SSE plc (LON:SSE) has announced its preliminary results for the year ended 31 March 2020.
HEADLINES
Results for 2019/20*
· Adjusted operating profit up 37% to £1,488.4m
- Despite negative coronavirus impact of £18.2m related to electricity demand#
· Reported operating profit down 40% to £963.4m
· Adjusted profit before tax up 49% to £1,023.4m
· Reported profit before tax down 55% to £587.6m
· Adjusted earnings per share up 35% to 83.6p, within forecast 83p-88p range
· Reported earnings per share down 67% to 40.6p
· Net exceptional charge of £738.7m before tax:
- £529.0m on discontinued operations; and
- £209.7m on continuing operations (incl. £33.7m relating to coronavirus impacts on bad debts#)
· Capital and investment expenditure down 5% to £1,357.4m
· Adjusted net debt and hybrid capital at £10.5bn, in line with forecast
· £7.7bn total contribution to UK GDP; 83,040 UK jobs supported; €650m total contribution to Ireland GDP; 3,740 Irish jobs supported.
#Total coronavirus impacts of £51.9m
*Unless otherwise stated, excludes results from discontinuing operations: SSE Energy Services sold in January 2020 and Gas Production assets held for sale
Dividend for 2019/20
· Final dividend of 56p per share recommended for payment on 18 September 2020, making a full year dividend of 80p per share in line with five-year 2018/19 to 2022/23 dividend plan
Outlook for 2020/21 and beyond
· Coronavirus impacts on operating profit estimated between £150m and £250m before mitigation
- Guidance on adjusted earnings per share to be provided later in financial year
· Comprehensive plan to sustain dividends and create value
- Maintaining good liquidity and effective financial management
- Reducing planned cash outflow (mainly capex) by at least £250m in 2020/21
- Securing value from disposals of at least £2bn by autumn 2021
· Plan to invest capital and investment of around £7.5bn net in five years to 2024/25, focused on core strategic decarbonisation projects
- Includes planned investment in 443MW Viking onshore wind farm – see separate announcement.
· New target to cut carbon intensity of electricity generation by 60% by 2030#
· Targeting net debt/EBITDA ratio at lower end of 4.5 to 5 times range between 2021/22 and 2024/25
· Target to maintain credit rating ratios comfortably above those required for investment grade
#Based on 2018 levels; previous target 50%. See sse.com for details
Dividend for 2020/21
· Continuing to target delivery of the five-year 2018/19 to 2022/23 dividend plan
*Based on estimated RPI of 1.5%
Richard Gillingwater, Chair of SSE, said:
“2019/20 was a year of progress for SSE. Financially, there was a solid recovery from the previous year. Strategically, we reshaped the Group with the sale of Energy Services and increased our focus on our core businesses of regulated electricity networks and renewable energy. Operationally, these businesses made significant progress towards our strategic priorities and ambition to be a leading energy company in a net zero world.
“Since March, SSE’s overriding priority has been to support the safe and reliable supply of the electricity upon which the people and organisations responding directly to coronavirus depend and the commitment of people across SSE in challenging circumstances has been outstanding.
“It is still too soon to predict with accuracy the full human, social, economic and business impact of coronavirus; but we have put in place a comprehensive plan to achieve the related objectives of sustaining the dividend payments which provides vital income for people’s pensions and savings – income which is now more important than ever; and promoting the long-term success of SSE for the benefit of all its stakeholders.
“Climate change remains a critical issue and we see significant opportunities to create sustainable value for shareholders and society through contributing to a much-needed green economic recovery and supporting the transition to net zero emissions.”
FINANCIAL PERFORMANCE IN 2019/20 AT A GLANCE
SSE Energy Services was sold on 15 January 2020 and SSE’s investment in Gas Production assets was classified as held for sale at 31 March 2020. Both businesses have been classified as discontinued operations in the Summary Financial Statements and have therefore been excluded from profit- and loss-based measures in the tables below, in all periods.
