SSE plc (SSE) Earnings Call Transcript & Summary

Good morning, everyone and welcome to our Full-Year Results Presentation. I'm joined today by Finance Director, Gregor Alexander and Chief Commercial Officer, Martin Pibworth. In today's update, we'll outline how we are creating sustainable value from a growth aligned strategy, which is delivering for shareholders and society and promises much more for the future. First, in our results overview, we'll cover a year of delivery on which we invested record levels well in excess of the strong profits we earned. We'll outline how this has given us financial strength to weather future market uncertainty, seize opportunities and create more shareholder and societal value. Then in our strategic update, we'll set out how we'll deliver GBP 18 billion of investment as part of our upgraded NZAP Plus plan to financial year '27. And finally, we'll show how we'll grow value out to 2032 and beyond, thanks to the sustainable solutions we offer on energy, security and climate change. In short, SSE offers a compelling investment proposition, a strong balance sheet, solid ESG credentials, fantastic optionality and capability and sustainable long-term value. You'll have seen our NZAP Plus outlined in this morning's statement and I'll cover it in more detail later, but here is a brief overview of the main changes. When we launched the original NZAP back in November 2021, we made it clear, it was a floor, not a ceiling to our ambition. We now expect to meet or exceed our original financial target, so we rolled the program forward by 12 months to financial year '27 and upgraded the plan to account for new opportunities and a changing investment mix between businesses. It remains a fully funded plan, but we're targeting over 40% more CapEx, partly due to inflation, but the majority through additional growth, spread across our networks, renewables and thermal businesses. And we've concluded after careful consideration of the balance and financial strength of the new plan that retaining full ownership of SSE distribution is the right strategy at this time. We'll outline why we believe we can continue to maintain attractive returns on that investment and why our current business bolstered by this additional investment can deliver sustainable earnings growth over the longer-term. We are aiming higher, investing for the future in both proven and emerging technologies and assets that society will need in GB, Ireland and further afield. Before we go any further, I'd like to say a few words about SSE's overriding priority, which is safety. Our record levels of investment come with a significant rise in construction activity and regrettably, we had 16 more injuries year-on-year and a small increase in our total recordable incident rate. Getting everyone home who works for SSE at the end of each day remains our top priority and that focus is all the key note following the tragic death of Liam McDonald, a young contractor working on Shetland in June last year. We pay tribute to Liam again today. Let me now turn to our role in the future energy system. The key lesson for everyone from the past year is this, we must go further and faster in delivering the clean energy transition. The war in Ukraine and the global energy crisis means decarbonization is now not only synonymous with tackling climate change, but also with security, affordability and fairness. And this means there is now broad national and international consensus on what needs to happen. Firstly, we need to radically increase renewables, particularly wind and solar. Secondly, we need to transform our electricity networks to transport all that clean energy to homes and businesses. Thirdly, we need to back it all up with low carbon, flexible generation and storage. And finally, we need to do all this without leaving people behind. Renewables, networks, flexible generation and storage and a just transition, these are the key ingredients of both our NZAP Plus strategy and a clean energy future. This is what we mean by creating value for shareholders and society. And we're doing this in a sustainable way. We published one of the U.K.'s first net-zero transition plans with science-based targets aligned to a 1.5 degree pathway and supported by an annual shareholder vote. We also have a long-standing commitment to fair tax and a leadership position on the living wage. At the same time, our employee base is growing. We are championing a just transition to Net Zero through increasing the number of people joining us from high-carbon industries and the other element of our sector-leading strategy in this area. These are just some of the social and environmental credentials that are reflected in our leading ESG index ratings and form a central plank of the compelling investment proposition that I have already mentioned. Finally, the last financial year shows how we're currently realizing our potential. Our investment plans are not hypothetical. We have been spending to bring forward critical infrastructure, create jobs and support communities. We invested GBP 2.8 billion, a record level of CapEx investment for SSE, which represents a 36% increase from the previous year. Much of that spend was on flagship capital projects in networks and renewables, notably the Shetland HVDC link, Seagreen and our expansion into Southern Europe. But we also invested in current and future flexibility, be it Triton Power, our battery portfolio or early stage development spend on future hydrogen, carbon capture and hydro pump storage options with alignment to societal tailwinds we have a major opportunity to leverage our unique capabilities, world-class assets and balance sheet strength to deliver decades of sustainable growth. I'll now hand over to Gregor.

