National Grid Plc · LSE:NG.
National Grid — Debt Investor Presentation (June 2020)
31 slides from National Grid's debt investor presentation, June 2020
Slide 1: Debt Investor Update Full Year Results 2019/20
Debt Investor Update Full Year Results 2019/20 National Grid plc Full Year Results 2019/20 June 2020 1
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: Responding to COVID: safe and seamless operational delivery
Responding to COVID Driving safe and seamless operational delivery • Maintained excellent levels of reliability across our networks • Delivered our significant capital programme – risk assessed all our projects – issued new working guidance to our field force, and – collaborated across the industry,
Slide 4: Responding to COVID: delivering for customers and communities
Responding to COVID Delivering for our customers and communities • Helping US customers who may be in financial difficulty – paused our US collections activities – deferred proposed rate increases in New York • Helping UK suppliers to address the financial impacts of COVID – deferral of network char
Slide 5: COVID-19 impact
COVID-19 impact Business environment Bad debts • Limited medium term economic impact • Expecting bad debt expense in FY21 to remain elevated • £400m operating profit impact in FY21 Cash flow and net debt Revenue deferrals • Forecast impact up to £1bn • Deferred NiMo rate increase • ~£3bn increase in
Slide 6: Financial performance highlights
Financial performance highlights A strong 2020 Underlying operating profit Underlying EPS Return on Equity £3,454m 58.2p 1% 11.7% 10bps FY19: £3,451m FY19: 58.9p FY19: 11.8% Capital Asset growth Dividend growth investment increased in line with policy £5.4bn 19% 9% 180bps 48.57p 2.6% FY19: £4.5bn FY
Slide 7: Progress on operational priorities in 19/20: US
US Progress on operational priorities in 19/20 US plans drive growth and value Strong operational progress • Achieved an ROE of 9.3%, up 50bps – earned 99% of our allowed return • Strong rate base growth of 12% – driven by investment of over $4bn; and – transfer of CWIP to rate base • Agreed new rat
Slide 8: Progress on operational priorities in 19/20: UK
UK Progress on operational priorities in 19/20 UK delivering growth and value for all stakeholders Strong operational delivery • Achieved an ROE of 12.4% – within target range of 200-300bp outperformance • Invested £1.3bn, up 5% on the prior year – completed Feeder 9 tunnel under the Humber – progre
Slide 9: Progress on operational priorities in 19/20: NGV & Other
NGV Progress on operational priorities in 19/20 NGV & Other Investment of £815m • Higher interconnector spend – projects remain on track • Acquisition of Geronimo Energy – start of operations at 200MW windfarm in South Dakota Good year for Property • Continued to sell sites into the St William joint
Slide 10: Interest, tax and earnings
Interest, tax and earnings Finance Underlying Underlying costs effective tax rate 1 earnings 2 £1,049m 19.9% £2,014m 6% higher than FY19 at £(478)m FY19: £1,995m • Higher US debt • Tax rate 30bps higher • 3,461 weighted than 19/20, due to average shares • Effective interest rate lower value property
Slide 11: Cash flow and net debt
Cash flow and net debt Year ended £m 31 March 2020 Net debt (£bn) Underlying operating profit 3,307 Depreciation & amortisation 1,640 2.7 28.6 Exceptional items (60) 1.3 (1.9) Working capital, timing & other 27 26.5 FX and IFRS 16 Cadent Underlying proceeds1 business Cash generated from operations 4
Slide 12: Capital investment and funding
Capital investment and funding Group capital investment includes Capital investment by segment • £4.5bn investment in regulated networks (£bn)1 • ~£500m interconnector investment 6 • Over £200m investment in Geronimo 5 ~10% NGV & Other CAGR UK Regulated Sustainable growth 4 • Network investment to m
Slide 13: 20/21 Outlook
20/21 Outlook Regulated performance Interest and tax • Fall in US operating profit from deferred revenue, • Interest charge to reduce from falling RPI and bad debt and higher COVID costs lower rates • Increase in US depreciation • Effective tax rate of around 22% • UK operating profit expected to re
Slide 14: Priorities & Outlook
Priorities & Outlook National Grid plc Full Year Results 2019/20 June 2020 14
Slide 15: Our pathway to value creation
Our pathway to value creation Our strategic priorities guide our Strategic focus areas over the next 12 months: priorities US • Ensuring right rate plans post COVID • Enable the energy • Efficient delivery of our investment program transition for all UK • Deliver for our • Agreeing the RIIO-T2 regul
Slide 16: US priorities and outlook: right rate plans
