SSE : Full-year Results Presentation Transcript 2021/22

POWERING CHANGE TOGETHER

SSE Preliminary Results for the year to 31 March 2022

• 1. TITLE SLIDE
  2. DISCLAIMER
     ALISTAIR PHILLIPS-DAVIES
  3. AGENDA
• Good morning everyone and welcome to our Full-year Results presentation.
• I'm joined today by our Finance Director Gregor Alexander and Chief Commercial Officer Martin Pibworth.
• 1. POWERING CHANGE TOGETHER
• Over the next 45 minutes, we will cover in detail three things:
• 1. Firstly, how a year of strong operational delivery has resulted in our financial objectives being met; with adjusted EPS growing at a rate above the long-term targets set in November and delivery of record capex investment;
  2. Secondly, how our resilient business mix is helping to navigate the Group through exceptionally volatile markets; it gives us good earnings inflation protection, natural hedges and options right across the energy value chain;
  3. And, finally, the prospect of further accelerated investment and growth as an encouraging financial outlook allows us to target further record investment next year of at least £2.5bn, adjusted EPS of at least 120p, and an increase to our target for adjusted EPS growth over the five years to March 2026.

• Critically, against the backdrop of a global gas crisis, the profit we are making is being re-invested at record levels into delivering clean energy infrastructure.
• And we will continue to invest at scale. Based on the clear opportunities we see in the coming years to deliver on the Government ambitions, assuming a continued supportive policy environment, our net investment into vital UK and Ireland infrastructure could exceed £25bn this decade, creating thousands of jobs and directly addressing the energy crisis.
• 1. SSE PLC: NET ZERO ACCELERATION PROGRAMME
• SSE's strategy is responsive to the changing world around us.
• COP26 in November and the stark warnings that followed from the IPCC made clear the urgency needed on climate action.
• But volatile gas prices and the invasion of Ukraine have also led to policy change in the UK, the EU and further afield.
• In our fully-funded Net Zero Acceleration Programme - which we'll refer to as the NZAP from here on - we provided a floor, not a ceiling, of ambition - aligning ourselves to a 1.5 degree pathway across the five years to 2026, then on to 2031.
• We covered funding plans, capacity additions, pipeline targets, RAV targets and what this would mean for shareholder returns. And it was well received by the ratings agencies.
• If anything, events this year have served to accelerate the long-term electrification and decarbonisation of energy which underpinned our NZAP and which are translating into more options for the second half of the decade.
• The NZAP set out the optimal pathway for SSE to grow and in the six months since we published it, I have become even more confident that, with our capabilities, our pipeline prospects and the increasingly supportive operating environment, we can meet and potentially exceed these ambitions.
• 1. DRIVING GROWTH WITH STRATEGIC DELIVERY

• Part of my confidence comes from how, in the face of some very challenging conditions, we have delivered our financial targets for the year and invested a record £2.1bn, underlining the benefit of our resilient, integrated business model to both shareholders and wider society.
• We will return to each of these points later, but in SSE Renewables we have progressed our major projects at Dogger Bank, Seagreen and Viking; made strides internationally through our acquisitions in Southern Europe and Japan; and added 1GW to our domestic pipeline with our ScotWind site.
• And the future looks bright for Transmission: Our flagship Shetland HVDC link continues to be built at pace while National Grid's Network Options Assessment made clear the critical need for further network development. And the UK Government has thrown its weight behind an even faster, more strategic network build-out as part of its recent British Energy Security Strategy.
• In Distribution, we worked through six exceptional weather events in 12 weeks, including back-to-back named storms, while progressing a stakeholder-led plan for ED2 that we continue to engage on with Ofgem and key stakeholders.
• In Thermal, commissioning started at Keadby 2 so it provide useful system flexibility. And elsewhere in the Group we acquired our first solar and battery sites.
• We also completed the sale of SGN - the last step in a strategic streamlining of the Group.
• And finally we also announced an upweighting to our 2030 business goals, which are aligned to the UN's Sustainable Development Goals, to ensure they keep pace with the NZAP.
• This is clear and demonstrable strategic progress that will create future value, achieved whilst also delivering shareholder returns today.
  7. TRACKING OUR NET ZERO TRANSITION

• We need shareholders with us on our net zero journey and that's why they will be given a vote at our AGM on the progress we are making towards decarbonising our own activities.
• Our recently published Net Zero Transition Plan sets out the targets we've set for scope 1 and scope 2 emissions by 2040 and for the remaining scope 3 emissions, by 2050, alongside our interim science-based targets aligned to a 1.5 degree pathway.
• The net zero transition will be exactly that - a transition - with complex challenges along the way that we will navigate through open dialogue with both our shareholders and wider society.

8. PROVIDING SOLUTIONS WITH THE RIGHT BUSINESS MIX

• SSE's business model is based around the assets and capabilities required for the global transition to an electrified, net zero economy.
• This is the result of a highly successful disposals programme and targeted investments which have created a group with the capabilities and projects to create value right across the clean electricity value chain.
• Our businesses share common capabilities in the financing, development, building and operation of world-class, highly technical electricity assets.
• They allow us to specialise in renewables, regulated networks and flexible, low-carbon power stations, while creating value as new opportunities emerge in areas like hydrogen, batteries and distributed energy.
• And with sustainability a core part of SSE's values, our credentials and performance underline our positioning as an ESG-aligned growth investment opportunity.
• We have an attractive blend of regulated and market-based income streams across a very deliberately chosen, integrated mix of businesses.

9. THE PEOPLE BEHIND OUR PURPOSE

• Of course, our people are central to the execution of our purpose of providing energy needed today while building a better world of energy for tomorrow.
• As always, keeping those people safe remains paramount to SSE. Our record investment in FY22 was driven by a surge in construction activity and, unfortunately, with that came 14 more injuries versus the same period last year and a small rise in our Total Recordable Incident Rate.
• As I say, the almost 11,000 people who work for us are central to our success … and we'll be creating 1,000 new jobs a year on average in delivering our five-year plan.
• In a busy and challenging year, it is the commitment and capability of our people that has enabled the strong performance that Gregor will now take us through …

GREGOR ALEXANDER

FINANCIAL RESULTS

• 1. AGENDA
• Thanks Alistair and good morning everyone.
• 1. FINANCIAL RESULTS - INVESTMENT SUMMARY
• We outlined in November the scale of capital investment and growth opportunities, as well as the market leading capabilities and attractive secured pipeline held by the Group.
• And we are using those capabilities to deliver on those opportunities - investing a record £2.1bn investment this year with almost 90% of that in low carbon assets and infrastructure.
• We plan to keep accelerating our investment as we push forward with the net zero transition and in FY23 we are expecting investment to be in excess of £2.5bn, including our Southern Europe acquisition once completed.
• SSE is delivering the energy needed today, whilst significantly investing in the innovative low-carbon technologies that will provide the energy needed tomorrow.
• 1. RESILIENCE OF BUSINESS IN VOLATILE MARKETS