Thanks, Alistair. I'll now talk you through what is clearly a year of strong financial and operational performance. You'll see in our preliminary results statement this morning, so rather than go through the numbers line-by-line, I will focus on the drivers behind the 65% of group adjusted operating profit contributed by our main generation businesses and the 30% from regulated networks. To summarize, earnings from our thermal flexible hydro and gas storage assets, which were awarded for providing timely back up more than offset broadly flat performance in renewables, which included the impact from Seagreen delays and the electricity generator levy. As Martin will mention later, we expect flexibility to be a key requirement of energy markets over the decade ahead and have plans for continued investment in this area. This balanced portfolio of market focused assets was well supported by regulated income from electricity networks that provide a strong foundation. At group level, we saw adjusted operating profit increased by 66% to GBP 2.5 billion. Adjusted profit before tax increased by 90% to GBP 2.2 billion and adjusted EPS was 166 pence in line with the upgraded guidance from our pre-close statement. These are strong profits that show the value of the business mix we have carefully created. But there are also profits with a purpose and we're delivering on our commitment to reinvest back into critical infrastructure projects. Effect of the volatile market conditions can be seen in the strong adjusted operating profit, it was mainly driven by our flexible generation fleet and gas storage assets. A year ago, we reported a GBP 2.1 billion net derivative asset on our balance sheet, which reflected the impact of the market volatility on our forward commodity contracts, not underlying performance. So it is no surprise to see this asset unwind in the year, resulting in the net remeasurement loss shown to leave a GBP 260 million net liability on derivatives this year-end. The change in volatility and resulting IFRS 9 measurement impact highlights exactly why we split those remeasurements from SSE's adjusted profit measures. In September, we reported GBP 141 million gain on the acquisition of Triton Power, reflecting the higher price environment upon completion. With most of that uplift earned in the second half of the year and after derivative remeasurements, the net uplift has reduced to around GBP 21 million. And finally, we've included adjustment for the first time this year to remove 25% of SSEN Transmission's operating profit from our adjusted results, as these are ultimately attributable to the minority interest shareholder of that business. SSE's regulated electricity networks represent the backbone of the company and they are increasingly becoming engines of long-term growth. This year saw a solid financial performance in transmission with operating profit broadly flat versus the prior year as higher allowed revenues were offset by lower-than-expected volumes, higher operating costs and the 25% minority interest, which we exclude from our adjusted metrics. SSEN Transmission has a central role in Net Zero. It was one of the fastest-growing regulatory networks in Europe underpinned by one of the most well-respected regulatory frameworks. For the last three years, consecutive years, the business has consistently been awarded 100% of the available incentive against the energy not supplied reliability measure. Meanwhile, we have seen excellent progress on a significant investment program, which includes the Shetland HVDC link, Northeast Scotland upgrade and the final circuit connecting Seagreen offshore wind farm to the grid. The base plan has been supplemented by uncertainty mechanisms that are all making good progress at various stages of their Ofgem processes. And the business is focused on preparing to deliver its share of the accelerated strategic transmission investment framework known as the ASTI program announced by Ofgem last year. Based on the latest view of the business, we expect average annual operating profit net of the minority interest to be at least GBP 400 million across the five years to the financial year '24. However, the current regulatory period marks the beginning of many years of growth as the network helps to connect the fast array of renewables under development in the north of Scotland. Moving to distribution, which has just completed its final year of RIIO-ED1. Performance has largely been as expected with an increase on last year's profit. I'm pleased to say that the lessons learned from the extreme back-to-back weather events of the financial year '22 led to quicker restoration times and better communication with our customers through the ice storm that hit Shetland and later during storm Otto, which was recognized by the Scottish Parliament. And it's been a good year in terms of service levels. There's more work to be done, but we are pleased to see significant progress over the period with SSEN Distribution ranking as the most improved DNO for customer satisfaction. A key milestone this year was reaching a final settlement with Ofgem on the RIIO-ED2 price control. Our final settlement of GBP 3.6 billion represents a 22% increase in allowed expenditure compared to ED1. Attention has now turned to improvement in business as usual operations. And the focus is on ensuring we have the people, systems and plans in place to hit the ground running on ED2. We're working hard to digitalize the network and adapt it to the impact of climate change. As with any networks businesses, the nature of the price control means that no one reporting period gives a complete picture of financial performance. In distribution, the price we charge per kilowatt hour is set 15 months ahead of the regulatory year, which means that the inflationary pressures which we are seeing in the cost base will not be reflected in revenue until the financial year '25. As a result, we expect a reduction in adjusted operating profit into financial year '24. We still expect average annual operating profit of at least GBP 450 million across the five years to financial year '27. Turning to Renewables. Despite being behind planned levels, wind speeds were up year-on-year and the hedge price achieved benefited from converting gas and carbon hedges into power when the spark spread was high. Meanwhile, our flexible hydro assets captured high prices, while as balancing the system to ensure secure supplies. These were offset by hedge buyback costs and the electricity generator levy. So all in all, SSE Renewables had a mixed year. A critical measure of performance is how we are progressing our major construction and development projects. And I'm pleased to say that we reached a long list of milestones in the financial year '23. Offshore foundation installation and onshore works continue at Dogger Bank ahead of expected first power this summer, weather permitting and all those supply chain delays mean the completion date for Phase A has been pushed back a few months, the commissioning volumes remain unhedged, which limits financial impact. There has been setbacks of Seagreen due to vessel availability, amongst other things, but with first power achieved in August 2022, the last of 114 foundations installed in April were on course for full commercial operation in the summer of this year. Clearly, projects of this scale and complexity are not without risks and challenges. It's been a big year for offshore wind strategically with one highlight being the consent application and mission for Berwick Bank, a major milestone for one of the biggest offshore wind opportunities in the world today. Onshore, at Viking and Shetland we saw the first of 103 turbines erected last month and construction is well underway on our Irish onshore projects. The acquisition of SGRE's onshore development platform in Southern Europe this year is starting to deliver with a number of projects aiming for a final investment decision later this year. And finally, hydro as part of SSE's DNA and is therefore particularly pleasing the Foyers performed so well and that Phase 1 of the refurbishment of Tummel has gone as planned. Our approach to hedging means that we have secured some value in hedge volumes several years ahead in wind and hydro, but retain some flexibility to help manage volume risk. We anticipate an immediate step up in financial year '24 volumes of roughly 25% to around 12.5 terawatt hours as we expect weather conditions to normalize following three consecutive unfavorable years and as the business benefits from the best part of the year's output from Seagreen. As hedges entered into during the current elevated price environment start to be delivered, we also expect an increase in the average hedge price of around 35% year-on-year. IPU from Dogger Bank will remain unhedged until construction has been largely completed and we've excluded any commissioning volumes from the 12.5 terawatt hours guidance. In thermal, the low-end speeds noted on the previous slide, a one reason the market has needed flexible generation plant. Equally, with disruption to international supplies, gas storage has been required to flexibly manage national imbalances, both in great Britain and Ireland. At SSE, we choose to maintain and invest in these technologies when others mothballed with years of lower earnings across the flexible thermal asset base. So in the context of last year's market conditions, it was clearly a good time to add around 700 megawatts of net capacity to the portfolio through the Triton Power acquisition. With an acquisition cost of only GBP 123 million, it enabled an immediate payback to our investment, but the real price will be its low carbon future. We also entered commercial operations in Keadby 2 in March, following a 4.5-year construction program, with an efficiency of around 63% making it the most efficient plant of its type in Europe and the ability to reach full power in just 30 minutes, Keadby 2 will provide flexibility to the electricity system for many years to come. And finally, gas storage has continued to provide important protection for the group against the ongoing volatility in gas prices. The previous slide demonstrates quite clearly the value from maintaining a flexible generation fleet. And as Martin will explain later, we believe these assets will sustain future profits above historic levels. We've invested in over 1.5 gigawatts of additional capacity ready to respond to the realities of the higher medium-term price environment. As markets continue to transition towards increased intermittent low carbon power over the next decade and customer demand rises, a flexible response from these assets will become increasingly important to the energy system. And as illustrated by the graph on the left of the slide, these assets have opportunities to earn income through being flexible not only when the weather is still and the output is required, but also when it is windy and the system does not need previously sold electricity generation, which can be bought back at generally lower prices. Taking all of this into account, we expect the thermal business including gas storage will deliver more than GBP 750 million operating profit in the financial year '24 and around GBP 500 million average operating profit annually over the four years to the financial year '27. I don't intend to go into the detail of this slide, but these businesses are part of a very deliberate operating model and each has a role to play in contributing to delivery of our Net Zero focused strategy. It's worth emphasizing, however, that the profitability reported at the half year for Airtricity has been largely reversed with tariffs being kept as low as possible for all consumers and reflecting other measures to help affordability. Furthermore, in April 2023, SSE Airtricity administered a EUR35 rebate to each customer fulfilling its commitment to return profits to customers in recognition of the cost of living crisis. Both Airtricity and business energy have important strategic roles in the group and we expect them to return with stronger profitability in the financial year '24. SSE's strong balance sheet continues to be underpinned by high-quality assets. After the year's record capital investment, adjusted net debt was GBP 8.9 billion at 31 March, with just over 90% of debt held at fixed rates. Net debt to EBITDA fell to 2.7x, mainly the product of very strong earnings and clearly well below the original NZAP target of 4.5x. Our credit ratings already compare favorably to periods and S&P have SSE on positive outlook, reflecting the resilience of the business mix and its ability to create value. Meanwhile, our pension schemes have weathered volatility well with no additional liquidity required. Both defined benefit schemes remain in accounting surplus with a combined surplus at the year-end of GBP 541 million. Our cash collateral remains comfortably within existing facilities and we've had good liquidity despite an increase in collateral requirements during the year. The strong financial footing provides the foundation for the group's up-weighted investment plan and enables the projects to create long-term value. Before I hand back to Alistair, let me spend a moment on the outlook for the remainder of this financial year. Clearly, financial year '23 has been a strong year with EPS in excess of our original guidance of at least GBP 120 that we gave in May last year, but there have been some headwinds. Looking to the financial year '24 when we take into account the expected increase in renewables volumes, continuing volatility and market conditions, increase in transmission and decrease in distribution operating profits, we have confidence that we will exceed GBP 150 adjusted earnings per share. As ever, final performance will be dependent upon market conditions, plant availability and weather and we'll provide further guidance later in the financial year. Alistair and Martin will outline our updated plans shortly. But clearly, investment is ramping up and CapEx in the financial year '24 is expected to be more than GBP 2.8 billion record investment delivered in this financial year. I'll now pass you on to Alistair.

