Interim results for the six months to 30 September 2017

SSE has this morning issued its Interim results for the six months to 30 September 2017. It includes updates on operations and investments in its Wholesale, Networks and Retail (including Enterprise) businesses. As performance over a six month period can be variable, SSE focuses on results for the financial year as a whole, and manages its businesses accordingly.

SSE is also issuing a statement on its household energy supply and services business in Great Britain, and this Interim Results Statement should be read in conjunction with that.

Overview of the 6 months to 30 September 2017

As expected and in line with SSE's Notification of Closed Period statement published on 27 September 2017, SSE's financial headlines for the six months to 30 September 2017 are as follows: (comparisons are with the same period in 2016 unless otherwise stated):

  • Interim dividend up 3.6% to 28.4p;
  • Adjusted earnings per share down 8.8 % to 31.2p;
  • Adjusted operating profit down 8.0% to £586.2m;
  • Adjusted profit before tax down 13.9% to £409.6m;
  • Investment and capital expenditure was slightly lower at £779.5m;
  • Adjusted net debt and hybrid capital increased by 9.0% to £9.2bn in the six months to 30 September 2017;
  • On market share buy backs totalling £270.5m were made in the six months to 30 September 2017, following £131.5m of share buy backs in the previous financial year;
  • Reported operating profit down 30.9% to £549.4m;
  • Reported profit before tax down 40.4% to £402.2m; and
  • Reported earnings per share down 43.9% to 29.8p.

The above results for the six months to 30 September 2017 are consistent with SSE's previously-stated expectation that adjusted earnings per share for 2017/18 and other financial results would be lower than 2016/17. This is mainly due to the phasing of capital expenditure on significant Transmission projects and the resulting impact on regulatory revenue, along with a reduced share of SGN earnings due to the part disposal in October 2016.


For the 2017/18 financial year as a whole, SSE is:

  • Expecting to report full year earnings per share at a level which is at least in line with the current consensus of sector analysts' forecasts of 116p (based on SSE compiled estimates from 18 analysts as at 1 November 2017);
  • Targeting an annual increase in the full-year dividend that is at least equal to RPI inflation;
  • Working to keep dividend cover within the expected range of around 1.2- 1.4 times, although it is likely to be towards the bottom of this range, as stated in SSE's Notification of Pre Close Statement on 30 March 2017, and again in its full year 2016/17 Results; and
  • Expecting to invest around £1.7bn in building, owning and operating assets, with around two thirds of this in electricity networks and renewable sources of energy.

Looking further ahead, SSE is currently:

  • Targeting delivery of annual dividend increases that at least keep pace with RPI inflation (see also today's further announcement regarding SSE's GB household retail business - extract below);
  • Working towards achievement of dividend cover within a range of around 1.2 times to 1.4 times;
  • Focusing on progress in its capital and investment expenditure totalling around £6bn across the four years to 2020, mainly in electricity networks and renewable energy;
  • Targeting an increased RAV of its economically-regulated networks businesses to close to £9bn, up from £8bn at September 2017;
  • Targeting an increased amount of renewable capacity, including pumped storage, of 4.3GW, up from 3.7GW at September 2017, which should then be capable of generating around 12TWh of electricity in a typical year*; and
  • Working to deliver enhanced customer experience of retail energy markets through the installation of smart meters and the provision of digital services.

As previously communicated, the level of dividend cover is subject to the ongoing factors that influence earnings in SSE's market-based businesses, and is also subject to material change in sector regulation.

The full report can be viewed here.