SSE Plc - Interim Results

 

SSE Plc

Interim results for the six months ended 30 September 2019

13 November 2019

Headlines

Headline half year results exclude SSE Energy Services and Gas Production assets held for sale:

The results below reflect the reinstatement of the Capacity Market following approval by the European Commission and therefore include c.GBP110m of GB Capacity Market payments in respect of the period from the date of its suspension to 30 September 2019; GBP8m of which is included in exceptional items.

Headline results in line with Pre-Close Statement of 26 September and exclude SSE Energy Services and Gas Production assets:

  • Adjusted operating profit on continuing operations: GBP491.9m, up 14%
  •  Reported operating profit/(loss) on continuing operations: GBP347.5m, versus GBP(184.6)m last year
  • Adjusted profit before tax on continuing operations: GBP263.4m, up 15%
  • Reported profit/(loss) before tax on continuing operations: GBP128.9m, versus GBP(284.6)m last year
  • Adjusted earnings per share on continuing operations: 18.0p, up 10%
  • Reported earnings/(loss) per share on continuing operations: 6.2p, versus (26.4p) last year 

Interim dividend in line with five-year dividend plan to 2023:

  • Interim dividend: 24 pence, down 18% reflecting dividend policy outlined in May 2018
  • Intention to recommend full-year dividend of 80 pence, with annual RPI growth in the three subsequent years

Investment and capital expenditure in line with plan to 2023:

  • Capital and investment expenditure: GBP638.2m, down 19%
  • Includes GBP446.2m invested in regulated electricity networks and renewable energy
  • Full-year capital and investment expenditure is now expected to be around GBP1.4bn
  • Adjusted net debt and hybrid capital: GBP10.3bn 

Positive updates to financial outlook for 2019/20:

  • In September 2019, SSE's forecast full year adjusted earnings per share was around 80p-85p, taking into account the impact of holding its interest in Gas Production for sale.
  • Gas production interests comprise assets and hedging contracts. The structure of the proposed disposal means the hedging contracts will be retained and are not accounted for as held for sale. It is estimated this will add around 3 pence to SSE's previous forecast for adjusted EPS for FY 19/20 taking it to around 83p-88p.
  • European Commission green light for Capacity Market means forecast adjusted EPS is no longer subject to receipt of suspended Capacity Market payments.
  • Full-year adjusted EPS is always subject to hydro and wind assets benefiting from normal weather conditions. Generally wet and windy weather since September means, as at early November, renewable output for the year to date is slightly ahead of plan.

Results of discontinued operations

At 30 September 2019, SSE Energy Services continues to be classified as held for sale and the Group's investment in Gas Production has also been classified as held for sale. Adjusted operating losses of the discontinued operations for the six months are GBP22.7m; reported operating losses are GBP511.8m (including GBP489.1m of impairment charges relating to SSE Energy Services); and the adjusted loss per share of the discontinued operations is 1.6p.

Delivery against strategic priorities continuing:

  • Agreement to sell SSE Energy Services to OVO Energy Limited on course for completion in early 2020, subject to the necessary regulatory approvals
  • Strong, stakeholder-led RIIO T2 business plan to be submitted to Ofgem for close to GBP2.4bn totex investment in north of Scotland that could contribute to a Transmission RAV of around GBP5bn by 2026
  • SSE Renewables' development capability confirmed by securing contracts for 2.2GW (SSE share) in CfD Allocation Round
  • Transition to lower carbon electricity generation confirmed by decision to close SSE's last remaining coal-fired generation plant at Fiddler's Ferry by March 2020.
  • Updated capital and investment expenditure plan to be set out by May 2020. 

Richard Gillingwater, Chair of SSE, said:

"SSE is progressing well in the execution of its low-carbon strategy with the sale of SSE Energy Services leading to group more focussed on renewable energy and regulated electricity networks.

"SSE Renewables has an enviable development pipeline bolstered by recent success in securing valuable Contracts for Difference and we have strong business plans for the upcoming Transmission price control. Our growth is aligned to net zero emissions and looking ahead to COP 26 in Glasgow next year, we will be encouraging even faster decarbonisation.

"Clearly some headwinds remain in the sector with political uncertainty and aspects of UK government policy being subject to judicial process, however, we have strong optionality to create value through the low carbon transition and deliver our dividend commitments."

SSE's financial performance at a glance for six months to 30 September 2019

At 30 September 2019 SSE Energy Services is held for sale and has been accounted for as a discontinued operation. Therefore, the results of SSE Energy Services have been excluded from the profit and loss metrics in the tables below. Details of SSE Energy Services performance can be found in the Group Financial Overview.

In addition, SSE's interests in Gas Production assets are also held for sale at 30 September 2019 and therefore results relating to these assets have been excluded from the profit and loss metrics in the tables below.