Before we move on, I'd like to take this opportunity to thank Gregor for his 21 years of financial stewardship of the SSE group. He should be very proud not only of what he's achieved doing his time here, but of the very strong position he leaves us in. We're losing one of the FTSE's finest FDs, but after a rigorous selection process, we have a highly capable successor in Barry O'Regan. Barry has been integral to SSE's growth story for many years now, particularly in terms of reshaping the group and we all look forward to working with him through the transition. Barry will join us for the interim results presentation in November, which will be Gregor's last update to the market. The NZAP story is build on our position as a national clean energy champion by committing to enhanced investment in renewables, networks and flexibility, whilst beginning to explore our capabilities overseas. Today's NZAP Plus will see us invest GBP 18 billion net out to financial year '27 with the reallocation of capital to reflect the options we have in thermal and networks, while enabling the expansion of our renewables pipeline. And that incremental investment will continue to be fully funded a strong cash flow generation from asset will drive an expected GBP 6 billion of incremental cash versus the previous plan. That also means we expect leverage to be lower than previously targeted at 3.5 to 4x net debt to EBITDA, although, our balanced and asset backed business still has the capacity to reach 4.5x and comfortably retain a strong investment-grade credit rating. The strength in balance sheet combined with a well-balanced investment plan that means the fully funded NZAP Plus no longer include a distribution stake sale. Based on performance to date, the wider economic and market outlook and the high-quality opportunities that are coming through, we now expect adjusted earnings per share to grow between 13% and 16% annually from our financial year '22 base and our confidence in this earnings growth means we are setting out an updated dividend plan of between 5% and 10% growth per annum to financial year '27 from the rebased dividend of 60 pence in financial year '24. This updated dividend combined with increased clarity on growth, balances our commitment to shareholders with our ambition to invest more in the assets that will be needed to reach Net Zero. The technological solutions to energy security are very much the same as those for Net Zero and despite a shift in political focus, our business remains fully aligned to society's goals, whether your motivations to reduce long-term prices, cut carbon emissions or increase energy independence, the answer is the same. So it's unsurprising that the global response to the Russian evasion of Ukraine has been a drive for more renewable to wean the world of gas. With the renewables ambitions rising so too is the requirement for electricity grids to connect them and for flexible solutions to balance variable output. And clearly, the IRA in the U.S. has led to more change there and across the rest of the world. This accelerated global green transition can only be positive for a company with SSE's capabilities, reputation and firm financial footing. This is a tailwind that will propel us for decade and hits every part of our group and we'll now turn to our business-by-business strategic update. SSEN Transmission is a network responding at pace to the renewables revolution occurring throughout Scotland. The business has been delivering its investment program under the T2 price control in line with plan. In addition to this, Shetland construction is going very well and as indicated on the chart at the top of the slide, projects at Skye and Argyll progressing through the uncertainty mechanism processes. Moreover, we were pleased with Ofgem's provisional approval in March of a subsea link to Orkney. We've had planning delays in Argyll, but recent positive signals from Ofgem on a final need case give us confidence that an acceptable solution will be achieved. Ofgem's ASTI framework is a game changer. It has confirmed the need for the eight projects in the lower section of the chart, which have been identified by the electricity system operator is required to meet 2030 offshore wind targets and it gives us visibility of a growing investment pipeline. Ofgem has provided much needed certainty to support timely and accelerated delivery, including early supply chain engagement and the chart on the side illustrates the significant ramp-up of spend required this decade in order to deliver the program of investment. While we welcome the impetus of the ASTI framework is giving to investment, deliverability is subject to risk, including planning issues like those we've seen recently in Argyll and supply chain constraints. With this in mind, SSEN Transmission is working with all stakeholders to ensure their views are heard and factored into decision making around this critical program. SSE now has increased visibility over an investment pipeline across the next five and 10 years. It is a decade that will see us invest significantly in a network that will help the whole of the U.K. to decarbonize, while mindful of the risks associated with complex infrastructure projects we now expect the transmission gross RAV will reach between GBP 8 million and GBP 9 billion by 2027 and exceed GBP 15 billion in 2032 and these targets are only going in one direction, with current system operated plans, enabling only 11 gigawatts of ScotWind's 28 gigawatt offshore wind ambition, a follow-up exercise is now underway which will set out how ScotWind's full ambition can be realized. Further reinforcement could be required to accommodate additional onshore wind capacity. The Scottish government are also consulting on its draft energy strategy and just transition plan, which includes proposals for an additional 8 to 12 gigawatts of onshore wind to be accommodated on the system by 2030. This all means transmission is a significant engine of growth and we're very well placed to fully realize its potential. Gregor has already mentioned the supportive distribution price control that we've agreed with Ofgem, but as with transmission, the business has significant scope for additional growth. Our baseline ED2 plan provides a strong starting point and Net Zero will be driven by homes and businesses with demand predicted to surge to accommodate the rising uptake of EVs, heat pumps, as well as continued growth in local generation and battery storage. Ofgem has been clear that DNO should make use of available uncertainty mechanisms and we'll be looking to the regulator to translate those positive signals into action to enable us to secure the anticipatory investment needed to strengthen the grid. So automatic volume drivers and reopeners there was a scope for up to GBP 700 million more of additional totex to ensure ongoing network resilience as Net Zero draws closer. Moreover, I was pleased to see the recent strategy and policy statement from government which proposes Ofgem consider the cost to consumers of delays to infrastructure delivery and significantly expedite the approval process for strategic upgrade. This is a very important step and we'll seek to test this new direction and how it can apply at a distribution level in the coming months. In terms of our forward strategy for distribution, this is set around three clear aims; further improving our performance for customers, growing the RAV for our shareholders and helping to deliver the future energy system that society requires. Operationally, the distribution executive team are making good progress with implementing a business wide transformation program aimed at securing further efficiencies as we deliver increased levels of capital investment and embedding performance improvements through digitization and process change. The RAV outlook is also strong, with a strategic focus on supporting decarbonization of homes and businesses and our latest expectations of low-carbon technology growth out to the end of the decade. We now expect the distribution RAV to reach between GBP 6 billion and GBP 7 billion by financial year '27 and in excess of GBP 9 billion by financial year '32. We also recognize our critical role in enabling smart and flexible networks. Distribution is at the forefront of delivering Net Zero at the local level and through our DSO responsibilities, we aim to deliver 5 gigawatts in flexible services over the five-year ED2 period, a tenfold increase on levels today. Our regulated Airtricity networks are high-quality engines of value creation and growth. There are also key enablers of growth in large scale renewables and flexible generation that Martin is now going to tell you more about.

