REG - SSE Plc - Half-year Report
13/11/2024 07:15
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RNS Number : 9812L SSE PLC 13 November 2024
SSE PLC: interim results
for six months ended 30 September 2024
13 November 2024
DELIVERING MISSION CRITICAL INVESTMENT
· Strong start to financial year, delivering adjusted earnings per
share of 49.8p, in line with expectations:
§ Value creating investment helping to drive increased contribution from
electricity networks and renewables which delivered over 95% of half year
adjusted operating profits.
§ Balanced business mix provided resilience, as return to favourable weather
conditions meant increased SSE Renewables profitability offset lower SSE
Thermal contribution.
§ Strong Balance Sheet, with 94% of debt fixed at average cost of 4.0%.
§ Interim dividend of 21.2p declared, reflecting an increase of 6% on prior
year.
· Reached mid-point of five-year clean power investment programme
delivering world-class assets:
§ £1.3bn invested in first half, with ~90% invested across electricity
networks and renewables.
§ Completion of £1bn+ combined investment in 443MW Viking onshore wind farm
in Shetland and associated subsea HVDC transmission cable, connecting the
islands to the GB grid for the first time.
§ Continue to progress turbine installations on Dogger Bank offshore wind
farm, completion expected in the second half of 2025 with equity returns
remaining comfortably above hurdle rates.
§ Construction commenced on £4.3bn Eastern Green Link 2 Joint Venture, the
UK's single largest electricity transmission project.
· Expectations unchanged for full year adjusted operating profits:
§ Increasing electricity networks contribution as inflation catch-up in
Distribution more than offsets lower Transmission profits due to economically
neutral capex tax relief, which is netted off revenue.
§ Increasing renewables contribution, as capacity additions and higher hedged
prices come through.
§ Thermal and Gas Storage profitability of around £200m reflecting stable
market conditions.
§ Adjusted Earnings Per Share guidance for 2024/25 to be provided later in
the financial year.
· Group remains on track to deliver 2026/27 adjusted earnings per
share of between 175 - 200p.
FINANCIAL SUMMARY Adjusted Reported
Sep 2024 Sep 2023 % mvmt Sep 2024 Sep 2023(1) % mvmt
Operating profit (£m) 860.2 693.2 24.1% 902.8 644.3 40.1%
Profit before tax (£m) 714.5 565.2 26.4% 845.9 615.3 37.5%
Earnings per share (p) 49.8 37.0 34.6% 47.7 30.7 55.4%
Investment, capital & acquisitions (£m) 1,292.1 1,054.3 22.6% 1,573.3 1,320.4 19.2%
Net Debt and Hybrid Capital (£bn)(2) (9.8) (8.9) 10.1% (8.7) (8.1) 7.4%
(1)Prior period reported figures have been restated, for further details see
note 2(v) to the Interim Financial Statements
(2)Reported net debt excludes equity accounted hybrid capital, for full
reconciliation to adjusted net debt see Alternative Performance Measures
section of Interim Financial Statements
Alistair Phillips-Davies, Chief Executive, said:
"This is a strong set of interim results including delivery of higher-quality
earnings and the mission-critical infrastructure that shows SSE is at the
heart of the clean energy transition.
"We are encouraged by the increasing attractiveness of our main markets and
our alignment with the new UK Government's mission to achieve Clean Power by
2030.
"SSE will be a key delivery partner with our ~£20bn investment programme and
the scale and quality of our project pipeline that spans renewables,
electricity networks and flexible power plants - which will all be required to
make clean power a reality.
"Our unique position gives us exceptional growth opportunities and clear
targets that will deliver long-term value to shareholders and society."
highlights: Delivering ON OUR INVESTMENT
· Financial performance in line with expectations, reflecting
strong operational delivery
§ Adjusted earnings per share of 49.8p, in line with expectations and
reflecting lower level of seasonality given upweighted earnings contribution
from regulated electricity networks businesses.
§ Reported earnings per share of 47.7p also reflects positive fair value
movements on derivatives offset by an increase in Deferred Tax driven by
capital allowances on an accelerating capital investment programme.
§ Electricity networks adjusted operating profits increased by 50% on prior
period, as expected lower revenue in Transmission was more than offset by
multi-year inflation catch-up through Distribution tariffs.
§ Renewables adjusted operating profit increased by 3.9 times on prior
period, as combination of 1GW+ increase in operating capacity and return to
favourable weather conditions drove ~45% increase in output with
long-established hedging approach providing ~30% increase in hedged prices.
§ Thermal and Gas Storage adjusted operating losses impacted by more stable
market environment, partly driven by return to Renewables-favourable weather
conditions over the period.
§ SSEN Transmission successfully launched in August 2024 its debut issuance
in the Euro bond market with a €850m 8-year Green Bond at an all-in fixed
funding cost of 4.95%. In October 2024, both SSE and SSEN Transmission
replaced existing revolving credit facilities with new sustainability linked
facilities totalling £3.0bn gross.
§ Adjusted investment, capital and acquisition expenditure of £1.3bn, with
~90% focused on clean power infrastructure across electricity networks and
renewables.
§ Adjusted net debt and hybrid capital at £9.8bn, in line with expectations,
with strength of balance sheet maintained alongside the strong investment
grade credit rating.
· Mid-point in five-year ~£20bn clean power Net Zero Acceleration
Programme Plus
§ Full energisation of Shetland HVDC link - a 260km subsea transmission cable
that connects the islands to the GB energy grid for the first time - and
completion of associated 443MW Viking wind farm both delivered in August 2024,
representing an investment of over £1bn.
§ Construction commenced on Eastern Green Link 2 (EGL2), a 2GW subsea HVDC
project being delivered in partnership with National Grid, which is the UK's
single largest electricity transmission project transporting enough
electricity to power two million UK homes. EGL2 was the first project to
receive "fast track" approval through Ofgem's Accelerated Strategic
Transmission Investment (ASTI) framework.
§ SSEN Transmission is continuing progress on remaining Large Onshore
Transmission Investments (LOTI) and ASTI projects, receiving final consents
for Argyll and Kintyre 275kV upgrade and commencing construction on £900m+
Orkney-Caithness link.
§ Major projects under way within SSEN Distribution, with framework
agreements worth £1.3bn+ having been agreed with delivery partners and over
750MW of distributed flexibility procured under the business plan.
§ Continuing to progress 3.6GW Dogger Bank offshore wind farm which, when
complete, will be the world's largest offshore wind farm. With turbine
installation ongoing on Dogger Bank A but the winter months fast approaching,
completion is expected in the second half of 2025. Monopile and transition
piece installation on Dogger Bank B continues to make good progress, with
procurement of a second turbine installation vessel under way. Despite slower
than expected progress on turbine installation, equity returns across all
three phases remain comfortably above hurdle rates.
§ Completion of the Tummel Bridge hydro-electric power station refurbishment,
investing £50m to increase capacity potential to 40MW whilst also extending
the plant's working life by at least 40 years.
§ Success in the UK sixth Contract for Difference auction (AR6) with 130MW
Cloiche onshore wind farm and in Ireland's fourth Renewable Electricity
Support Scheme auction (RESS 4) with 60MW Drumnahough onshore wind farm Joint
Venture.
§ Entered commercial operations on 55MW Slough Multifuel, a Joint Venture
with CIP, ahead of schedule. The facility is expected to process around
480,000 tonnes of residual waste each year, backed by a 15 year capacity
contract, with steam produced being re-used on the Slough Trading Estate.
§ Progress made in selected international markets with ~100MW onshore wind
under construction across Spain, France and Italy and auction success in the
Netherlands with 2GW Ijmuden Ver Alpha offshore wind farm Joint Venture.
Key Performance Indicators
Financial Performance Adjusted Reported
Sep 2024 Sep 2023 Sep 2024 Sep 2023(1)
Operating profit £m 860.2 693.2 902.8 644.3
EBITDA £m 1,323.0 1,109.6 1,290.7 987.9
Profit before tax £m 714.5 565.2 845.9 615.3
Earnings per share (EPS) pence 49.8 37.0 47.7 30.7
Interim dividend per share (DPS) pence 21.2 20.0 21.2 20.0
Investment, capital and acquisitions £m 1,292.1 1,054.3 1,573.3 1,320.4
Net debt and hybrid capital £m 9,843.8 8,943.8 8,688.8 8,050.6
SSEN Transmission RAV - £m ((100% basis)) 6,359 5,289
SSEN Distribution RAV - £m 5,528 5,138
SSE Total Electricity Networks RAV - £m ((100% basis)) 11,887 10,427
(1)Prior period reported figures have been restated, for further details see
note 2(v) to the Interim Financial Statements
Performance against 2030 Goals Sep 2024 Mar 2024 Sep 2023
Cut carbon intensity by 80%
- Scope 1 GHG intensity (gCO2e/kWh) 207 205 232
Increase renewable energy output fivefold
- Renewable generation output (TWh)(1) 5.4 11.2 3.8
Enable low-carbon generation and demand
- Renewables connected in SSEN Transmission network area (GW)(2) 10.6 9.3 9.2
Champion a fair and just energy transition
- Contribution to GDP UK and Ireland (£bn / €bn)(3) - 5.96/1.06 -
- Jobs supported in UK and Ireland(2) - 53,230/3,270 -
1 Includes SSE Renewables total output inc. pumped storage, battery, and
constrained off wind in GB, as well as biomass asset in Enterprise
2 Transmission and distribution connected capacity within the SSEN
Transmission Network area, includes pumped storage and battery storage
3 Direct, indirect and induced Gross Value Added and jobs supported, from PwC
analysis
Safety Performance Sep 2024 Mar 2024 Sep 2023
Total Recordable Injury Rate per 100k hours worked (SSE & contractors) 0.16 0.20 0.24
Investor Timetable
Interim ex-dividend date 2 January 2025
Record date 3 January 2025
Scrip reference pricing days 2-8 January 2025
Scrip reference price confirmed and released via RNS 9 January 2025
Q3 Trading Statement Around 31 January 2025
Final date for receipt of scrip elections 31 January 2025
Interim dividend payment date 27 February 2025
Notification of Closed Period Around 31 March 2025
Preliminary results for the year ended 31 March 2025 21 May 2025
Contact Details
Institutional investors and analysts ir@sse.com (mailto:ir@sse.com) + 44 (0)345 0760 530
Shareholder services www.investorcentre.co.uk/contactus + 44 (0)345 143 4005
Media media@sse.com (mailto:media@sse.com) + 44 (0)345 0760 530
MHP Group, Oliver Hughes oliver.hughes@mhpgroup.com (mailto:oliver.hughes@mhpgroup.com) + 44 (0)7885 224 532
MHP Group, James McFarlane james.mcfarlane@mhpgroup.com (mailto:james.mcfarlane@mhpgroup.com) + 44 (0)7584 142 665
Disclaimer
This financial report contains forward-looking statements about financial and
operational matters. These statements are based on the current views,
expectations, assumptions, and information of management, and are based on
information available to the management as at the date of this financial
report. Because they relate to future events and are subject to future
circumstances, these forward-looking statements are subject to unknown risks,
uncertainties and other factors which may not have been in contemplation as at
the date of the financial report. As a result, actual financial results,
operational performance, and other future developments could differ materially
from those envisaged by the forward-looking statements. Neither SSE plc nor
its affiliates assumes any obligations to update any forward-looking
statements.
SSE plc gives no express or implied warranty, representation, assurance or
undertaking as to the impartiality, accuracy, completeness, reasonableness or
correctness of the information, opinions or statements expressed in the
presentation or any other information (whether written or oral) supplied as
part of it. Neither SSE plc, its affiliates nor its officers, employees or
agents will accept any responsibility or liability of any kind for any damage
or loss arising from any use of this presentation or its contents. All and any
such responsibility and liability is expressly disclaimed. In particular, but
without prejudice to the generality of the foregoing, no representation,
warranty, assurance or undertaking is given as to the achievement or
reasonableness of any future projections, forward-looking statements about
financial and operational matters, or management estimates contained in the
financial report.
This financial report does not constitute an offer or invitation to
underwrite, subscribe for, or otherwise acquire or dispose of any SSE plc
shares or other securities, or of any of the businesses or assets described in
the financial report, and the information contained herein cannot be relied
upon as a guide to future performance.
Definitions
The financial information set out in this Interim Results Statement has been
prepared in accordance with the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority and UK adopted International Accounting
Standard 34 Interim Financial Reporting. The interim financial information is
unaudited but has been formally reviewed by the Group's statutory auditor and
its report to the Company is set out after the Interim Financial Statements.
In order to present the financial results and performance of the Group in a
consistent and meaningful way, SSE applies a number of adjusted accounting
measures throughout this financial report. These adjusted measures are used
for internal performance management and are believed to present the underlying
performance of the Group in the most useful manner for ordinary shareholders
and other stakeholders.
The definitions SSE uses for adjusted measures are explained in the
Alternative Performance Measures ("APMs") section before the Interim Financial
Statements. SSE continues to prioritise the monitoring of developing practice
in the use of APMs, ensuring the financial information in its results
statements is clear, consistent, and relevant to the users of those
statements.
For the purpose of calculating the 'Net Debt to EBITDA' metric, 'Net Debt'
represents the group's 'Adjusted Net Debt and Hybrid Capital" APM and 'EBITDA'
represents the full year group "Adjusted EBITDA" APM and including a further
adjustment to remove the proportion of "Adjusted EBITDA" from equity-accounted
Joint Ventures which relates to project financed debt.
Online Information
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Management presentation webcast and teleconference
SSE will present its interim results for the six months to 30 September 2024
on Wednesday 13 November at 08:30am GMT. The presentation will be available to
replay.
You can join the webcast by visiting www.sse.com and following the links on
either the homepage or investor pages; or directly using:
edge.media-server.com/mmc/p/9bft4i7j
This will also be available as a teleconference, for which participants can
register to receive a unique pin code and conference call number using:
register.vevent.com/register/BI5f565c50b4df4864b930be33d0b01a36
Strategic Overview
sse at the heart of the energy transition
SSE has made a strong start to the 2024/25 financial year, with capital
delivery and quality earnings driving significant value for our shareholders
and wider society. This performance demonstrates the resilience and value of
our balanced business mix. The market volatility that benefited SSE Thermal in
the prior period was not repeated, but it was more than offset by rising
output in SSE Renewables and high-quality electricity networks earnings. We
also saw margins recover in our customers businesses as they enjoyed more
normal market conditions.
The underlying driver of this performance is our own clean energy plan, the
five-year Net Zero Acceleration Programme (NZAP) Plus. As it reaches its
halfway point, this fully-funded ~£20bn investment plan continues to create
value in the form of new renewables capacity and increasing regulated asset
value as it adds mission-critical infrastructure to the energy system. The
delivery focus of the NZAP Plus, coupled with our enviable portfolio of
renewables, flexible back-up generation and electricity networks, puts us at
the very heart of the clean energy transition. SSE has the most attractive
renewables opportunities in one of the world's most attractive markets. At the
same time, we are building on the options we have to back up the intermittency
of renewables with an extensive thermal generation fleet, flexible hydro and,
increasingly, battery assets. And we have ramped up investment and projects in
electricity networks, particularly in our transmission business as it unlocks
the north of Scotland's renewables potential.
The new UK Government's urgency of intent on clean power by 2030 gives us
greater confidence in both the value of our climate-focused strategy and the
deliverability our ambitious development pipeline. This has been underpinned
by the recent report on Clean Power 2030 by the National Electricity System
Operator (NESO) that set out the critical roles of renewables, electricity
networks and flexibility in delivery of the UK Government's target. We have
also seen an acceleration of policy in specific areas like long-duration
storage, funding for Carbon Capture and Storage, planning reforms and budgets
for offshore wind auctions that all align with our strategic priorities and
reinforce our position as a major delivery partner. Further afield, it is a
similar story as the race to decarbonise gathers pace in selected markets like
the EU and Japan. We are constructing renewables in three EU countries now and
have recently won the Ijmuden Ver Alpha offshore tender in the Netherlands.
The benefits of our significant investment in renewables and electricity
networks can be seen in the delivery in the first half of both Viking onshore
wind farm and the pioneering HVDC transmission link that now connects Shetland
to the mainland for the first time.
But there is much more to come. As we work through recent issues with GE
Vernova blades on Dogger Bank A, work is already well under way on Dogger Bank
B and C. In electricity networks, construction has started on the Eastern
Green Link 2, which is the biggest transmission project undertaken in the UK,
and we have received final consent for an upgrade of the main electricity
transmission network across Argyll and Kintyre. Meanwhile, we are preparing to
submit our RIIO-T3 Business Plan in December for a price control that will be
a critical enabler of clean power by 2030 and beyond. All this delivery is
wholly dependent on employees and contract partners who share a common purpose
that seeks to build a better world of energy. Keeping these people out of
harm's way is our number one objective, so it is pleasing to be able to report
a significant reduction in both the number of injuries and the Total
Recordable Injury Rate in the first half of the year.
Our performance in the first half and the progress we are making on the NZAP
Plus gives us confidence in our 175-200p adjusted EPS target by FY27, with
clear visibility of growth within our renewables and electricity networks
plans. The transition to net zero offers an enormous opportunity. At SSE we
are seizing the moment thanks to our delivery focus, the resilience and
optionality of our business mix and a combination of underlying balance sheet
strength and capital discipline that allows us to pursue growth when and where
the value is greatest.
Alistair Phillips-Davies
Chief Executive
SSE plc
Group financial review
FINANCIAL PERFORMANCE FOR SIX MONTHS TO 30 SEPTEMBER 2024
In order to present the financial results and performance of the Group in a
consistent and meaningful way, SSE applies a number of adjusted accounting
measures throughout this financial report. These adjusted measures are used
for internal management reporting purposes and are believed to present the
underlying performance of the Group in the most useful manner for shareholders
and other stakeholders.
The definitions SSE uses for adjusted measures are consistently applied and
are explained - including a detailed reconciliation to reported measures - in
the Alternative Performance Measures section of this document before the
Interim Financial Statements.
Segmental EBITDA results are included in Note 5 to the Interim Financial
Statements.
Key Financial Metrics (£m) Adjusted Reported
Sep 2024 Sep 2023 Sep 2024 Sep 2023(1)
Segmental operating profit / (loss)
SSEN Transmission 157.5 215.6 210.0 287.3
SSEN Distribution 346.3 120.1 346.3 120.1
Electricity networks total 503.8 335.7 556.3 407.4
SSE Renewables 335.6 86.8 270.5 18.3
SSE Thermal (9.0) 312.9 (6.3) 234.6
Gas Storage (34.8) (86.7) (34.8) (91.3)
Thermal Total (43.8) 226.2 (41.1) 143.3
SSE Business Energy 60.1 88.0 60.1 88.0
SSE Airtricity (NI and Ire) 70.6 5.8 70.6 5.3
Energy Customer Solutions Total 130.7 93.8 130.7 93.3
SSE Energy Markets 14.1 9.0 79.3 88.9
SSE Enterprise (19.0) (8.4) (19.0) (8.4)
Neos Networks (10.7) (14.7) (12.3) (16.3)
Corporate unallocated (50.5) (35.2) (61.6) (82.2)
Total operating profit 860.2 693.2 902.8 644.3
Net finance (costs) / income (145.7) (128.0) (56.9) (29.0)
Profit before tax 714.5 565.2 845.9 615.3
Tax charge (96.0) (88.4) (213.3) (155.9)
Effective tax rate (%) 13.4 15.6 25.2 25.3
Profit after tax 618.5 476.8 632.6 459.4
Less: hybrid equity coupon payments (73.7) (73.1) (73.7) (73.1)
Less: profits attributable to non-controlling interests - - (36.8) (51.2)
Profit after tax attributable to ordinary shareholders 544.8 403.7 522.1 335.1
Earnings per share (pence) 49.8 37.0 47.7 30.7
Number of shares for basic/reported and adjusted EPS (million) 1,094.2 1,090.4 1,094.2 1,090.4
Shares in issue at 30 September (million)(2) 1,105.4 1,092.1 1,105.4 1,092.1
1 Prior period reported figures have been restated, for further details see
note 2(v) to the Interim Financial Statements
2 Excludes Treasury shares of 3.0m in September 2024 and 3.6m in September
2023
Operating profit
Adjusted and reported operating profits/losses in SSE's business segments for
the year to 30 September 2024 are set out below; comparisons are with the same
period to 30 September 2023 unless otherwise stated.
SSEN Transmission
Adjusted operating profit, which is presented net of the business' 25%
non-controlling interest, decreased by 27% to £157.5m from £215.6m in the
prior period. Despite growing expenditure and associated underlying
allowances, a true-up for benefit received in the 2023/24 financial year in
relation to "full expensing" accelerated capital allowances means that net
allowed revenues were lower than the prior period. In addition, operating
costs continue to grow as the business rapidly increases its workforce to
deliver on the growth programme agreed with the regulator and depreciation
increased in line with the asset base.
Reported operating profit decreased by 27% to £210.0m compared to £287.3m,
as a result of all of the movements above but reflecting that non-controlling
interests are fully consolidated for all profit metrics under IFRS.
SSEN Distribution
Adjusted and reported operating profit increased by 188% to £346.3m compared
to £120.1m in the prior period. The large increase in price control allowed
revenues in the period reflects that 2024/25 is the earliest financial year
when unexpectedly-high cost inflation in 2022/23 and 2023/24 can be recovered,
as tariffs are set 15 months before the start of financial year. The prior
period was also impacted by a volume-driven under recovery, with a small
over-recovery expected this financial year. This cost inflation true-up and
volume improvement is partially offset by increasing operating costs
associated with business transformation and improving network resilience, as
well as higher depreciation on a growing asset base.
SSE Renewables
Adjusted operating profit increased by 287% to £335.6m from £86.8m in the
prior period. The increase was largely driven by a combination of increased
operating capacity and favourable weather conditions - with average wind
speeds in Scotland around 14% higher than the comparative period - which drove
a ~45% increase in output. Operational capacity increased following Viking
Onshore Wind Farm achieving full commercial operations in August 2024, and
Seagreen Offshore Wind Farm achieving commercial operations in October 2023.
In addition, SSE Renewables' first battery energy storage system (BESS) was
delivered at Salisbury in April 2024. The increase in output was delivered in
a higher hedged price environment, with 2024/25 hedge prices around 30% higher
than the prior period, reflecting value from the long-established Renewables
hedging approach.
Reported operating profit increased to £270.5m from £18.3m in the prior
period. This reflects the above and other movements including an increase in
the Joint Venture / Associate share of interest and tax, and a positive impact
from exceptional items comprising remeasurement on SSE's affiliate CfD
arrangements which are classified as derivative contracts.
SSE Thermal
Adjusted operating profit decreased to a loss of £(9.0)m, compared to
£312.9m of profit in the prior period. The majority of this decrease is due
to the lower spark spread and lower volatility market environment, following
the normalisation of energy prices from the start of 2024. Capacity market
payments in GB and Ireland were also reduced compared to the prior period,
reflecting lower auction prices achieved. However, strong operational
performance was seen in the period with lower levels of unplanned outages in
the period, with the business also benefiting from the capacity addition of
the 55MW Slough Multifuel plant in August 2024.
Reported operating profit decreased to a loss of £(6.3)m, compared to
£234.6m of profit in the prior period. In addition to the movements above,
the prior period reported result was impacted by a £(76.7)m loss from a
non-recurring impairment charge on Triton Power and losses on remeasurements
of operating derivatives in that business.
Gas Storage
Adjusted operating loss decreased to a £(34.8)m loss, compared to a loss of
£(86.7)m in the prior period. As a seasonal business, a typical year sees gas
injected in the summer months when prices are low and then withdrawn and sold
in winter months when prices are higher. Trading churn of the injected gas
held in storage - driven by decreasing gas prices - has the effect of lowering
the average cost of gas and therefore creating an adjusted operating loss.
This loss is typically reversed in the winter months, as gas is withdrawn into
a higher price environment. The lower level of half year loss reflects the
lower levels of gas price volatility in the market this period.
Reported operating loss decreased to a £(34.8m) loss, compared to a loss of
£(91.3)m in the prior period. In addition to the movements above, the prior
period reflected a £(4.6)m mark-to-market loss on the fair value of physical
gas inventory held which was not repeated this period.
SSE Business Energy
Adjusted and reported profitability decreased to £60.1m in the year compared
to £88.0m in the prior year. The seasonal phasing of earnings continues to
drive greater realised margins in the first half of the financial year, with
profitability then expected to partially reverse for the full year. Following
the implementation of a new customer management system - Evolve - the focus
has been on servicing our existing customers, resulting in a tapering down of
acquisition activity, which has contributed to an overall reduction in
customer numbers and consumption volumes. Reduction in bad debt expense of
£39.5m partially offset this fall, as improved customer data from the Evolve
system, lower customer tariffs and a more stable market price environment
reduced the overall level of provisioning required. During the period customer
tariffs were reduced as markets stabilised.
SSE Airtricity
Adjusted profitability increased to £70.6m, from £5.8m in the prior period.
The prior period saw lower margins realised as the business honoured its
commitment to support customers throughout the cost-of-living crisis by
largely absorbing the impact of higher commodity costs and indirect costs
including bad debt expenses. The normalisation of energy prices in the first
six months has meant the business has been able to deliver tariff reductions
to customers whilst also returning supply margins to more sustainable levels.
This improvement was further aided by an increase in income from legacy wind
farms contracted to SSE Airtricity which rose to £15.9m in the current
period.
Reported operating profit also increased to £70.6m compared to £5.3m in the
prior period, with the prior period reflecting a £(0.5)m share of interest
and tax from Joint Ventures, in addition to the movements above.
