SSE Plc - Preliminary results for the year to 31 March 2019
Financial performance in 2018/19 in line with Notification of Close Period Statement on 28 March:
· Final dividend of 68.2 pence, making full-year dividend of 97.5 pence, in line with five-year dividend plan.
· Headline results reflect £284.9m adjusted operating loss previously forecast in Energy Portfolio Management (EPM):
o Adjusted earnings per share* of 67.1 pence, down 32%; and
o Adjusted profit before tax* of £725.7m, down 38%.
· Reported results reflect the EPM loss and the impact of £1,096.9m exceptional gains and fair value uplift from asset sales:
o Reported earnings per share* of 135.2 pence, up 110%; and
o Reported profit before tax* of £1,370.6m, up 59%.
· Adjusted EBITDA# total for the core businesses of Electricity Networks and Renewables was over £1.5bn, 83% of SSE Group* total.
· Value creating disposals in the year delivered:
o over £1bn of cash proceeds;
o £608.4m of exceptional gains on sale; and
o £488.5m of exceptional unrealised fair value uplift (reflecting revaluation of retained stakes).
· Investment and capital expenditure of £1.42bn includes over £1bn investment in regulated electricity networks and renewable energy but excludes £195m investment in assets subsequently divested in the year.
· Adjusted net debt and hybrid capital of £9.39bn.
· Total GDP contribution to UK economy of £8.9bn and to Irish economy of €689m as a result of direct and supply chain activities. This supported an estimated 105,000 jobs across both countries.
Note: percentage comparisons relate to year to 31 March 2018
*Excludes SSE Energy Services, which remains held for disposal
# EBITDA - adjusted earnings before interest, tax, depreciation and amortisation
Delivery against strategic priorities continuing:
· £1bn Caithness-Moray transmission link (SSE's first major HVDC project) completed on time and below budget, helping take Transmission RAV to over £3.25bn.
· All 84 turbines at the 588MW Beatrice offshore wind farm commissioned, with this £2.6bn project being delivered on time and below budget, (SSE share: 40%)
· Stronelairg onshore wind farm (228MW) completed six months early and on budget.
· Development and operation of renewable energy assets brought together under new SSE Renewables management team as part of wider refocusing of SSE's businesses
· New approach to hedging commodity price exposures, outlined in November 2018, on course to be fully in place from 2020/21, with 'SSE's Approach to Hedging: May 2019 Update' published today on sse.com.
· Four business goals for 2030 adopted to tackle climate change and support global goals for sustainable development.
· Disposal of 50% stake in SSE Enterprise Telecoms for up to £380m; process to prepare for disposal of investments in gas production under way.
· Katie Bickerstaffe appointed Executive Chair of SSE Energy Services with mandate to secure the best future for the business outside SSE.
Outlook for 2019/20
· Intention to recommend a full-year dividend of 80 pence per share, in line with five-year dividend plan.
· Adjusted investment and capital expenditure expected to be around £1.5bn, including almost £1.0bn investment in regulated electricity networks and renewable energy.
· Group adjusted operating profit improving but likely to be negatively impacted by expected phasing of profits in regulated Electricity Networks and by Renewable output for 19/20 being hedged at less than current market prices. For more detail see the Group Financial Review section of this statement.
· Share buy back plans include:
o programme of £200m announced in February with share buy backs totalling £50m so far completed at an average market price per share of 1,149p; and
o intention to buy-back shares if Scrip take-up of full year dividend exceeds 20%.
· Adjusted net debt forecast to be around £10bn at 31 March 2020.
Developing key future opportunities for long-term business through low-carbon transition:
· Over 8GW of on- and off-shore wind farm pipeline developments for SSE Renewables in GB and Ireland, capable of doubling renewable energy output to over 20TWh by 2025.
· Powerful case for investment in north of Scotland that could contribute to a Transmission RAV of around £5bn by 2026, up from around £3.3bn at March 2019.
· Opportunity to support the UK's decarbonisation objectives through evolution to Distributed System Operators, including industry-first smart grid trial in Oxfordshire.
Richard Gillingwater, Chair of SSE, said:
"While our financial results clearly fell well short of what we hoped to achieve at the start of the year, we've made significant progress towards our ambition to be a leading energy company in a low-carbon world.
"We have continued to develop our core businesses of regulated energy networks and renewables; demonstrated our ability to create and unlock value from developing and operating, as well as owning, assets; and adopted clear long-term goals as we set up the business for long-term success.
"The fundamental strengths of our business and the strategic opportunities afforded by the transition to a low-carbon economy will support the delivery of our five-year dividend plan and creation of value for society as a whole."