16 NOVEMBER 2022
NAVIGATING VOLATILITY TO DELIVER CRITICAL ENERGY INFRASTRUCTURE AND A STRONG PERFORMANCE
· Investing at record levels, far greater than profits, in projects that will enhance energy security while creating green jobs and supporting local communities.
· Reporting adjusted earnings per share of 41.8p, in line with pre-close guidance, reflecting strength of balanced, integrated business model and importance of assets for system security.
· Making strategic progress on SSE’s £12.5bn Net Zero Acceleration Programme, which is the optimal pathway for SSE to deliver long term growth as the UK’s clean energy champion.
· Strong balance sheet with prudent use of debt markets, meaning minimal long-term debt refinancing expected until FY25 and a strong liquidity position for cash collateral requirements.
· In the context of the prevailing volatile, complex and challenging market conditions, SSE’s guidance of adjusted earnings per share for 2022/23 of at least 120p remains unchanged. Also continue to expect 2022/23 capital investment (including acquisitions) in excess of £2.5bn and leverage well below the target 4.5x net debt to EBITDA ratio.
· Total Recordable Injury Rate reduced to 0.15 from 0.16 in the same period last year.
FINANCIAL SUMMARY (continuing operations)
| Adjusted | Reported | ||||||
| Sept 2022 | Sept 2021 | % mvmt | Sept 2022 | Sept 2021 | % mvmt | ||
| Operating profit / (loss) (£m) | 716.0 | 376.8 | +90% | (635.1) | 1,904.4 | -133% | |
| Profit / (loss) before tax (£m) | 559.4 | 174.2 | +221% | (511.0) | 1,686.1 | -130% | |
| Earnings / (loss) per share (p) | 41.8 | 10.5 | +298% | (39.7) | 103.6 | -138% | |
| Investment, capital and acquisitions (£m) | 1,743.2 | 1,042.8 | +67% | 1,432.6 | 1,056.6 | +36% | |
| Net Debt and Hybrid Capital (£bn) | (10.0) | (9.6) | +4% | (9.1) | (8.9) | +2% | |
Alistair Phillips-Davies , Chief Executive, said:
“One year on and despite unprecedented volatility in the operating environment, our Net Zero Acceleration Programme has never been more relevant to society. We are investing around £12.5bn in the five years to March 2026, with further opportunities that could take the total to over £25bn this decade in the UK and Ireland alone. This direct investment primarily in offshore wind, UK electricity networks and flexible thermal will create the technologies to support long-term energy security.
“Over the past six months we have been delivering on our domestic investment programme at pace whilst increasing our pipeline diversity, through exporting our renewables expertise into selected markets overseas where net zero ambitions have also increased. This has been complemented by our Triton acquisition and organic growth potential in networks as they keep pace with increasingly ambitious government policy.
“The strength and optionality of our resilient mix of market-based and regulated businesses have shone through in this period, with recent trading conditions highlighting the true value to society of a portfolio that balances intermittent renewables with flexible generation when the system needs it most. Our business model and strategy are delivering for our stakeholders today, whilst creating future long-term societal value.”
STRATEGIC HIGHLIGHTS
· Continuing execution of Net Zero Acceleration Programme , with record levels of capex far greater than profits, across a range of projects and technologies.
· First power achieved at 1,075MW Seagreen offshore wind project with commercial operations now expected in summer 2023, and significant progress on Dogger Bank and Viking projects which are progressing to plan.
· Further RAV growth in Transmission, with cable installation under way, connecting Shetland islands to the mainland ahead of expected energisation in FY24.
· Diversified and enhanced pipeline through acquisition of Southern European onshore wind development platform, adding 2.2GW (secured) and up to 3GW (prospective) onshore wind and solar hybridisation projects. Acquisition provides a platform for building the onshore pipeline over the course of this decade.
· Completion of 1.3GW Triton Power acquisition , in a 50:50 Joint Venture with Equinor, strengthens SSE’s position in hydrogen and carbon capture technologies to support long-term decarbonisation of the UK power system whilst contributing to security of supply and grid stability.
· Energy policy environment continues to evolve with short-term interventions counterbalanced by accelerated longer-term ambition in key markets.
FINANCIAL HIGHLIGHTS
· Adjusted earnings per share of 41.8p, in line with pre-close guidance .