SSE Energy Markets
Adjusted operating profit has increased to £14.1m from a £9.0m profit in the
prior period. With Energy Markets continuing to drive significant value for
the energy exposed businesses through its trading services, the business
itself continues to generate a relatively low level of baseline operating
earnings from these services which is supplemented by optimisation activities
and contracting for third party Power Purchase Agreement and route to market
contracts. The increase in period-on-period profitability is mainly due to
gains from optimisation trades which benefited from increased margins achieved
on gas and power trades across both UK and EU markets.
Reported operating profit decreased by 11% to £79.3m from £88.9m in the
prior period. In addition to the movements above, the reported operating
result includes a lower level of net remeasurement gains on forward commodity
derivatives in the year relative to a higher gain in the prior period. In line
with previous periods, these IFRS 9 remeasurements exclude any remeasurement
of 'own use' contracts and are unrelated to underlying operating performance.
SSE Enterprise
An adjusted and reported operating loss of £(19.0)m was recognised, compared
to a loss of £(8.4)m in the prior period. The business continues to incur
planned losses as it invests in a range of new pipeline opportunities across a
range of localised and flexible smart energy infrastructure technologies, in
addition to underlying inflationary increases in the operating cost base.
In September 2024, a restructuring of SSE Enterprise commenced which will see
the existing activities of the business integrated into other Business Units
for a simpler Group organisational structure and enhanced platforms for
growth.
Neos Networks
SSE's remaining 50% share in the Telecoms business Neos Networks Limited
recorded an adjusted operating loss of £(10.7)m compared to £(14.7)m in the
prior period, continuing to reflect the planned losses incurred to support
future business growth.
The reported result in both the current and previous year also includes a
£(1.6)m charge being SSE's share of Joint Venture Interest and Tax
expenditure.
Corporate Unallocated
Adjusted operating loss of £(50.5)m compares against a loss of £(35.2)m in
the prior period. The current period result includes a one-off impairment
charge of £11.3m relating to legacy IT systems which were replaced in the
period as part of IT Infrastructure upgrades.
Reported operating losses decreased from £(82.2)m in the prior period to
£(61.6)m, with the prior period including a £(50.5)m exceptional charge
relating to the Group's exposure on certain financial guarantee liabilities
following adoption of IFRS 17. In contrast, the current period reflected an
exceptional charge of £(21.9)m relating to the disposal of the Infrastructure
Solutions component of Enerveo Limited which is expected to complete in the
second half of the year. The reported result also includes a £10.8m positive
revaluation adjustment relating to the legacy Gas Production decommissioning
provision compared to a £3.5m positive adjustment on the same provision in
the prior period.
Earnings per share
In the six months ended 30 September 2024, SSE's adjusted earnings per share
was 49.8p. This compares to 37.0p for the previous period and reflects the
movements in adjusted operating profit outlined in the section above in
addition to higher year-on-year interest charges from Seagreen offshore
windfarm following that Joint Venture reaching full operations in October
2023, partially offset by a lower tax rate as a result of increased first-year
capital allowances available on an accelerated capital investment programme.
Reported earnings per share has increased to 47.7p from 30.7p in the previous
period and, in addition to the movements in adjusted earnings per share noted
above, reflects the £81.9m favourable net remeasurement on derivatives and
commodities held at fair value during the year, offset by £21.6m of
exceptional items and an increase in Deferred Tax driven by capital allowances
on an accelerating capital investment programme. Please see the Supplemental
Financial Information section of this Statement for more details.
Interim Dividend
Dividend per Share (pence) Mar 2025 Mar 2024
Interim Dividend 21.2 20.0
Final Dividend To be confirmed at preliminary results in May 2025 40.0
Full Year Dividend To be confirmed at preliminary results in May 2025 60.0
SSE believes that dividends should be sustainable and based on earnings
performance, whilst also enabling the longer-term growth prospects of its
assets and operations. To that end, the existing dividend plan to 2026/27 is
designed to balance income to shareholders with the appropriate funding for an
accelerated growth plan that will ultimately create greater value and total
return for shareholders over the long term.
In line with that dividend plan and reflecting the financial performance over
the first six months of the year, SSE today announces an interim dividend of
21.2 pence for payment on 27 February 2025. This represents an increase of 6%
on the 2023/24 Interim Dividend.
financial outlook
FINANCIAL OUTLOOK for 2024/25
SSE's balanced portfolio of assets across electricity networks, renewables and
flexible thermal generation mean that the Group is confident of delivering
strong and sustainable operating profit over the coming years.
The first half of SSE's financial year has seen the Group deliver strong
performance, in line with expectations, in an evolving market environment. The
greater operating profit contribution from electricity networks' businesses
has reduced the level of seasonality in the half year results, with the higher
output delivered by renewables meaning that flexible thermal generation
capacity was not required as often in a stable market environment.
The expectations set out in May 2024 by the Group for operating profits by
business therefore remain broadly unchanged, with the key winter months still
to come for renewables and flexible thermal generation:
· SSEN Transmission - continues to expect that operating profit
will be lower than the prior year, with reduced tariffs reflecting the
economically neutral "full expensing" taxation relief for qualifying capital
expenditure, which is netted off revenue.
· SSEN Distribution - continues to expect that operating profit
will be significantly higher than the prior year outturn, with the expected
inflationary catch-up in tariffs expected to more than double operating
profit.
· SSE Renewables - the increase in hedged prices combined with the
additional capacity from Seagreen offshore windfarm and Viking onshore
windfarm means that operating profits are expected to increase significantly
year-on-year.
· SSE Thermal and Gas Storage - expects that the current
loss-making position will reverse in the second half of the financial year,
with full year adjusted operating profits from these assets of around £200m
in current market conditions.
· Energy Customer Solutions - whilst the seasonal phasing of
earnings in Business Energy is expected to partially reverse the first half
result, Energy Customer Solutions continues to expect full year adjusted
operating profit for this segment to be at a similar level as the prior year.
These expectations are subject to normal weather conditions, current market
conditions and plant availability.
Consistent with the approach taken in prior years, we will look to give
specific adjusted earnings per share guidance later in the financial year.
Under the existing dividend commitment to increase dividends by between 5 -
10% per annum, the recommendation for the final dividend will be made in May
2025, as part of the Full Year Results Statement.
With capital expenditure and investment continuing to ramp up during the first
six months of the year, the full year capex is expected to significantly
increase to around £3bn, with the net debt to EBITDA ratio expected to be
towards the lower end of the 3.5 - 4.0x targeted range.
Net Zero Acceleration Programme PLUS
Reaching the mid-point of the NZAP Plus - a ~£20bn Five Year Investment
Programme
SSE set out its "Net Zero Acceleration Programme Plus" or "NZAP Plus" in
November 2023, providing the market with a fully funded five-year investment
plan to the end of the 2026/27 financial year, which reflected the strong
progress made in delivering the original investment plan, whilst recognising
the impact from a changing macroeconomic environment.
This investment programme targets capital expenditure of around £20bn over
the five-year period, with a weighting towards regulated electricity networks
as follows:
· SSEN Transmission (~37% or ~£7.5bn) in delivery of the RIIO-T2
baseline investment programme as well as part of the ~£20bn of additional
gross nominal investment to deliver eleven LOTI and ASTI projects critical to
removing constraints within the current electricity transmission network. This
investment is expected to increase gross RAV to more than £10bn by the end of
2026/27, whilst delivering expected adjusted operating profits (net of 25%
Non-Controlling Interest) of more than £400m on average across the five year
plan.
· SSEN Distribution (~17% or ~£3.5bn) in delivery of its RIIO-ED2
investment programme which continues to progress at pace. This business
continues to expect RAV to increase to between £6 - 7bn by the end of 2026/27
and deliver expected adjusted operating profits of at least £450m on average
across the five year plan.
· SSE Renewables (~34% or ~£7bn) to deliver on its existing
construction programme. Whilst the target to reach around 9GW of installed
capacity by 2026/27 remains, the business continues to focus on financial
discipline and selective renewables growth only where it is value accretive.
With that focus, the business does not need to reach the 9GW target in order
to achieve an expected ~19% adjusted operating profit CAGR over the five-year
plan.
· SSE Thermal and other businesses (~12% or ~£2.5bn) comprise the
majority of the remaining expected investment, with delivery of Keadby 2,
Slough Multifuel and other projects helping Thermal to achieve ~£400m
adjusted operating profits on average over the four years to FY27.
With around 90% of the investment plan still expected to be invested in
electricity networks and renewables, the substantial majority is focused on
climate solutions to achieve SSE's 2030 Goals which are linked to its most
highly-material UN Sustainable Development Goals (SDGs) and aligned to the
Technical Screening Criteria of the EU Taxonomy.
Continued strong balance sheet as the foundation of a fully-funded investment
plan
SSE has continually demonstrated its ability to realise value from disposals,
create sustainable earnings growth and raise capital at highly attractive
terms. Over the plan to date, £3.7bn of long-term debt has been issued at
attractive, fixed coupons.
The financial strength of the Group and continued earnings growth means that
it expects to still be within or below the target range of 3.5 - 4.0x net debt
/ EBITDA over the course of the plan to 2026/27.
Reaffirming expected earnings growth and dividend plan
After considering the Group's latest view of project delivery out to 2026/27,
in addition to the current and forecasted market conditions, SSE continues to
have confidence in reaching its 175 - 200p adjusted earnings per share
guidance range for 2026/27. This takes into account increased visibility over
investment through regulatory approvals for network upgrades, the delivery of
projects such as Seagreen and Viking and the extension of "full expensing"
capital allowances.
Reflecting the SSE plc Boards' confidence in delivering this future earnings
growth, the commitment to target dividend increases of between 5 to 10% per
year across 2024/25, 2025/26 and 2026/27 remains unaffected. This plan retains
the scrip dividend option for shareholders, with the cap on take-up still set
at 25% and implemented (if necessary) by means of a share buy-back.
Supplemental financial information
Adjusted Investment and Capex Summary Sep 2024 Sep 2024 Sep 2023
Share % £m £m
SSEN Transmission (net of 25% non-controlling interest) 29% 376.6 242.6
SSEN Distribution 23% 296.2 245.5
Regulated networks total 52% 672.8 488.1
SSE Renewables 38% 491.9 447.1
SSE Thermal 4% 46.4 38.2
Gas Storage -% 0.9 0.2
Thermal Energy Total 4% 47.3 38.4
Energy Customer Solutions 3% 36.2 36.8
SSE Energy Markets -% 4.5 3.4
SSE Enterprise 2% 27.0 15.2
Corporate unallocated 1% 12.4 25.3
Adjusted investment and capital expenditure 100% 1,292.1 1,054.3
Adjusted investment, capital and acquisitions expenditure 100% 1,292.1 1,054.3
Capital Expenditure Programme
During the 6 months to 30 September 2024, SSE's adjusted investment, capital
and acquisitions expenditure totalled £1,292.1m, compared to £1,054.3m in
the same period last year.
Investment in the reporting period was driven mainly by SSE's renewables and
electricity networks divisions, with limited deployment of capital in thermal
and other businesses, and no acquisitions expenditure.
In SSEN Transmission, £376.6m net capex was delivered, including £49m on the
EGL2 subsea HVDC being jointly delivered with National Grid, as onshore works
get underway. Construction has also commenced on Orkney HCAV system where
£24m net capex was delivered and £23m was invested in Argyll and Kintyre
after final planning approvals for the 275kV upgrade were granted in the
period.
In SSEN Distribution the £296.2m capex invested represents a more than 20%
increase on the same period in 2023/24, as the business ramps up delivery of
an ambitious RIIO-ED2 investment programme. £115m was delivered in the north,
covering both ongoing subsea cable investment and regional whole-circuit work.
Whilst in the south, expenditure of £181m included reinforcement work at Iver
in West London and Bramley-Thatcham near Reading.
SSE Renewables invested a total of £491.9m during the period, including £30m
on Viking Onshore Wind Farm on Shetland, which entered full commercial
operations during August 2024. £33m of capex was delivered in Southern
Europe, with progress being made across projects in Jubera (Spain), Chaintrix
(France) which achieved first power in October 2024, and Puglia (Italy). In
Ireland, £27m was invested at Yellow River, where full commercial operations
are expected during Spring 2025. In offshore, £116m of equity was drawn as
installation and commissioning of turbines at Dogger Bank Offshore Wind Farm
continues, with completion now expected in the second half of calendar year
2025. On battery and energy storage system (BESS) projects £71m was delivered
on Ferrybridge (West Yorkshire) with completion expected during 2025.
Hedging Position
The long-established approach to hedging followed by SSE looks to generally
reduce its broad exposure to commodity price variation in advance of delivery.
SSE continues to monitor market developments and conditions and periodically
alters its hedging approach in response to changes in its exposure profile.
A summary of the hedging position for each of SSE's market-based businesses is
set out below.
SSE Renewables - GB wind and hydro:
Energy output hedges are progressively established through the forward sale of
either:
§ Electricity - where market depth and liquidity allow;
§ Gas and carbon equivalents - recognising that spark spread exposures
remain; or
§ Gas equivalents only - recognising that carbon and spark spread exposures
remain.
This approach reflects that certain energy products have lower available
forward market depth and liquidity. Whilst some basis risk or commodity
exposure will remain, it facilitates the reduction of SSE Renewables' overall
exposure to potentially volatile spot market outcomes.
The table below notes both the proportion of hedges and prices of those hedges
for electricity and for gas alone (i.e. where the carbon leg has been unable
to be hedged). Due to market liquidity, there are no gas and carbon equivalent
hedges in place.
As at 31 March 2024 As at 30 September 2024
2024/25 2025/26 2026/27 2027/28
Wind
Total energy output volumes hedged - TWh 6.4 8.2 4.4 0.7
- Hedge in electricity & equivalents - TWh 4.1 4.3 2.6 0.5
- Electricity hedge price - £MWh £91 £87 £75 £69
- Hedge in Gas - TWh 2.3 3.9 1.8 0.2
- Gas hedge price - £MWh £122 £76 £57 £47
Hydro
Total energy output volumes hedged - TWh 2.9 2.7 1.4 0.1
- Hedge in electricity & equivalents - TWh 1.8 1.2 0.8 0.1
- Electricity hedge price - £MWh £96 £86 £74 £67
- Hedge in Gas - TWh 1.1 1.5 0.6 -
- Gas hedge price - £MWh £120 £82 £57 -
Note: where gas and carbon trades have been used as a proxy for electricity, a
constant 1 MWh:69.444 th and 1MWh:0.3815 te/MWh conversion ratio between
commodities has been applied. These same ratios have been used to convert
underlying commodity prices into electricity £MWh and therefore no
assumptions have been made on either spark or carbon.
The table above reflects the hedge position against outright merchant power
production. It therefore excludes any volumes and income under separate
contracts such as CfDs, ROCs and Balancing Mechanism activity.
Limited hedging activity has now commenced for SSE's equity share of Dogger
Bank A wind farm, with volumes hedged therefore included within the table
above. Given the project is still under construction, hedging activity has
been limited to a risk-adjusted forecast of expected pre-CfD volumes with
hedges only commencing during the second half of calendar year 2025.
SSE's established approach seeks to minimise the volumetric downside risk for
renewable energy output by targeting a hedge of less than 100% of its
anticipated wind energy output for the coming 12 months.
The targeted hedge percentage is reviewed and adjusted as necessary to reflect
any changes in market and wind capture insights. The last such revision
occurred in September 2023, setting a baseline target hedge of around 80% of
the anticipated energy output from wind and hydro for twelve months.
Energy output hedges for both wind and hydro are progressively established
over the 36 months delivery (although the extent of hedging activity for
future periods also depends on the available market depth and liquidity).
Target hedge levels are achieved through the forward sale of either
electricity or a combination of gas or carbon equivalents as outlined above.
When gas-and-carbon hedges are converted into electricity hedges a "spark
spread" is realised which can lead to changes in the average hedge price
expected. This can increase the previously published average hedge price or
decrease it. Likewise, when gas hedges are subsequently converted into
electricity hedges ahead of delivery, a carbon-and-spark spread value is
realised which will also lead to changes in the average hedge price expected.
GB Thermal:
Hedging for the flexible thermal fleet is based upon a mathematical assessment
of the optimal option delta based upon volatility, shape and time assumptions.
At negative spark spreads this hedge volume is therefore likely to be very
low; and at higher prices the hedge will be much fuller. The targeted hedge
position for the flexible thermal fleet is therefore dynamic, changing as
market values vary, with the constant process of reoptimisation (where
liquidity permits) accruing value to the Thermal fleet in future periods.
At all times the Thermal portfolio offers the wider group protection from
price spikes, renewables shortfall or asset availability issues and therefore
has material risk management value to the Group. This is in addition to the
value it provides to the wider market as a back-up reserve to an increasingly
renewables led energy-system, principally remunerated through the Capacity
Mechanism.
Gas Storage:
The assets are being commercially operated to optimise value arising from
changes in the spread between summer and winter prices, market volatility and
plant availability.
At 30 September 2024, 117mTh of gas inventory was physically held which
represents 62% of SSE's share of gross capacity (at 30 September 2023, 109mTh
of gas inventory representing 58% of SSE's share of gross capacity).
SSE Business Energy:
The business supplies electricity and gas to business and public sector
customers. Sales to contract customers are hedged: at point of sale for fixed
contract customers; upon instruction for flexi contract customers; and on a
rolling hedge basis for tariff customers.
Given the pricing and macro-economic context, SSE Business Energy is
dynamically monitoring nearer term consumption actuals for early signs of
demand variability and adjusting future volumes hedged accordingly.
SSE Energy Markets:
This business provides the route to market and manages the execution for all
of SSE's commodity trading outlined above (spark spread, power, gas, oil and
carbon). This includes monitoring market conditions and liquidity and
reporting net Group exposures. The business operates under strict position
limits and VAR controls.
There is some scope for position-taking to permit this business to manage
around shape and liquidity and providing market insight whilst taking
optimisation opportunities. This is contained within a total daily VAR limit
of £9m.
Ireland:
Vertical integration of the generation and customer businesses in Ireland
limits the Group's commodity exposure in that market.
exceptional items and certain remeasurements
Exceptional items
In the period ended 30 September 2024, SSE recognised a net exceptional charge
within continuing operations of £(21.6)m before tax. The following table
provides a summary of the key components included in the net charge:
Exceptional (charges) / credits Total
within continuing operations £m
Enerveo part-disposal (previously SSE Contracting) (21.9)
Other 0.3
Total exceptional charge (21.6)
Note: The definition of exceptional items can be found in Note 2(iii) of the
Interim Financial Statements.
For a full description of exceptional items, see Note 6 of the Interim
Financial Statements.
Certain remeasurements
In the period ended 30 September 2024, SSE recognised a favourable net
remeasurement within continuing operations of £81.9m before tax. The
following table provides a summary of the key components making up the
favourable movement:
Certain remeasurements Total
within continuing operations £m
Operating derivatives (including share from jointly controlled entities) 86.5
Financing derivatives (4.6)
Total net favourable remeasurement 81.9
Operating derivatives
SSE enters into forward purchase contracts (for power, gas and other
commodities) to meet the future demands of its energy supply businesses and to
optimise the value of its generation assets. Some of these contracts are
determined to be derivative financial instruments under IFRS 9 and as such are
required to be recorded at their fair value as at the date of the financial
statements.
SSE shows the change in the fair value of these forward contracts separately
as this mark-to-market movement does not reflect the realised operating
performance of the businesses. The underlying value of these contracts is
recognised as the relevant commodity is delivered, which for the large
majority of the position at 30 September 2024 is expected to be within the
next 6 - 18 months.
The change in the operating derivative mark-to-market valuation was a £86.5m
positive movement from the start of the period, reflecting a £118.7m positive
movement on fully consolidated operating derivatives combined with a £(32.2)m
share of movement on derivatives in jointly controlled entities (or a
£(24.2)m share net of tax) driven by commodity contract revaluations.
The positive movement of £118.7m on fully consolidated operating derivatives
includes:
· Settlement during the year of £67.1m of previously net
"out-of-the-money" contracts in line with the contracted delivery periods and
· A favourable net mark-to-market remeasurement of £51.6m on
unsettled contracts including affiliate CfDs, entered into in line with the
Group's stated approach to hedging. This mark-to-market remeasurement
reflects the reduced volatility seen in commodity markets during the period.
As in prior periods, the reported result does not include remeasurement of
'own use' hedging agreements which do not meet the definition of a derivative
financial instrument under IFRS 9 "Financial Instruments".
Commodity stocks held at fair value
Gas inventory purchased by the Gas Storage business for secondary trading
opportunities is held at fair value with reference to the forward month market
price. With the trading churn in the period having adjusted the average cost
of gas in the period though creating an adjusted operating loss for the
business, the relative stability in gas prices mean that the book value is
aligned with the fair value at the period end.
However, whilst this assessment considers the net change in fair value of
physical gas inventory held at the period end, it does not take into account
any positive or negative mark-to-market movement on forward contracted sales.
Therefore, similar to derivative contracts held at fair value, SSE does not
expect that any valuation movement will reflect the final result realised by
the business.
Financing derivatives
In addition to the movements above, an adverse movement of £(4.6)m was
recognised on financing derivatives in the period, including mark-to-market
movements on cross-currency swaps and floating rate swaps that are classed as
hedges under IAS 39. These hedges ensure that any fair value movement in net
debt is predominately offset by a movement in the derivative position. The
adverse movement was primarily driven by a declining interest rate
environment, driving an increase in the "out of the money" position on SSE's
fixed rate swaps.
These remeasurements are presented separately as they do not represent
underlying business performance in the year. The result on financing
derivatives will be recognised in adjusted profit before tax when the
derivatives are settled.
Financial management and balance sheet
Debt metrics Sep 2024 Mar 2024 Sep 2023
£m £m £m
Net Debt / EBITDA(1) N/A 3.0x N/A
Adjusted net debt and hybrid capital (£m) (9,843.8) (9,435.7) (8,943.8)
Average debt maturity (years) 6.3 6.4 5.9
Adjusted interest cover N/A 8.9x N/A
Average cost of debt at period end (including all hybrid coupon payments) 4.04% 3.90% 4.02%
1 Net debt represents the group adjusted net debt and hybrid capital. EBITDA
represents the full year group adjusted EBITDA, less £179.6m at March 2024
for the proportion of adjusted EBITDA from equity-accounted Joint Ventures
relating to project financed debt.
Net finance costs reconciliation Sep 2024 Sep 2023
£m £m
Adjusted net finance costs 145.7 128.0
Add/(less):
Lease interest charges (11.0) (11.7)
Notional interest arising on discounted provisions (13.2) (11.0)
Hybrid equity coupon payment 73.7 73.1
Adjusted finance costs for interest cover calculation 195.2 178.4
Principal Sources of debt funding Sep 2024 Mar 2024 Sep 2023
Bonds 62% 58% 54%
Hybrid debt and equity securities 17% 18% 18%
European investment bank loans 4% 5% 5%
US private placement 7% 8% 8%
Short-term funding 7% 8% 11%
Index -linked debt 3% 3% 4%
% of which has been secured at a fixed rate 94% 93% 91%
Rating Agency Rating Criteria Date of Issue
Moody's Baa1 'stable outlook' 'Low teens' Retained Cash Flow/Net Debt 19 December 2023
Standard and Poor's BBB+ 'outlook positive' About 18% Funds From Operations/Net Debt 5 September 2023
Maintaining a strong balance sheet
A key objective of SSE's long-term approach to balancing capital investment,
debt issuance and securing value and proceeds from disposals is by maintaining
a strong net debt/EBITDA ratio. SSE calculates this ratio based on a
methodology that it believes best reflects its activities and commercial
structure, in particular its strategy to secure value from partnering by using
Joint Ventures and non-recourse project financing.
SSE considers it has the capacity to reach a ratio of up to around 4.5x,
comparable with private sector utilities across Europe, whilst remaining above
the equivalent ratios required for an investment grade credit rating.
Given the strength of the Group's Balance Sheet, the net debt/EBITDA ratio at
31 March 2024 was well below this threshold at 3.0x. It is expected that this
ratio will trend upwards to around 4.0x, as the Group delivers on its ~£20bn
investment plan to 31 March 2027.
SSE's Standard and Poor's credit rating was re-affirmed in September 2023 at
BBB+ with 'outlook positive' and its Moody's rating was reaffirmed in December
2023 at Baa1 with 'stable outlook'.
Adjusted net debt and hybrid capital
SSE's adjusted net debt and hybrid capital was £9.8bn at 30 September 2024,
an increase of £0.4bn from 31 March 2024. With no significant acquisitions or
divestments in the period, the debt movement predominantly relates to capital
investment expenditure, with revaluation of currency debt as well as various
working capital movements being offset by operating cash flows less dividend
payments.
Debt summary as at 30 september 2024
The Group, through the Scottish Hydro Electric Transmission plc entity, issued
£0.9bn of new long-term debt in the financial period whilst also continuing
to roll Commercial Paper at similar levels to March 2024:
· In June 2024 Scottish Hydro Electric Transmission plc issued an
1.5bn NOK (£111m) 10-year private placement maturing June 2034 with a coupon
of 4.731% and an all-in GBP cost of 5.3315% once swapped back to Sterling.
· In July 2024 Scottish Hydro Electric Transmission plc issued a
£30m 15-year private placement maturing July 2039 with a coupon of 5.591%.
