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Notification of Closed Period

27 Sep 2022

Ahead of publication on 16 November 2022 of results for the six months to 30 September 2022, SSE plc today updates the market on its recent performance and outlook, including:

  • Expecting to report half-year adjusted earnings per share of at least 40 pence, as balanced business mix continues to navigate volatile market conditions
  • Continuing to expect full-year adjusted earnings per share of at least 120 pence, against the backdrop of uncertainty associated with a highly changeable operating environment
  • Investing at record levels, ahead of profits, in the clean electricity infrastructure needed for decarbonisation and national energy self sufficiency, including construction of the world’s largest offshore wind farm

HALF YEAR FINANCIAL OUTLOOK

Since SSE’s Q1 Trading Statement, good performance from gas storage and flexible thermal has continued in volatile market conditions, demonstrating their value to the energy system. At the same time, lower-than-expected output, mainly due to weather, means total renewable output for the year to 22 September was around 13% below plan.

In light of this SSE expects to report half year 2022/23 adjusted earnings per share of at least 40 pence. However, as performance over any six-month period can be variable, SSE focuses on results for the financial year as a whole and manages its businesses accordingly.

Developments in the execution of SSE’s Net Zero Acceleration Programme include:

  • First power from Seagreen, Scotland’s largest and the world’s deepest tethered offshore wind farm, in August 2022;
  • Construction on what will be the world’s largest offshore wind farm at Dogger Bank and Viking onshore wind farm on Shetland progressing to plan;
  • Delay to completing the commissioning of the Keadby 2 CCGT, which is now expected to be available later this winter to help ensure secure energy supplies;
  • Completion of the acquisition of the c.3.8GW Southern European onshore wind development platform, with scope for up to 1.4GW of additional solar opportunities; and
  • Completion of the joint acquisition of Triton Power with Equinor, including the 1.2GW Saltend power station which has significant decarbonisation potential.

Adjusted net debt is expected to be around £10bn at 30 September 2022, with a high proportion held at fixed rates, and SSE continues to have access to the capital markets with issuance of a €1.0bn Hybrid Bond in April 2022 and a €650m Green Bond in July 2022. The Group’s collateral requirements are within existing facilities and SSE’s £1.5bn of Revolving Credit Facilities remains undrawn throughout the period.

FULL YEAR FINANCIAL OUTLOOK

SSE’s balanced portfolio of assets of electricity networks, renewables and flexible generation and storage mean that the Company is performing well in volatile market conditions. However, risks remain given continuing market uncertainty and liquidity, a fast-moving policy environment, weather variability, plant availability and the complexity and scale of large capital projects in which SSE is engaged. As always, SSE will seek to manage these risks carefully through the winter period.

Despite the current highly changeable market environment, and the resultant wide range of potential financial outcomes from volatile future commodity prices, SSE’s original full-year guidance of adjusted earnings per share of at least 120 pence remains unchanged. SSE expects to provide updated guidance on full-year adjusted earnings per share later in the year, as the winter period progresses.

SSE has been clear that any additional profit it may generate, subject to the risks outlined above, will be reinvested in projects that will provide long-term solutions that help reduce the UK’s exposure to volatile international gas prices. The Company remains on course to report record 2022/23 capex in excess of £2.5bn (including acquisitions) and expects leverage to be lower than the target 4.5 times net debt to EBITDA ratio.

Finance Director, Gregor Alexander, said:

“Our balanced business mix has ensured a strong performance to date, however in such highly volatile market conditions, financial performance for the full year will be significantly influenced by plant availability, weather and commodity price movements.

“SSE continues to deliver growth through its fully-funded £12.5bn Net Zero Acceleration Programme that will benefit society in the long term. Our plans include a growth enabling, rebased dividend from 2023/24 onwards and SSE’s net investment into vital UK and Ireland infrastructure could exceed £25bn this decade, creating thousands of jobs and ensuring secure, affordable, low carbon energy systems.

“As an infrastructure company SSE’s over-riding response to the European energy crisis is to address the root cause of the problem and we are committed to reinvesting any additional profits derived from market variability directly back into energy infrastructure that will prevent a repeat of the crisis in the long-term.”