| Key Financial Indicators | Mar 20 | Mar 19* | Mar 18* |
| Adjusted operating profit/(loss) | £m | £m | £m |
| SSEN Transmission | 218.1 | 252.1 | 195.6 |
| SSEN Distribution | 356.3 | 401.3 | 402.2 |
| Electricity Networks Total | 574.4 | 653.4 | 597.8 |
| Investment in SGN | 202.3 | 176.8 | 165.3 |
| Economically-regulated networks total | 776.7 | 830.2 | 763.1 |
| SSE Renewables | 567.3 | 455.9 | 475.9 |
| Thermal Generation | 152.7 | (22.3) | 107.8 |
| Gas Storage | 3.7 | (5.7) | (6.5) |
| Thermal Energy Total | 156.4 | (28.0) | 101.3 |
| Business Energy (GB) | 9.2 | 51.6 | 64.2 |
| SSE Airtricity (NI and Ire) | 48.8 | 38.6 | 33.0 |
| Customer Solutions Total | 58.0 | 90.2 | 97.2 |
| Energy Portfolio Management | (137.4) | (284.9) | 46.0 |
| Gas Production Continuing – contracts | 77.1 | – | – |
| Enterprise | 8.1 | 31.8 | 26.9 |
| Corporate Unallocated | (17.8) | (6.5) | 10.4 |
| Total adjusted operating profit from continuing operations | 1,488.4 | 1,088.7 | 1,520.8 |
| Adjusted profit before tax | 1,023.4 | 685.1 | 1,153.3 |
| Adjusted earnings per share (EPS) pence | 83.6 | 61.8 | 93.3 |
| Interim dividend per share (DPS) pence | 24.0 | 29.3 | 28.4 |
| Final dividend per share (DPS) pence | 56p | 68.2 | 66.3 |
| Full year dividend per share (DPS) pence | 80p | 97.5 | 94.7 |
| Investment and capital expenditure (adjusted & reported) £m | 1,357.4 | 1,422.9 | 1,503.0 |
| Adjusted net debt and hybrid capital £m | (10,465.9) | (9,437.0) | (9,211.8) |
| Reported operating profit /(loss) on continuing operations | |||
| SSEN Transmission | 218.1 | 252.1 | 195.6 |
| SSEN Distribution | 351.9 | 401.3 | 420.2 |
| Electricity Networks Total | 570.0 | 653.4 | 597.8 |
| Investment in SGN | 80.8 | 85.1 | 71.8 |
| Economically-regulated networks total | 650.8 | 738.5 | 669.6 |
| SSE Renewables | 459.9 | 1,242.9 | 452.0 |
| Thermal Generation | 15.5 | (50.6) | 71.4 |
| Gas Storage | (1.4) | (5.7) | (6.5) |
| Thermal Energy Total | 14.1 | (56.3) | 64.9 |
| Business Energy (GB) | (18.5) | 51.6 | 64.2 |
| SSE Airtricity (NI and Ire) | 42.8 | 38.6 | 26.9 |
| Customer Solutions Total | 24.3 | 90.2 | 91.1 |
| Energy Portfolio Management | (171.6) | (613.1) | (43.1) |
| Gas Production Continuing – contracts | 77.1 | ||
| Enterprise | (2.0) | 31.8 | 15.1 |
| Corporate unallocated | (89.2) | 179.6 | (21.5) |
| Total reported operating profit on continuing operations | 963.4 | 1,613.6 | 1,228.1 |
| Total Reported profit before tax on continuing operations | 587.6 | 1,300.3 | 943.1 |
| Reported earnings per share (EPS) pence on continuing operations | 40.6 | 123.7 | 69.9 |
| Unadjusted net debt £m | (10,007.8) | (8,936.0) | (8,378.3) |
| (Loss)/profit after tax on discontinuing operations | (478.6) | 145.5 | 115.0 |
*Restated to exclude the contribution of SSE Energy Services and Gas Production assets which have been presented as discontinued operations (see note 5.2 (i)) to the Summary Financial Statements).
| Key Performance Indicators | Mar 20 | Mar 19 | Mar 18 |
| Total Generation output – all plant – GWh | 28,293 | 30,835 | 33,098 |
| Total Thermal Generation – GWh | 17,725 | 21,056 | 23,670 |
| Total Renewable Generation – GWh (inc. pumped storage) | 10,694 | 9,711 | 9,338 |
| Total Renewable Generation – GWh (also inc. constrained off) | 11,384 | 10,399 | 9,744 |
| Average carbon intensity of electricity generated (gCO2e/KWh) | 288 | 284 | 305 |
| Electricity Transmission RAV – £m | 3,469 | 3,276 | 3,070 |
| Electricity Distribution RAV – £m | 3,685 | 3,555 | 3,406 |
| Gas Distribution RAV – £m | 1,952 | 1,898 | 1,828 |
| SSE Total RAV – £m | 9,106 | 8,729 | 8,304 |
| Business Energy Electricity Sold – GWh | 16,914 | 19,336 | 20,177 |
| Business Energy Gas Sold – mtherms | 272 | 277 | 294 |
| All Ireland energy market accounts – m | 0.72 | 0.72 | 0.74 |
Notes:
The definitions SSE uses for adjusted measures are consistently applied and are explained in the Alternative Performance Measures section of this document, before the Summary Financial Statements. Throughout this document losses are shown in brackets.
Renewable generation excludes SSE’s small biomass capability which is now managed by SSE’s Enterprise business and which generated 58GWh 2019/20; 68GWh 2018/19 and 90GWh 2017/18.
SSE’s 2030 carbon intensity target is based on generation emissions only. To track progress against this target, previous years’ intensity ratios have been restated to only cover electricity generation emissions rather than total scope 1 emissions.
