performance against Interim Carbon Targets 24/25 42
Slide 44: Financial Results - Overview
Financial Results - Overview Six months ended 30 September 2024 Adjusted Reported Continuing operations1 HY25 HY24 HY25 HY241 Operating Profit - £m 860.2 693.2 902.8 644.3 Net Finance (Costs) / Income - £m (145.7) (128.0) (56.9) (29.0) Profit Before Tax - £m 714.5 565.2 845.9 615.3 Taxation (charge)
Slide 45: Financial Results - Segments
Financial Results - Segments Six months ended 30 September 2024 Adjusted Operating Profit (£m) HY25 HY24 SSEN Transmission 157.5 215.6 SSEN Distribution 346.3 120.1 Regulated Networks 503.8 335.7 SSE Renewables 335.6 86.8 SSE Thermal (9.0) 312.9 Gas Storage (34.8) (86.7) Energy Generation & Gas Stor
Slide 46: Financial Results – Adjusted & Reported
Financial Results – Adjusted & Reported Six months ended 30 September 2024 Reconciliation from adjusted to reported operating profit Other reconciling items 1,000 IFRS 9 Fair Value movements reflects net movement on energy derivatives, which have increased to a £170m net derivative asset at 950 87 t
Slide 47: Financial Results – Balance Sheet
Financial Results – Balance Sheet Six months ended 30 September 2024 LONG TERM DEBT MATURITY PROFILE1 3.5 Hybrid Capital (First Call Date) Bonds and Private Placements 3.0 2.5 2.0 £bn 1.5 1.0 0.5 0.0 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32+ 1. Excludes short term commercial paper (£811m outstanding
Slide 48: Reconciliation – Income Statement
Reconciliation – Income Statement Reconciliation between Reported and Adjusted Income Statement metrics 2024/25 – Six Months EBITDA (£m) EBIT (£m) EPS (p) Comments Reported 1,290.7 902.8 47.7 In line with UK adopted IAS Movement on derivatives (86.5) (86.5) (8.0) Not relevant to CY performance Excep
Slide 49: Reconciliation – Net Debt
Reconciliation – Net Debt Reconciliation between Unadjusted Net Debt and Adjusted Net Debt and Hybrid Capital £m 30 Sept 2024 30 Sept 2023 Comments Unadjusted Net Debt 8,688.8 8,050.6 In line with UK adopted IAS Add: Hybrid Equity 1,882.4 1,882.4 100% of Hybrids included within SSE metric, compared
Slide 50: RIIO-2 Price Controls - Parameters
RIIO-2 Price Controls - Parameters Key parameters under the current five-year agreements with Ofgem SSEN Transmission SSEN Distribution Comment RIIO-T2 Agreement RIIO-ED2 Agreement Apr 2021-Mar 2026 Apr 2023-Mar 2028 Cost of Equity (real) 4.25% (FDs); 4.76% (2024) 5.23%(FDs); 5.49% (2024) Adjusted a
Slide 51: RIIO-T2 Price Control - Revenues
RIIO-T2 Price Control - Revenues Revenue profiles published by Ofgem in latest Price Control Financial Model As per 26 July 2024 published PCFM “Tariff set in Jan “Allowed “Recovered Revenue 2024” Revenue” SSEN Transmission Revenue Price base FY22 FY23 FY24 FY25 FY26 Fast money £m 18/19 - - - 244.0
Slide 52: RIIO-ED2 Price Control - Revenues
RIIO-ED2 PRICE CONTROL - REVENUES Revenue profiles published by Ofgem in latest Price Control Financial Model As per 26 July 2024 published PCFM “Recovered Revenue Forecast” “Tariff set in Dec 2023” “Allowed Revenue” SSEN Distribution Revenue Price base FY24 FY25 FY26 FY27 FY28 Fast money £m 20/21 -
Slide 53: SSE Renewables – Current Operations
SSE Renewables – Current Operations Diversity of key assets across geographies and technologies Technology Geography Net Capacity (MW) Location of operational clusters Scotland 762 England 252 Total Offshore Wind 1,014 Scotland 1,660 England 68 Northern Ireland 117 Republic of Ireland 581 Total Onsh
Slide 54: SSE Renewables – Pipeline And Prospects
SSE Renewables – Pipeline And Prospects LATE-STAGE EARLY-STAGE IN CONSTRUCTION SECURED PIPELINE FUTURE PROSPECTS DEVELOPMENT DEVELOPMENT MW MW MW MW MW Aberarder 50 Cloiche 130 GB 81 GB 637 GB ~1100 Yellow River 101 Strathy South 208 Ireland 911 Ireland 1,048 Ireland ~260 ONSHORE Chaintrix 28 Bhlara
Slide 55: SSE Renewables – EBIT And EBITDA Breakdown
SSE Renewables – EBIT And EBITDA Breakdown Split by technology, on SSE adjusted basis Adjusted EBITDA HY25 HY24 Conventional hydro 113.0 55.8 Pumped storage 23.3 25.6 Onshore wind 190.0 89.0 Offshore wind 167.8 59.7 Solar & Battery (6.7) (11.5) Total SSE Renewables 487.4 218.6 Adjusted EBIT HY25 HY2