Thanks, Alistair and good morning, everyone. The medium and long-term operating environment for SSE's current and future portfolio have never been more supportive. French nuclear availability and system response issues in Northwest Europe drove higher spark spreads in the year just gone and this alongside higher prices more broadly contributed to the group's strong financial performance. It showed that the ability of our fleet to respond to volatility and provide vital system services is extremely valuable. And forward markets suggest that higher power and carbon prices will persist over the medium term, which would clearly sustain higher generation profitability. For the purposes of the NZAP Plus however, we have assumed that the long-term baseload price for renewable output is closer to GBP 75 to GBP 85 per megawatt hour nominal. As time goes by and more intimate renewables come on to energy systems, volatility is likely to become a more regular fixture of the market and that means flexibility will continue to be highly valued. This is being reflected in government policy and it is noticeable the reports ranging from the Climate Change Committee to the International Energy Agency, all call for more of both renewables and flexible low-carbon thermal assets. While the latter are likely to run infrequently, they will be needed to balance the renewables-led system and to provide security of supply in the event of extreme weather patterns. This gives us confidence that our approach of investing in a balanced mix of new low-carbon technologies will create real long-term value. We now expect SSE Renewables to deliver enhanced earnings growth over the five years to financial year '27, growing adjusted operating profit by around 20% per annum and this is before taking account of any developer profits on project sell-downs. Part of this growth can be attributed to power prices remaining much higher than when we launched the original NZAP in November 2021, but the real drivers are the incoming 2.8 gigawatts of capacity we have under construction and our increasingly diverse pipeline of development options. By FY '27, we expect our flagship Seagreen, Viking and Dogger Bank projects will be joined by onshore wind, solar and battery projects in our home markets alongside the first onshore Southern European wind and solar projects from our new development platform. Correspondingly, as part of the NZAP Plus, we forecast a rapid build-out in SSE Renewables with more than 5 gigawatts net installed capacity growth in the five years to FY '27, taking capacity to more than 9 gigawatts with expected investments of around GBP 7 billion over the same period. Our renewables pipeline goes from strength-to-strength as we continue to develop domestic options, whilst working with our platform as well as local partners to do the same in international markets. The left-hand side of this slide shows our secured renewable pipeline when we first launched NZAP and on the right, our pipeline today, which is already at our NZAP target of 15 gigawatts and significantly more diverse than it was 18 months ago in terms of both technology and geography. Onshore, you'll see a slice of the pie chart belongs to hydro. [ 4S ] performance this year demonstrates the increased value that pump storage can bring as a tool for system balancing and that's why we believe Coire Glas time has now come. Its value in a system dominated by intermittent renewables is obvious and it can play a key role in enabling the U.K. government to reach its targets of a Net Zero power sector by 2035. Having recently committed over GBP 100 million to further exploration works to move us closer to FID, we are eagerly anticipating developments of a policy mechanism to provide revenue stabilization for long-duration electricity storage expected to be in place to enable investment decisions by the end of 2024. You can also see here that we have integrated the standalone solar and battery business that previously reported alongside SSE distributed energy into our onshore SSE Renewables portfolio. This adds just over 1 gigawatts of projects and it makes sense to have SSE Renewables developer expertise overseeing our efforts to build and operate solar and battery technologies at scale. Finally, we now have wind and solar projects coming through in Spain, France, Italy and Greece via our Southern European acquisition, which I'll expand on shortly. Meanwhile, offshore, our pipeline continues to both progress and grow. It is hard to see governments offshore wind targets for 2030 being met without the 4.1 gigawatts of capacity that Barrick Bank can provide and we submitted planning documents in December. We continue to target quality and value over quantity when we bid for new projects and last year when our ScotWind project, Ossian which has increased its potential capacity to 3.6 gigawatts following geophysical surveys, while Seagreen 1A has also received revised consent for increased capacity. In addition, the North Falls extension to Greater Gabbard is due to submit for planning consent next year and we are exploring options for a Phase IV at Dogger Bank subject to [ Crowdestate ] consent. Also at Dogger Bank, we are exploring the potential for green hydrogen production. We expect green hydrogen to be a key route to market for wind generation and have a hydrogen electrolyzer pilot in development at our Gordonbush project, which was recently shortlisted for funding by U.K. government as part of its Net Zero hydrogen fund. We are also seeing increased appetite for other routes to market with SSE Business Energy signing its first corporate PPAs on behalf of SSE Renewables this year. Internationally, we are making headway too. In the Netherlands, one of the leading offshore wind markets in Europe, we continue to explore tender options and are partnering with APG, who acts on behalf of the Netherlands' largest pension fund. We look forward to entering the next bidding round in early 2024. Further afield, SSE Pacifico gives us an entry into the Japanese auction processes and we have offices, partners and interest in geographies, including the U.S., where we continue to market -- monitor market entry options. As I mentioned earlier, our Southern European acquisition is starting to deliver on its promise with projects in France, Spain and Italy aiming to move towards construction. With a 50 strong development team and extensive experience of delivering projects, the platform has around 2.4 gigawatts of secured projects progressing alongside a long list of further prospects. In Ireland, whilst Arklow was not successful in the first offshore auction, it remains a well-progressed project and we are looking at options for future RS auctions as well as other routes to markets. While we are keen to get building at Arklow, it is right that we maintain our discipline when it comes to project returns. Looking beyond Arklow, the up to 1.2 gigawatt Caltex CRA is aiming for the second round of auctions in 2024 and we have further options for future auction when it comes to project returns. Looking beyond Arklow, the up to 1.2 gigawatt Caltex CRA is aiming for the second round of auctions in 2024 and we have further options for future auctions. We stand today with around 4 gigawatts of potential offshore wind projects in Irish waters. And as you can see here, a host of onshore projects and opportunities too. With our wind ambitions and complementary hydrogen, solar, battery and other options, we stand ready to grow our businesses across Ireland and Continental Europe. In a volatile world, flexibility is key and we are clearly in a transitional market period as the system leaves behind coal and older nuclear stations. There is also a time lag as government progresses new low-carbon flexible technologies which will take time to build. In the meantime, SSE's fleet is ready to bridge the gap. The supportive market conditions I described earlier mean that we expect to continue to earn a premium over the forward peak spark prices for the medium-term, including income earned from the balancing mechanism and ancillary services. And the need for this flexible generation is also very clearly demonstrated by the out turns of the recent U.K. and Irish capacity market auctions which have set record levels. Our own fleet has grown in the past year with over 1.5 gigawatts of additional capacity from the joint acquisition of Triton Power and the commissioning of KB2. However, the real price of the Triton acquisition will be its future low-carbon flexibility. Gregor has already talked about the contribution to earnings from gas storage. The criticality of these assets is a system balancer was highlighted this winter and we remain committed to working with policymakers on a role for our cabins in future hydrogen storage. Carbon capture and storage and hydrogen hold the key to the long-term decarbonization of industrial clusters, as well as the future provision of clean, flexible power. While the Hamburg will not be the first region taken forward in the cluster sequencing process, we believe that KB3 and Peterhead CCS in Scotland will both need to be built for Net Zero to be achieved whilst maintaining security of supply. We have every confidence that our projects will be needed, but supportive policy does need to accelerate. Our plans will also deliver a just transition as we repurpose our assets for the Net Zero world and Tarbert is a case in point. To meet Ireland's pressing flexible generation need and at the government's request, construction has now started on a temporary 150-megawatt emergency generation plant at Tarbert that will close by the end of 2028. Separately, last month, we also secured 10-year capacity contracts for two new low-carbon power stations at Tarbert and Platin, which will initially run on sustainable biofuels. And we are also looking at battery storage at the site as well as an up to 1 gigawatt offshore wind farm in the vicinity. Tarbert is just one example. SSE Thermal is developing other projects on existing sites, such as the Aldborough Pathfinder which looks to bring hydrogen production, storage and power generation together into a single ecosystem and was also shortlisted under the government's Net Zero hydrogen Fund. In summary, we have an enviable portfolio of assets and opportunities across the electricity value chain at a time when the world is looking to accelerate the clean energy transition and when the market is beginning to value flexibility. I'll now hand back to Alistair.