· Reported loss per share of (39.7)p, reflecting a number of exceptional items and certain re-measurements, most notably the negative impact from £(1.5)bn of fair value remeasurements, principally arising on forward commodity contracts.
· Profitability in Renewables negatively affected by pace of project delivery and unfavourable weather , exacerbated by the associated requirement to buy back hedges in a higher-price environment.
· Strong performance in Thermal Energy , with thermal generation and gas storage providing vital flexibility and security of supply to the energy system in a time of crisis.
· Raised £1.7bn in Hybrid Capital, Eurobonds and Private Placements in the period which, together with expected disposal proceeds, mean the Group expects to have minimal long-term debt refinancing requirements until FY25.
· Ample liquidity within SSE’s two pension schemes, with liability-driven investment strategies unaffected by October gilt rates spike and no additional company support required
· Adjusted investment, capital and acquisition expenditure of £1.7bn
· Adjusted net debt and hybrid capital at £10.0bn, in line with pre-close guidance .
INTERIM DIVIDEND IN LINE WITH DIVIDEND PLAN TO 2026
· Interim dividend of 29.0p per share in line with policy (assuming FY23 average RPI of 12.7%).
· Continue to target RPI increase for FY23 followed by rebase to 60p in FY24, with attractive annual growth of at least 5% to FY26 underpinned by strong earnings growth forecasts.
· Scrip uptake capped at 25% on full-year dividends to FY26 as previously announced.
FINANCIAL OUTLOOK FOR 2022/23 AND BEYOND
· Continue to expect adjusted earnings per share for the full year of at least 120p.
· Remain on course to report record FY23 capex in excess of £2.5bn (including acquisitions).
· Expect FY23 leverage to be lower than the target 4.5x net debt/EBITDA ratio.
· Continue to expect adjusted EPS to grow at a CAGR of between 7-10% over the five years to March 2026, from an FY21 baseline of 87.5p.
KEY PERFORMANCE INDICATORS
| Key Financial Indicators | Adjusted | Reported | |||
| (continuing operations) | Sept 2022 | Sept 2021 | Sept 2022 | Sept 2021 | |
| Operating profit / (loss) by business £m | |||||
| – SSEN Transmission | 208.4 | 181.7 | 208.4 | 181.7 | |
| – SSEN Distribution | 174.6 | 153.3 | 174.6 | 153.3 | |
| – SSE Renewables | 22.5 | 25.4 | (29.3) | (33.6) | |
| – SSE Thermal & Gas Storage | 248.2 | 64.8 | 887.5 | 479.5 | |
| – Other businesses | 62.3 | (48.4) | (1,876.3) | 1,123.5 | |
| Operating profit / (loss) £m | 716.0 | 376.8 | (635.1) | 1,904.4 | |
| EBITDA £m | 1,109.3 | 700.2 | (224.7) | 2,247.2 | |
| Profit / (loss) before tax £m | 559.4 | 174.2 | (511.0) | 1,686.1 | |
| Earnings / (loss) per share (EPS) pence | 41.8 | 10.5 | (39.7) | 103.6 | |
| Interim dividend per share (DPS) pence | 29.0 | 25.5 | |||
| Investment and capital expenditure £m | |||||
| – SSEN Transmission | 270.9 | 291.0 | 270.9 | 291.0 | |
| – SSEN Distribution | 175.8 | 171.3 | 222.0 | 201.4 | |
| – SSE Renewables | 426.3 | 417.5 | 635.4 | 116.0 | |
| – SSE Thermal & Gas Storage | 95.7 | 94.1 | 37.8 | 58.1 | |
| – Other businesses | 134.5 | 68.9 | 266.5 | 390.1 | |
| Acquisition consideration £m | 640.0 | – | – | – | |
| Investment, capital and acquisitions £m | 1,743.2 | 1,042.8 | 1,432.6 | 1,056.6 | |
| Net debt and hybrid capital £m | 9,988.6 | 9,611.4 | 9,076.4 | 8,877.7 | |
| Operational Key Performance Indicators | Sept 2022 | Sept 2021 |
| Thermal generation – GWh1 | 9,158 | 7,812 |
| Renewable generation – GWh (inc. pumped storage and constrained off) | 3,725 | 2,853 |
| Other generation – GWh2 | 38 | 50 |
| Total generation output – all plant – GWh | 12,921 | 10,715 |
| SSEN Transmission RAV – £m | 4,590 | 3,875 |
| SSEN Distribution RAV – £m | 4,525 | 3,862 |
| SSE Total Electricity Networks RAV – £m | 9,115 | 7,737 |
| Business Energy Electricity Sold – GWh | 5,806 | 6,161 |
| Business Energy Gas Sold – mtherms | 65 | 73 |
| Airtricity Electricity Sold – GWh | 2,693 | 2,485 |
| Airtricity Gas Sold – mtherms | 69 | 66 |
Notes: 1HY23 excludes 651GWh of pre-commissioning output from Keadby 2. 2Other generation comprises SSE’s small biomass capability which is managed by SSE Distributed Energy and which generated 30GWh in HY23; and 37GWh HY22 in addition to 8GWh in HY23 and 13GWh in HY22 generated by other SSE Distributed Energy assets.