· In August 2024 Scottish Hydro Electric Transmission plc issued a
€850m (£715m) 8-year green bond maturing September 2032 with a coupon of
3.375% and an all-in GBP cost of 4.9127% once swapped back to Sterling.
· Over the course of the year, SSE plc rolled maturing short-term
Commercial Paper at similar levels to March 2024. On 30 September 2024 €955m
(£810m. Commercial Paper has been issued in Euros and swapped back to
Sterling at an average cost of debt of 5.50% and matures between October 2024
and January 2025.
In the six months to 30 September 2024 £0.2bn of medium-to-long-term debt has
matured comprising $320m (£204m) of US Private Placements which matured in
April 2024.
Over the next twelve months there is a further £1.0bn of medium-to-long-term
debt maturing being the €600m (£531m) Eurobond maturing 16 April 2025 and
€600m (£499m) Eurobond maturing 8 September 2025. As noted above, €955m
(£810m) of short-term debt in the form of Commercial Paper is also due to
mature in the second half of 2024/25, however the current intention is to roll
this maturing short-term debt forward throughout the 2024/25 and 2025/26
financial years.
Hybrid bonds summary as at 30 september 2024
Hybrid bonds are a valuable part of SSE's capital structure, helping to
diversify SSE's investor base and supporting credit ratings, as their 50%
equity treatment by the rating agencies is positive for credit metrics.
A summary of SSE's hybrid bonds as at 30 September 2024 can be found below:
Issued Hybrid Bond Value(1) All in rate(2) First Call Date Accounting Treatment
July 2020 £600m 3.74% Apr 2026 Equity accounted
July 2020 €500m (£453m) 3.68% July 2027 Equity accounted
April 2022 €1bn (£831m) 4.00% Apr 2028 Equity accounted
1 Sterling equivalents shown reflect the fixed exchange rate on date of
receipt of proceeds and is not subsequently revalued.
2 All in rate reflects coupon on bonds plus any cost of swap into sterling
which currently only applies to July 2020 Hybrid.
Further details on each hybrid bond can be found in Note 14 to the Interim
Financial Statements and a table noting the amounts, timing and accounting
treatment of coupon payments is shown below:
Hybrid coupon payments 2025/26 2024/25
HYe FYe HYa FYa
Total equity (cash) accounted hybrid coupon(1) £74m £74m £74m £74m
1 Coupon payments on €1.5bn of hybrid bonds remain denominated in Euros, and
are therefore subject to foreign exchange adjustments.
SSE's hybrid bonds are perpetual instruments and are therefore accounted for
as part of equity within the Interim Financial Statements but, consistent with
previous periods, have been included within SSE's 'Adjusted net debt and
hybrid capital' to aid comparability.
The coupon payments relating to the equity accounted hybrid bonds are
presented as distributions to other equity holders and are reflected within
adjusted earnings per share when paid.
Managing net finance costs
SSE's adjusted net finance costs - which exclude equity accounted hybrid
coupons - were £(145.7)m in the six months to 30 September 2024, compared to
£(128.0)m in the previous period. The higher level of finance costs in the
period is driven by a higher share of Joint Venture interest costs,
predominantly due to interest charges from Seagreen offshore wind farm project
finance. This is partially offset by higher capitalised interest costs
reflecting continued increasing construction activity.
Reported net finance costs were £(56.9)m compared to £(29.0)m in the
previous period. Higher interest charges incurred in Joint Ventures combined
with a £(45.6)m decrease in beneficial movement on financing derivatives as
previously referenced more than offset the reduction seen in adjusted net
finance costs
Summarising cash and cash equivalents
At 30 September 2024, SSE's adjusted net debt included cash and cash
equivalents of £0.9bn, which is broadly unchanged from September 2023.
Cash collateral is only required for forward commodity contracts traded
through commodity exchanges, with the level of cash collateral either provided
or received depending on the volume of trading through the exchanges, the
periods being traded and the associated price volatility.
At 30 September 2024, £(260.2)m of net cash collateral was held (2023:
£140.6m net posted) consisting of £(264.6)m received offset by £4.4m
deposited on the commodity trading exchanges. The decrease in cash collateral
posted reflects an increase in the "in the money" trading positions held by
the Group.
Revolving Credit Facility / SHORT-TERM FUNDING
SSE had £3.5bn gross of committed bank facilities in place at 30 September
2024 to ensure the Group has sufficient liquidity to allow day-to -day
operations and investment programmes to continue in the event of disruption to
Capital Markets preventing SSE from issuing new debt for a period of time.
These facilities are set out in the table below.
Date Issuer Debt type Term Value
Mar 19 SSE plc Syndicated Revolving Credit Facility with 10 Relationship Banks 2026 £1.3bn
Oct 19 SSE plc Revolving Credit Facility with Bank of China 2026 £200m
Nov 22 SHET plc Syndicated Revolving Credit Facility with 11 Relationship Banks 2026 £750m
Nov 22 SHEPD plc and SEPD plc Syndicated Revolving Credit Facility with 11 Relationship Banks 2026 £250m
Feb 23 SSE plc Syndicated Revolving Credit Facility with 10 Relationship Banks 2025 £1.0bn
The facilities can also be utilised to cover short-term funding requirements -
however they were undrawn for most of the period and remained undrawn as at 30
September 2024.
Since 30 September 2024, the above facilities have been cancelled and
replaced, leaving the SSE Group with the following committed facilities with a
syndication of 15 Relationship Banks
· £1.5bn revolving credit facility at SSE plc maturing October
2029 with two one-year extension options.
· £1.5bn revolving credit facility at Scottish Hydro Electric
Transmission plc maturing October 2029 with two one-year extension options.
Both these new facilities are classified as sustainability linked with
interest rate and fees paid dependant on various ESG-related metrics being
achieved.
In addition to the above, a $300m private placement shelf facility exists with
NY Life which can be drawn in approximately two equal tranches 12 months apart
over before February 2026. At 30 September 2024, no drawings have been made on
this facility. The Group also has access to a £15m overdraft facility.
Maintaining a prudent Treasury policy
SSE's treasury policy is designed to be prudent and flexible. In line with
that, cash from operations is first used to finance regulatory and maintenance
capital expenditure and then dividend payments, with investment and capital
expenditure for growth generally financed by a combination of cash from
operations, bank borrowings and bond issuance.
As a matter of policy, a minimum of 50% of SSE's debt is subject to fixed
rates of interest. Within this policy framework, SSE borrows as required on
different interest bases, with financial instruments being used to achieve the
desired out-turn interest rate profile. At 30 September 2024, 94% of SSE's
borrowings were at fixed rates (31 March 2024: 93%).
Borrowings are mainly in Sterling and Euros to reflect the underlying currency
denomination of assets and cash flows within SSE. All other foreign currency
borrowings are swapped back into either Sterling or Euros.
Transactional foreign exchange risk arises in respect of procurement
contracts, fuel and carbon purchasing, commodity hedging and energy portfolio
management operations, and long-term service agreements for plant.
SSE's policy is to hedge any material transactional foreign exchange risks
using forward currency purchases and/or financial instruments. Translational
foreign exchange risk arises in respect of overseas investments; hedging in
respect of such exposures is determined as appropriate on a case-by-case
basis.
STRENGTH AND STABILITY through medium- and long-term borrowings
The ability to raise funds at competitive rates is fundamental to investment.
SSE's fundraising over the past five years, including senior bonds, hybrid
capital and term loans, now totals £6.6bn and SSE's objective is to maintain
a reasonable range of debt maturities.
A key objective of the Group's NZAP Plus five-year investment plan is to
strike the right balance between capital investment, long-term debt issuance
and securing value through disposals, all whilst maintaining a strong net debt
/ EBITDA ratio. Whilst this investment will naturally require a level of
incremental debt issuance - in addition to refinancing of existing debt - the
Group considers the plan to be fully-funded given expected continued access to
debt markets and with SSE retaining a strong investment grade credit rating.
At 30 September 2024, the average debt maturity, excluding hybrid securities
was 7.0 years, consistent with the position at 31 March 2024.
SSE's average cost of debt is now 4.04%, compared to 3.90% at 31 March 2024.
The slight increase relates to issuing debt at higher rates than the average
cost of debt in March 2024.
Going Concern
The Directors consider that the Group has adequate resources to continue in
operational existence for the period to 31 December 2025. The condensed
Interim Financial Statements are therefore prepared on a going concern basis.
In reaching their conclusion, the Directors regularly review the Group's
funding structure (see note 13 of the Interim Financial Statements) against
the current economic climate to ensure that the Group has the short and long
term funding required. The Group has performed detailed going concern testing,
including the consideration of cash flow forecasts under stressed scenarios
for the period to December 2025.
The Group has an established €1.5bn Euro commercial paper programme (paper
can be issued in a range of currencies and swapped into Sterling) and as at 30
September 2024 there was £799m commercial paper outstanding (31 March 2024:
£840m). In the six months ended 30 September 2024, the Group has issued new
debt instruments totalling £0.9bn, and has redeemed £0.2bn of maturing long
term debt, while rolling £0.8bn of short term commercial paper.
The Group also continues to have access to its revolving credit facilities. As
at 30 September 2024 there were five committed facilities totalling £3.5bn
which were undrawn, as described in note 13. On 23 October 2024 these
facilities have been re-financed with the £0.75m facility relating to
Scottish Hydro Electric Transmission plc being increased to £1.5bn, and the
£2.75bn of facilities relating to SSE plc and Distribution being reduced to
£1.5bn. This reduction relates to the cancellation of the £1.0bn collateral
facility due to mature in February 2025, and the £0.25bn Distribution
facility that is no longer required.
This results in the Group having the following committed facilities:
· a £1.5bn revolving credit facility for SSE plc maturing October
2029 with two 1 year extension options; and
· a £1.5bn revolving credit facility for Scottish Hydro Electric
Transmission plc maturing October 2029 with two 1 year extension options.
The re-financing of the committed facilities was undertaken to ensure the
Group is set up to meet its funding obligations over the next five years, with
available committed facilities on the entities that require them. The
opportunity was also taken to increase the number of relationship banks from
11 to 15, which supports the Group's growth plans and funding requirements
over the next five years. The £1.5bn revolving credit facility for SSE plc is
in place to provide back-up to the commercial paper programme and support the
Group's capital expenditure plans. The Scottish Hydro Electric Transmission
plc facility, was entered into to help cover the capital expenditure and
working capital of that business.
Operating a Scrip Dividend Scheme
SSE's Scrip Dividend Scheme was renewed for a three-year period at the 2024
AGM. As part of the Group's dividend plan to 2026/27, take-up from the Scrip
Dividend Scheme is capped at 25%. This cap is implemented by means of a share
repurchase programme, or 'buyback', following payment of the final dividend.
The scale of any share repurchase program would be determined by shareholder
subscription to Scrip Dividend Scheme across the full year, taking into
account the interim and final dividend elections.
Overall Scrip Dividend Scheme take-up for the 2023/24 financial year was 35.7%
therefore the Group initiated a share buy-back programme to limit the dilutive
effect of the Scrip Dividend Scheme in line with dividend plan's 25% uptake
cap. This share buy-back programme commenced on 30 September 2024 and
completed on 16 October 2024, following the repurchase of 3.8m ordinary
shares.
principal joint ventures and associates
SSE's financial results include contributions from equity interests in joint
ventures ("JVs") and associates, all of which are equity accounted. The
details of the most significant of these are included in the table below. This
table also highlights SSE's share of off-balance sheet debt associated with
its equity interests in JVs which totals around £3.7bn as at 30 September
2024.
SSE principal JVs and associates(1) Asset type SSE holding SSE share of external debt SSE Shareholder loans
Marchwood Power 920MW CCGT 50% No external debt £8m
Seabank Power 1,234MW CCGT 50% No external debt No loans outstanding
Slough Multifuel 55MW energy-from-waste facility 50% No external debt £179m
Triton Power Holdings 1,200MW CCGT & 140MW OCGT 50% No external debt No loans outstanding
Beatrice Offshore Windfarm 588MW offshore wind farm 40% £590m Project financed
Dogger Bank A Wind Farm 1,200MW offshore wind farm 40% £928m £159m
Dogger Bank B Wind Farm 1,200MW offshore wind farm 40% £864m Project financed
Dogger Bank C Wind Farm 1,200MW offshore wind farm 40% £722m Project financed
Ossian Offshore Windfarm ScotWind seabed 40% No external debt No loans outstanding
Seagreen Wind Energy 1,075MW offshore wind farm 49% £654m £1,000m(2)
Seagreen 1A Offshore wind farm extension 49% No external debt £27m
Lenalea Wind Energy 30MW onshore wind farm 50% No external debt £14m
Clyde Wind Farm 522MW onshore wind farm 50.1% No external debt £127m
Dunmaglass Wind Farm 94MW onshore wind farm 50.1% No external debt £47m
Stronelairg Wind Farm 228MW onshore wind farm 50.1% No external debt £89m
Cloosh Valley Wind Farm 105MW onshore wind farm 25% No external debt £24m
Neos Networks Private telecoms network 50% No external debt £72m
1 Greater Gabbard, a 504MW offshore windfarm, is proportionally consolidated
and reported as a Joint Operation with no loans outstanding.
2 For accounting purposes, £309m of the £1,000m of SSE shareholder loans
advanced to Seagreen Wind Energy Limited have been classified as equity.
Taxation
SSE considers being a responsible taxpayer a core element of being a
responsible member of society. SSE seeks to pay the right amount of tax on its
profits, in the right place, at the right time, and was the first FTSE 100
company to have been awarded the Fair Tax Mark. October 2024 marked the tenth
consecutive year that SSE has achieved Fair Tax Mark accreditation.
While SSE has an obligation to its customers and shareholders to manage its
total tax liability efficiently, it does not seek to use the tax system in a
way it does not consider it was meant to operate, or use "tax havens" to
reduce its tax liabilities.
SSE understands it also has an obligation to the society in which it operates,
and from which it benefits - for example, tax receipts are vital for the
public services SSE relies upon. Therefore, SSE's tax policy is always to
operate within both the letter and spirit of the law.
For reasons outlined in the Alternative Performance Measures section of this
document, SSE's focus is on adjusted profit before tax, and in line with that,
SSE believes that the adjusted current tax charge on that profit is the tax
measure that best reflects underlying performance. SSE's adjusted current tax
rate for the period to 30 September 2024, based on adjusted profit before tax,
is 13.4%, as compared with 15.6% for the same period last year on the same
basis, and after discrete items. The decrease in rate is largely driven by
increased capital allowances on capital expenditure in the period.
The UK Spring Budget in March 2023 introduced "full expensing" for qualifying
capital expenditure incurred during the period from 1 April 2023 to 31 March
2026, that measure then being made permanent in the November 2023 Autumn
Statement. First-year capital allowance rates of 100% and 50% replaced the
existing rates of 18% and 6% respectively for qualifying capital expenditure,
significantly increasing the amount of first-year capital allowances available
on SSE's capital investment programme.
The UK has now introduced legislation in respect of Multinational Top-up Tax
in line with OECD BEPS pillar 2 principles. The Group has applied the
exemption from recognising and disclosing information about deferred tax
assets and liabilities related to Pillar Two income taxes as required by the
amendments to IAS 12 - International Tax Reform-Pillar Two Model Rules, which
were issued in May 2023. The legislation will come into force for the year
ended 31 March 2025 including this interim period. Similar draft legislation
has been introduced in the Republic of Ireland and other EU jurisdictions. The
Group has undertaken modelling and does not expect a material impact to arise
as tax rates, including deferred tax, in the countries in which the Group
operates are expected to exceed 15%.
Pensions
Contributing to employees' pension schemes - IAS 19 September 24 March 24 September 23
£m
£m
£m
Net pension scheme asset recognised in the balance sheet before deferred tax 470.8 421.6 411.0
£m
Employer cash contributions Scottish Hydro Electric scheme £m 0.5 1.0 0.5
Employer cash contributions SSE Southern scheme £m 12.5 27.1 15.2
Deficit repair contribution included above £m 7.7 16.3 9.1
In the six months to 30 September 2024, the surplus across SSE's two pension
schemes increased by £49.2m, from £421.6m to £470.8m, primarily due to
actuarial gains of £33.5m and contributions to the schemes.
The valuation of the SSE Southern scheme increased by £28.2m in the six-month
period primarily due to actuarial gains of £17.9m, driven by the impact of
higher discount rates which offset the losses on plan assets, and
contributions of £12.5m.
The Scottish Hydro Electric Pension scheme has partially insured against
volatility in its deferred and pensioner members through the purchase of
'buy-in' contracts meaning that the Group only retains exposure to volatility
in active employees. During the period the scheme's surplus increased by
£21.0m. This increase was also mainly driven by the impact of higher discount
rates which offset the losses on plan assets.
Additional information on employee pension schemes can be found in Note 17 to
the Interim Financial Statements.
SUSTAINABILITY SUMMARY
Performance against 2030 Goals Sep 2024 Mar 2024 Sep 2023
Cut carbon intensity by 80%
- Scope 1 GHG intensity (gCO2e/kWh) 207 205 232
Increase renewable energy output fivefold
- Renewable generation output (TWh) 5.4 11.2 3.8
Enable low-carbon generation and demand
- Renewables connected in SSEN Transmission network area (GW)(1) 10.6 9.3 9.2
Champion a fair and just energy transition
- Contribution to GDP UK and Ireland (£bn / €bn)(2) - 5.96/1.06 -
- Jobs supported in UK and Ireland(2) - 53,230/3,270 -
1 Includes SSE Renewables total output inc. pumped storage, battery, and
constrained off wind in GB, as well as biomass asset in Enterprise
2 Direct, indirect and induced Gross Value Added and jobs supported, from PwC
analysis
Safety Performance Sep 2024 Mar 2024 Sep 2023
Total Recordable Injury Rate per 100k hours worked (SSE and contractors) 0.16 0.20 0.24
providing profitable solutions for people and planet
Due to the essential nature of SSE's activities, sustainability has naturally
been a long-standing feature of its business model, embedded at the heart of
its strategy. It provides a framework that guides decisions as it transitions
to net zero, ensuring it is done in a way that creates and shares value with
stakeholders.
Sustainability is articulated at the highest level, with SSE's business
strategy aligned to the UN's Sustainable Development Goals (SDGs). To embed
this approach throughout the organisation, SSE has identified four SDGs which
are highly material to the business, and to which it has linked its four core
business goals for 2030. These 2030 Goals are focused on addressing the
challenge of climate change in a way that is fair to working people, consumers
and communities.
MEASURING PERFORMANCE
The scope 1 GHG intensity of electricity generated in the six months to 30
September 2024 fell to 207gCO2e/kWh from 232gCO2e/kWh in the same period in
2023. Increased generation output from renewables as a result of more
favourable weather conditions and additional capacity, combined with stable
emissions arising from thermal generation drove the improvement in scope 1 GHG
intensity performance.
Renewable output was 45% higher period-on-period, driven by incremental
operating capacity and more favourable weather conditions. Operational
capacity increased following the delivery of the Viking Wind Farm on Shetland
in August 2024 and SSE Renewables' first battery energy storage system (BESS)
in April 2024. Additionally, the period benefited from a full contribution
from Seagreen Offshore Windfarm.
As of 30 September 2024, the total installed renewable capacity connected to
SSE's north of Scotland Transmission network is 10.6GW, exceeding the
business' RIIO-T2 goal to deliver a network in the north of Scotland with the
capacity and flexibility to accommodate 10GW of renewable generation by 2026,
following the connection of several large renewable schemes in 2024/25.
SSE's combined SSE employee and contractor Total Recordable Injury Rate fell
to 0.16 from 0.24 in the prior period, benefiting from a >30% improvement
in contractor injury rates. SSE's new immersive training facility represents a
major investment in safety with over 6,000 employees and partners trained
since April 2024, contributing to better safety behaviours.
Further information on SSE's progress towards its SDG-aligned 2030 Business
Goals can be found in the Half Year Sustainability Statement published here:
www.sse.com/sustainability/reporting/
(https://www.sse.com/sustainability/reporting/)
BUSINESS OPERATING REVIEW
SSEN Transmission
SSEN Transmission owns, operates and develops the high voltage electricity
transmission system in the north of Scotland and its islands. Following a
minority stake sale completed in November 2022, the business is owned 75% by
SSE plc and 25% by Ontario Teachers' Pension Plan Board. All references to
performance indicators relate to 100% of the business unless otherwise stated.
Key Performance Indicators September 24 September 23
Transmission adjusted operating profit(1) - £m 157.5 215.6
Transmission reported operating profit - £m 210.0 287.3
Transmission adjusted investment and capital expenditure(1) - £m 376.6 242.6
Gross Regulated Asset Value (RAV) - £m(2) 6,359 5,289
SSE Share Regulated Asset Value (RAV)(1,2) - £m 4,769 3,967
Renewable Capacity connected within SSEN Transmission area - MW(3) 10,610 9,217
1 Excludes 25% minority interest
2 Estimated and subject to outturn of annual regulatory process
3 Transmission and distribution connected capacity within the SSEN
Transmission Network area, includes pumped storage and battery storage.
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery - RIIO-T2
SSEN Transmission continued to deliver a strong operational performance in the
first half of 2024/25 and is on track to achieve the maximum annual RIIO-T2
reward available through the 'Energy Not Supplied Incentive', which would
equate to £0.8m in 2018/19 prices. This performance is underpinned by a
robust and ongoing programme of inspection, maintenance, refurbishment and
replacement of assets, supporting GB security of supply.
Capital investment programme
The RIIO-T2 capital investment programme continues, with progress being made
across major projects. As of 30 September 2024, the total installed capacity
of the north of Scotland network was almost 11.9GW, of which just over 10.6GW
is from renewable and other low carbon sources - including 0.6GW of pumped
storage and batteries.
This connected capacity is enough to power 12.3m homes, meaning the business
has achieved its RIIO-T2 goal to transport the renewable electricity that
powers 10m homes, two years early.
A key part of this was delivered in the period with the completion of the
Shetland High Voltage Direct Current (HVDC) link, which was fully energised in
August, capable of transporting enough clean energy to power 500,000 homes.
Delivered on time and on budget, this landmark project connects Shetland to
the GB transmission grid for the first time, via the first multi-terminal HVDC
switching station of its kind installed anywhere in Europe.
Work has also progressed to connect Shetland's existing electricity
distribution network to the Shetland HVDC link, connecting Shetland's homes
and business to the GB electricity network for the first time via the new Grid
Supply Point being constructed at Gremista. The Kergord-Gremista 132kV
circuits will then connect the HVDC link to the new Gremista Grid Supply
Point. The project remains on track to be complete by the end of 2025.
Work to incrementally increase the voltage in the north-east Scotland
transmission network to 400kV continues with the next phase due to be
completed towards the end of 2026. Further 400kV infrastructure is expected to
enter construction as part SSEN Transmission's Accelerated Strategic
Transmission Investment (ASTI) projects, from 2026 onwards.
Other regulatory investments
The business has secured regulatory approvals required to take forward several
major investments over and above its baseline RIIO-T2 investment plan.
Through Ofgem's Large Onshore Transmission Investment (LOTI) Uncertainty
Mechanism, SSEN Transmission is currently progressing three projects with an
estimated gross nominal investment of around £3bn. To accelerate the
regulatory process and facilitate delivery of the offshore and onshore network
reinvestments required for the energy transition, Ofgem introduced the ASTI
regulatory framework in December 2022 with SSEN Transmission currently
progressing eight projects through that framework with an estimated gross
nominal investment of around £17bn.
LOTI projects
In September, construction began on the Orkney-Caithness transmission link.
The link will transport around 220MW of renewable electricity generation and
full energisation is anticipated in 2028.
For the Skye reinforcement project, which will see the replacement and upgrade
of the existing Fort Augustus to Skye transmission line, a decision on the
Section 37 overhead line planning application is expected during the remainder
of 2024, following both substation applications being granted consent by the
Highland Council at the start of 2024. Construction work is ready to begin,
and full energisation is targeted towards the end of 2028.
In September 2024, Scottish Ministers granted consent for the final major
elements of the Argyll and Kintyre 275kV upgrade. Substation construction work
is under way, and overhead line preparatory work has started too, with full
energisation expected during 2029.
ASTI projects
SSEN Transmission's eight ASTI projects include overhead line and substation
installations as well as subsea cables to support the connection of offshore
wind and onshore electricity generation, namely:
· Onshore (all wholly owned): Beauly-Spittal, Beauly-Peterhead,
Beauly-Denny upgrade and Kintore-Tealing
· Offshore wholly owned: Western Isles Link and Spittal-Peterhead
· Offshore jointly-developed with National Grid: Eastern Green Link
2 (EGL2) and Eastern Green Link 3 (EGL3)
The EGL2 project - which will see the installation of a 2GW electricity
transmission subsea superhighway between the north east of Scotland and
Yorkshire - has made progress during the year with all approvals in place,
supply chain secured and final cost approval confirmed by Ofgem in August
2024. Onshore works are now under way at either end of the HVDC link and
the project is on track for completion in 2029.
Work to progress EGL3 - which will see the installation of a 2GW subsea HVDC
between the north east of Scotland and south Lincolnshire/West Norfolk -
continues to progress with the supply chain engaged in the tender process.
In what is one of the biggest consultations that Scotland has ever seen, SSEN
Transmission has carried out over 230 public events across its ASTI projects,
gathering community feedback to shape its plans. Consultation will continue
throughout the rest of 2024 and into 2025 in advance of submitting consent
applications.