Thank you, Martin. We've just explained to you how SSE has a wealth of opportunities right across the Net Zero electricity value chain. Our business units create a group with a leading presence and a wealth of growth options. Each of these businesses can and will decarbonize guided by science-based goals that they are aligned to the energy sector's 1.5 degree C global warming trajectory. The SSE group of businesses continues to create increased investment optionality over the five years and beyond. This slide shows these investment beginning to come through in the comparison with our original NZAP. You can see on the left, the sheer scale of investment per annum anticipated and the ramp-up we expect as we enter the second half of the decade. On the right, a reminder that although as you would expect, our estimated supply chain costs have been impacted by inflation, a significant proportion of the step-up in our CapEx plans relates to new growth projects across networks, renewables and thermal. Under our new plan, we'll be investing GBP 18 billion or around GBP 10 million a day in the infrastructure needed for Net Zero and energy security compared to the GBP 7.5 million a day under previous plans, in line with how we have presented investments previously, the GBP 18 billion plan is net of the project financing and partnerships, which are essential to ensure diversity and appropriate leverage as we optimize investments and use of the balance sheet. But amidst the wealth of opportunities, we must remain highly disciplined in selecting those that we will take to financial close. Across the group, we have a robust governance framework that ensures the projects we pursue align with our strategy, our sustainable credentials and meet investor present expectations and deliver strong risk-adjusted returns. And these return expectations applied internationally as we continue to expand our renewables business. And on the top of the slide, you can see our returns targets, which have been adjusted today, renewables will remain broadly unchanged since November 2021 as we hold our long-term cost despite the turbulent times. Along the bottom, you can see the value SSE brings to investment as an experienced developer, builder and operator. The returns we achieve are based on the amount we invest in our business and are therefore more dependent upon the quality of the assets and our capabilities than the headline RAV or megawatts installed. Capital costs are low carbon generation projects have undoubtedly risen in the past year. And so too, of power prices, which Martin explained are likely to remain higher over the longer term. As we've set out today, we have a wealth of high-quality projects in our pipeline, which provides us the optionality to maintain financial discipline by only progressing the best projects. And this, along with more than 20 years' experience of adding value as set out on the page gives us the confidence that we can build on the strong returns we have visibility on for existing and in construction assets and achieve attractive returns on the next generation of assets as we look out to financial year '27. Financial returns will always be the critical driver of each individual investment. But when we bring these investments together and look at the five-year plan, we're also targeting a balance of merchant and regulated revenue producing strong earnings growth. From the chart on the left, you can see our expectation that as new renewables projects begin to produce high-quality earnings and the flexibility of the thermal fleet continues to be more valuable than it has been historically. This will outweigh earnings in networks despite the significant capital being deployed. However, the RAV continues to grow on a risk-adjusted basis, networks can be expected to perform well and they counterbalance the group's market-based businesses. All in all, this translates into an adjusted EPS CAGR over the five years to financial year '27 of 13% to 16%, far higher than earnings growth expected under the original NZAP and still representing positive medium-term growth from the strong set of financial year '23 results we've presented today. This financial year '27 target is underpinned by the strong asset growth across the group outlined today, but also the relatively reasonable GBP 85 a megawatt hour, nominal baseload power price covered earlier. And as an assumption that we do not make developer profits on project sell-downs in financial year '27, alongside the other assumptions you can see outlined on the slide. In summary, SSE is a company producing high-quality, diverse and robust earnings. Back in November 2021, we highlighted a well-chosen partnering is a key element of SSE's financial strategy, allowing the group to balance earnings mix, whilst unlocking increased investment for growth. And earlier this year, we successfully completed the 25% stake sale of SSE and transmission to Ontario Teachers, a supportive long-term partner who we have worked with successfully over the past 18 years through our investment in SGN. And with the transmission business remaining core to our strategic direction, the GBP 1.5 billion of proceeds from that sale will support the significant growth expected. SSE consistently reviews the group's strategic direction, challenging the optimum pathway to long-term growth and value creation. Whilst the original NZAP also included a minority stake sale in SSEN Distribution, a significantly strengthened balance sheet and an investment plan that remains well balanced are the main factors contributing to the Board's assessment that continuing to hold 100% of SSEN Distribution is the right strategy at this time. This is now reflected in SSE's fully funded NZAP Plus plan. Distribution is a high-quality core business for the group and with the support of RIIO-ED2 financial determination and the potential for further investment, we expect it will make a significant contribution to delivering sustainable long-term value. We were clear in our initial NZAP announcement in November 2021, that while the dividend policy will continue to reward shareholders, it was very much growth enabling. This rebase to 60 pence in 2024 was to support our ambitions to invest more in the assets that will be needed to reach Net Zero. And it was accompanied with a commitment to increase that dividend by at least 5% per year to 2026. So in line with the NZAP Plus, we are now extending that dividend plan out to 2027 and reflecting our confidence in the earnings growth delivered by that plan. We're also setting out a clearer commitment to grow the 60 pence rebase dividend by 5% to 10% per annum to 2027, whilst retaining the 25% cap on scrip dividends. It is the right choice for these times and appropriately balances rewarding shareholders, while maintaining our clear focus on growth. As you can see from our NZAP Plus for the five years, it is a marked increase as we pursue disciplined growth, but just as importantly it continues to be fully funded. The sources and uses chart shows the updates to our funding plan. There is over GBP 6 billion of incremental operational cash flow compared to the original NZAP and after GBP 2 billion of additional interest and tax payment, we're reinvesting the remainder and more into further low-carbon infrastructure investment. The plan is balanced, continues to be aligned with a strong investment grade credit rating, while also providing sustainable earnings growth and alignment with a 1.5-degree pathway. It strikes to right balance between financial strength and financial discipline, whilst maximizing our increasing opportunities for investment. Before taking your questions, I'll summarize the key messages from today's presentation. Today has been a story of strong results in the face of volatility and an upweighted NZAP Plus that enables us to maximize our value-creating potential. But there is always more to do as we build a cleaner, secure, affordable energy system. We're taking the right action right now. We're leaning more into networks and flexibility. 18 months from now, we might be leaning more into hydrogen. But thanks to our balanced business model and strength, we have the optionality to make different choices in the future, whilst retaining our core focus on low carbon electricity infrastructure. Our plan promises even more balanced than the original NZAP with more geographical and technological diversity but also reflects a shift in the capital mix with slightly higher CapEx percentages going into regulated networks. Back in November 2021, we anticipated spending around GBP 25 billion in the U.K. and Ireland over the coming decade, 18 months on our site to raised higher and we see ourselves investing around GBP 40 billion in the critical infrastructure needed for Net Zero and energy security. Quite simply, we are one of the FTSE's largest capital investors investing more than we earn in profits. So in conclusion, a year of delivery and a strong balance sheet, combined with enviable ESG credentials and a balanced business mix underpinned with our upgraded NZAP Plus plans. They mean more value for shareholders and society, more financial strength, more investment, more jobs and more growth to come over the next decade. The NZAP Plus is still a floor, not a ceiling to our ambitions and we are just getting started. Thank you for your time this morning and we'll now take your questions.