US US priorities and outlook Ensuring we have the right rate plans for a post-COVID world • Focus on new rates in New York and Massachusetts • Working with regulators to achieve timely recovery of COVID-related costs; and • Balancing the need for critical investment with affordability KEDNY / KEDLI
Slide 17: US priorities and outlook: efficient investment
US US priorities and outlook Efficient investment • We expect investment levels in the US to remain significant • Streamlining processes – Gas Business Enablement program – modernising our work management – integrating planning and customer requirements • Finding digital solutions – ‘On My Way’ in E
Slide 18: UK priorities and outlook: RIIO-T2
UK UK priorities and outlook RIIO-T2: Agreeing a new regulatory outcome • Final business plans submitted in December – wealth of stakeholder engagement – working through points raised by the Challenge Group • We will look at the whole package: – putting customers at the centre of the price control –
Slide 19: UK priorities and outlook: innovation and efficiencies
UK UK priorities and outlook Delivering innovation and efficiencies for our customers • On track to meet our cost reduction target of £100m for FY21 • Improving the customer experience • Two new digital platforms launched: – ‘ConnectNow’: help customers with new transmission connections, and – ‘Conn
Slide 20: NGV & Other priorities and outlook
NGV NGV & Other priorities and outlook • Delivering Interconnector projects – NSL, IFA2, and Viking – over £900m to invest through to 2023 – EBITDA contribution of £250m from the mid-2020s • Continue to grow pipeline of renewable energy projects in the US – signed PPAs on nearly 500MW of solar proje
Slide 21: Maintaining momentum on targeting net zero
Maintaining momentum on targeting net zero • Achieved a significant milestone, with our CO2 reduction targets own emissions now 70% below 1990 levels vs 1990 baseline • Setting more ambitious interim targets of – 80% reduction by 2030, and Power – 90% reduction by 2040 • Our ESG event in October wil
Slide 22: Debt funding
Debt funding National Grid plc Full Year Results 2019/20 June 2020 22
Slide 23: Debt funding
Debt funding 2019/2020 • c. £2.9bn of senior long-term debt raised in 2019/20, including 13 bonds: o Majority raised in UK through GBP public bonds for NGET and NGG, our debut EUR green bond for NGET and a number of EMTN private placements across AUD/EUR/GBP/HKD/USD o US issuance lower due to $2.5bn
Slide 24: Summary
Summary • A year of good operational progress • We are managing the impacts of COVID – helping our most vulnerable customers – maintaining network reliability – higher near term costs, but limited long term economic impact • Focus on our regulatory filings – RIIO-T2 in the UK – New York and Massachu
Slide 25: Q&A
Q&A National Grid plc Full Year Results 2019/20 June 2020 25
Slide 26: Appendices
Appendices National Grid plc Full Year Results 2019/20 June 2020 26
Slide 27: UK Electricity Transmission
UK UK Electricity Transmission Return on equity Underlying operating profit (£m) • Controllable costs benefit from 10.2% efficiency savings of £54m 1,174 Base return 59 • Capital investment up 13%: 250bps (3) 26 Other inc – Phase 2 London power 1,092 Net depreciation tunnels Totex incentive Controll
Slide 28: UK Gas Transmission
UK UK Gas Transmission Return on equity Underlying operating profit (£m) • Net revenue increase from 10.0% 32 17 12 – non repeat of Avonmouth Depreciation 402 revenue return Base return Controllable Net & other costs 341 – 2018 Cyber reopeners (70)bps revenue Totex incentive • Controllable costs ben
Slide 29: US Regulated
US US Regulated Return on equity Underlying operating profit (£m) • Achieved 99% of the allowed 51 8.7% return Controllable (145) New York 257 costs Depreciation (61) • Net revenue increase from new (83) Bad rates 9.0% 1,617 Net debt Other 1,636 Massachusetts revenue • Exceeded efficiency programme
Slide 30: NG Ventures
NGV NG Ventures Year ended Year ended Operating profit (£m) 31 March 2020 31 March 2019 • Geronimo investment over £200m Capital investment (£m) Metering 158 153 Grain LNG 78 74 • £246m increase in Interconnectors 61 64 interconnector capital 815 Other (28) (28) expenditure 269 263 • FY20 is peak NG
Slide 31: Other activities
Other Other activities Year ended Year ended Operating profit (£m) 31 March 2020 31 March 2019 • Non recurrence of Property 63 181 – Fulham transaction Corporate centre & other (90) (44) – US legal settlements (27) 137 Total investment1 Post tax share of JVs (£m) £70m St William 18 (17) FY19: £179m
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