To support the timely delivery of ASTI and all future projects, SSEN
Transmission is actively advocating for a maximum 12-month determination of
all Section 37 overhead line planning applications. This is in line with the
recommendations of the UK Government's Electricity Networks Commissioner, and
others. In October 2024, the UK Government, in collaboration with the Scottish
Government, published a consultation reviewing the consenting process for
Electricity Infrastructure in Scotland. The consultation, which seeks to
modernise and streamline consenting in Scotland, builds on the Scottish
Government's Green Industrial Strategy, which includes the ambition for
12-month consent determinations.
RIIO-T3 price control
In July, Ofgem published its Sector Specific Methodology Decision (SSMD), an
important step in the RIIO-T3 regulatory price control process covering the
period between 2026 and 2031.
While the signals from Ofgem to support investment in the SSMD were positive,
the unprecedented level of investment required to deliver SSEN Transmission's
~£20bn of LOTI and ASTI projects, as well as baseline RIIO-T3 spend, means
the final RIIO-T3 framework must be attractive to both equity and debt
providers. SSEN Transmission will work constructively with Ofgem and wider
stakeholders to ensure the future regulatory framework provides the
flexibility and agility required to deliver the unprecedented level of
required investment. Work progresses to develop the SSEN Transmission Business
plan, which is scheduled for submission to Ofgem by 11 December 2024.
Future growth opportunities
In August, Ofgem published a consultation on the NESO's Beyond 2030 report,
the second transitional Centralised Strategic Plan. For the north of Scotland,
the NESO's plan confirms the need for a number of projects to proceed now for
delivery by 2035, which combined represent a potential estimated gross
investment of over £5bn for SSEN Transmission.
Ofgem's consultation has provisionally approved the need for four major
investments in upgraded and new infrastructure in the north of Scotland,
including a second HVDC link to Shetland. Ofgem has also provisionally
identified SSEN Transmission as the delivery body for three of the four
projects, exempting them from competition, with a decision on the fourth
expected around the end of the year.
Further investment beyond the Pathway to 2030 is required to unlock the north
of Scotland's full renewable potential and to deliver energy security and net
zero targets.
SSEN DISTRIBUTION
SSEN Distribution, operating under licence as Southern Electric Power
Distribution plc (SEPD) and Scottish Hydro Electric Power Distribution plc
(SHEPD), is responsible for safely and reliably maintaining the electricity
distribution networks supplying over 3.9m homes and businesses across central
southern England and the north of Scotland. SSEN Distribution's networks cover
the greatest land mass of any of the UK's Distribution Network Operators
spanning over 75,000km² of extremely diverse terrain. The business has
significant growth opportunities as a key enabler of the local and national
transition to a net zero future.
Key Performance Indicators September 24 September 23
Distribution adjusted and reported operating profit - £m 346.3 120.1
Regulated Asset Value (RAV) - £m 5,528 5,138
Distribution adjusted investment and capital expenditure - £m 296.2 245.5
Electricity Distributed - TWh 12.0 16.7
Customer minutes lost (SHEPD) average per customer 31 28
Customer minutes lost (SEPD) average per customer 27 27
Customer interruptions (SHEPD) per 100 customers 28 25
Customer interruptions (SEPD) per 100 customers 22 26
RAV, Customer minutes lost and Customer interruptions figures estimated and
subject to outturn of annual regulatory process
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery - RIIO-ED2
SSEN Distribution is mid-way through the second year of the RIIO-ED2 price
control, which runs until March 2028. This secured £3.6bn of baseline
expenditure, an increase of 22% on the previous price control, and there is
further opportunity to trigger up to £0.7bn in additional funding under
Uncertainty Mechanisms to meet new demand and generation growth, and to
improve subsea cable connections to Scotland's islands.
SSEN is continuing to deliver this plan at pace, engaging with Government and
the Regulator to ensure that the agility within the price control is fully
maximised to deliver on the recently accelerated timescales for clean power
delivery. This approach balances network optimisation through expanding
capabilities in local flexibility with growing the asset base to underpin the
net zero transition, thus increasing long-term Regulatory Asset Value (RAV).
Targeted improvements in performance and efficiency are also being made while
retaining a core focus on delivery of business plan outputs.
Improving customer performance
Targets for improving service levels for customers are set through the
regulatory framework. In RIIO-ED2, the performance required to secure higher
incentive rewards has been tightened. Within the Interruptions Incentive
Scheme (IIS), SSEN is offered an incentive on its performance against the loss
of supply, through the recording of the number of Customer Interruptions (CI)
and Customer Minutes Lost (CML). These include both planned and unplanned
interruptions.
SEPD has seen an 18% improvement in its Customer Interruption (CI) performance
with Customer Minutes Lost (CML) performance remaining stable. SHEPD's CI
performance declined by 12% compared with the same point last year with its
CML performance declining by 11%. The improvements in SEPD reflect progress in
defect removal, the installation of more automation, and more recruitment and
training of new colleagues to carry out routine maintenance and tree cutting.
In SHEPD, poor weather throughout the summer - which did not qualify as
exceptional under IIS provisions - contributed to network performance.
SHEPD's Customer Satisfaction Score increased by 1% in the first half of this
financial year; in SEPD it decreased by 2.5%. Delivering improvements to
customer satisfaction is a key focus for the business, and the 'Perform'
programme is reorganising the Operations division in central southern England.
This is beginning to deliver performance improvements, including a 24%
increase in the number of network jobs completed per day.
Capital investment programme
Following £505.1m of investment and capital expenditure in 2023/24, SSEN
Distribution's capital investment programme continues to accelerate, with
£296.2m being invested in the year to date - a £50.7m increase on the same
period last year. At one of the Grid Supply Points (GSPs) in Iver in West
London, delivery is currently underway on a £175m upgrade, which will remove
fault level constraints, accommodate connections for new customers, and
improve operational flexibility. In the SEPD licence area, frameworks worth
>£1bn have been agreed with delivery partners which will bring benefits to
customers and create capacity for new connections. A similar programme for the
SHEPD licence area will result in tenders being awarded in the coming months.
Other regulatory investments
In total, more than £130m of Uncertainty Mechanism spend has so far been
approved or minded-to approved by Ofgem in the RIIO-ED2 price control period,
with the majority of potential additional funding becoming eligible for
triggering later in the price control.
Ofgem is assessing SSEN's plans for the Shetland Standby Project under the
Shetland Enduring Solution reopener. A draft determination published in
September 2024 proposed that the reopener would be funded in line with SSEN's
request of £27m for the rest of the current price control period. This
follows proactive work with stakeholders and the regulator to prepare a
robust, evidence-based submission. The final decision is expected in winter
2024.
Looking further ahead to load-related Uncertainty Mechanisms which will open
for submissions in January 2025, SSEN Distribution is taking an approach which
seeks to invest proactively and strategically to meet generation and demand
needs to 2050.
Leading on the future system
SSEN Distribution has become the first Distribution Network Operator to
publish Strategic Development Plans, setting out a regional view of expected
generation and demand growth and related network investment need in stages to
2050. These are now being produced for each Grid Supply Point (GSP) and the
area it serves. They will act as blueprints for optimal investment and provide
evidence to Ofgem on the feasibility of plans and the cost to consumers.
SSEN's strong support for net zero planning at a local level is borne out by
proactive relationships with local authorities. This is epitomised by SSEN's
sector-leading Local Energy Net Zero Accelerator (LENZA) application. LENZA is
a geospatial planning tool, which empowers local authorities to make effective
net zero plans and provides robust evidence for the regulatory funding of
future investment.
SSEN Distribution remains at the forefront of the development of new flexible
electricity systems. In this year's Ofgem Distribution System Operator (DSO)
Performance Panel, SSEN scored well and secured an upper-tier incentive return
of £2.2m.
SSEN Distribution also continues to increase the tendering of Flexibility
Services in areas where localised high demand can be offset to extend overall
network capacity. SSEN recently launched a new Flexibility Market Platform and
has signed 19 new Overarching Agreements with 12 different companies. A total
of 20 different companies are now on a Flexibility Service Contract and the
business has already sought the procurement of a further 367MW this year,
adding to the 703MW of flexibility services contracted during 2023/24.
SSE Renewables
SSE Renewables is a leading developer and operator of renewable energy
generation, focusing on onshore and offshore wind, hydro, solar and battery
storage. The business' core focus is on the UK and Ireland, with a growing
presence in carefully selected international markets, and comprises c2,100
renewable energy professionals predominately based across the UK and Ireland
with a growing presence in Continental Europe and Japan.
Key Performance Indicators September 24 September 23
Renewables adjusted operating profit - £m 335.6 86.8
Renewables reported operating profit - £m 270.5 18.3
Renewables adjusted investment & capital expenditure before acquisitions - 491.9 447.1
£m
Generation capacity - MW
Onshore wind capacity (GB) - MW 1,728 1,285
Onshore wind capacity (NI) - MW 117 117
Onshore wind capacity (ROI) - MW 581 567
Total onshore wind capacity - MW 2,426 1,969
Offshore wind capacity (GB) - MW 1,014 1,014
Conventional hydro capacity (GB) - MW 1,160 1,159
Pumped storage capacity (GB) - MW 300 300
Battery capacity (GB) - MW 50 -
Total renewable generation capacity (inc. pumped storage) - MW 4,950 4,442
Contracted capacity 3,458 3,015
Generation output - GWh (including compensated constraints)
Onshore wind output (GB) - GWh 1,720 1,060
Onshore wind output (NI) - GWh 84 97
Onshore wind output (ROI) - GWh 516 532
Total onshore wind output - GWh 2,320 1,689
Offshore wind output (GB) - GWh 1,715 1,006
Conventional hydro output (GB) - GWh 1,194 884
Pumped storage output (GB) - GWh 151 144
Battery output (GB)-GWh 21 -
Total renewable generation (inc. pumped storage & battery) - GWh 5,401 3,723
1. Capacity and output based on 100% of wholly owned sites and share of joint
ventures
2. Total renewable generation capacity is increased by 508MW. This
principally reflects 443MW from Viking wind farm fully operational August 2024
and 50MW from Salisbury BESS completed in April 2024.
3. Contracted capacity includes sites with a CfD, eligible for ROCs, or
contracted under REFIT (CfD contracts may be still to commence)
4. Onshore GB wind output includes 420GWh of compensated constrained off
generation in HY2024/25 and 272GWh in HY2023/24; Offshore GB wind output
includes 731GWh of compensated constrained off generation in HY2024/25 and
62GWh in HY2023/24
5. Biomass capacity of 15MW and output of 28GWh in HY2024/25 and 37GWh
HY2023/24 is excluded, with the associated operating profit or loss reported
within SSE Enterprise
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery
In onshore, operational performance was strong across the portfolio with
higher-than-average wind speeds, especially in late summer. Total volumes to
September were 2,320GWh, significantly higher than prior year volume of
1,689GWh. This was a result of wind resource for the period combined with
Viking entering into operations. Asset availability remained high with planned
maintenance campaigns delivered on time.
In offshore, Beatrice (588MW, SSE share 40%), Greater Gabbard (504MW, SSE
share 50%) and Seagreen (1,075MW, SSE share 49%) all performed in line with,
or better than, expectations. Beatrice was impacted by transmission outages
for tie-in works, but this was offset by a combination of high availability
and better than forecast wind resource. Greater Gabbard also enjoyed increased
turbine availability, although export capability has recently been impacted
due to a switchgear failure for which a resolution is in progress. Seagreen
performed well in its first full year of operation with higher than
anticipated wind resource and good availability delivering above expectation.
In hydro, operational performance was strong in the first six months of the
financial year with production of 1,194GWh, higher than prior period volume of
884GWh. At Foyers, plant availability was good at 85%.
Delivering world-class assets
Onshore, a landmark milestone was achieved with the completion of Viking wind
farm (443MW) in Shetland in August 2024 achieved on time and on budget, with
the project supporting around 35 full time jobs in addition to a community
fund that is expected to contribute more than £70m to the local Shetland
economy over its lifetime. Construction is substantially complete at Yellow
River (101MW) in Ireland with first power expected before the end of 2024,
supporting commercial operations in spring 2025. Export will be via a
temporary connection prior to transfer to a permanent connection, expected in
late 2025.
Offshore, installation and commissioning work resumed on the turbines at
Dogger Bank A in late August, following recent blade failures on the Haliade-X
turbine. It is expected Dogger Bank A will reach completion within the second
half of calendar year 2025. This expected completion date reflects the delay
resulting from additional quality assurance procedures and remedial works put
in place by GE Vernova.
On Dogger Bank B, the interarray cable lay has commenced, and all monopiles
and transition pieces have been produced with around 85% installed. At Dogger
Bank C, offshore substation platform completion work is ongoing and onshore
converter station construction continues to progress. It is anticipated that
there will be a knock-on effect for turbine installations at both Dogger Bank
B and C as a consequence of the delays on Dogger Bank A. The delays are not
expected to materially impact Dogger Bank's equity returns across all three
phases, which remain comfortably above SSE's offshore wind hurdle rate.
In hydro, SSE Renewables completed the refurbishment of its Tummel Bridge
power station in August 2024, increasing the station's potential output to
34-40MW and extending its life by 30 years. The business is also carrying out
other improvement works on hydro assets to maximise run-off, storage and
optimisation benefits.
SSE Renewables reached FID on its first onshore wind projects in Italy, Castel
Favorito and Masseria la Cattiva (together 17MW), in the Puglia region.
Construction is due to begin in by the end of 2024 and COD is expected in
2026. Construction continues on SSE Renewables' first French onshore wind
farm, Chaintrix (c.28MW), with all turbines now installed, first power
achieved and commercial operations expected in early 2025.
Growth opportunities - GB & Ireland
In September 2024, SSE Renewables' Cloiche wind farm (130.5MW), located in the
Scottish Highlands, was successful in the UK's sixth Contract for Difference
(CfD) Allocation Round. It will receive a guaranteed strike price of
£50.90/MWh, based on 2012 prices but annually indexed since then for CPI
inflation, for a 15-year period from the 2027/28 delivery year. A final
investment decision is expected in 2025.
In Ireland, SSE Renewables was successful in securing a 16.5-year contract for
Drumnahough wind farm (60MW, SSE share 50%) in the fourth round of the
Renewable Electricity Support Scheme auction, where the average weighted bid
price was €90.47/MWh for onshore wind.
In June, SSE Renewables submitted an offshore planning consent application for
the offshore infrastructure required for its proposed Arklow Bank Wind Park 2
project (800MW) in the Irish Sea. With consent secured for the operations and
maintenance base and for the onshore cabling and substation, this marks the
third and final planning consent required to move to the construction stage of
the project.
SSE Renewables added to its grid-scale battery storage projects with the
acquisition of a consented battery energy storage system (BESS) - Thornberry
BESS (120MW/240Mwh in Co Offaly). Subject to reaching FID, Thornberry could be
operational by the end of the decade.
In October 2024, the UK Government confirmed it will introduce a cap and floor
scheme for long-duration electricity storage, a mechanism which SSE has long
called for to support pumped hydro storage. The scheme will open to
applications in 2025. SSE Renewables hopes to make a final investment decision
on Coire Glas (c.1,300MW) subject to a timely process and being successful in
the administrative allocation of an investable mechanism.
Growth opportunities - International
Continental Europe
In the Netherlands, SSE Renewables was successful in securing the Alpha site
(2GW, SSE share 50%) in the Dutch Government's Ijmuiden Ver zone tender, with
its joint venture partner APG (acting on behalf of Dutch pension fund ABP).
The award is for a pre-developed and fully consented offshore wind site in the
North Sea, with a 40-year lease period (€1m annual payment). Subject to
reaching FID, expected by late 2025, the wind farm would be commissioned by
the end of the decade.
Japan
In June, a consortium including SSE's joint ownership company, SSE Pacifico
(80% stake), was awarded funding from the Japanese Government for a c.30MW
floating offshore wind demonstration project in Japan. If it proceeds to
construction, the project would be one of the deepest offshore development
sites in the world at depths of up to 400m.
SSE Thermal
SSE Thermal owns and operates conventional flexible thermal generation in GB
and Ireland, whilst actively exploring opportunities for growth in
technologies such as carbon capture and storage (CCS) and hydrogen power
generation. SSE Thermal's flexible and efficient fleet of gas-fired generation
will continue to play a critical role in the transition to net zero, providing
reliable back-up power and complementing renewable energy.
Key Performance Indicators September 24 September 23
Thermal adjusted operating (loss)/profit - £m (9.0) 312.9
Thermal reported operating (loss)/profit - £m (6.3) 234.6
Thermal adjusted investment and capital expenditure, before acquisitions - £m 46.4 38.2
Generation capacity - MW
Gas- and oil-fired generation capacity (GB) - MW 5,538 5,538
Gas- and oil-fired generation capacity (ROI) - MW 672 672
Energy from waste capacity (GB) - MW 28 0
Total thermal generation capacity - MW 6,237 6,210
Generation output - GWh
Gas- and oil-fired output (GB) - GWh 6,295 6,099
Gas- and oil-fired output (ROI) - GWh 640 921
Energy from waste output (GB) - GWh 22 0
Total thermal generation - GWh 6,957 7,020
1 Capacity is wholly owned and share of joint ventures, and reflects
Transmission Entry Capacity
2 Output is based on SSE 100% share of wholly owned sites and 100% share of
Marchwood PPAs due to the contractual arrangement.
3 Output in GB in six months to September 2024 excludes 20GWh of
pre-commissioning output from Slough Multifuel which commissioned August 2024.
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery
The role of thermal plant has changed materially over the last two years. Its
value to the market is increasingly to provide back-up reserve to the
renewables led system (remunerated through the Capacity Mechanism) and then to
provide flexible response as overall UK balances change. Increasingly this
means that the value of the intrinsic baseload spark spread is less relevant
to Thermal revenues, and value is accrued through the Capacity Mechanism,
offering the National Energy System Operator services though the Balancing
Mechanism and other ancillary contracts and then through trading the option
value of the assets.
At all times the Thermal portfolio offers the wider group protection from
price spikes, renewables shortfall or asset availability issues and therefore
has material risk management value to the Group.
In the first six months of 2024/25, the SSE Thermal fleet delivered strong
commercial availability - availability when the market requires flexible power
generation - despite planned outages at Keadby 2, Great Island and Seabank
extending beyond the original schedule.
Slough Multifuel completed its first full month of commercial operation,
delivering incremental value to the business, although also affected by low GB
power prices. Slough Multifuel's 15-year Capacity Market agreement commenced
on 1 October 2024.
Lower spark spreads have also been seen in Ireland, as continued strong demand
in a tight Irish system has been offset by increased CCGT capacity available
to the market. Whilst period-on-period output from Great Island has been lower
than expected due to an extended outage, since full return to service in
August it has run predominantly baseload.
Managing availability responsibly, both within year and taking a view of
future system needs, continues to be a priority for SSE Thermal. This is being
considered when setting out the approach to maintenance programmes - planning
across multiple years and portfolio-wide to build in additional resilience,
with the older existing assets (Keadby 1, Medway and Peterhead) now expected
to play an important role on the system for longer than originally
anticipated, and at least to 2030.
Construction programme
In August, the construction and commissioning of Slough Multifuel was
completed, with the site handed to commercial operations. The build of the
55MW energy-from-waste plant began in May 2021 with the project - a 50/50 JV
with Copenhagen Infrastructure Partners - being delivered ahead of schedule
and on budget.
In Ireland, construction of a Temporary Emergency Generation unit at Tarbert
is nearing completion. The 150MW emergency capacity, being delivered at the
request of Irish authorities, is now scheduled to be available by the end of
2024. Under legislation from the Irish Government, it will cease operations
when the temporary electricity emergency has been addressed and no later than
March 2028. Until then, it would only be utilised when it is clear that
market-sourced generation will not be sufficient to meet system needs and with
a maximum running time of 500 hours per year.
Growth opportunities
Strong progress is being made on SSE Thermal's proposed new power stations in
Ireland which would run on 100% sustainable biofuels. In October 2024, SSE
Thermal received planning consent from An Bord Pleanála for the 300MW Tarbert
Next Generation Power Station in County Kerry. A planning decision is expected
soon from An Bord Pleanála on the 170MW Platin Power Station in County Meath.
A final investment decision is targeted by the end of 2024 for the projects,
both of which hold 10-year capacity agreements due to commence in the
2026/2027 delivery year.
In GB, SSE Thermal is actively developing two new flexible power stations at
its Keadby and Ferrybridge sites. The up to 910MW (SSE share 50%) Keadby Next
Generation Power Station and up to 1.2GW Ferrybridge Next Generation Power
Station would be 'dual fuel' in nature, allowing them to run on natural gas
before converting to hydrogen once the necessary transport and storage
infrastructure has been deployed. SSE Thermal is taking this approach to
minimise the risk of carbon lock-in, while recognising that progress to
decarbonise flexible generation in the GB power system has been slower than
anticipated and there is a need for additional flexible capacity on the system
over the coming decade.
As part of its strategy to unlock hydrogen, SSE Thermal is also continuing
development on multiple hydrogen production projects. It has partnered with
EET Hydrogen on Gowy Green Hydrogen, a proposed 40MWe green hydrogen
production facility in Cheshire. Planning activity is expected to commence for
Gowy Green Hydrogen and the H2NorthEast blue hydrogen production project, a
joint venture with Kellas Midstream located in Teesside, in 2025.
A planning application has been submitted for Aldbrough Hydrogen Pathfinder, a
first-of-a-kind project which would unite hydrogen production, storage and
power generation in one location by 2028. The project has also been entered
into the Government's HAR2 allocation round, with progress expected in spring
2025.
The UK Government is expected to unveil next steps for deployment of carbon
capture technology in Scotland and the Humber in the Spring of 2025, following
its £22bn commitment to CCS in October 2024. It is anticipated this will open
opportunities for SSE Thermal's Peterhead Carbon Capture and Keadby Carbon
Capture to receive Dispatchable Power Agreements and help to deliver the UK
Government's clean energy ambitions.
Gas Storage
SSE holds around 40% of the UK's conventional underground gas storage capacity
at two sites on the east Yorkshire coast. The Atwick facility, near Hornsea,
is wholly-owned by SSE, while the Aldbrough facility is operated as a joint
venture with Equinor. These two sites offer flexibility and hedging services
to the UK and interconnected gas markets. As part of the transition to net
zero, opportunities to convert gas storage facilities to store low-carbon
hydrogen, which can be used to decarbonise power generation, industry, heat,
transport and other key sectors are being explored.
Key Performance Indicators September 24 September 23
Gas Storage adjusted operating loss- £m (34.8) (86.7)
Gas Storage reported operating (loss) / profit - £m (34.8) (91.3)
Gas storage adjusted investment and capital expenditure - £m 0.9 0.2
Gas storage level at period end - mTh 117 109
Gas storage level at period end - % 62 58
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery
SSE's Gas Storage business continues to respond to market needs, optimising
assets to help ensure security of gas supply for the UK whilst providing
important liquidity to the market. These assets are an important risk
management tool for the Group's generation portfolio. They offer short-notice
flexibility as a result of their technical ability to cycle quickly and
mitigate exposures from wind speeds and demand variability.
The patterns of operation give rise to seasonal variations in financial
performance depending on the market dynamics. The gas markets have
demonstrated limited volatility in the first half of the year, with minimal
spread between summer and winter prices.
Third party contracts have been secured with three customers for injection and
withdrawal, locking in value for the assets while maintaining the ability to
trade the remaining capacity.
Availability at Atwick was limited from August to October for planned
maintenance intervention on Cavern Three and work to maintain operability of
the compressors. The site reached full injection capacity in October. At
Aldbrough, all caverns provided strong injection and withdrawal availability
across the period.
Growth opportunities
Good progress was made by the UK Government on the development of the Hydrogen
Storage Business Model in the early part of the year. Despite slower progress
since the new Government took office, DESNZ still recognises the strategic
importance of hydrogen storage to cost-effective deployment of a hydrogen
economy. SSE Thermal expects that the allocation processes for hydrogen
transport and storage support will progress in 2025.
Aldbrough Hydrogen Storage, which SSE is developing in partnership with
Equinor, remains well placed to enter this process and be part of a broader
Humber Hydrogen Hub that could link Aldbrough, Saltend and Easington into a
regional hydrogen network. Preparation to submit a planning application for
Aldbrough Hydrogen Storage continues, with statutory consultation completed.
Energy Customer Solutions
SSE Business Energy in Great Britain (non-domestic) and SSE Airtricity on the
island of Ireland (domestic and non-domestic) provide a shopfront and route to
market for SSE's generation, renewable green products and low-carbon energy
solutions. Across Great Britain and the island of Ireland, the primary focus
has been on supporting customers, modernising systems and expanding the green
energy and low carbon product offerings to enable customers to reduce their
energy consumption and carbon emissions.
SSE Business Energy
Key Performance Indicators September 24 September 23
SSE Business Energy adjusted & reported operating profit - £m 60.1 88.0
Electricity Sold - GWh 4,895 5,203
Gas Sold - mtherms 46.1 60.8
Aged Debt (60 days past due) - £m 356.8 230.3
Bad debt expense - £m 17.1 56.6
Energy customers' accounts - m 0.34 0.41
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery
Connecting customers with SSE's renewable assets continues to be a core focus
for the business, with additional corporate customers successfully securing
CPPA products during the period. Delivery of the Smart programme continues,
with the business expected to exceed its target by year-end.
Under the SSE Energy Solutions brand, the business continues to deliver
transformative decarbonisation projects through a range of public and private
sector partnerships. SSE Energy Solutions' partnership with Ortus Energy
includes the acquisition of 13MW of existing rooftop solar assets and the
option to finance up to 130MW of future solar projects over the next three
years, providing future growth opportunities and optionality around developing
new customer propositions.
