2024-05-24 04:58:06 ET
SSE plc (SSEZF)
Q4 2024 Earnings Conference Call
May 22, 2024, 05:00 AM ET
Company Participants
Alistair Phillips-Davies - CEO
Martin Pibworth - CCO
Barry O'Regan - CFO
Conference Call Participants
Rob Pulleyn - Morgan Stanley
Mark Freshney - UBS
Deepa Venkateswaran - Bernstein
Ajay Patel - Goldman Sachs
Jenny Ping - Citi
Dominic Nash - Barclays
Peter Bisztyga - Bank of America
Harry Wyburd - BNP Paribas Exane
Charles Swabey - HSBC
Pavan Mahbubani - JPMorgan
Presentation
Alistair Phillips-Davies
Good morning, and thank you for joining us for our Full Year Results Presentation. I'm joined by Chief Commercial Officer, Martin Pibworth; and Barry O'Regan, our Chief Financial Officer. We'd be delighted to take your questions after we present the results of what was a good year of delivery as we continue to power sustainable growth across the group.
First, I'd like to acknowledge the people behind today's results. SSE's ongoing success depends on the employees and contractors who deliver our strategy. Keeping them safe is our top priority, and we were deeply saddened by the loss of Richard Ellis, the employee of a contractor who died in an off-site incident in October last year. Our thoughts remain with Richard's family, friends and colleagues.
Our workforce is growing significantly to deliver our construction program, and we are redoubling efforts to ensure everyone on an SSE site gets home safely. As part of this, we recently opened Scotland's first immersive safety training center. It will serve up to 7,000 colleagues and contractors per year over the next three years before being open to a wider industry, and it reinforces the importance of embedding a strong safety culture across our activities.
Before we get into the detailed financial and operational review, I'd like to take a few minutes to give a brief overview of the past year and tell you why we remain confident about our future growth prospects. This year has demonstrated three defining features of SSE, our track record of powering growth and delivering major projects, the resilience of our business model in a range of market conditions and the continued strengthening of our growth prospects with multiple high-quality options to deploy capital where we can generate most value for shareholders and society.
As you will see, delivering the fully funded £20.5 billion Net Zero Acceleration Program Plus, NZAP Plus as we like to call it, has been at the forefront of the last year. And as we execute on this plan, we're also delivering increasingly high-quality sustainable earnings that reflect the premium nature of our portfolio. And you can see this in the strong EPS growth we're delivering, which is just -- which is going from just under 95p in 2022 to 158.5p today and then onwards to 175p to 200p in 2027. That's a run rate of between 13% and 16% compound earnings growth per annum.
The upweighted investment in regulatory networks that we announced in November means that 55% of the CapEx plan is now allocated to the significant growth we see in those businesses, particularly transmission, which is one of the fastest-growing networks in the world.
This investment provides real equity returns that are stable, relative to inflation, and the regulatory mechanic means we receive an upfront fast money earnings benefit from this increased investment, which also happens to be absolutely vital to the energy transition and the U.K.'s economic prospects. And crucially, we have largely locked in the supply chain derisking delivery.
In Renewables, we've selectively progressed organic projects across a range of technologies that provide strong risk-adjusted returns in line with our hurdle rates. And as I say, this is high-quality, sustainable growth.
The majority of earnings are protected from market volatility and a large proportion of debt is locked in at fixed rates. We have an optimized business mix that means earnings are resilient to a range of scenarios. And as you'll hear from Barry shortly, we have every confidence we'll meet our 2027 earnings guidance and go on to create even more high-quality growth after that. That confidence and growth is underpinned by our unique value proposition....
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SSE plc (SSEZF) Q4 2024 Earnings Call Transcript