We are now going to proceed with our questions on the phone. The first -- the first question comes from the line of Ajay Patel from Goldman Sachs.

I guess I have two questions, please. Firstly, when you look at the plan and the leverage at the end, can compare with your debt capacity, there's clearly an opportunity to utilize capital for further investment. And I just wanted to understand what the priority is here. Is it more to build pipeline on the renewable side? Is it internationally, domestically? Just a little bit of more detail there would be really helpful. And then secondly, more just understand the mix within renewables. If we deliver the 9 gigawatts for 2027, it looks like you'll need a decent amount of step-up in onshore wind. And I just wondered with that point that you made about diversifying route to market, would more of that onshore capacity be merchants or is there any sense of split that you could give us for 2027 so we have an understanding of the risk profile of those assets?

Yes, both really good questions. I'll let Martin deal with some of the mix because he'll definitely be thinking about that with his teams. But my overall point was, let's build optionality and let's see what comes. Some things get accelerated, some things don't. I think in terms of the balance sheet, yes, the business performance and Gregor's management of that have put us in a very strong position. So as you note, we remain far stronger in terms of our balance sheet than we originally envisaged, and we've certainly got capacity there to do things. We've obviously got a significant uprating of the plan today. That's about a 40% uprating in core capital that we see investing, and that's very strong. Going forward, though, we maintain flexibility. We can look at further acquisitions if they make sense, and we can look at further ambitious expansion on a core basis. We have said this is essentially a floor to what we want to do. It's not a ceiling, and that's important. But just pay testament to the management of what we've done, the growth that we've generated that gives us those options and that flexibility going forward. I would, however, be remiss in saying, but I'll give Gregor a chance just in case he wants [ to note though ] that we will maintain discipline. And I think we've clearly shown that over the last few months. Is there anything else on balance sheet, Gregor?