Following the implementation of a new customer management system, focus has
been on fully integrating the new system to deliver an improved customer
experience and increased capability for a broader offering.
SSE Airtricity
Key Performance Indicators September 24 September 23
Airtricity adjusted operating profit - £m 70.6 5.8
Airtricity reported operating profit - £m 70.6 5.3
Aged Debt (60 days past due) - £m 19.7 19.8
Bad debt expense - £m 2.1 5.4
Airtricity Electricity Sold - GWh 3,152 3,110
Airtricity Gas Sold - mtherms 85.3 67.0
All Ireland energy market customers (Ire) - m 0.79 0.74
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery
During the first half of this year, Airtricity continued to support domestic
customers through tariff reductions on three consecutive occasions and ongoing
discretionary supports. Higher customer numbers and higher volumes contributed
to a return to profitability. SSE Airtricity also launched its £5m Generation
Green Community Fund in May which will deliver funding for sustainable
initiatives in communities across the island of Ireland.
SSE Airtricity remains focused on providing a route to market for green
generation and developing low carbon solutions for all customer segments, with
households and businesses across the island of Ireland benefiting from its
home energy efficiency upgrades. The business sees further opportunity for
developing energy efficiency upgrades in Northern Ireland and developing its
B2B proposition across the island. Part of the low carbon solutions offering
comes via SSE Airtricity's 50% joint venture partnership with Activ8 Solar
Energies.
The business is dedicated to customer proposition innovation with a particular
focus on demand side flexibility, resulting in the launch of its Energihub
offering. Customer service is central to its innovation efforts, with
increased utilisation of digital tools to meet customers' needs.
SSE Enterprise
SSE Enterprise has long been the incubator of new propositions and now, to
build an enhanced platform for growth, structural changes are being made to
incorporate the constituent parts of the business into other areas of the SSE
Group. This strategic realignment will optimise the growth potential of
offerings like smart digital and distributed energy solutions such as district
heat networks, EV charging infrastructure, private wires, behind the meter
solar and battery, and Independent Distribution Network Operator (IDNO)
capability by leveraging the strength of the Group.
Key Performance Indicators September 24 September 23
SSE Enterprise adjusted and reported operating (loss) - £m (19.0) (8.4)
SSE Heat Network Customer Accounts 12,823 11,493
Biomass, heat network and other capacity - MW 26 26
Biomass, heat network and other output - GWh 43 49
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery
In July 2024, SSE Enterprise's EV business agreed a joint venture with
TotalEnergies, creating Source . Source targets the deployment of up
to 3,000 high power charge points, grouped in 300 "EV hubs". The joint venture
has made a strong start to its growth plans with 34 EV charging hubs to be
completed by the financial year end. This includes the launch of Scotland's
most powerful EV charging hub in Myrekirk, Dundee (2.5MVA) and SSE's first EV
hub in the Republic of Ireland in Lough Sheever (0.8 MVA).
In IDNO, the business has developed a 150MVA private network connection trial
at Imperial Park in South Wales, bringing the site's total capacity to around
400MVA. Meanwhile, the smart digital energy solutions business continues to
work with SSE Energy Markets to optimise front-of-meter battery trading for
the Group.
Operational availability across the portfolio of 18 heat networks in Scotland
and England remains strong, with Slough Heat and Power benefiting from
additional connections to deliver electric, water and steam services across
Slough Trading Estate.
The business continues to develop its whole system approach to local networks
and has entered a joint development agreement with Northumberland Estates
Renewables to develop large-scale solar farms, battery energy storage systems
and district heat networks in the north of England.
The business is pioneering innovation in heat distribution and has an
ambitious project pipeline under development in advance of the UK Government's
proposals for a new regulation and zoning regime to support investment in heat
networks in England. This includes capturing heat from data centres, deep
geothermal, electricity network transformers and energy-from-waste plants.
SSE Energy Markets
SSE Energy Markets - previously Energy Portfolio Management (EPM) -
commercially optimises all of SSE's market-based Business Unit assets in the
wholesale energy markets, securing value on behalf of these businesses by
trading in wholesale energy markets and managing volatility through active
risk management.
This involves trading the principal commodities to which SSE's asset
portfolios are exposed, as well as the spreads between two or more commodity
prices (e.g. spark spreads): power (baseload and other products); gas; and
carbon (emissions allowances). Each commodity has different risk and liquidity
characteristics, which impacts the quantum of hedging possible.
Key Performance Indicators September 24 September 23
SSE Energy Markets adjusted operating profit - £m 14.1 9.0
SSE Energy Markets reported operating profit - £m 79.3 88.9
For financial performance commentary please refer to the Group Financial
Review.
Operational delivery
SSE Energy Markets plays a pivotal role in navigating energy market
volatility, managing risk and ensuring the Group's market-based Business Units
can capture and maximise value. This covers all trading periods, with
decisions being made from one Centre of Excellence. The value Energy Markets
secures for SSE's asset portfolio continues to be reported against individual
Business Units.
The business has continued to build a strong portfolio of third-party assets
as part of its strategy of independently adding value to the Group. In the
first half of the year, it signed a 15-year route-to-market PPA with Inch Cape
to optimise its Inch Cape Offshore Wind Farm. As part of the agreement, SSE
Energy Markets will offtake 50% of the wind farm's electricity output and
associated environmental benefits.
It also signed a two-year route-to-market PPA with CWP Energy for its
Aikengall I onshore wind farm in East Lothian, Scotland. This builds on
10-year optimisation contracts previously secured on Copenhagen Infrastructure
Partners' 500MW BESS project in Coalburn, Scotland and with Sheaf Energy
Limited for their 249MW BESS project in Kent, England.
SSE Energy Markets has also increased the volumes it is trading in European
power and gas markets, which will be critical as the Group seeks opportunities
in carefully selected international markets. It has also continued to adapt to
the shifting energy landscape by further strengthening its data and advanced
analytics capabilities.
ALTERNATIVE PERFORMANCE MEASURES
When assessing, discussing and measuring the Group's financial performance,
management refer to measures used for internal performance management. These
measures are not defined or specified under International Financial Reporting
Standards ("IFRS") and as such are considered to be Alternative Performance
Measures ("APMs").
By their nature, APMs are not uniformly applied by all preparers including
other participants in the Group's industry. Accordingly, APMs used by the
Group may not be comparable to other companies within the Group's industry.
Purpose
APMs are used by management to aid comparison and assess historical
performance against internal performance benchmarks and across reporting
periods. These measures provide an ongoing and consistent basis to assess
performance by excluding items that are materially non-recurring,
uncontrollable or exceptional. These measures can be classified in terms of
their key financial characteristics:
· Profit measures allow management to assess and benchmark
underlying business performance during the period. They are primarily used by
operational management to measure operating profit contribution and are also
used by the Board to assess performance against business plan. The Group has
six profit measures, of which adjusted operating profit and adjusted profit
before tax are the main focus of management through the financial period and
adjusted earnings per share is the main focus of management on an annual
basis. In order to derive adjusted earnings per share, the Group has defined
adjusted operating profit, adjusted net finance costs, and adjusted current
tax charge as components of the adjusted earnings per share calculation.
Adjusted EBITDA is used by management as a proxy for cash derived from
ordinary operations of the Group.
· Capital measures allow management to track and assess the
progress of the Group's significant ongoing investment in capital assets and
projects against their investment cases, including the expected timing of
their operational deployment and also to provide a measure of progress against
the Group's strategic Net Zero Acceleration Programme Plus objectives ("NZAP
Plus").
· Debt measures allow management to record and monitor both
operating cash generation and the Group's ongoing financing and liquidity
position.
There have been no changes to the way the Group calculates its APMs in the
current period.
The following section explains the key APMs applied by the Group and referred
to in these statements:
Profit measures
Group APM Purpose Closest equivalent IFRS measure Adjustments to reconcile to primary financial statements
Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) Profit measure Operating profit · Movement on operating and joint venture operating derivatives
('certain re-measurements')
· Exceptional items
· Adjustments to retained Gas Production decommissioning provision
· Share of joint ventures and associates' interest and tax
· Depreciation and amortisation before exceptional charges
(including depreciation and amortisation expense on fair value uplifts)
· Share of joint venture and associates' depreciation and
amortisation
· Non-controlling share of operating profit
· Non-controlling share of depreciation and amortisation
· Release of deferred income
Adjusted Operating Profit Profit measure Operating profit · Movement on operating and joint venture operating derivatives
('certain re-measurements')
· Exceptional items
· Adjustments to retained Gas Production decommissioning provision
· Depreciation and amortisation expense on fair value uplifts
· Share of joint ventures and associates' interest and tax
· Non-controlling share of operating profit
Adjusted Profit Before Tax Profit measure Profit before tax · Movement on operating and financing derivatives ('certain
re-measurements')
· Exceptional items
· Adjustments to retained Gas Production decommissioning provision
· Non-controlling share of profit before tax
· Depreciation and amortisation expense on fair value uplifts
· Interest on net pension assets/liabilities (IAS 19)
· Share of joint ventures and associates' tax
Adjusted Net Finance Costs Profit measure Net finance costs · Exceptional items
· Movement on financing derivatives
· Share of joint ventures and associates' interest
· Non-controlling share of financing costs
· Interest on net pension assets/liabilities (IAS 19)
Adjusted Current Tax Charge Profit measure Tax charge · Share of joint ventures and associates' tax
· Non-controlling share of current tax
· Deferred tax including share of joint ventures, associates and
non-controlling interests
· Tax on exceptional items and certain re-measurements
Adjusted Earnings Per Share Profit measure Earnings per share · Exceptional items
· Adjustments to retained Gas Production decommissioning provision
· Movements on operating and financing derivatives ('certain
re-measurements')
· Depreciation and amortisation expense on fair value uplifts
· Interest on net pension assets/liabilities (IAS 19)
· Deferred tax including share of joint ventures, associates and
non-controlling interests
Rationale for adjustments to profit measures
1 Movement on operating and financing derivatives ('certain re-measurements')
This adjustment can be designated between operating and financing derivatives.
Operating derivatives are contracts where the Group's SSE Energy Markets
function enters into forward commitments or options to buy or sell
electricity, gas and other commodities to meet the future demand requirements
of the Group's SSE Business Energy and SSE Airtricity operating units, or to
optimise the value of the production from SSE Renewables and Thermal
generation assets or to conduct other trading subject to the value at risk
limits set out by the Energy Markets Risk Committee. Certain of these
contracts (predominately purchase contracts) are determined to be derivative
financial instruments under IFRS 9 and as such are required to be recorded at
their fair value. Changes in the fair value of those commodity contracts
designated as IFRS 9 financial instruments are reflected in the income
statement (as part of 'certain re-measurements'). The Group shows the change
in the fair value of these forward contracts separately as this mark-to-market
movement is not relevant to the underlying performance of its operating
segments due to the volatility that can arise on revaluation. The Group will
recognise the underlying value of these contracts as the relevant commodity is
delivered, which will predominantly be within the subsequent 12 to 24 months.
Conversely, commodity contracts that are not financial instruments under IFRS
9 (predominately sales contracts) are accounted for as 'own use' contracts and
are consequently not recorded until the commodity is delivered and the
contract is settled. Gas inventory purchased by the Group's Gas Storage
business for secondary trading opportunities is also held at fair value with
gains and losses on re-measurement recognised as part of 'certain
re-measurements' in the income statement. Finally, the mark-to-market
valuation movements on the Group's contracts for difference contracts entered
into by SSE Renewables that are not designated as government grants and which
are measured as Level 3 fair value financial instruments are also included
within 'certain re-measurements'.
Financing derivatives include all fair value and cash flow interest rate
hedges, non-hedge accounted (mark-to-market) interest rate derivatives, cash
flow foreign exchange hedges and non-hedge accounted foreign exchange
contracts entered into by the Group to manage its banking and liquidity
requirements as well as risk management relating to interest rate and foreign
exchange exposures. Changes in the fair value of those financing derivatives
are reflected in the income statement (as part of 'certain re-measurements').
The Group shows the change in the fair value of these forward contracts
separately as this mark-to-market movement is not relevant to the underlying
performance of its operating segments.
The re-measurements arising from operating and financing derivatives, and the
tax effects thereof, are disclosed separately to aid understanding of the
underlying performance of the Group.
2 Exceptional Items
Exceptional charges or credits, and the tax effects thereof, are considered
unusual by nature or scale and of such significance that separate disclosure
is required for the underlying performance of the Group to be properly
understood. Further explanation for the classification of an item as
exceptional is included in note 2 (iii).
3 Adjustments to retained Gas Production decommissioning provision
The Group retains an obligation for 60% of the decommissioning liabilities of
its former Gas Production business which was disposed in October 2021. The
revaluation adjustments relating to these decommissioning liabilities are
accounted for through the Group's consolidated income statement and are
removed from the Group's adjusted profit measures as the revaluation of the
provision is not considered to be part of the Group's core continuing
operations.
4 Share of joint ventures and associates' interest and tax
This adjustment can be split between the Group's share of interest and the
Group's share of tax arising from its investments in equity accounted joint
ventures and associates. The Group is required to report profit before
interest and tax ('operating profit') including its share of the profit after
tax of its equity accounted joint ventures and associates. However, for
internal performance management purposes and for consistency of treatment, SSE
reports its adjusted operating profit measure before its share of the interest
and/or tax on joint ventures and associates.
5 Share of joint ventures and associates' depreciation and amortisation
For management purposes, the Group considers EBITDA (earnings before interest,
tax, depreciation and amortisation) based on a sum-of-the-parts derived metric
which includes a share of the EBITDA from equity accounted investments. While
this is not equal to adjusted cash generated from operating activities, it is
considered useful by management in assessing a proxy for such a measure, given
the complexity of the Group structure and the range of investment structures
utilised.
For the purpose of calculating the 'Net Debt to EBITDA' metric, 'adjusted
EBITDA' is further refined to remove the proportion of adjusted EBITDA from
equity-accounted joint ventures relating to off-balance sheet debt. This
metric is not calculated for 30 September period ends.
6 Depreciation and amortisation expense on fair value uplifts
The Group's strategy includes the realisation of value (developer gains) from
divestments of stakes in SSE Renewables' offshore and international
developments. In addition, for strategic purposes, the Group may also decide
to bring in equity partners to other businesses and assets. Where SSE's
interest in such vehicles changes from full to joint control, and the
subsequent arrangement is classified as an equity accounted joint venture, SSE
may recognise a fair value uplift on the remeasurement of its retained equity
investment. Those non-cash accounting uplifts will be treated as exceptional
gains in the period of the relevant transactions completing. Furthermore, SSE
may acquire businesses or joint venture interests which are determined to
generate an exceptional opening gain on acquisition and accordingly an
exceptional accounting fair value uplift to the opening assets acquired will
be recorded. These uplifts create assets or adjustments to assets, which are
depreciated or amortised over the remaining life of the underlying assets or
contracts in those businesses with the charge being included in the Group's
depreciation and amortisation expense. The Group's adjusted operating profit,
adjusted profit before tax and adjusted earnings per share are therefore
adjusted to exclude any additional depreciation, amortisation and impairment
expense arising from fair value uplifts given these charges derived from
significant one-off gains which are treated as exceptional when initially
recognised.
7 Release of deferred income
The Group deducts the release of deferred income in the period from its
adjusted EBITDA metric as it principally relates to customer contributions
against depreciating assets. As the metric adds back depreciation, the income
release is also deducted.
8 Interest on net pension assets/liabilities (IAS 19 "Employee Benefits")
The Group's net interest income relating to defined benefit pension schemes is
derived from the net assets of the schemes as valued under IAS 19. This will
mean that the credit or charge recognised in any given period will be
dependent on the impact of actuarial assumptions such as inflation and
discount rates. The Group excludes these from its adjusted profit measures due
to the non-cash nature of these charges or credits.
9 Deferred tax
The Group adjusts for deferred tax when arriving at adjusted profit after tax,
adjusted earnings per share and its adjusted effective rate of tax. Deferred
tax arises as a result of differences in accounting and tax bases that give
rise to potential future accounting credits or charges. As the Group remains
committed to its ongoing capital programme, the liabilities associated are not
expected to reverse and accordingly the Group excludes these from its adjusted
profit measures.
10 Results attributable to non-controlling interest holders
The Group's structure includes non-wholly owned but controlled subsidiaries
which are consolidated within the financial statements of the Group. The most
significant of those is SSEN Transmission, a 25% stake in which was divested
on 30 November 2022. In the current period ended 30 September 2024 and in the
year ended 31 March 2024 the Group has removed the share of profit
attributable to holders of non-controlling equity stakes in all such
businesses from the point when the ownership structure changed from all of its
profit measures, to report all metrics based on the residual share of profit
items attributable to the ordinary equity holders of the Group. The adjustment
has been applied consistently to all of the Group's adjusted profit measures,
including removing proportionate non-controlling share of operating profit and
depreciation and amortisation from the Group's adjusted EBITDA metric;
removing the non-controlling share of operating profit from the Group's
adjusted operating profit metric; removing the non-controlling share of net
finance costs from the Group's adjusted net finance costs metric; and removing
the non-controlling interest share of current tax from the Group's adjusted
current tax metric.
30 September 2024
Continuing operations (£m) Reported Movement on derivatives Exceptional items Adjustments to Gas Production decommissioning provision Depreciation expense on FV uplifts Joint venture interest and tax Interest on net pension asset Deferred tax Share of profits attributable to non-controlling interests Adjusted
Operating profit 902.8 (86.5) 21.9 (10.8) 9.9 75.3 - - (52.4) 860.2
Net finance (costs)/income (56.9) 4.6 (0.3) - - (86.2) (10.2) - 3.3 (145.7)
Profit before taxation 845.9 (81.9) 21.6 (10.8) 9.9 (10.9) (10.2) - (49.1) 714.5
Taxation (213.3) 19.7 (3.1) - - 10.9 - 95.3 (5.5) (96.0)
Profit after taxation 632.6 (62.2) 18.5 (10.8) 9.9 - (10.2) 95.3 (54.6) 618.5
Attributable to other equity holders (110.5) - - - - - - (17.8) 54.6 (73.7)
Profit attributable to ordinary shareholders 522.1 (62.2) 18.5 (10.8) 9.9 - (10.2) 77.5 - 544.8
Number of shares for EPS 1,094.2 1,094.2
Earnings per share (pence) 47.7 49.8
Adjusted EBITDA
30 September 2024
Adjusted operating profit from continuing operations Share of joint venture and associates' depreciation and amortisation Release of deferred income Depreciation expense on FV uplifts Depreciation, impairment and amortisation before exceptional charges Share of depreciation, impairment and amortisation before exceptional items Adjusted EBITDA
attributable to non-controlling interests
£m £m £m £m £m
£m
£m
860.2 110.2 (7.4) (9.9) 387.9 (18.0) 1,323.0
30 September 2023 (restated*)
Continuing operations (£m) Reported Movement on derivatives Exceptional items Adjustments to Gas Production decommissioning provision Depreciation expense on FV uplifts Joint venture interest and tax Interest on net pension asset Deferred tax Share of profits attributable to non-controlling interests Adjusted
Operating profit 644.3 (49.7) 113.7 (3.5) 9.4 50.2 - - (71.2) 693.2
Net finance (costs)/income (29.0) (41.0) (0.2) - - (47.8) (12.8) - 2.8 (128.0)
Profit before taxation 615.3 (90.7) 113.5 (3.5) 9.4 2.4 (12.8) - (68.4) 565.2
Taxation (155.9) 21.3 (3.2) - - (2.4) - 47.4 4.4 (88.4)
Profit after taxation 459.4 (69.4) 110.3 (3.5) 9.4 - (12.8) 47.4 (64.0) 476.8
Attributable to other equity holders (124.3) - - - - - - (12.8) 64.0 (73.1)
Profit attributable to ordinary shareholders 335.1 (69.4) 110.3 (3.5) 9.4 - (12.8) 34.6 - 403.7
Number of shares for EPS 1,090.4 1,090.4
Earnings per share (pence) 30.7 37.0
*The comparative has been restated. See note 2(v).
Adjusted EBITDA
30 September 2023
Adjusted operating profit from continuing operations Share of joint venture and associates' depreciation and amortisation Release of deferred income Depreciation expense on FV uplifts Depreciation, impairment and amortisation before exceptional charges Share of depreciation, impairment and amortisation before exceptional items Adjusted EBITDA
attributable to non-controlling interests
£m £m £m £m £m
£m
£m
693.2 104.3 (6.4) (9.4) 343.6 (15.7) 1,109.6
31 March 2024
Continuing operations (£m) Reported Movement on derivatives Exceptional items Adjustments to Gas Production decommissioning provision Depreciation expense on FV uplifts Joint venture interest and tax Interest on net pension asset Deferred tax Share of profits attributable to non-controlling interests Adjusted
Operating profit 2,608.2 (522.7) 266.3 9.9 19.0 184.8 - - (139.1) 2,426.4
Net finance costs (113.1) (6.1) (0.3) - - (110.7) (26.2) - 4.7 (251.7)
Profit before taxation 2,495.1 (528.8) 266.0 9.9 19.0 74.1 (26.2) - (134.4) 2,174.7
Taxation (610.7) 130.3 (23.3) - - (74.1) - 198.8 8.0 (371.0)
Profit after taxation 1,884.4 (398.5) 242.7 9.9 19.0 - (26.2) 198.8 (126.4) 1,803.7
Attributable to other equity holders (173.9) - - - - - - (25.6) 126.4 (73.1)
Profit attributable to ordinary shareholders 1,710.5 (398.5) 242.7 9.9 19.0 - (26.2) 173.2 - 1,730.6
Number of shares for EPS 1,091.8 1,091.8
Earnings per share (pence) 156.7 158.5
Adjusted EBITDA
31 March 2024
Adjusted operating profit from continuing operations Share of joint venture and associates' depreciation and amortisation Release of deferred income Depreciation expense on FV uplifts Depreciation, impairment and amortisation before exceptional charges Share of depreciation, impairment and amortisation before exceptional items Adjusted EBITDA
attributable to non-controlling interests
£m £m £m £m £m
£m
£m
2,426.4 208.8 (13.0) (19.0) 724.9 (32.5) 3,295.6
debt measure
Group APM Purpose Closest equivalent IFRS measure Adjustments to reconcile to primary financial statements
Adjusted Net Debt and Hybrid Capital Debt measure Unadjusted net debt · Hybrid equity
· Cash held and posted as collateral
· Lease obligations
· Non-controlling share of borrowings and cash
rationale for Adjustments to debt measure
11 Hybrid equity
The characteristics of certain hybrid capital securities mean they qualify for
recognition as equity rather than debt under applicable accounting standards.
Consequently, their coupon payments are presented within equity rather than
within finance costs. As a result, the coupon payments are not included in
SSE's adjusted profit before tax measure. In order to present total funding
provided from sources other than ordinary shareholders, SSE presents its
adjusted net debt measure inclusive of hybrid capital to better reflect the
Group's funding position.
12 Cash held and posted as collateral
Cash held and posted as collateral refers to cash balances received from and
deposited with counterparties including trading exchanges. Collateral balances
mostly represent initial and variation margin, required as part of the
management of the Group's exposures on commodity contracts, that will be
received on maturity of the related trades. Loans with a maturity of less than
three months are also included in this adjustment. The Group includes this
adjustment in order to better reflect the immediate cash resources to which it
has access, which in turn better reflects the Group's funding position.
13 Lease obligations
SSE's reported loans and borrowings include lease liabilities on contracts
within the scope of IFRS 16 "Leases", which are not directly related to the
external financing of the Group. The Group excludes these liabilities from its
adjusted net debt and hybrid capital measure to better reflect the Group's
underlying funding position with its primary sources of capital.
14 Debt and cash attributable to non-controlling interest holders
The Group's structure includes non-wholly owned but controlled subsidiaries
which are consolidated within the financial statements of the Group under
IFRS. The most significant of those is SSEN Transmission, a 25% stake in which
was divested on 30 November 2022. Following completion of the transaction, the
Group has removed the share of external debt and cash in these subsidiaries
proportionately attributable to the non-controlling interest holders from its
adjusted net debt and hybrid capital metric. While legal entitlement to these
items has not changed, the Group makes this adjustment to present net debt
attributable to ordinary equity holders of the Group.
March September 2024 September 2023
2024
£m £m £m
(8,097.8) Unadjusted net debt (8,688.8) (8,050.6)
(353.2) Cash (held)/posted as collateral (260.2) 140.6
407.5 Lease obligations 401.4 394.4
490.2 External net debt attributable to non-controlling interests 586.2 454.2
(7,553.3) Adjusted Net Debt (7,961.4) (7,061.4)
(1,882.4) Hybrid equity (1,882.4) (1,882.4)
(9,435.7) Adjusted Net Debt and Hybrid Capital (9,843.8) (8,943.8)
capital measures
Group APM Purpose Closest equivalent IFRS measure Adjustments to reconcile to primary financial statements
Adjusted Investment and Capital Expenditure Capex measure Capital additions to intangible assets and property, plant and equipment · Customer funded additions
· Allowances and certificates
· Additions acquired through business combinations
· Joint ventures and associates' additions funding
· Non-controlling share of capital expenditure
· Lease asset additions
Adjusted Investment, Capital and Acquisition Expenditure Capital measure Capital additions to intangible assets and property, plant and equipment · Customer funded additions
· Allowances and certificates
· Additions acquired through business combinations
· Joint ventures and associates' additions funding
· Non-controlling share of capital expenditure
· Lease asset additions
· Acquisition cash consideration
rationalE for Adjustments to capex measures
15 Customer funded additions
Customer funded additions represent additions to electricity and other
networks funded by customer contributions. Given these are directly funded by
customers, these additions have been excluded to better reflect the Group's
underlying investment position.
