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SSE invests c.4x more than it makes in profits

16 Nov 2022

Results for six months ended 30 September 2022 show scale of record investment programme.

  • Record £1.7bn (HY 2021: £1bn) investment boosting energy security and sustainability
  • Adjusted profit after tax of £450m (HY 2021: £111m)
  • Earnings Per Share (EPS) of 41.8p, in line with pre-close guidance
  • Full year guidance unchanged from May 2022 with EPS of at least 120p expected

SSE, the leading electricity infrastructure company, invested almost four times as much as it made in profits in the first half of its financial year, according to its interim results, published today.

The group, which is one of the leading generators of renewable energy and one of the largest operators of electricity networks in Great Britain, invested a record £1.7bn (2021: £1bn) compared to adjusted profit after tax of £489m (2021: £162m) in the six months ending 30 September 2022.

The group’s financial results benefited from a good performance from the Thermal Energy business, which includes flexible gas-fired power stations and gas storage facilities. SSE has approximately 40% of the UK’s onshore underground gas storage capacity which has proven its value to the system providing vital security of supply and flexibility in more volatile market conditions after a number of years of weaker returns.

Performance was also strong in the group’s Regulated Networks businesses, which continue to connect new generation assets to the grid, securing power to people’s homes.

"We have delivered a good strategic and financial performance reflecting the strength of our business model. This has enabled us to invest far more than we earn – building and operating the clean homegrown energy infrastructure that will provide a sustainable solution to the current energy crisis."

Alistair Phillips-Davies, SSE Chief Executive

Alistair continued:

“By SSE's own estimates, if the system investment required to meet 2030 targets had been delivered by 2022, around £30bn would have been saved in GB expenditure on gas this year.

“We therefore know cheaper, cleaner and more secure energy is coming, it just needs to be built and SSE is building at pace. With a supportive government policy environment, SSE alone could invest more than £24bn in Great Britain by the end of this decade. We therefore welcome the Prime Minister’s commitment at COP27 to go faster in deploying clean energy infrastructure.

“This will not only support the creation of tens of thousands of good jobs, underpinning sustainable growth in communities across Great Britain. But it will also deliver greater financial security to families and improved energy security for everyone.”

Financial Summary (continuing operations):

Continuing OperationsAdjustedReported
Sept 2022Sept 2021Sept 2022Sept 2021
Operating profit / (loss) (£m)716.0376.8(635.1)1,904.4
Profit / (loss) before tax (£m)559.4174.2(511.0)1,686.1
Profit / (loss) after tax (£m) attributable to ordinary shareholders450.3110.8(427.4)1,093.1
Earnings / (loss) per share (p)41.810.5(39.7)103.6
Investment, capital and acquisitions (£m)1,743.21,042.81,432.61,056.6
Net Debt and Hybrid Capital (£bn)(10.0)(9.6)(9.1)(8.9)

Reported results include the impact of accounting rules (IFRS 9) on the group’s forward purchase contracts, or hedges, which does not reflect the realised operating performance of the business. SSE therefore provides adjusted results to give a more accurate picture of underlying performance.

First half earnings per share were in line with September’s pre-close guidance at 41.8p. The Board has recommended an interim dividend of 29.0p, in line with policy and payable on the 9 March 2023.

SSE continues to expect adjusted earnings per share for the full year of at least 120p – unchanged from May - with capital expenditure for the full year expected to be in excess of a record £2.5bn, including acquisitions.

Building clean, homegrown energy in the UK and Ireland and beyond

SSE invested £1.1bn in the first half in building and operating offshore and onshore wind farms, upgrading transmission and distribution networks to support increased electricity demand, and pioneering carbon capture and hydrogen storage technologies. A further £640m was invested in strategic acquisitions where SSE sees opportunities to deliver more clean infrastructure.

Progress in the period included:

  • First power at Seagreen, Scotland’s largest and the world’s deepest tethered wind farm and completing the first foundations at Dogger Bank, which will be the world’s largest offshore wind farm when completed.
  • The first 100km of subsea cable that will connect Shetland to the mainland electricity grid for the first time ever.
  • The acquisition, with our joint venture partners, of Triton Power, adding to SSE’s pipeline of opportunities in emerging carbon capture and hydrogen storage technologies.

Expansion into growth markets in Southern Europe with pipeline of up to 5GW of onshore wind projects.

Boosting employment in communities across the UK

SSE has also continued to increase its workforce across the UK, consistent with its plan of adding at least 1,000 new roles per year to 2025. In the past 12 months alone, the company has hired an additional 1,200 posts including a record number of apprentices and graduates.
Across the UK, the group’s operations and investment programme supports more than 40,000 jobs, many of which are outside larger urban centres, helping support communities across the country.

Making a major contribution to delivering the UK’s climate change targets

The UK government has set a target to decarbonise the electricity system by 2035, as part of its legally binding climate change targets.

SSE will play a major role in achieving this objective including delivering:

  • 20% of the UK’s 50GW offshore wind target
  • 20% of the UK’s planned electricity network investment, which is essential for transporting clean energy from where it is generated to where it is needed most
  • A doubling of the UK’s electricity storage capacity with the first large scale pumped hydro scheme in more than 30 years
  • Multi-GW solar and battery storage
  • Over 2GW of innovative carbon capture and hydrogen storage capacity

Addressing the climate emergency

SSE was a Principal Partner of COP26 in Glasgow and is a main sponsor of the UK Pavilion at COP27 in Sharm El-Sheikh. The group is proud of its 2030 ESG commitments.

These include:

  • Cutting its carbon intensity by 80%
  • Increasing renewable energy output 5x
  • Enabling low-carbon generation and demand
  • Championing a fair and just energy transition on the journey to net zero emissions.

You can read the half year statement here.