SSE PLC

INTERIM RESULTS FOR THE SIX MONTHS TO SEPTEMBER 2021

17 NOVEMBER 2021

HIGHLIGHTS – PROGRESS AND DELIVERY

Strategy of the group remains clear , with the separate standalone announcement today of 'Net Zero Acceleration Programme' to accelerate clean growth, lead the energy transition and maximise value for all stakeholders

Plans include enhanced, fully funded £12.5bn strategic capital investment plans to 2026 alongside ambitious 2031 targets, aligned with net zero and 1.5 degrees 

The fully funded plan represents £1bn of additional capex investment per year, over 2.5 times more capex allocated to Renewables and – through a proposed minority interest disposal of Transmission and Distribution – optimising capital allocation between regulated and unregulated businesses.

Optimal pathway for UK's clean energy champion positions SSE to enable delivery of over 25% of UK's 40GW offshore wind target and over 20% of UK electricity networks investment, deploy flexibility solutions and export renewables capabilities overseas

Growth-enabling dividend plan paying at least £3.50 per share across the five years, comprising a rebase to 60p in 23/24, with attractive annual growth of at least 5% to March 2026.

Integral to the accelerated investment plan is the announcement of renewed 2030 greenhouse gas emission targets, aligned with a science based 1.5° Celsius pathway for the power sector.

In line with the Group's net zero-focused strategy, in the period since reporting Full-year Results in May 2021, SSE has:

• Announced its entry into the Japanese offshore wind market through a joint ownership company with Pacifico Energy, including the 80% acquisition of a 10GW development platform.
• Amalgamated Berwick Bank and Marr Bank offshore wind farms, into one single wind farm with a potential capacity of up to 4.1GW. Berwick Bank wind farm would more than double the size of current offshore wind either in construction or currently operational in Scotland.
• Continued to make good progress on the construction of its offshore wind projects, Seagreen and Dogger Bank, as well as the Viking onshore wind farm on Shetland.
• Reached an agreement to sell down a 10% stake in Dogger Bank C to Eni for an equity consideration of £70m.
• Submitted a pre-qualification application to the Bureau of Ocean Energy Management (BOEM) to participate in the New York Bight Auction in the US.
• Submitted a bid for the Thor offshore wind tender in Denmark
• Submitted an Initial Needs Case under the RIIO-T2 Uncertainty Mechanism for a proposed £400m replacement transmission line between Fort Augustus and Skye and are finalising the submission for upgrading the Argyll transmission network to 275kV operation.
• Published and engaged with stakeholders on a comprehensive and ambitious RIIO-ED2 business plan, ahead of final submission to Ofgem in December
• Used its Principal Partnership of COP26 to advance the case for decarbonisation of the energy sector to go further and faster to align with a 1.5C pathway.

Total Recordable Injuries during the year was 30 (Total Recordable Injury Rate of 0.16), compared to 24 (0.19) in the same period last year.¹

¹ 2020/21 comparator restated to exclude SSE Contracting & Rail and Neos Networks (formerly SSE Telecoms) to reflect current business composition.

* Unless otherwise started, excludes results from discontinuing operations: Scotia Gas Networks and Gas Production assets which were held for sale at 30 September 2021.

FINANCIAL SUMMARY FOR THE SIX MONTHS TO SEPTEMBER 2021

• Adjusted EPS up 44% to 10.5p, just above SSE's guided range of between 7.5p and 10p and reflecting improved performance across a number of businesses in the second half of September.
• Reported EPS up 65% to 103.6p, mainly due to mark-to-market revaluation gains on operating derivatives of c£1.2bn in the period, a result of recent market volatility.
• As previously announced, Renewables profitability in the first half was adversely impacted by exceptionally unfavourable weather conditions (25% or 1.1TWh below the comparative period), and the associated requirement to buy back hedges in volatile markets.
• This was more than offset by higher volumes and revenue allowances in regulated networks, and a strong performance from non-core businesses, notably gas storage
• Adjusted investment and capital expenditure up 140% to £1,042.8m reflecting the strong progression of the Group's capital investment strategy following coronavirus, and the impact from one-off project finance development expenditure refunds in the prior period.
• Adjusted net debt and hybrid capital at £9.6bn, reflecting increased investment and capital expenditure.
• Intention to recommend an interim dividend of 25.5p per share – in line with five year dividend plan to 2023 – for payment on 10 March 2022,   reflecting an assumed average annual RPI rate of 5%.  As announced in the accompanying Strategy Update, the scrip dividend will be capped at 25% each financial year.

FINANCIAL OUTLOOK FOR 2021/22 AND BEYOND

• SSE is focused on long-term, sustainable financial performance, and remains confident about delivery of solid financial performance for the full year.
• The group has enjoyed a strong start to the second half of the year, with renewables volumes above plan in October, and thermal and hydro plant in particular achieving strong prices in the market.
• Subject to normal weather, plant availability and similar levels of commodity prices over the coming winter months, SSE currently expects to report full year adjusted earnings per share at a level which is at least in line with consensus of analysts' forecasts of 83p (Bloomberg 15 November 2021). SSE intends to provide further guidance later in the financial year.
• The Group remains committed to its five-year dividend plan to March 2023 and expects to recommend a full-year dividend of 81 pence plus RPI inflation in line with that plan.
• Capital expenditure and investment is now expected to total in excess of £2bn in 2021/22 (net of project finance development expenditure refunds).
• Disposal of SSE's entire 33.3% investment in gas distribution operator Scotia Gas Networks Ltd (SGN) is expected to complete within the 2021/22 financial year.
• Targeting a ratio of net debt to EBITDA of around 4.5 times at 31 March 2022.

The enhanced £12.5bn Net Zero Acceleration Programme, also announced today, further outlines SSE's plans to accelerate growth and maximise value for all stakeholders for the five years to March 2026, as well as outlining longer term targets to 2031 and a rebased dividend with attractive growth for post 2023.