16 Allowances and certificates
Allowances and certificates consist of purchased carbon emissions allowances
and generated or purchased renewable obligations certificates ("ROCs") and
additions in the period are not included in the Group's 'capital expenditure
and investment' APM to better reflect the Group's investment in enduring
operational assets.
17 Additions acquired through business combinations
Where the Group acquires an early stage development company, which is
classified as the acquisition of an asset, or group of assets and not the
acquisition of a business, the acquisition is treated as an addition to
intangible assets or property, plant and equipment and is included within
'adjusted investment and capital expenditure'. Where the Group acquires an
established business or interest in an equity-accounted joint venture
requiring a fair value assessment in line with the principles of IFRS 3
'Business Combinations', the fair value of acquired consolidated tangible or
intangible assets are excluded from the Group's 'adjusted investment and
capital expenditure', as they are not direct capital expenditure by the Group.
However, the fair valuation of consideration paid for the business or
investment is included in the Group's 'adjusted investment, capital and
acquisition expenditure' metric, see 21 below. During the period there were no
significant business acquisitions.
18 Joint ventures and associates' additions funding
Joint ventures and associates' additions included in the Group's capital
measures represent the direct loan or equity funding provided by the Group to
joint venture and associate arrangements in relation to capital expenditure
projects. This has been included to better reflect the Group's use of directly
funded equity accounted vehicles to grow the Group's asset base. Asset
additions funded by project finance raised within the Group's joint ventures
and associates are not included in this adjustment.
19 Non-controlling interest share of capital expenditure
The Group's structure includes non-wholly owned but controlled subsidiaries
which are consolidated within the financial statements of the Group under
IFRS. The most significant of those is SSEN Transmission, a 25% stake in which
was divested on 30 November 2022. In the current period and prior year, the
Group has removed the share of capital additions attributable proportionately
to these equity holders from the point when the ownership structure changed
from its "adjusted investment and capital expenditure" and "adjusted
investment, capital and acquisition expenditure" metrics. This is consistent
with the adjustments noted elsewhere related to these non-controlling
interests.
20 Lease additions
Additions of right of use assets under the Group's IFRS 16 compliant policies
for lease contracts are excluded from the Group's adjusted capital measures as
they do not represent directly funded capital investment. This is consistent
with the treatment of lease obligations explained at 13, above.
21 Acquisition cash consideration in relation to business combinations
The Group has outlined a significant investment programme which will partly be
achieved through the acquisition of businesses with development opportunities
for the Group. The cash consideration paid for these entities is included
within the Group's adjusted investment, capital and acquisition expenditure
metric as it provides stakeholders an accurate basis of cash investment into
the Group's total development pipeline and is consistent with the reporting of
the Group's Net Zero Acceleration Programme Plus. During the period there were
no significant business acquisitions.
March September 2024 September 2023
2024
£m £m £m
1,314.2 Capital additions to intangible assets 392.5 381.0
1,971.4 Capital additions to property, plant and equipment 1,180.8 939.4
3,285.6 Capital additions to intangible assets and property, plant and equipment 1,573.3 1,320.4
(152.0) Customer funded additions (92.6) (91.4)
(774.5) Allowances and certificates (192.4) (163.3)
390.0 Joint ventures and associates' additions 173.6 94.3
(199.4) Non-controlled interests share of capital expenditure (126.8) (80.8)
(73.0) Lease asset additions (43.0) (24.9)
2,476.7 Adjusted Investment and Capital Expenditure 1,292.1 1,054.3
2,476.7 Adjusted Investment, Capital and Acquisition Expenditure 1,292.1 1,054.3
INTERIM FINANCIAL STATEMENTS
Consolidated Income Statement
for the period 1 April 2024 to 30 September 2024
2024 2023
Before exceptional items and certain re-measure-ments Exceptional items and certain re-measure-ments (note 6) Total Before exceptional items and certain re-measure-ments Exceptional items and certain re-measure-ments (note 6) (restated*) Total (restated*)
Note £m £m £m £m £m £m
Continuing operations
Revenue 5 4,459.3 - 4,459.3 4,790.5 - 4,790.5
Cost of sales (2,778.4) 118.7 (2,659.7) (3,295.3) 60.3 (3,235.0)
Gross profit 1,680.9 118.7 1,799.6 1,495.2 60.3 1,555.5
Operating costs (836.4) (21.9) (858.3) (734.2) (113.7) (847.9)
Debt impairment charges (21.2) - (21.2) (64.7) - (64.7)
Other operating income 7.7 - 7.7 16.3 - 16.3
Operating profit/(loss) before joint ventures and associates 831.0 96.8 927.8 712.6 (53.4) 659.2
Joint ventures and associates:
Share of operating profit 82.5 - 82.5 45.9 - 45.9
Share of interest (86.2) - (86.2) (47.8) - (47.8)
Share of movement in derivatives - (32.2) (32.2) - (10.6) (10.6)
Share of tax 2.9 8.0 10.9 (5.0) 2.6 (2.4)
Share of loss on joint ventures and associates (0.8) (24.2) (25.0) (6.9) (8.0) (14.9)
Operating profit/(loss) 5 830.2 72.6 902.8 705.7 (61.4) 644.3
Finance income 7 97.5 0.3 97.8 103.6 41.2 144.8
Finance costs 7 (150.1) (4.6) (154.7) (173.8) - (173.8)
Profit/(loss) before taxation 777.6 68.3 845.9 635.5 (20.2) 615.3
Taxation 8 (188.7) (24.6) (213.3) (135.2) (20.7) (155.9)
Profit/(loss) for the period 588.9 43.7 632.6 500.3 (40.9) 459.4
Attributable to:
Ordinary shareholders of the parent 478.4 43.7 522.1 376.0 (40.9) 335.1
Non-controlling interests 36.8 - 36.8 51.2 - 51.2
Other equity holders 73.7 - 73.7 73.1 - 73.1
Earnings per share
Basic (pence) 10 47.7 30.7
Diluted (pence) 10 47.6 30.7
The accompanying notes are an integral part of this interim statement.
*The comparative Consolidated Income Statement has been restated. See note
2(v).
Consolidated Income Statement
for the year ended 31 March 2024
Before exceptional items and certain Exceptional items and certain re-measure-ments Total
re-measure-ments
(note 6)
Note £m £m £m
Continuing operations
Revenue 5 10,457.2 - 10,457.2
Cost of sales (6,568.3) 461.3 (6,107.0)
Gross profit 3,888.9 461.3 4,350.2
Operating costs (1,577.7) (270.9) (1,848.6)
Debt impairment charges (128.8) - (128.8)
Other operating income 116.7 4.6 121.3
Operating profit before joint ventures and associates 2,299.1 195.0 2,494.1
Joint ventures and associates:
Share of operating profit 237.5 - 237.5
Share of interest (110.7) - (110.7)
Share of movement in derivatives - 61.4 61.4
Share of tax (58.8) (15.3) (74.1)
Share of profit on joint ventures and associates 68.0 46.1 114.1
Operating profit 5 2,367.1 241.1 2,608.2
Finance income 7 198.8 6.4 205.2
Finance costs 7 (318.3) - (318.3)
Profit before taxation 2,247.6 247.5 2,495.1
Taxation 8 (519.0) (91.7) (610.7)
Profit for the year 1,728.6 155.8 1,884.4
Attributable to:
Ordinary shareholders of the parent 1,554.7 155.8 1,710.5
Non-controlling interests 100.8 - 100.8
Other equity holders 73.1 - 73.1
Earnings per share
Basic (pence) 10 156.7
Diluted (pence) 10 156.5
The accompanying notes are an integral part of this interim statement.
Consolidated Statement of Comprehensive Income
for the period 1 April 2024 to 30 September 2024
Year ended 31 March 2024 Six months ended 30 September 2023 (restated*)
Six months ended 30 September 2024
£m £m £m
1,884.4 Profit for the period - continuing operations 632.6 459.4
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
6.5 Net gains/(losses) on cash flow hedges (8.3) 41.3
2.1 Transferred to assets and liabilities on cash flow hedges 0.3 1.9
(0.3) Taxation on cash flow hedges 2.4 (10.2)
8.3 (5.6) 33.0
(40.9) Share of other comprehensive (loss)/income of joint ventures and associates, (27.4) 84.4
net of taxation
(66.6) Exchange difference on translation of foreign operations (56.1) (27.1)
30.9 Gain on net investment hedge 46.1 7.4
(68.3) (43.0) 97.7
Items that will not be reclassified to profit or loss:
(116.4) Actuarial (loss)/gain on retirement benefit schemes, net of taxation 25.1 (112.3)
3.5 Gains on revaluation of investments in equity instruments, net of taxation - -
(112.9) 25.1 (112.3)
(181.2) Other comprehensive loss, net of taxation (17.9) (14.6)
1,703.2 Total comprehensive income for the period - continuing operations 614.7 444.8
Attributable to:
1,529.3 Ordinary shareholders of the parent 509.6 317.4
100.8 Non-controlling interest 31.4 54.3
73.1 Other equity holders 73.7 73.1
1,703.2 614.7 444.8
The accompanying notes are an integral part of this interim statement.
*The comparative Consolidated Statement of Other Comprehensive Income has been
restated. See note 2(v).
Consolidated Balance Sheet
as at 30 September 2024
At At 30 September 2024 At
31 March 30 September 2023
2024 (restated*)
£m Note £m £m
Assets
16,611.5 Property, plant and equipment 17,461.1 15,986.8
2,324.6 Goodwill and other intangible assets 2,362.1 2,122.1
1,963.2 Equity investments in joint ventures and associates 1,889.8 1,982.4
1,352.9 Loans to joint ventures and associates 1,484.4 1,196.8
3.2 Other investments 7.6 2.9
170.1 Other receivables 181.6 159.5
64.2 Derivative financial assets 16 63.2 139.9
421.6 Retirement benefit assets 17 470.8 411.0
22,911.3 Non-current assets 23,920.6 22,001.4
754.7 Intangible assets 305.5 263.9
343.0 Inventories 331.3 246.0
2,654.1 Trade and other receivables 2,634.6 2,343.5
35.1 Current tax asset 58.4 59.2
1,035.9 Cash and cash equivalents 890.8 902.4
536.1 Derivative financial assets 16 420.8 262.6
- Assets held for sale 19.3 -
5,358.9 Current assets 4,660.7 4,077.6
28,270.2 Total assets 28,581.3 26,079.0
Liabilities
1,128.0 Loans and other borrowings 13 1,903.9 1,394.9
3,322.5 Trade and other payables 2,831.0 2,545.5
9.3 Current tax liabilities 4.0 -
3.1 Financial guarantee liabilities 2.9 47.0
52.7 Provisions 63.8 21.8
345.2 Derivative financial liabilities 16 250.9 505.2
- Liabilities held for sale 19.3 -
4,860.8 Current liabilities 5,075.8 4,514.4
8,005.7 Loans and other borrowings 13 7,675.7 7,558.1
1,536.8 Deferred tax liabilities 1,639.7 1,352.9
1,092.8 Trade and other payables 1,184.8 1,037.4
36.4 Financial guarantee liabilities 35.0 34.5
712.4 Provisions 690.9 701.9
222.2 Derivative financial liabilities 16 208.8 141.7
11,606.3 Non-current liabilities 11,434.9 10,826.5
16,467.1 Total liabilities 16,510.7 15,340.9
11,803.1 Net assets 12,070.6 10,738.1
Equity:
548.1 Share capital 15 554.2 547.9
820.1 Share premium 814.0 820.3
52.6 Capital redemption reserve 52.6 52.6
407.6 Hedge reserve 377.7 556.0
(2.6) Translation reserve (10.3) 11.9
7,345.0 Retained earnings 7,618.7 6,163.6
9,170.8 Equity attributable to ordinary shareholders of the parent 9,406.9 8,152.3
1,882.4 Hybrid equity 14 1,882.4 1,882.4
749.9 Attributable to non-controlling interests 781.3 703.4
11,803.1 Total equity 12,070.6 10,738.1
*The comparative Consolidated Balance Sheet has been restated. See note 2(v).
The accompanying notes are an integral part of this interim statement.
Consolidated Statement of Changes in EQuity
for the period 1 April 2024 to 30 September 2024
Share capital Share premium Capital redemption reserve Hedge reserve Translation reserve Retained earnings Total attributable to ordinary shareholders Hybrid equity Total equity before non-controlling interest Non-controlling interest Total equity
£m £m £m £m £m £m £m £m £m £m £m
At 1 April 2024 548.1 820.1 52.6 407.6 (2.6) 7,345.0 9,170.8 1,882.4 11,053.2 749.9 11,803.1
Profit for the period - - - - - 522.1 522.1 73.7 595.8 36.8 632.6
Other comprehensive income/(loss) - - - (29.9) (7.7) 25.1 (12.5) - (12.5) (5.4) (17.9)
Total comprehensive income for the period - - - (29.9) (7.7) 547.2 509.6 73.7 583.3 31.4 614.7
Dividends to shareholders - - - - - (437.3) (437.3) - (437.3) - (437.3)
Scrip dividend related share issue 6.1 (6.1) - - - 225.5 225.5 - 225.5 - 225.5
Issue of treasury shares - - - - - 0.7 0.7 - 0.7 - 0.7
Distributions to Hybrid equity holders - - - - - - - (73.7) (73.7) - (73.7)
Share buyback - - - - - (75.0) (75.0) - (75.0) - (75.0)
Credit in respect of employee share awards - - - - - 14.8 14.8 - 14.8 - 14.8
Investment in own shares - - - - - (2.2) (2.2) - (2.2) - (2.2)
At 30 September 2024 554.2 814.0 52.6 377.7 (10.3) 7,618.7 9,406.9 1,882.4 11,289.3 781.3 12,070.6
On 29 August 2024, SSE entered into an irrevocable share buyback programme up
to a maximum of £75.0m. The buyback scheme was initiated in order to honour
SSE's existing commitment to cap scrip dividend take-up at 25%. As the
irrevocable agreement was entered into prior to the balance sheet date, the
full value of the programme has been recognised as a liability at 30 September
2024. The share repurchase scheme commenced on 30 September 2024, with 227k of
shares repurchased in the period for a total consideration of £4.3m
(including stamp duty and commission). SSE completed the share buyback process
on 16 October 2024.
Share capital Share premium Capital redemption reserve Hedge reserve Translation reserve Retained earnings Total attributable to ordinary shareholders Hybrid equity Total equity before non-controlling interest Non-controlling interest Total equity
£m £m £m £m £m £m £m £m £m £m £m
At 1 April 2023 547.0 821.2 52.6 441.2 32.1 6,657.6 8,551.7 1,882.4 10,434.1 649.1 11,083.2
Profit for the period (restated*) - - - - - 335.1 335.1 73.1 408.2 51.2 459.4
Other comprehensive income/(loss) - - - 114.8 (20.2) (112.3) (17.7) - (17.7) 3.1 (14.6)
Total comprehensive income for the period (restated*) - - - 114.8 (20.2) 222.8 317.4 73.1 390.5 54.3 444.8
Dividends to shareholders - - - - - (738.1) (738.1) - (738.1) - (738.1)
Scrip dividend related share issue 0.9 (0.9) - - - 29.8 29.8 - 29.8 - 29.8
Issue of treasury shares - - - - - 0.4 0.4 - 0.4 - 0.4
Distributions to Hybrid equity holders - - - - - - - (73.1) (73.1) - (73.1)
Credit in respect of employee share awards - - - - - 10.8 10.8 - 10.8 - 10.8
Investment in own shares - - - - - (19.7) (19.7) - (19.7) - (19.7)
At 30 September 2023 (restated*) 547.9 820.3 52.6 556.0 11.9 6,163.6 8,152.3 1,882.4 10,034.7 703.4 10,738.1
*The comparative Consolidated Statement of Changes in Equity has been
restated. See note 2(v).
Consolidated Statement of Changes in Equity
for the year ended 31 March 2024
Share capital Share premium Capital redemption reserve Hedge reserve Translation reserve Retained earnings Total attributable to ordinary shareholders Hybrid equity Total equity before non-controlling interest Non-controlling interest Total equity
£m £m £m £m £m £m £m £m £m £m £m
At 1 April 2023 547.0 821.2 52.6 441.2 32.1 6,657.6 8,551.7 1,882.4 10,434.1 649.1 11,083.2
Profit for the year - - - - - 1,710.5 1,710.5 73.1 1,783.6 100.8 1,884.4
Other comprehensive loss - - - (33.6) (34.7) (112.9) (181.2) - (181.2) - (181.2)
Total comprehensive income for the year - - - (33.6) (34.7) 1,597.6 1,529.3 73.1 1,602.4 100.8 1,703.2
Dividends to shareholders - - - - - (956.4) (956.4) - (956.4) - (956.4)
Scrip dividend related share issue 1.1 (1.1) - - - 38.6 38.6 - 38.6 - 38.6
Issue of treasury shares - - - - - 9.2 9.2 - 9.2 - 9.2
Distributions to Hybrid equity holders - - - - - - - (73.1) (73.1) - (73.1)
Credit in respect of employee share awards - - - - - 20.2 20.2 - 20.2 - 20.2
Investment in own shares - - - - - (21.8) (21.8) - (21.8) - (21.8)
At 31 March 2024 548.1 820.1 52.6 407.6 (2.6) 7,345.0 9,170.8 1,882.4 11,053.2 749.9 11,803.1
Consolidated Cash Flow Statement
for the period 1 April 2024 to 30 September 2024
Year Note Six months ended 30 September 2024 Six months ended 30 September 2023
ended 31 March 2024 (restated*)
£m £m £m
2,608.2 Operating profit - continuing operations 5 902.8 644.3
(114.1) Less/add share of (profit)/loss of joint ventures and associates 25.0 14.9
2,494.1 Operating profit before jointly controlled entities and associates 927.8 659.2
(9.5) Pension service charges, less contributions paid (5.5) (6.9)
(443.4) Movement on operating derivatives (115.1) (51.2)
859.0 Depreciation, amortisation, write downs and impairments 387.9 343.6
136.8 Impairment of joint venture investment including shareholder loans - 63.2
20.2 Charge in respect of employee share awards (before tax) 14.8 10.8
(9.0) Profit on disposal of assets and businesses - -
14.6 Charge/(release) of provisions (11.2) (8.5)
(12.5) Credit in respect of financial guarantees (0.9) -
(13.0) Release of deferred income 5 (7.4) (6.4)
3,037.3 Cash generated from operations before working capital movements 1,190.4 1,003.8
39.6 Decrease in inventories 11.3 141.2
763.1 Decrease in receivables 162.2 932.9
243.0 Increase/(decrease) in payables (191.7) 36.6
(33.9) Decrease in provisions (9.5) (16.8)
4,049.1 Cash generated from operations 1,162.7 2,097.7
223.7 Dividends received from investments 98.3 112.2
(67.0) Interest paid (43.0) (54.6)
(345.8) Taxes paid (143.0) (126.3)
3,860.0 Net cash from operating activities 1,075.0 2,029.0
(1,970.3) Purchase of property, plant and equipment 5 (1,137.1) (848.0)
(542.2) Purchase of other intangible assets 5 (200.1) (228.6)
93.4 Receipt of government grant income 13.7 -
17.4 Deferred income received 12.8 18.8
14.9 Proceeds from disposals 11 16.5 -
(42.9) Purchase of businesses, joint ventures and subsidiaries - -
(443.6) Loans and equity provided to joint ventures and associates (215.2) (133.1)
14.6 Loans and equity repaid by joint ventures 18.1 6.7
0.4 Decrease in other investments - -
(2,858.3) Net cash from investing activities (1,491.3) (1,184.2)
9.2 Proceeds from issue of share capital 15 0.7 0.4
(917.8) Dividends paid to the company's equity holders 9 (211.8) (708.3)
(73.1) Hybrid equity dividend payments 14 (73.7) (73.1)
(21.8) Employee share awards share purchase 15 (2.2) (19.7)
1,982.2 New borrowings 1,655.6 1,751.0
(1,842.7) Repayment of borrowings (1,097.7) (1,786.4)
6.4 Settlement of cashflow hedges 0.3 1.9
(857.6) Net cash (used in)/from financing activities 271.2 (834.2)
144.1 Net increase/(decrease) in cash and cash equivalents (145.1) 10.6
891.8 Cash and cash equivalents at the start of period 1,035.9 891.8
144.1 Net increase/(decrease) in cash and cash equivalents (145.1) 10.6
1,035.9 Cash and cash equivalents at the end of period 890.8 902.4
*The comparative Consolidated Cashflow Statement has been restated. See note
2(v).
Notes to the Interim Financial Statements
1. Condensed Interim Financial Statements
SSE plc (the Company) is a company domiciled in Scotland. The condensed
Interim Financial Statements comprise those of the Company and its
subsidiaries (together referred to as the Group).
The financial information set out in these condensed Interim Financial
Statements does not constitute the Group's statutory accounts for the periods
ended 30 September 2024, 31 March 2024 or 30 September 2023 within the meaning
of Section 435 of the Companies Act 2006. Statutory accounts for the year
ended 31 March 2024, which were prepared in accordance with UK-adopted
international accounting standards, have been reported on by the Group's
auditors and delivered to the Registrar of Companies. The report of the
auditor was (i) unqualified (ii) did not include reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain statements under section 498 (2) or (3) of
the Companies Act 2006. The Group's financial statements for the year ending
31 March 2025 will be prepared on a consistent basis in accordance with
UK-adopted international accounting standards.
The financial information set out in these condensed Interim Financial
Statements has been prepared in accordance with the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority and UK adopted IAS 34
'Interim Financial Reporting'. The interim financial information is unaudited
but has been formally reviewed by the auditor and its report to the Company is
set out on page 93.
These interim statements were authorised by the Board on 12 November 2024.
2. Basis of preparation
These condensed Interim Financial Statements for the period to 30 September
2024 and the comparative information for the period to 30 September 2023 have
been prepared applying the accounting policies used in the Group's
consolidated financial statements for the year ended 31 March 2024.
(i) Adjusted measures
The Directors assess the performance of the Group and its reportable segments
based on 'adjusted measures'. These measures are used for internal performance
management and are believed to be appropriate for explaining underlying
financial performance to users of the accounts. These measures are also deemed
to be the most useful for the ordinary shareholders of the Company and for
other stakeholders.
Reconciliations from the reported measures to adjusted measures along with
further description of the rationale for those adjustments are included in the
'Alternative Performance Measures' section on pages 41 to 47.
(ii) Going concern
The Directors consider that the Group has adequate resources to continue in
operational existence for the period to 31 December 2025. The condensed
Interim Financial Statements are therefore prepared on a going concern basis.
In reaching their conclusion, the Directors regularly review the Group's
funding structure (see note 13) against the current economic climate to ensure
that the Group has the short and long term funding required. The Group has
performed detailed going concern testing, including the consideration of cash
flow forecasts under stressed scenarios for the period to December 2025.
The Group has an established €1.5bn Euro commercial paper programme (paper
can be issued in a range of currencies and swapped into Sterling) and as at 30
September 2024 there was £799m commercial paper outstanding (31 March 2024:
£840m). In the six months ended 30 September 2024, the Group has issued new
debt instruments totalling £0.9bn, and has redeemed £0.2bn of maturing long
term debt, while rolling £0.8bn of short term commercial paper.
The Group also continues to have access to its revolving credit facilities. As
at 30 September 2024 there were five committed facilities totalling £3.5bn
which were undrawn, as described in note 13. On 23 October 2024 these
facilities have been re-financed with the £0.75m facility relating to
Scottish Hydro Electric Transmission plc being increased to £1.5bn, and the
£2.75bn of facilities relating to SSE plc and Distribution being reduced to
£1.5bn. This reduction relates to the cancellation of the £1.0bn collateral
facility due to mature in February 2025, and the £0.25bn Distribution
facility that is no longer required.
This results in the Group having the following committed facilities:
· a £1.5bn revolving credit facility for SSE plc maturing October
2029 with two 1 year extension options; and
· a £1.5bn revolving credit facility for Scottish Hydro Electric
Transmission plc maturing October 2029 with two 1 year extension options.
The re-financing of the committed facilities was undertaken to ensure the
Group is set up to meet its funding obligations over the next five years, with
available committed facilities on the entities that require them. The
opportunity was also taken to increase the number of relationship banks from
11 to 15, which supports the Group's growth plans and funding requirements
over the next five years. The £1.5bn revolving credit facility for SSE plc is
in place to provide back-up to the commercial paper programme and support the
Group's capital expenditure plans. The Scottish Hydro Electric Transmission
plc facility, was entered into to help cover the capital expenditure and
working capital of that business.
(iii) Exceptional items and certain re-measurements
Exceptional items are those charges or credits that are considered unusual by
nature and/or scale and of such significance that separate disclosure is
required for the financial statements to be properly understood. The trigger
points for recognition of items as exceptional items will tend to be
non-recurring although exceptional charges (or credits) may impact the same
asset class or segment over time.
Examples of items that may be considered exceptional include material asset or
business impairment charges; reversals of historic impairments; certain
business restructuring and reorganisation costs; significant realised gains or
losses on disposal; unrealised fair value adjustments on acquisitions or
disposals; and provisions in relation to significant disputes and claims.
