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SSE on course to deliver on their FY19/20 financial forecasts

SSE plc (LON:SSE) has today announced a Trading Statement for the third financial quarter ending 31 December 2019.

Financial outlook

In line with its interim results statement on 13 November 2019:

·     SSE continues to expect adjusted Earnings Per Share (EPS) for FY 2019/20 to be in the range of 83p to 88p*.  

·     SSE remains committed to its dividend plan for the five years to March 2023 and, in line with that, expects to recommend a FY2019/20 dividend of 80p per share.

Adjusted EPS expectations are always subject to hydro and wind assets benefiting from normal weather conditions. As at 31 December 2019, output of renewable energy for the first nine months of the financial year was just over 5% behind plan.

* Adjusted EPS excludes the Energy Services business sold on 15 January 2020 and the gas production assets which are held for sale

Key developments since interim results

·     SSE’s final Transmission business plan for the RIIO-T2 price control was submitted in December, with proposals for £2.4bn of total expenditure, which would take potential RAV to over £5bn by 2026.

·     In December, Ofgem announced its decision in principle to endorse SSEN Distribution’s proposal to contribute financially towards the proposed electricity transmission links to Shetland, Western Isles and Orkney. Based on current assumptions, this would be around £250m for Shetland, and SSEN Transmission has re-submitted its Needs Case for the proposed Transmission link to Shetland.

·     Also in December, the Queen’s Speech included enhanced ambitions for offshore wind and carbon capture, usage and storage, which should present opportunities for SSE’s renewables and thermal businesses. Good progress is being made on SSE Renewables’ offshore wind projects with the first ‘ground-breaking’ at Dogger Bank on 17 January 2020 and several Tier 1 preferred supplier agreements signed in relation to both Dogger Bank and Seagreen.

·     SSE Renewables has also taken the final investment decision to proceed with the construction of an additional 11 turbines (up to 38MW) at Gordonbush onshore wind farm.

·     On 15 January 2020, SSE completed the sale of its Energy Services business to OVO Energy Limited, meaning SSE is no longer involved in supplying energy and energy services to households in GB.

·     SSE is on course to cease production at its last coal-fired generation plant at Fiddlers Ferry by the end of March 2020.

·     Work is continuing on the sale of gas production assets although a transaction will not be completed in FY2019/20.

Operational performance indicators

 SSE Renewables9 months to 31-Dec-20199 months to 31-Dec-2018
Onshore wind generation output – GWh3,0263,186
Offshore wind generation output – GWh1,487921
Conventional hydro generation output – GWh2,2942,250
Pumped storage output – GWh127168
Total renewables output – GWh6,9346,525

Output from electricity generating plant in which SSE has an ownership interest (output based on SSE’s contractual share) across the UK and Eire. Wind output excludes 308GWh of constrained off generation in the nine months to 31 Dec 2019 and 437GWh in the same period the previous year. 

SSEN Distribution9 months to 31-Dec-20199 months to 31-Dec-2018
Customer minutes lost (SHEPD) – average per customer3845
Customer minutes lost (SEPD) – average per customer3538
Customer interruptions (SHEPD) – per 100 customers4352
Customer interruptions (SEPD) – per 100 customers3740
Electricity transported through SSEN Distribution – TWh2828

These KPIs are part of the Interruptions Incentive Scheme for electricity distribution customers operated by Ofgem and excludes exceptional events.

SSE Thermal Energy9 months to 31-Dec-20199 months to 31-Dec-2018
Gas- and oil-fired (incl. multi-fuel) generation output – GWh12,32115,138
Coal-fired generation output – GWh1,003519

Output from electricity generating plant in which SSE has an ownership interest (output based on SSE’s contractual share) across the UK and EIRE.

Notification of Closed Period

SSE expects to issue a notification of closed period statement on 27 March ahead of publication of its preliminary results for FY19/20 on 22 May 2020.

Gregor Alexander, Finance Director of SSE, said:

“Strategic execution, good operational performance and optionality in SSE’s portfolio remain critical for driving societal and shareholder value.  Since reporting our interim results we have continued to deliver on our priorities, focusing the SSE group on businesses that are well placed to play a leading role in delivery of a low-carbon strategy that supports the transition to net zero emissions.

“The first financial objective of that strategy is to remunerate shareholders’ investment through dividends based on the quality and nature of assets and operations, earnings derived from them and the long-term financial outlook.  The first nine months of the financial year have been generally positive for SSE, and we are on course to deliver our FY2019/20 financial forecasts.”

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