No. Look, Ajay, I think, clearly, we've got more capacity as we go out, but in the second half of the plan, you can see the kind of growth opportunity increase. So we just have to balance that up. And as I've always said, SSE is about optionality. We look at evolving and, as opportunities arise, we take them forward. And the 2 acquisitions that we made in '22-'23 weren't in our plans a year before, so we have to evolve and that's why a strong balance sheet is really important to give us flexibility.

Just on the broader perspective. Obviously, a year on from -- a 1.5 year on from the NZAP, a lot of things have happened in the world, but most jurisdictions have increased their renewable ambitions, and particularly in the EU, some of the ambitions of individual countries that we're now working on developing in are pretty aspirational, pretty high, and we think that would create possibilities. To answer directly to your question about where the additional 2 is coming from through to 2027, obviously, the SGRE platform acquisition gives us optionality in Southern Europe and we'd hope to have 500 megawatts operational by 2026 and then obviously more to follow. And we've mentioned the solar and battery move to renewables and a 1 GW-plus pipeline there, which we think has really, really strong possibilities. And we would expect other options to potentially come up as different national states, including our home markets, mature their overall renewable aspirations.

Just to follow up there. Is there any chance you could give us what the merchant volumes would be expected in '27?

We can take that away and have a look at it. We're certainly looking internally generally our plan, so that if you go back a year, we'd be increasing the nonmerchant volumes looking forward, and I think we have headroom to look at more merchant volumes and/or to look at corporate PPAs that might not be 15 or 20 years, but might be a little bit shorter. So I think that's generally there, but we can probably either come back or maybe Martin can talk...

Yes, just a general point just on the corporate PPA market. We talked 6 months ago about how we were seeing volumes and interest increase. We've continued to see that. Perhaps market volatility perhaps created a bit of a stall in that process maybe last winter, but definitely interest is increasing and picking up. We also referenced in our presentation that our customers division had started signing quasi-corporate PPAs as well. So we're pretty confident that as an expanding route to market for renewables going forward.

We are now going to proceed with our next question. And the questions come from the line of Harry Wyburd from Exane BNP Paribas.

Two for me as well, please. So, firstly, just on the Thermal business and the sustainability of profits there. So I'm just looking at Slide 21 and you gave very helpful guidance on the bottom right suggesting you'd be earning north of GBP 400 million of EBIT from 2025 and beyond. Just wanted to check, is that right? I'm interested in how you budget for that because that's nearly quadruple I think the historical run rate. So what gives you the confidence to assume that that's going to be structurally higher and how did you arrive at your GBP 400 million figure for that part of the business. And then just on the dividend, just given you lowered your net debt target, you're investing more, you're going for a higher dividend growth rate, why did you opt to not just increase the GBP 0.60 base, which I guess you could have done given your current balance sheet position, so just interested in the dynamics there. Thank you.

We'll let Martin go first on Thermal and then Gregor and I'll fight it out for the dividend, given how committed we've been to it over the years.

Yes. Harry, so first is GBP 500 million and we said on the slide. There's lots of different remuneration strands on thermal. Firstly, the capacity mechanism, which has obviously been clearing higher and actually last year created record prices for [ T minus 4 ], so we're obviously getting earnings from that. The intrinsic spark spreads have clearly picked up on some of the issues we discussed during the presentation in terms of a system relying on perhaps aging nuclear potentially vulnerable imports, and also just demand in renewable patterns which are a bit more uncertain. So we're seeing intrinsic spark spreads a bit higher than we would have seen them 6 months ago down the curve. And then on top of that, very clearly, regardless of fuel and gas supply issues, independently the electricity market is experiencing its own level of volatility that just comes from the inevitability of an [ intermittent-led ] system and how that plays out on a daily basis, and we have invested historically significant amounts of money in our thermal fleet to ensure that it can respond very reliability to those volatility signals. And we expect some of that intraday volatility to continue regardless of the fuel price context. And that option value or extrinsic value goes back to our Thermal P&L and our calculations for the longer or the medium-term outlook for that business.

Okay. Well, I think given this would be the last time that Gregor announces a significant change in dividend policy or even a slight tweak to it, should we say, I think I should give him the first word.

Yes, look, dividend's clearly been a key part of our proposition over the last 20 years, but we're now in a huge growth kind of time with the CapEx. And we're announcing another average of GBP 1.1 billion a year of CapEx growth. This shows you that we have confidence in the balance sheet and the strength of the business. But when we go back 18 months ago when we did NZAP in November, clearly, the outlook on profitability wasn't as good as it was as today, and therefore, we felt that it was right to reflect on that and give shareholders a bit more guidance on the potential for a dividend growth. I think it recognizes the strength of the earnings growth of the business and the strength of balance sheet, so that was the basis behind it.

And going forward, we as a management team, recognize that dividends do reward shareholders for their capital and their patients with us, and therefore, we're very committed to paying them. With stronger growth in earnings, we wanted to signal stronger growth in dividends to people. I think we've done that, but also, we know shareholders were very supportive of the plans that we had in the original NZAP and the updated version, and obviously we've been able to add to that today. If we can deploy capital effectively and create more value, then I think shareholders will support that. And that's why we've maintained the original dividend, which is indicated greater growth to reflect the greater earnings growth that we think we'll be getting.

We are now going to proceed with our next question. And the questions come from the line of Deepa Venkateswaran from Bernstein.

Congratulations on today's results and a good update for the plan. So I had 3 questions. The first 1 was on renewable returns. I was just comparing it to some of the numbers you've laid out previously. So on onshore and solar, the spread over WACC seems to have compressed from 100 to 400 basis points to 50 to 300 basis points. Could you explain what's driving that? Is that the mix shift more towards batteries and solar driving this down or anything else? And how much has your WACC gone up so we can compare that? And secondly, you've also said that the returns for offshore on the other hand are slightly better from greater than 11% versus 10%, so again, just what's driving that change in return? So that's my first question. And the second question is on the Irish auction, which the price seemed quite reasonably high compared to some of the other auctions at EUR86. So if you could just comment on why you were not successful and how much higher you needed the price to be? So if you could just comment on why you were not successful and how much higher you needed the price to be? And last, could I just confirm on the business plan with the 85 per megawatt hour assumption, are you assuming at that point around 12 terawatt hours of merchant exposure, just so we can run up the sensitivities in case power prices end up being different?

