National Grid Plc · LSE:NG.
National Grid — Corporate Update (March 2021)
14 slides from National Grid's corporate update, Mar 2, 2021
Slide 1: RIIO-T2 Final Determination: National Grid response
RIIO-T2 Final Determination National Grid response London, 2 March 2021 National Grid plc RIIO-2 FD Response March 2021 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: Our response
Our response John Pettigrew Chief Executive National Grid plc RIIO-2 FD Response March 2021 3
Slide 4: Overview
Overview • Our overall view of Ofgem’s Final Determination • The basis of our decision to make an appeal to the CMA regarding; – the cost of equity and; – the outperformance wedge • Group credit metrics outlook • Dividend policy • Next steps National Grid plc RIIO-2 FD Response March 2021 4
Slide 5: Broad acceptance of Final Determinations
Broad acceptance of Final Determinations • Recognition of the effort the team has put in to the RIIO-T2 process • Our widest consultation ever - over 25,000 stakeholders • Pleased to accept a large part of the Final Determinations • Our three core objectives we set out to achieve: ONE TWO THREE Inve
Slide 6: Achieving our objectives under RIIO-T2
Achieving our objectives under RIIO-T2 • We believe the final determinations provides: – the investment required to maintain asset health levels – the flexibility to deliver investment for the green recovery and energy transition • Looking ahead to the next 5 years we expect: – to invest around £10b
Slide 7: A technical appeal to the CMA
A technical appeal to the CMA • The Board has decided on a technical appeal to the CMA focused on the cost of equity and outperformance wedge 3 MARCH 2021 • On cost of equity we believe that Ofgem's methodology: National Grid to submit – discards evidence for higher total market return and risk- Tec
Slide 8: Credit Metrics
Credit Metrics Andy Agg Chief Financial Officer National Grid plc RIIO-2 FD Response March 2021 8
Slide 9: Near term impacts
Near term impacts COVID-19 • Our guidance due to Covid-19 remains unchanged for FY21: – £400m headwind to underlying operating profit and – up to £1bn cash impact • We remain confident on recovery through UK timing mechanisms and US rate negotiations and filings • Timing of US recoveries may now tak
Slide 10: Impact on financial metrics
Impact on financial metrics At the National Grid plc level: • Moody’s targets a 9% RCF/Net Debt for Baa1 • S&P targets a 13% FFO/Net Debt for BBB+ 5 year outlook • We expect to remain below these thresholds • Strong possibility that we’ll see a one notch rating downgrade at National Grid plc and the
Slide 11: John Pettigrew
John Pettigrew Chief Executive National Grid plc RIIO-2 FD Response March 2021 11
Slide 12: Dividend policy
Dividend policy The Board has reaffirmed the existing dividend policy for this financial year • To grow the dividend at least in line with UK RPI inflation New dividend policy from FY2021/22 • Aim to grow the annual dividend per share in line with UK CPIH inflation • This reflects the move from RPI
Slide 13: Next steps
Next steps • Pleased we are able to accept a large part of the final determinations • Will work closely with the CMA over the course of the year • We remain: – committed to a strong, investment grade credit rating – well placed to deliver investment to deliver strong asset growth towards the top end
Slide 14: Q&A
Q&A National Grid plc RIIO-2 FD Response March 2021 14