(iii) Exceptional items and certain re-measurements
(continued)
The Group operates a policy framework for establishing whether items should be
considered to be exceptional. This framework, which is reviewed annually, is
based on the materiality of the item, by reference to the Group's key
performance measure of adjusted earnings per share. This framework estimates
that any qualifying item greater than £40.0m will be considered exceptional,
with a potentially lower threshold applied to strategic restructuring of
activities or discontinued operations, which will respectively be considered
on a case by case basis or will always be treated as exceptional. The only
exception to this threshold is for gains or losses on disposal, or divestment
of early stage international or offshore windfarm development projects within
SSE Renewables, which are considered non-exceptional in line with the Group's
strategy to generate recurring gains from developer divestments. Where a gain
arises on a non-cash transaction, the gain is treated as exceptional.
Certain re-measurements are re-measurements arising on certain commodity,
interest rate and currency contracts which are accounted for as held for
trading or as fair value hedges in accordance with the Group's policy for such
financial instruments; re-measurements on stocks of commodities held at the
balance sheet date; or movements in fair valuation of contracts for difference
not designated as government grants. The amount recorded in the adjusted
results for these contracts is the amount settled in the year as disclosed in
note 16.
This excludes commodity contracts not treated as financial instruments under
IFRS 9 where the contracts are held for the Group's own use requirements. The
fair value of these contracts is not recorded and the value associated with
the contract is not recognised until the underlying commodity is delivered.
The impact of changes in Corporation Tax rates on deferred tax balances are
also included within certain re-measurements.
(iv) Other additional disclosures
As permitted by IAS 1 'Presentation of financial statements', the Group's
income statement discloses additional information in respect of joint ventures
and associates, exceptional items and certain re-measurements to aid
understanding of the Group's financial performance and to present results
clearly and consistently.
(v) Changes to presentation and prior year adjustments
The prior period comparatives at 30 September 2023 have been restated as
follows:
Derivative financial instruments prior period adjustment
A non-cash adjustment has been made to restate derivative financial
instruments following the identification of an error in the calculation of the
Level 3 non-government Contracts for Difference ("CfD") financial instruments
at 30 September 2023. The adjustment has resulted in a £63.7m credit to
certain re-measurements in the cost of sales line in the income statement
(from £3,298.7m to £3,235.0m), a £56.2m reduction to non-current derivative
financial liabilities (from £197.9m to £141.7m) and a £7.5m increase to
non-current derivative financial assets (from £132.4m to £139.9m) lines in
the balance sheet, with a related current tax impact of £15.9m (from a charge
of £140.0m to £155.9m and from an asset of £75.1m to £59.2m). As the error
primarily relates to the Group's CfD arrangement with its joint venture
investment in Seagreen Offshore Wind Farm, the share in the joint venture's
derivative re-measurement movements have been debited by £28.9m (increasing
the credit from £18.3m to a £10.6m charge), with a related current tax
charge being credited by £7.2m (from a charge of £9.6m to £2.4m charge),
resulting in a £21.7m decrease in equity investments in the balance sheet
(from £2,004.1m to £1,982.4m). The overall reported profit after tax
increased by £26.1m (from £433.3m to £459.4m) and the Group's net assets
increased by £26.1m (from £10,715.3m to £10,741.4m). As a result of this
adjustment reported basic and diluted earnings per share for 30 September 2023
have increased from 28.3p to 30.7p.
This adjustment was identified and included in the 31 March 2024 results and
has no impact on the adjusted performance measures of the Group at 30
September 2023.
3. New accounting policies and reporting changes
The accounting policies applied in the preparation of these condensed Interim
Financial Statements are consistent with those applied by the Group in the
preparation of the consolidated financial statements for the year ended 31
March 2024.
Set out below are revisions to accounting standards that have become
applicable in the period, or which are issued but not yet effective.
3.1 New standards, amendments and interpretations effective or adopted by
the Group
In the 6 months to 30 September 2024, the Group adopted the amendments to:
- IAS 1 'Presentation of Financial Statements' in relation to
non-current liabilities with covenants
- IFRS 16 'Leases' in relation to a lease on sale and leaseback
- IAS 7 'Statement of Cash Flows' and IFRS 7 'Financial
Instruments: Disclosures' in relation to supplier finance arrangements'
Adoption of these amendments had no material impact on these condensed Interim
Financial Statements.
3.2 New standards, amendments and interpretations issued, but not yet
adopted by the Group
IFRS 18 'Presentation and Disclosure in Financial Statements' is expected to
be effective from 1 January 2027 (1 April 2027 for the Group) but remains
subject to UK endorsement. The Group is continuing to assess the expected
impact of adoption of the standard.
Amendments to IFRS 9 'Financial Instruments' and IFRS 7 'Financial
Instruments: Disclosures' in relation to the classification and measurement of
financial instruments have been issued and are expected to be effective from 1
January 2026, but have not been adopted by the Group as UK endorsement remains
outstanding at the date the financial statements were authorised for issue.
The Group is continuing to assess the expected impact of these amendments.
4. Accounting judgements and estimation uncertainty
In the process of applying the Group's accounting policies, management is
required to make judgements and estimates that will have a significant effect
on the amounts recognised in the financial statements. Changes in the
assumptions underlying the estimates could result in a significant impact to
the financial statements. The Group's key accounting judgement and estimation
areas are noted below.
4.1 Significant financial judgements and estimation uncertainties
The preparation of these condensed Interim Financial Statements has
specifically considered the following significant financial judgements, some
of which are areas of estimation uncertainty as noted below.
(i) Impairment testing and valuation of certain non-current assets -
financial judgement and estimation uncertainty
The Group reviews the carrying amounts of its goodwill, other intangible
assets, specific property, plant and equipment and investment assets to
determine whether any impairments or reversal of impairments to the carrying
value of those assets requires to be recorded. Where an indicator of
impairment or impairment reversal exists, the recoverable amount of those
assets is determined by reference to value in use calculations or fair value
less cost to sell assessments, if more appropriate.
At 30 September 2024, the Group has reviewed its Thermal generation assets;
Gas Storage assets; Great Britain & Ireland and Japanese wind assets; and
its equity investment in Neos Networks Limited for indicators of impairment
(or impairment reversal) arising since the last formal review performed at 31
March 2024. There were no indicators identified and therefore no formal
impairment assessments were performed.
The Group also performed an assessment of indicators of impairment over the
carrying value of its Southern European goodwill and intangible development
assets and its equity investment in Triton Power Holdings Limited. The review
indicated that there were indicators of impairment, requiring a full
impairment assessment to be performed at 30 September 2024. The indicators of
impairment and the results of the impairment assessments are documented in
note 12 to these Interim Financial Statements.
The main assumptions in the Group's impairment assessments performed at 31
March 2024 were: regulation and legislation changes (including the Electricity
Generator Levy and climate change related regulation), power, gas, carbon and
other commodity prices, volatility of gas prices, plant running regimes and
load factors and discount rates.
The Group will reassess the assets for indicators of impairment, or impairment
reversal, at 31 March 2025.
(ii) Retirement benefit obligations - estimation uncertainty
The assumptions in relation to the cost of providing post-retirement benefits
during the period are based on the Group's best estimates and are set after
consultation with qualified actuaries. While these assumptions are believed to
be appropriate, a change in these assumptions would impact the level of the
retirement benefit obligation recorded and the cost to the Group of
administering the schemes.
Further detail of the calculation basis, key assumptions used and the
resulting movements in obligations are disclosed in note 17 of these condensed
Interim Financial Statements.
(iii) Revenue recognition - Customers unbilled supply of energy -
estimation uncertainty
Revenue from energy supply activities undertaken by SSE Business Energy and
SSE Airtricity businesses includes an estimate of the value of electricity or
gas supplied to customers between the date of the last meter reading and the
period end. This estimation comprises both billed revenue and unbilled revenue
and is calculated based on applying the tariffs and contract rates applicable
to customers against aggregated estimated customer consumption, taking account
of various factors including tariffs, consumption patterns, customer mix,
metering data, operational issues relating to the billing process and
externally notified aggregated volumes supplied to customers from national
settlement bodies. During the year ended 31 March 2024, the Group's SSE
Business Energy Segment completed the implementation of a new billing
system. Due to the timing of the data migration, which occurred in the
second half of the prior financial year for the majority of customers, the
level of unbilled sales and hence the level of judgement applied in
determining the sales accruals for these customer remains higher than the
comparable period to 30 September 2023. At both 30 September 2024 and 31 March
2024 the Group has recognised a provision against this accrual to reflect that
customer billing delays may result in poorer collection performance.
This unbilled estimation is subject to an internal corroboration process which
compares calculated unbilled volumes to a theoretical 'perfect billing'
benchmark measure of unbilled volumes (in GWh and millions of therms) derived
from historical consumption patterns and aggregated metering data used in
industry reconciliation processes. Unbilled revenue is also compared to
billings in the period between the balance sheet date and the finalisation of
the condensed Interim Financial Statements which has provided evidence of post
reporting date billings and hence support to the accrual recognised.
Given the requirement of management to apply judgement, the estimated revenue
accrual is considered to be a significant estimate made by management in
preparing the condensed Interim Financial Statements. A 5% sensitivity on the
unbilled energy accrual would equate to an increase or decrease in the
receivable balance of £14.1m (March 2024: £20.7m). A more comprehensive
explanation of the Group's policy, and the nature of the judgements requiring
consideration, is disclosed in note 18 of the Group's 31 March 2024 Annual
Report.
(iv) Valuation of other receivables - financial judgement and estimation
uncertainty
The Group holds a £100m loan note due from OVO Holdings Limited following the
disposal of SSE Energy Services on 15 January 2020. The loan is repayable in
full by 31 December 2029, carries interest at 13.25% and is presented
cumulative of accrued interest payments, discounted at 13.25%. At 30 September
2024, the carrying value (net of expected credit loss provision of £1.6m
(March 2024: £1.6m)) is £181.6m (March 2024: £170.1m).
The Group has assessed the recoverability of the loan note receivable and has
recognised a provision for the expected credit loss in accordance with the
requirements of IFRS 9. The Group's assessment of the recoverability of the
loan note is considered to be a significant financial judgement. The Group has
taken appropriate steps to assess all available information in respect of the
recoverability of the loan note. Procedures included reviewing recent
financial information of Energy Transition Holdings Limited ("ETHL") (new
holding company of OVO Group Limited), including the 31 December 2023
statutory financial statements; and discussions with ETHL management. While
the carrying value is considered to be appropriate, changes in economic
conditions could lead to a change in the expected credit loss incurred by the
Group in future periods.
(v) Impact of climate change and the transition to net zero -
financial judgement and estimation uncertainty
Climate change and the transition to net zero have been considered in the
preparation of these condensed Interim Financial Statements. Where relevant,
assumptions have been applied that are consistent to a Paris-aligned 1.5(O)C
2050 net zero pathway. The Group has a clearly articulated NZAP Plus plan to
lead in the UK's transition to net zero and aligns its investment plans and
business activities to that strategy. These plans are supported by the Group's
Green Bond framework under which the eighth green bond was issued by SSEN
Transmission in August 2024. The proceeds of the eighth green bond were
allocated to fund Transmission network projects.
The impact of future climate change regulation could have a material impact on
the currently reported amounts of the Group's assets and liabilities. In
preparing these condensed Interim Financial Statements, the following climate
change related risks have been considered:
Valuation of property, plant and equipment, and impairment assessment of
goodwill
In the medium term, the transition to net zero may result in regulation
restricting electricity generation from unabated gas fired power stations. The
Group's view is that flexible generation capacity, such as the Group's fleet
of CCGT power stations, will be an essential part of the net zero transition
in order to provide security of supply to a market increasingly dependent upon
renewable sources, which are inherently intermittent. The majority of the
Group's GB CCGT fleet is nearing the end of its economic life and it is not
currently expected that regulation to require abatement would be introduced
before the planned closure of those power stations. Of the net book value held
at 30 September 2024, only four assets are forecast to continue to operate
beyond 2030 being: Great Island; Keadby 2; Marchwood (which is operated by SSE
under a lease); and Saltend Power Station within the Triton joint venture. The
Group extended the useful economic lives of Peterhead, Keadby and Medway power
stations to March 2030. These changes in end of life assumptions were
reflected in the annual impairment process at 31 March 2024. The Group's view
is that Great Island will continue to be essential to providing security of
supply in the Irish electricity market. Keadby 2 has an efficiency of around
63% making it the most efficient plant of its type in the UK and Europe. Work
is also underway to explore how to decarbonise Keadby 2 further, with the
potential to blend hydrogen into the plant. Marchwood is a 50% equity
accounted joint venture and is considered one of the most efficient CCGTs in
the UK. Saltend was acquired as part of Triton Power 50% equity accounted
joint venture and supports the long-term decarbonisation of the UK's power
system, and also contributes to security of supply and grid stability. Initial
steps are underway at Saltend, targeting abatement by 2029 through blending up
to 30% of low-carbon hydrogen. The Group considers that other assets operating
in the market would be more likely to close before Keadby 2, Marchwood and
Saltend and the assets will continue to be required to balance the UK
electricity market beyond 2030. As a result, the useful economic lives of the
assets have not been shortened when preparing the condensed Interim Financial
Statements. The Group assesses the useful economic life of its property, plant
and equipment assets annually.
A significant increase in renewable generation capacity in the Group's core
markets in the UK and Ireland could potentially result in an oversupply of
renewable electricity at a point in the future, which would lead to a
consequential decrease in the power price achievable for the Group's wind
generation assets. The Group has not assessed that this constitutes an
indicator of impairment at 30 September 2024 as the Group's baseline
investment case models assume a centrally approved volume of new build in
these markets over the life of the existing assets. The Group's policy is to
test the goodwill balances associated with wind generation portfolio for
impairment on an annual basis in line with the requirements of IAS 36.
Changes to weather patterns resulting from global warming have also been
considered as a potential risk to future returns from the Group's wind and
hydro assets. Changes to weather patterns could result in calmer, drier
weather patterns, which would reduce volumes achievable for the Group's wind
and hydro generation assets (although noting that this would likely lead to
capacity constraints and hence higher prices). This has not been assessed as
an indicator of impairment for operating assets in the UK and Ireland at 30
September 2024, as there is no currently observable evidence to support that
scenario directly.
Valuations of decommissioning provisions
The Group holds decommissioning provisions for its Renewable and Thermal
generation assets and has retained a 60% share for the decommissioning of its
disposed Gas Production business. As noted above, the Group's view at 30
September 2024 is that climate change regulation will not bring forward the
closure dates of its CCGT fleet, many of which are expected to close before
2030. Similarly, it is expected that fundamental changes to weather patterns,
or the impact of new wind generation capacity will not bring forward the
decommissioning of the Group's current wind farm portfolio.
The Group's discounted share of the Gas Production provision is £207.0m
(March 2024: £219.7m). At 30 September 2024, the impact of discounting of
this retained provision is £67.9m (March 2024: £68.3m), which is expected to
be incurred across the period to 31 March 2040. If the decommissioning
activity was accelerated due to changes in legislation, the costs of unwinding
the discounting of the provision would be recognised earlier.
Defined benefit scheme assets
The Group holds defined benefit pension scheme assets at 30 September 2024
which could be impacted by climate-related risks. The Trustees of the schemes
have a long-term investment strategy that seeks to reduce investment risk as
and when appropriate and takes into consideration the impact of
climate-related risk.
Going concern
The implications of near term climate-related risks have been considered in
the Group's going concern assessment.
4.2 Other accounting judgements and estimation uncertainties - changes
from the prior year
The Group has made no changes to accounting judgements and estimation
uncertainties and identified no new areas of estimation uncertainty from those
presented in the Group's 2024 Annual Report.
4.3 Other areas of estimation uncertainty
Decommissioning costs
The calculation of the Group's decommissioning provisions involves the
estimation of quantum and timing of cash flows to settle the obligation. The
Group engages independent valuation experts to estimate the cost of
decommissioning its Renewable, Thermal and Gas Storage assets every three
years based on current technology and prices. The last independent assessment
for the majority of the Group's Renewable and Thermal generation assets was
performed in the year to 31 March 2022. The costs of these provisions will be
reassessed in the second half of the financial year. The last formal
assessment for Gas Storage assets was performed in the year to 31 March 2023.
Retained decommissioning costs in relation to the disposed Gas Production
business are periodically agreed with the field operators and reflect the
latest expected economic production lives of the fields.
The dates for settlement of future decommissioning costs are uncertain,
particularly for the disposed Gas Production business where reassessment of
gas and liquids reserves and fluctuations in commodity prices can lengthen or
shorten the field life.
At 30 September 2024, the carrying value of decommissioning provisions has
decreased due to increases in discount rate and minimal movement in inflation
assumptions since 31 March 2024. All revaluation movements have been matched
by an offsetting adjustment to the associated asset, except for the decrease
of £10.8m (March 2024: increase £9.9m) to the provision relating to Gas
Production activities, which has been recognised in the income statement.
5. Segmental information
There have been no changes to the Group's core operating segments during the
period. These segments are used internally by the Board to manage the business
and make strategic decisions. The Group's 'Corporate unallocated' segment is
the Group's residual corporate central costs which are not allocated to
individual segments and includes the contribution from Enerveo Limited and the
Group's joint venture investment in Neos Networks Limited.
The types of products and services from which each reportable segment
generates its revenue are:
Business area Reported segments Description
Continuing operations
Transmission SSEN Transmission The economically regulated high voltage transmission of electricity from
generating plant to the distribution network in the North of Scotland.
Distribution SSEN Distribution The economically regulated lower voltage distribution of electricity to
customer premises in the North of Scotland and the South of England.
Renewables SSE Renewables The generation of electricity from renewable sources, such as onshore and
offshore windfarms and run of river and pumped storage hydro assets in the UK
and Ireland. This segment also includes the development of wind assets in
Japan and the Netherlands; solar assets in Poland; and the development of
wind, solar and battery opportunities in the UK and Southern Europe.
Thermal SSE Thermal The generation of electricity from thermal plants including CCGTs and the
Group's interests in multifuel assets in the UK and Ireland.
Gas Storage The operation of gas storage facilities in Great Britain, utilising capacity
to optimise trading opportunities associated with the assets.
Energy Customer Solutions SSE Business Energy The supply of electricity and gas to business customers in Great Britain and
smart buildings (BEMS) activity.
SSE Airtricity The supply of electricity, gas and energy related services to residential and
business customers in the Republic of Ireland and Northern Ireland.
SSE Enterprise SSE Enterprise The provision of low carbon energy solutions to customers; behind-the-meter
solar and battery solutions, EV charging activities, private electric
networks and heat and cooling networks.
On 30 September 2024, the Group announced that SSE Enterprise will be
integrated into SSE's other segments to provide an enhanced platform for
growth. This realignment of segment reporting will be applied in the annual
financial statements for the year to 31 March 2025.
SSE Energy Markets SSE Energy Markets The provision of a route to market for the Group's Renewable and Thermal
generation businesses and commodity procurement for the Group's energy supply
businesses in line with the Group's stated hedging policies.
The internal measure of profit used by the Board is 'adjusted profit before
interest and tax' or 'adjusted operating profit' which is arrived at before
exceptional items, the impact of financial instruments measured under IFRS 9,
share of profits attributable to non-controlling interests, the net interest
costs/income associated with defined benefit pension schemes, adjustments to
the retained Gas Production decommissioning, the impact of depreciation on
fair value uplifts and after the removal of taxation and interest on profits
from joint ventures and associates.
Analysis of revenue, operating profit, capital expenditure and earnings before
interest, taxation, depreciation and amortisation ('EBITDA') by segment is
provided below. All revenue and profit before taxation arise from operations
within the UK and Ireland. Details of revenue recognition policies are
included in the Group's consolidated financial statements for the year to 31
March 2024.
5. Segmental information (continued)
5. (a) Revenue by segment
Six months ended 30 September 2024 Six months ended 30 September 2023
Reported revenue Inter-segment revenue Segment revenue Reported revenue Inter-segment revenue Segment revenue
£m £m £m £m £m £m
Continuing operations
SSEN Transmission 397.2 - 397.2 441.1 - 441.1
SSEN Distribution 700.5 35.1 735.6 468.2 24.4 492.6
SSE Renewables 145.4 454.2 599.6 140.6 185.0 325.6
SSE Thermal 238.2 396.1 634.3 279.0 1,530.7 1,809.7
Gas Storage 8.1 1,154.8 1,162.9 4.6 1,302.3 1,306.9
Energy Customer Solutions
SSE Business Energy 1,278.9 20.1 1,299.0 1,544.5 21.0 1,565.5
SSE Airtricity 837.9 59.1 897.0 949.6 75.1 1,024.7
SSE Enterprise 40.3 16.9 57.2 38.3 10.1 48.4
SSE Energy Markets:
Gross trading 5,234.6 2,479.9 7,714.5 6,812.4 4,010.0 10,822.4
Optimisation trades(i) (4,529.1) (130.6) (4,659.7) (5,916.2) (1,327.2) (7,243.4)
SSE Energy Markets 705.5 2,349.3 3,054.8 896.2 2,682.8 3,579.0
Corporate unallocated 107.3 149.3 256.6 28.4 119.0 147.4
Total SSE Group 4,459.3 4,634.9 9,094.2 4,790.5 5,950.4 10,740.9
Year ended 31 March 2024
Reported revenue Inter-segment revenue Segment revenue
£m £m £m
Continuing operations
SSEN Transmission 885.2 - 885.2
SSEN Distribution 1,004.0 45.9 1,049.9
SSE Renewables 335.5 876.3 1,211.8
SSE Thermal 571.0 3,123.9 3,694.9
Gas Storage 11.2 2,948.4 2,959.6
Energy Customer Solutions
SSE Business Energy 3,183.2 48.5 3,231.7
SSE Airtricity 2,021.2 170.0 2,191.2
SSE Enterprise 91.9 23.6 115.5
SSE Energy Markets:
Gross trading 15,074.3 7,951.4 23,025.7
Optimisation trades(i) (12,785.1) (2,674.2) (15,459.3)
SSE Energy Markets 2,289.2 5,277.2 7,566.4
Corporate unallocated 64.8 250.9 315.7
Total SSE Group 10,457.2 12,764.7 23,221.9
(i) The Group continues to provide optimisation volume disclosures
to disclose the volume of trading in the period by its SSE Energy Markets
segment.
5. Segmental information (continued)
5. (a) Revenue by segment (continued)
Disaggregation of revenue
Revenue from contracts with customers can be disaggregated by reported
segment, by major service lines and by timing of revenue recognition as
follows:
Six months ended 30 September 2024
Revenue from contracts with customers
Goods or services transferred over time Goods or services transferred at a point in time
Use of electricity networks Supply of energy and ancillary services Construction related services Other contracted services Physical energy Gas storage Other revenue Total revenue from contracts with customers Other contract revenue Total
£m £m £m £m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 385.4 - - 10.4 - - 1.4 397.2 - 397.2
SSEN Distribution 676.5 - - 7.3 - - 9.9 693.7 6.8 700.5
SSE Renewables - 30.9 - 53.4 60.2 - 0.9 145.4 - 145.4
SSE Thermal - 235.4 - - - - 0.6 236.0 2.2 238.2
Gas Storage - - - - - 8.1 - 8.1 - 8.1
Energy Customer Solutions
SSE Business Energy - 1,250.6 - - - - 28.3 1,278.9 - 1,278.9
SSE Airtricity - 825.8 - - - - 12.1 837.9 - 837.9
SSE Enterprise 11.4 12.4 6.5 - - - 4.5 34.8 5.5 40.3
SSE Energy Markets - - - - 548.1 - 157.4 705.5 - 705.5
Corporate unallocated - - - 95.6 - - 11.7 107.3 - 107.3
Total SSE Group 1,073.3 2,355.1 6.5 166.7 608.3 8.1 226.8 4,444.8 14.5 4,459.3
5. Segmental information (continued)
5. (a) Revenue by segment (continued)
Disaggregation of revenue (continued)
Six months ended 30 September 2023
Revenue from contracts with customers
Goods or services transferred over time Goods or services transferred at a point in time
Use of electricity networks Supply of energy and ancillary services Construction related services Other contracted services Physical energy Gas storage Other revenue Total revenue from contracts with customers Other contract revenue Total
£m £m £m £m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 429.8 - - 9.3 - - 2.0 441.1 - 441.1
SSEN Distribution 445.1 - - 6.5 - - 7.4 459.0 9.2 468.2
SSE Renewables - 25.1 - 49.6 63.7 - 2.2 140.6 - 140.6
SSE Thermal - 264.5 - - - - 14.5 279.0 - 279.0
Gas Storage - - - - - 4.6 - 4.6 - 4.6
Energy Customer Solutions
SSE Business Energy - 1,523.5 - - - - 21.0 1,544.5 - 1,544.5
SSE Airtricity - 937.8 - - - - 11.8 949.6 - 949.6
SSE Enterprise 8.6 14.3 6.3 1.9 - - 1.7 32.8 5.5 38.3
SSE Energy Markets - - - - 757.1 - 139.1 896.2 - 896.2
Corporate unallocated - - - - - - 28.4 28.4 - 28.4
Total SSE Group 883.5 2,765.2 6.3 67.3 820.8 4.6 228.1 4,775.8 14.7 4,790.5
5. Segmental information (continued)
5. (a) Revenue by segment (continued)
Disaggregation of revenue (continued)
Year ended 31 March 2024
Revenue from contracts with customers
Goods or services transferred over time Goods or services transferred at a point in time
Use of electricity networks Supply of energy and ancillary services Construction related services Other contracted services Physical energy Gas storage Other revenue Total revenue from contracts with customers Other contract revenue Total
£m £m £m £m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 854.1 - - 18.8 - - 12.3 885.2 - 885.2
SSEN Distribution 951.2 - - 14.0 - - 16.9 982.1 21.9 1,004.0
SSE Renewables - 58.6 - 104.0 169.5 - 3.4 335.5 - 335.5
SSE Thermal - 531.5 - - - - 39.5 571.0 - 571.0
Gas Storage - - - - - 11.2 - 11.2 - 11.2
Energy Customer Solutions
SSE Business Energy - 3,135.4 - - - - 47.8 3,183.2 - 3,183.2
SSE Airtricity - 1,999.2 - - - - 22.0 2,021.2 - 2,021.2
SSE Enterprise 18.6 30.7 4.7 - - - 32.1 86.1 5.8 91.9
SSE Energy Markets - - - - 2,136.5 - 152.7 2,289.2 - 2,289.2
Corporate unallocated - - - - - - 64.8 64.8 - 64.8
Total SSE Group 1,823.9 5,755.4 4.7 136.8 2,306.0 11.2 391.5 10,429.5 27.7 10,457.2
5. Segmental information (continued)
5. (b) Operating profit/(loss) by segment
Six months ended 30 September 2024
Adjusted operating profit reported to the Board Depreciation expense on fair value uplifts Joint Venture/ Associate share of interest and tax Non-controlling interests Before exceptional items and certain re-measurements Exceptional items and certain re-measurements Total
Adjustments to Gas Production decommissioning provision
£m £m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 157.5 - - - 52.5 210.0 - 210.0
SSEN Distribution 346.3 - - - - 346.3 - 346.3
SSE Renewables 335.6 (9.8) (84.3) - (0.1) 241.4 29.1 270.5
SSE Thermal (9.0) (0.1) 2.6 - - (6.5) 0.2 (6.3)
Gas Storage (34.8) - - - - (34.8) - (34.8)
Energy Customer Solutions
SSE Business Energy 60.1 - - - - 60.1 - 60.1
SSE Airtricity 70.6 - - - - 70.6 - 70.6
SSE Enterprise (19.0) - - - - (19.0) - (19.0)
SSE Energy Markets 14.1 - - - - 14.1 65.2 79.3
Corporate
Corporate (50.5) - - 10.8 - (39.7) (21.9) (61.6)
unallocated
Neos Networks (10.7) - (1.6) - - (12.3) - (12.3)
Total SSE Group 860.2 (9.9) (83.3) 10.8 52.4 830.2 72.6 902.8
The adjusted operating profit of the Group is reported after removal of the
Group's share of interest, fair value movements on operating derivatives, the
depreciation expense on fair value uplifts and tax from joint ventures and
associates, Gas Production decommissioning costs, operating profit from
non-controlling interests and after adjusting for exceptional items and
certain re-measurements (note 6).
