PROVIDING ENERGY TODAY BUILDING VALUE FOR TOMORROW FINANCIAL RESULTS FOR THE YEAR TO 31 MARCH 2020 17 JUNE 2020
PROVIDING ENERGY TODAY, BUILDING VALUE FOR TOMORROW 2019/20 Results Presentation Part One • 2019/20 – a year of progress Part Two • Responding to coronavirus – positioning the business well for the long term Part Three • Contributing to green recovery, creating value through transition to net zero Alistair Phillips-Davies Gregor Alexander Martin Pibworth Chief Executive Finance Director Energy Director SSE Financial Results for the Year to 31 March 2020 2 Presenter: Alistair Phillips-Davies
SUSTAINING DIVIDENDS AND PROMOTING LONG-TERM SUCCESS SSE’s vision is to be a leading energy company in a net zero world Clear objectives • Sustaining dividend payments on which pensioners and savers depend • Promoting long term success of company for benefit of all stakeholders Focus on regulated electricity networks and renewables • Achieving excellence • Contributing to green economic recovery • Delivering growth • Creating value through transition to net zero SSE Financial Results for the Year to 31 March 2020 3 Presenter: Alistair Phillips-Davies
New photo? FULFILLING OUR CORE PURPOSE Responding to coronavirus Supporting electricity supplies • Maintaining reliability of electricity networks • Ensuring availability of power generation Being a responsible employer • Working closely with trade unions • No employees furloughed Committing to C-19 Business Pledge • Focus on customers, communities, suppliers and employees SSE Financial Results for the Year to 31 March 2020 4 Presenter: Alistair Phillips-Davies
Part One RESULTS TO 31 MARCH 2020 A YEAR OF PROGRESS SSE Financial Results for the Year to 31 March 2020 5 Presenter: Alistair Phillips-Davies
RESULTS TO 31 MARCH 2020 A year of progress SOLID FINANCIAL RESULTS STRATEGIC EXECUTION OPERATIONAL DELIVERY Best ever year for safety A solid recovery from the Completed Energy Services sale performance, wellbeing and previous year to focus on the core environmental care Increases in adjusted operating Success in CfD auctions and Total recordable injuries down to profit, adjusted profit before tax quality RIIO T2 business plan 71 in 2019/20 from 86 in and adjusted earnings per share 2018/19 SSE Financial Results for the Year to 31 March 2020 6 Presenter: Alistair Phillips-Davies
RESULTS TO 31 MARCH 2020 Coronavirus and related impacts Main components 2019/20 Income Statement £m • Demand impacts Adjusted EBIT impact (18.2) Exceptional charge (33.7) • Increased provision within customer Total estimated impact (51.9) businesses for bad debts 2019/20 Adjusted EPS Pence March 27 forecast (pre-coronavirus impact) 83-88 Adjusted EPS 83.6 SSE Financial Results for the Year to 31 March 2020 7 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Overview Income statement – continuing operations* FY20 FY19 Adjusted Operating Profit - £m 1,488.4 1,088.7 Adjusted Profit Before Tax - £m 1,023.4 685.1 Reported Profit Before Tax - £m 587.6 1,300.3 Adjusted EPS - pence 83.6 61.8 Key movements • Restoration of GB Capacity Market payments • Reduction in EPM-related loss • Strong performance in SSE Renewables * 2019/20 discontinued operations: SSE Energy Services adjusted operating profit £32.7m; Gas Production Assets adjusted operating profit £25.8m SSE Financial Results for the Year to 31 March 2020 8 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Exceptional items Main components Cont. Discont. FY20 Exceptional items (£m) Total Operations Operations • Loss on disposal of Energy Services is £231m lower then Reshaping the SSE Group (176.0) (237.7) (413.7) reported at HY due to novation of out-the-money derivatives Market conditions (291.3) (291.3) • Loss on closure of final coal plant • Telecoms and onshore wind gains Coronavirus impact (33.7) (33.7) IFRS9 Movements • Gas Production impairment Total exceptional items (209.7) (529.0) (738.7) For a full description of exceptional charges see note 7 of the summary financial statements SSE Financial Results for the Year to 31 March 2020 9 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Regulated networks businesses Year on year movement FY20 FY19 Adjusted EBIT (£m) Electricity Transmission • Phasing of allowed revenue 218.1 252.1 • Increased depreciation Electricity Distribution* 356.3 401.3 Net increase in costs including • Increased depreciation Investment in SGN • 202.3 176.8 Higher costs associated with supplying Shetland Total Networks 776.7 830.2 • Increased Totex outperformance • Additional commercial income RAV • Combined RAV £9.1bn at 31 March 2020 *September 2019 forecast was £375m; variance due to lower than expected volumes in 2H20 SSE Financial Results for the Year to 31 March 2020 10 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 SSE Renewables FY20 FY19 Adjusted EBIT (£m) Hydro (inc. pumped storage) 191.1 178.7 Onshore wind 201.4 188.3 Offshore wind 174.8 88.9 Total SSE Renewables 567.3 455.9 Year on year movement • Net increase in wind energy capacity, mainly Beatrice • Total renewable output 11.4 TWh including 0.7TWh constrained off wind SSE Financial Results for the Year to 31 March 2020 11 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Core Businesses Adjusted EBIT (£m) FY20 FY19 SSE Renewables 567.3 455.9 SSEN Electricity Networks 574.4 653.4 Total Core Businesses 1,141.7 1,109.3 Investment in SGN 202.3 176.8 1,344.0 1,286.1 Total Renewables and Networks Adjusted EBITDA (£m) FY20 FY19 SSE Renewables 803.3 694.0 SSEN Electricity Networks 798.9 850.9 1,602.2 1,544.9 Total Core Businesses Investment in SGN 259.1 234.3 1,861.3 1,779.2 Total Renewables and Networks SSE Renewables and regulated networks (SSEN and SGN) contributed around 90% of Group EBIT and 85% of Group EBITDA in FY20 SSE Financial Results for the Year to 31 March 2020 12 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Energy Businesses Year on year movement Adjusted EBIT (£m) FY20 FY19 Total Renewables and Networks 1,344.0 1,286.1 • Capacity market reinstatement • Increased multifuel profits Thermal Generation 152.7 (22.3) • Benefitting from merchant Gas Storage 3.7 (5.7) operation in volatile markets • Gas Production contracts 77.1 n/a Reflecting split of assets and contracts pursuant to sale EPM (137.4) (284.9) Total Energy Businesses 96.1 (312.9) Variance to guidance Total Customer Businesses 66.1 122.0 • OVO transaction impact • Weaker Sterling Corporate unallocated (17.8) (6.5) SSE Group 1,488.4 1,088.7 SSE Financial Results for the Year to 31 March 2020 13 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Customer Businesses Adjusted EBIT (£m) FY20 FY19 Total Renewables and Networks 1,344.0 1,286.1 Year on year movement Total Energy Businesses 96.1 (312.9) • Higher bad debts and other Business Energy 9.2 51.6 indirect costs • Non-commodity costs Airtricity 48.8 38.6 • Slightly improved margins Enterprise 8.1 31.8 • Reflects reduced earnings due to 50% disposal of Telecoms Total Customer Businesses 66.1 122.0 Corporate unallocated (17.8) (6.5) SSE Group 1,488.4 1,088.7 SSE Financial Results for the Year to 31 March 2020 14 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Pension schemes Contributing to employees’ pension schemes FY20 FY19 Net pension scheme asset - £m 341.7 287.1 • Net accounting surplus across SSE’s two pension schemes • SHEP conversion of swap covering £800m of liabilities to ‘buy - in’ • Significantly reducing exposure to fluctuations in valuation of scheme obligations SSE Financial Results for the Year to 31 March 2020 15 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Investment and Capital Expenditure Investment and CapEx FY20 Summary Capital Recycling • Transmission 19MW Sleive Divena II at 1600 £2,700/kW • Total £329.0m 1400 • New substations 1200 Distribution 1000 • Total £364.9m 800 • Subsea reinforcement 600 Renewables • Total £342.7m 400 • Seagreen contribution 200 Thermal 0 • Total £177.0m £m FY20 FY19 FY18 • Keadby 2 and multifuel Networks Renewables Other SSE Financial Results for the Year to 31 March 2020 16 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Managing net debt FY20 HY20 FY19 10,466 10,339 9,437 Adjusted net debt and hybrid capital - £m Average cost of debt at period end, incl. hybrid capital 3.51% 3.60% 3.70% Adjusted net finance costs - £m 465.0 403.6 Adjusted net finance cost movement • Higher net debt • Higher JV interest costs • Lower capitalised interest • Impact of IFRS 16 SSE Financial Results for the Year to 31 March 2020 17 Presenter: Gregor Alexander
RESULTS TO 31 MARCH 2020 Dividend • Dividends provide vital income for pensions and savings • 2019/20 was a year of progress • Quality and nature of core businesses FINAL DIVIDEND 2019/20 FULL YEAR DIVIDEND 2019/20 Payment 18 September 56p* 80p * recommended SSE Financial Results for the Year to 31 March 2020 18 Presenter: Gregor Alexander
Part Two 2020/21 AND BEYOND SSE Financial Results for the Year to 31 March 2020 19 Presenter: Alistair Phillips-Davies
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