Okay. So we'll split that. I'll have a first go at the return. So the 50 to 300 is compressed slightly. I think there's competition in the market. Costs of financing has gone up, things of that nature. So you've got that. Yes, we have more solar in there. So solar is likely, given it's generally less risky to put it up and to operate it to be at the lower end of that, so some slight compression there. Returns on offshore. that just reflects the risks that I think are out there and that people have seen. I don't think there's too many people building offshore wind. It's absolutely bang on time at the moment and without any issues. These are massive capital projects getting bigger and bigger with leading-edge technologies, it's getting bigger and bigger, with leading edge technologies, it's getting bigger, and so we've just reflected there the fact that we think returns need to be higher. So returns on existing assets are roughly in line with what we've said previously. But going forward, we definitely see that we need something more out of that. Martin, you might want to comment on Ireland.

Yes. So the -- Irish auction include about 3 gigawatts. And as you say, Deepa, we were unsuccessful in that. We clearly around, I think, is EUR86 as an average price. And the simple answer to this -- there's 2 simple answers to your question. Firstly, the Arklow projects would have been a couple years away from securing supply chain, and therefore, you'd expect us to take a pretty disciplined view about our anticipated CapEx on that, so maybe that meant we were a little bit higher. And secondly, just in terms of general Irish policy, there is a clear policy intent from the Irish government to deploy significant amounts of offshore winds. So there are other possibilities for Arco going forward, not least 5 gigawatts by 2030 and 20 gigawatts by 2040 requires a big offshore wind build, and we were mindful of that as well.

On the volumes and margin, maybe Gregor, but I think we'll be over [ 10 terawatt hours] unhedged '26-'27.

[ Just a bit more hedging. ]

Okay, unhedged but overall the GBP 85 is for the achieved price, right? So the overall is that closer to 12%?

That's the baseload price.

So baseload price in line with that graph goes from GBP 75 to GBP 85 and you can see it on the years there, and that is the baseload price and then the achieved price will be our own assumptions about whatever you get for wind-capture levels coming out of the baseload price.

Okay, so your actual assumption might be lower than GBP 85, right?

Well, it'll just be different based on whatever our wind-capture view is.

We are now going to proceed with our next question. And it comes from the line of Mark Freshney from Credit Suisse.

Thanks for taking my questions. So can I ask on the GBP 2 billion supply chain increase, how much of that pertains to in-flight projects, thinking Dogger Bank, et cetera, that cannot pass it through unlike networks? Secondly, can you confirm whether as part of the aborted electricity distribution grid sale you had received any offers and whether they had informed your decision not to sell? And thirdly, just on your plan, it's very admirable and you have a lot of ambition as do the U.K. government. But it's clear that the U.K. government's ability to put through policy sometimes doesn't meet that ambition. So I guess my question is, if you can't get an FID on Berwick, Coire Glas by the end of next year and CCUS over the line, what are the options for capital deployment and actually spending GBP 18 billion on decarbonization?

That's great. On electricity distribution, just briefly, as you can see, we've got a very strong plan there. Net debt to EBITDA is down to 2.7. It's going to be much lower. We decided now wasn't the time to sell that business. We don't need to sell it right now, and we can just get on with the transformation programs delivering ED2 and getting the additional spends that we expect to see there in a similar way to ASTI which Ofgem will be pushing forward with. I think we'll see something similar within distribution. So that's it. We don't comment particularly on processes. I'm not going to comment on whether anybody gave us a bid or didn't give us a bid, but it just wasn't the right thing for us to do. It's a highly valuable asset and we obviously had a highly successful sale of the other asset before, which helped bolster our financial strength. At some point, we may come back and decide to do that [indiscernible] later on in the decade. Gregor?

So, Mark, your question, the GBP 2 billion in-flight supply chain, roughly half is in [ networks ] and actually about GBP 0.5 billion in each of distribution and transmission. The GBP 1 billion is in renewables, but our renewables projects, we've got about 30-plus projects running, some in construction, some pre-FID, and we will see some supply pressures coming through there. On the likes of Dogger Bank and Seagreen, we'll see a bit of extra cost coming through, but because we went into FID before a lot of the price pressures started coming through, it won't be significant. The other thing I'd say is that those contracts or the projects haven't hedged a significant amount of inflation like other developers have had, and therefore, through the CFD pricing, we will benefit from higher inflation in our revenues, which will offset -- more than offset any cost pressures that we see.

Just on ambition, I'm sure both Martin and I've got points. I think my overriding point is this government and opposition parties are pretty united in their desire to hit some ambitious targets for the U.K. by 2030, they now need to get on with the delivery phase of that. For things like the CCUS, it's clear from the Climate Change Committee, we need another 7 or 8 plants announced. We need probably 4 to 6 of those announced later on this year in the autumn, so we're fully expecting that to happen. The U.K. is going to benefit enormously from assets like Coire Glas going into financial close and going into startup build next year. There are various pathways that we have to get these things to market. Berwick Bank, which you also mentioned, U.K. will miss its 50 gigawatt target, and may even struggle to get to its 40 gigawatt previous target with now Berwick Bank being built. So these are things that people have to find a way through in essence. We're doing all we can to go through the consultation processes and to deliver them. And in the event that some of these assets are delayed slightly, and we end up spending the money fractionally later, we're very fortunate that we have an enormous number of assets currently in build and already sitting there. Any delay in this will probably mean that those assets earn more money ultimately and I think just give people the impetus they need to make sure that we invest, and we bring down the cost for consumers, which is what we're very focused on.

I agree with the point about, firstly, government understanding the need to progress some of these technologies to achieve net zero and indeed the political consensus that exists. Just on a bit of a more micro detail, clearly the government is consulting on how to get long duration energy storage away, which would go to Coire Glas, clearly there are quite big programs on carbon capture and how you get remuneration for CCS and also how do you start hydrogen deployments. And so there are some quite big policy ambitions which on the ground the government is doing the work on and has to unlock some of these technologies. And just also got to say that successive U.K. governments have been pretty successful in achieving quite big technology deployment that perhaps other countries are slightly behind on right now, so a slightly trusted process and the policy.

We are now going to proceed with our next question. And the questions come from the line of Rob Pulleyn from Morgan Stanley.