| ESG Key Performance Indicators | Sept 2022 | March 2022 | Sept 2021 |
| Carbon emissions (scopes 1&2) MtCO2e | – | 6.24 | – |
| Scope 1 GHG intensity gCO2e/kWh | 271 | 259 | 292 |
| Total water consumed (million cubic meters) | – | 0.8 | – |
| Total recordable injury rate per 100,000 hours worked | 0.15 | 0.17 | 0.16 |
| Total economic contribution – UK/Ireland (£bn/€m)1 | – | 5.8/438 | – |
| Jobs supported – UK/Ireland (headcount)2 | – | 45,290/1,840 | – |
| Total taxes paid UK/Ireland (£m/€m) | – | 335.3/46.4 | – |
| Employee retention/turnover rate (%)3 | – | 90.5/9.5 | |
| Employee engagement index (%)4 | 84 | 82 | 82 |
| Average board tenure – years5 | 3.9 | 3.8 | 3.3 |
| Female board members (%) | 46 | 50 | 50 |
| Independent board members (%)6 | 75 | 73 | 73 |
| Total number of board members | 13 | 12 | 12 |
Notes: 1 Direct, indirect and induced Gross Value Added, from PwC analysis. 2 Direct, indirect and induced jobs supported, PwC analysis. 3 Includes voluntary and involuntary turnover, excludes end of fixed term contracts and internal transfers. 4 Results from SSE’s annual employee engagement survey. 5 Non-Executive directors including non-Executive Chair. 6 Excludes non-Executive Chair.
FURTHER INFORMATION
| Investor Timetable | ||
| Interim ex-dividend date | 12 January 2023 | |
| Record date | 13 January 2023 | |
| Scrip reference pricing days | 12-18 January 2023 | |
| Scrip reference price confirmed and released via RNS | 19 January 2023 | |
| Q3 Trading Statement | 7 February 2023 | |
| Final date for receipt of scrip elections | 10 February 2023 | |
| Interim dividend payment date | 9 March 2023 | |
| Notification of Closed Period | by 31 March 2023 | |
| Preliminary results for the year ended 31 March 2023 | 24 May 2023 | |
| AGM and Q1 Trading Statement | 20 July 2023 | |
| Contact Details | ||
| Institutional investors and analysts | ir@sse.com | + 44 (0)345 0760 530 |
| Shareholder services | SSE@linkgroup.co.uk | + 44 (0)345 143 4005 |
| Media, Sam Peacock, Glenn Barber | media@sse.com | + 44 (0)345 0760 530 |
| MHP Communications, Oliver Hughes | oliver.hughes@mhpc.com | + 44 (0)7885 224 532 |
| MHP Communications, Simon Hockridge | simon.hockridge@mhpc.com | + 44 (0)7709 496 125 |
Management presentation webcast and teleconference
SSE will present its interim results for the six months to 30 September 2022 on Wednesday 16 November at 08:30am GMT.
You can join the webcast by visiting www.sse.com and following the links on either the homepage or investor pages; or directly using:
https://edge.media-server.com/mmc/p/ui6sj7uu
This will also be available as a teleconference, for which participants can register to receive a unique pin code and conference call number using:
https://register.vevent.com/register/BId3fb30052edf496899a18ed65f1c18ff
Both facilities will be available to replay.
Online Information
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