5. Segmental information (continued)
5. (b) Operating profit/(loss) by segment (continued)
Six months ended 30 September 2023 (restated*)
Adjusted operating profit reported to the Board Depreciation expense on fair value uplifts Joint Venture/ Associate share of interest and tax Non-controlling interests Before exceptional items and certain re-measurements Exceptional items and certain re-measurements Total
Adjustments to Gas Production decommissioning provision
£m £m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 215.6 - - - 71.7 287.3 - 287.3
SSEN Distribution 120.1 - - - - 120.1 - 120.1
SSE Renewables 86.8 (9.4) (49.1) - (0.5) 27.8 (9.5) 18.3
SSE Thermal 312.9 - (1.6) - - 311.3 (76.7) 234.6
Gas Storage (86.7) - - - - (86.7) (4.6) (91.3)
Energy Customer Solutions
SSE Business Energy 88.0 - - - - 88.0 - 88.0
SSE Airtricity 5.8 - (0.5) - - 5.3 - 5.3
SSE Enterprise (8.4) - - - - (8.4) - (8.4)
SSE Energy Markets 9.0 - - - - 9.0 79.9 88.9
Corporate
Corporate unallocated (35.2) - - 3.5 - (31.7) (50.5) (82.2)
Neos Networks (14.7) - (1.6) - - (16.3) - (16.3)
Total SSE Group 693.2 (9.4) (52.8) 3.5 71.2 705.7 (61.4) 644.3
*The comparative has been restated within the "Exceptional items and certain
re-measurements" column above for SSE Renewables. See note 2(v).
5. Segmental information (continued)
5. (b) Operating profit/(loss) by segment (continued)
Year ended 31 March 2024
Adjusted operating profit reported to the Board Depreciation expense on fair value uplifts Joint Venture/ Associate share of interest and tax Adjustments to Gas Production decommissioning provision Non-controlling interests Before exceptional items and certain re-measurements Exceptional items and certain re-measurements Total
£m £m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 419.3 - - - 139.8 559.1 - 559.1
SSEN Distribution 272.1 - - - - 272.1 - 272.1
SSE Renewables 833.1 (19.0) (145.7) - (0.7) 667.7 (37.4) 630.3
SSE Thermal 736.1 - (13.1) - - 723.0 (78.6) 644.4
Gas Storage 82.8 - - - - 82.8 (125.0) (42.2)
Energy Customer Solutions
SSE Business Energy 95.8 - - - - 95.8 - 95.8
SSE Airtricity 95.0 - (0.5) - - 94.5 - 94.5
SSE Enterprise (25.6) - - - - (25.6) - (25.6)
SSE Energy Markets 38.9 - - - - 38.9 551.1 590.0
Corporate
Corporate unallocated (88.8) - - (9.9) - (98.7) 4.6 (94.1)
Neos Networks (32.3) - (10.2) - - (42.5) (73.6) (116.1)
Total SSE Group 2,426.4 (19.0) (169.5) (9.9) 139.1 2,367.1 241.1 2,608.2
5. Segmental information (continued)
5. (c) Capital expenditure by segment
Capital additions to intangible assets Capital additions to property, plant and equipment Capital additions to intangible assets Capital additions to property, plant and equipment Capital additions to intangible assets Capital additions to property, plant and equipment
30 September 2024 30 September 2024 30 September 2023 30 September 2023 31 March 31 March
£m £m £m £m 2024 2024
£m £m
Continuing operations
SSEN Transmission - 504.8 - 324.8 12.8 784.7
SSEN Distribution 4.5 384.4 4.7 332.2 20.3 636.8
SSE Renewables 144.3 223.5 134.4 246.8 355.1 433.8
SSE Thermal 6.7 13.7 15.4 5.2 83.3 24.6
Gas Storage - 0.9 - 0.2 - 0.8
Energy Customer Solutions
SSE Business Energy 11.3 15.2 27.8 - 43.7 -
SSE Airtricity 9.5 0.2 8.6 0.4 14.1 0.7
SSE Enterprise 10.2 12.4 11.1 4.7 26.4 32.4
SSE Energy Markets 196.9 - 166.7 - 723.4 -
Corporate unallocated 9.1 25.7 12.3 25.1 35.1 57.6
Total SSE Group 392.5 1,180.8 381.0 939.4 1,314.2 1,971.4
Increase in prepayments related to capital expenditure - 142.7 - 76.7 - 215.1
Tarbert temporary generation additions - 13.7 - - - 93.4
Decrease/(increase) in trade payables related to capital expenditure - (64.5) 10.9 (51.8) 2.5 (84.6)
Customer funded additions - (92.6) - (91.4) - (152.0)
Lease asset additions - (43.0) - (24.9) - (73.0)
Less non-cash items:
Allowances and certificates (153.2) - (68.1) - (346.6) -
Net cash outflow 239.3 1,137.1 323.8 848.0 970.1 1,970.3
Capital additions do not include assets acquired in acquisitions, assets
acquired under leases or assets constructed that the Group were reimbursed by
way of a government grant. During the period the Group received reimbursements
totalling £13.7m (2023: £nil; March 2024: £93.4m) from government bodies
relating to construction of a temporary generation plant at the Group's
Tarbert site, which have been presented separately on the cashflow statement.
Capital additions to intangible assets includes the cash purchase of emissions
allowances and certificates of £39.2m (2023: £95.2m; March 2024: £427.9m).
These purchases are presented in the cash flow statement within operating
activities since they relate to the obligation to surrender the allowances and
certificates in line with operating volumes of emissions. Other non-cash
additions comprise self-generated renewable obligation certificates.
No segmental analysis of assets is required to be disclosed as this
information is not presented to the Board.
5. Segmental information (continued)
5. (c) Capital expenditure by segment (continued)
Six months ended 30 September 2024
Capital additions to intangible assets Capital additions to property, plant and equipment Capital Investment relating to Joint Ventures and Associates (i) Allowances and certificates Customer funded additions Lease asset additions (iv) Share of non-controlling interests Adjusted
£m £m £m (ii) (iii) £m (v) Investment and Capital Expenditure
£m £m £m £m
Continuing operations
SSEN Transmission - 504.8 - - - (2.6) (125.6) 376.6
SSEN Distribution 4.5 384.4 - - (92.6) (0.1) - 296.2
SSE Renewables 144.3 223.5 142.5 - - (17.2) (1.2) 491.9
SSE Thermal 6.7 13.7 26.0 - - - - 46.4
Gas Storage - 0.9 - - - - - 0.9
Energy Customer Solutions
SSE 11.3 15.2 - - - - - 26.5
Business
Energy
SSE Airtricity 9.5 0.2 - - - - - 9.7
SSE Enterprise 10.2 12.4 5.1 - - (0.7) - 27.0
SSE Energy Markets 196.9 - - (192.4) - - - 4.5
Corporate unallocated 9.1 25.7 - - - (22.4) - 12.4
Total SSE Group 392.5 1,180.8 173.6 (192.4) (92.6) (43.0) (126.8) 1,292.1
i) Represents equity or debt funding provided to
joint ventures or associates in relation to capital expenditure projects.
ii) Allowances and Certificates consist of purchased
carbon emissions allowances and generated or purchased renewable obligations
certificates (ROCs) and are not included in the Group's Capital Expenditure
and Investment alternative performance measure.
iii) Represents removal of additions to electricity
and other networks funded by customer contributions.
iv) Represents removal of additions in respect of right
of use assets recognised on the commencement date of a lease arrangement.
v) Represents the share of capital additions
attributable to non-controlling interests.
5. Segmental information (continued)
5. (c) Capital expenditure by segment (continued)
Six months ended 30 September 2023
Capital additions to intangible assets Capital additions to property, plant and equipment Capital Investment relating to Joint Ventures and Associates (i) Allowances and certificates Customer funded additions Lease asset additions Share of non-controlling interests (v) Adjusted
£m £m £m (ii) (iii) (iv) £m Investment and Capital Expenditure
£m £m £m £m
Continuing operations
SSEN Transmission - 324.8 - - - (1.4) (80.8) 242.6
SSEN Distribution 4.7 332.2 - - (91.4) - - 245.5
SSE Renewables 134.4 246.8 67.4 - - (1.5) - 447.1
SSE Thermal 15.4 5.2 17.6 - - - - 38.2
Gas Storage - 0.2 - - - - - 0.2
Energy Customer Solutions
SSE 27.8 - - - - - - 27.8
Business
Energy
SSE Airtricity 8.6 0.4 - - - - - 9.0
SSE Enterprise 11.1 4.7 - - - (0.6) - 15.2
SSE Energy Markets 166.7 - - (163.3) - - - 3.4
Corporate unallocated 12.3 25.1 9.3 - - (21.4) - 25.3
Total SSE Group 381.0 939.4 94.3 (163.3) (91.4) (24.9) (80.8) 1,054.3
i) Represents equity or debt funding provided to joint ventures or
associates in relation to capital expenditure projects.
ii) Allowances and Certificates consist of purchased carbon
emissions allowances and generated or purchased renewable obligations
certificates (ROCs) and are not included in the Group's Capital Expenditure
and Investment alternative performance measure.
iii) Represents removal of additions to electricity and other networks
funded by customer contributions.
iv) Represents removal of additions in respect of right of use assets
recognised on the commencement date of a lease arrangement.
v) Represents the share of capital additions attributable to
non-controlling interests.
5. Segmental information (continued)
5. (c) Capital expenditure by segment (continued)
Year ended 31 March 2024
Capital additions to intangible assets Capital additions to property, plant and equipment Capital Investment relating to Joint Ventures and Associates (i) Allowances and certificates Customer funded additions Lease asset additions (iv) Share of non-controlling interests Adjusted
£m £m £m (ii) (iii) £m (v) Investment and Capital Expenditure
£m £m £m £m
Continuing operations
SSEN Transmission 12.8 784.7 - - - (2.5) (199.4) 595.6
SSEN Distribution 20.3 636.8 - - (152.0) - - 505.1
SSE Renewables 355.1 433.8 324.5 - - (16.3) - 1,097.1
SSE Thermal 83.3 24.6 51.4 (59.7) - - - 99.6
Gas Storage - 0.8 - - - - - 0.8
Energy Customer Solutions
SSE 43.7 - - - - - - 43.7
Business
Energy
SSE Airtricity 14.1 0.7 - - - - - 14.8
SSE Enterprise 26.4 32.4 - - - (7.8) - 51.0
SSE Energy Markets 723.4 - - (714.8) - - - 8.6
Corporate unallocated 35.1 57.6 14.1 - - (46.4) - 60.4
Total SSE Group 1,314.2 1,971.4 390.0 (774.5) (152.0) (73.0) (199.4) 2,476.7
i) Represents equity or debt funding provided to joint ventures or
associates in relation to capital expenditure projects.
ii) Allowances and Certificates consist of purchased carbon
emissions allowances and generated or purchased renewable obligations
certificates (ROCs) and are not included in the Group's Capital Expenditure
and Investment alternative performance measure.
iii) Represents removal of additions to electricity and other networks
funded by customer contributions.
iv) Represents removal of additions in respect of right of use assets
recognised on the commencement date of a lease arrangement.
v) Represents the share of capital additions attributable to
non-controlling interests.
5. Segmental information (continued)
5. (d) Earnings/(losses) before interest, taxation, depreciation and
amortisation ('Adjusted EBITDA')
30 September 2024
Adjusted operating profit reported to the Board Depreciation expense on fair value uplifts Depreciation/ impairment/ amortisation before exceptional charges Joint venture/ Associate share of depreciation and amortisation Release of deferred income Share of non-controlling interest depreciation and amortisation Adjusted EBITDA
£m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 157.5 - 72.1 - (1.0) (18.0) 210.6
SSEN Distribution 346.3 - 105.2 - (6.0) - 445.5
SSE Renewables 335.6 (9.8) 94.5 67.1 - - 487.4
SSE Thermal (9.0) (0.1) 44.1 20.7 - - 55.7
Gas Storage (34.8) - 0.4 - - - (34.4)
Energy Customer Solutions
SSE Business Energy 60.1 - 9.6 - - - 69.7
SSE Airtricity 70.6 - 8.2 - - - 78.8
SSE Enterprise (19.0) - 4.9 - (0.2) - (14.3)
SSE Energy Markets 14.1 - 3.2 - - - 17.3
Corporate
Corporate unallocated (50.5) - 45.7 - (0.2) - (5.0)
Neos Networks (10.7) - - 22.4 - - 11.7
Total SSE Group 860.2 (9.9) 387.9 110.2 (7.4) (18.0) 1,323.0
5. Segmental information (continued)
5. (d) Earnings/(losses) before interest, taxation, depreciation and
amortisation ('Adjusted EBITDA') (continued)
30 September 2023
Adjusted operating profit reported to the Board Depreciation expense on fair value uplifts Depreciation/ impairment/ amortisation before exceptional charges Joint venture/ Associate share of depreciation and amortisation Release of deferred income Share of non-controlling interest depreciation and amortisation Adjusted EBITDA
£m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 215.6 - 63.0 - (1.0) (15.7) 261.9
SSEN Distribution 120.1 - 94.0 - (4.9) - 209.2
SSE Renewables 86.8 (9.4) 81.7 59.5 - - 218.6
SSE Thermal 312.9 - 50.7 21.4 - - 385.0
Gas Storage (86.7) - 6.2 - - - (80.5)
Energy Customer Solutions
SSE Business Energy 88.0 - 3.3 - - - 91.3
SSE Airtricity 5.8 - 4.1 - - - 9.9
SSE Enterprise (8.4) - 3.2 - (0.2) - (5.4)
SSE Energy Markets 9.0 - 2.6 - - - 11.6
Corporate
Corporate unallocated (35.2) - 34.8 - (0.3) - (0.7)
Neos Networks (14.7) - - 23.4 - - 8.7
Total SSE Group 693.2 (9.4) 343.6 104.3 (6.4) (15.7) 1,109.6
31 March 2024
Adjusted operating profit reported to the Board Depreciation expense on fair value uplifts Depreciation/ impairment/ amortisation before exceptional charges Joint venture/ Associate share of depreciation and amortisation Release of deferred income Share of non-controlling interest depreciation and amortisation Adjusted EBITDA
£m £m £m £m £m £m £m
Continuing operations
SSEN Transmission 419.3 - 130.1 - (2.0) (32.5) 514.9
SSEN Distribution 272.1 - 194.8 - (9.9) - 457.0
SSE Renewables 833.1 (19.0) 171.9 121.6 - - 1,107.6
SSE Thermal 736.1 - 104.0 40.6 - - 880.7
Gas Storage 82.8 - 12.4 - - - 95.2
Energy Customer Solutions
SSE Business Energy 95.8 - 9.1 - - - 104.9
SSE Airtricity 95.0 - 5.1 - - - 100.1
SSE Enterprise (25.6) - 10.2 - (0.5) - (15.9)
SSE Energy Markets 38.9 - 5.1 - - - 44.0
Corporate
Corporate unallocated (88.8) - 82.2 - (0.6) - (7.2)
Neos Networks (32.3) - - 46.6 - - 14.3
Total SSE Group 2,426.4 (19.0) 724.9 208.8 (13.0) (32.5) 3,295.6
6. Exceptional items and certain re-measurements
Six months ended 30 September 2024 Six months ended 30 September 2023
Year ended 31 March £m (restated*)
2024 £m
£m
Continuing operations
Exceptional items (note 6.1)
(270.9) Asset impairments (19.2) (63.2)
- Other exceptional provisions and charges (2.7) (50.5)
4.9 Net gains on disposals/acquisitions of businesses and other assets 0.3 0.2
(266.0) Total exceptional items (21.6) (113.5)
Certain re-measurements (note 6.2)
452.2 Movement on operating derivatives 118.7 64.9
9.1 Movement in fair value of commodity stocks - (4.6)
6.1 Movement on financing derivatives (4.6) 41.0
46.1 Share of movement on derivatives in jointly controlled entities (net of tax) (24.2) (8.0)
513.5 Total certain re-measurements 89.9 93.3
247.5 Exceptional items and certain re-measurements on continuing operations before 68.3 (20.2)
taxation
Taxation
23.3 Taxation on other exceptional items 3.1 3.2
(115.0) Taxation on certain re-measurements (27.7) (23.9)
(91.7) Taxation (24.6) (20.7)
155.8 Total exceptional items and certain re-measurements on continuing operations 43.7 (40.9)
after taxation
Exceptional items and certain re-measurements are disclosed across the
following categories within the income statement:
Six months ended 30 September 2024 Six months ended 30 September 2023
Year ended 31 March £m (restated*)
2024 £m
£m
Continuing operations
Cost of sales:
452.2 Movement on operating derivatives (note 16) 118.7 64.9
9.1 Movement in fair value of commodity stocks - (4.6)
461.3 118.7 60.3
Operating costs:
(270.9) Asset impairments (19.2) (63.2)
- Other exceptional provisions and charges (2.7) (50.5)
(270.9) (21.9) (113.7)
Operating income:
4.6 Net gains on disposals of businesses and other assets - -
4.6 - -
Joint ventures and associates:
46.1 Share of movement on derivatives in jointly controlled entities (net of (24.2) (8.0)
tax)
46.1 (24.2) (8.0)
241.1 Operating profit: 72.6 (61.4)
Finance costs
6.1 Movement on financing derivatives (note 16) (4.6) 41.0
0.3 Interest income on deferred consideration receipt 0.3 0.2
6.4 (4.3) 41.2
247.5 Profit before taxation on continuing operations 68.3 (20.2)
*The comparative has been restated. See note 2(v).
6. Exceptional items and certain re-measurements (continued)
6.1 Exceptional items
Exceptional items recognised within continuing operations in the current
financial period ended 30 September 2024
i) Enerveo Limited
On 3 October 2024, subsequent to the balance sheet date, the Group entered
into an agreement with HUK 144 Limited, a subsidiary of Hilco Capital Limited,
to dispose of the Infrastructure Solutions component of Enerveo Limited
("Enerveo") for consideration of £1 less costs. The Group has assessed that
the criteria of IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations" to be classified as held for sale were met by the Infrastructure
Solutions component as at 30 September 2024. The Group has recognised an
exceptional charge of £19.2m to reflect the impairment of the assets to fair
value and a provision for £2.7m of pre-tax related disposal costs. The
current period charges have been treated as exceptional to align the treatment
with previously recognised exceptional charges associated with Enerveo. The
results of the Infrastructure Solutions business are immaterial to the Group
and therefore have not been separately disclosed as a discontinued operation.
The transaction is expected to complete in the second half of the year. The
Group has retained the Highway Electricals component of Enerveo as a
continuing operation. The results of the retained component are also
immaterial to the Group and will be reported as part of Corporate Unallocated.
ii) Other credits
At 30 September 2024, the Group recognised a final exceptional credit of
£0.3m relating to the unwind of discounting on deferred consideration
recognised as an exceptional item on the part disposal of SSE Slough Multifuel
Limited in the year ended 31 March 2021. The deferred consideration of £7.0m
was paid on commissioning of the plant.
Taxation
The Group has separately recognised the tax effect of the exceptional items
summarised above.
Exceptional items in the year ended 31 March 2024
i) Triton Power 50% joint venture - investment impairment charge
At 31 March 2024 the Group recognised an impairment charge of £63.2m against
the carrying value of the Group's investment in Triton Power Holdings Limited,
reflecting future market price assumptions.
ii) Gas Storage - impairment charge
The Group performed a formal impairment review at 31 March 2024 to reassess
the carrying value of its Gas Storage operations at Aldbrough and Atwick. As a
result of the assessment, the Group recognised an exceptional impairment
charge of £85.7m to the carrying value of the assets at Aldbrough and £48.4m
to the carrying value of the assets at Atwick.
iii) Neos Networks 50% joint venture - impairment charge
At 31 March 2024, the Group performed a formal impairment assessment on the
carrying value of its 50% joint venture investment, including shareholder loan
balances, in Neos Networks Limited. The assessment indicated that the
recoverable amount of the investment and shareholder loan receivable balances
were impaired by £73.6m.
iv) Enerveo acquisition
On 22 March 2024, the Group purchased the entire share capital of Enerveo from
Aurelius Antelope Limited ("Aurelius") for cash consideration of £1.0m.
Completion of the transaction resulted in an exceptional credit of £4.6m
being recognised on acquisition during the year ended 31 March 2024.
6.2 Certain re-measurements
The Group, through its SSE Energy Markets business, enters into forward
commodity purchase (and sale) contracts to meet the future demand requirements
of its SSE Business Energy and SSE Airtricity supply businesses, to optimise
the value of its SSE Renewables and SSE Thermal power generation assets or to
conduct other trading subject to the value at risk limits set out by the
Energy Markets Risk Committee. Certain of these contracts (predominately
electricity, gas and other commodity purchase contracts) are determined to be
derivative financial instruments under IFRS 9 "Financial Instruments" and as
such are required to be recorded at their fair value. Conversely, commodity
contracts that are not financial instruments under IFRS 9 (predominately
electricity sales contracts) are accounted for as 'own use' contracts and are
not recorded at fair value. Inventory purchased to utilise excess capacity
ahead of an optimised sale in the market by the Gas Storage business is held
as trading inventory at fair value with changes in value recognised within
'certain re-measurements'. In addition, the mark-to-market valuation movements
on the Group's contracts for difference contracts entered into by SSE
Renewables that are not designated as government grants, and which are
measured as Level 3 fair value financial instruments, are also included within
'certain re-measurements'.
Changes in the fair value of those commodity contracts designated as financial
instruments and trading inventory are therefore reflected in the income
statement. The Group shows the change in the fair value of these forward
contracts and trading inventory separately as "certain re-measurements", as
the Group does not believe this mark-to-market movement is relevant to the
underlying performance of its businesses.
At 30 September 2024, changes in global commodities markets and in SSE's
contractual positions have resulted in favourable net mark-to-market
remeasurement on commodity contracts designated as financial instruments,
contracts for difference contracts and trading inventory of £118.7m (gain)
(2023: £60.3m gain (restated), March 2024: £461.3m gain). The net IFRS 9
position on operating derivatives at 30 September 2024 is an asset of £169.9m
(2023: £336.4m liability (restated); March 2024: £51.4m asset).
6. Exceptional items and certain re-measurements (continued)
The mark-to-market gain in the period has resulted in a tax charge of £27.7m
(2023: £23.9m charge (restated), March 2024: £115.0m charge), which has been
reported separately as part of certain re-measurements. In addition, the Group
has recognised losses of £4.6m (2023: £41.0m gains, March 2024: £6.1m
gains) on the remeasurement of the certain interest rate and foreign exchange
contracts through the income statement. Losses on the remeasurement of cash
flow hedge accounted contracts of £8.3m (2023: £41.3m gain, March 2024:
£6.5m gain) and losses on the equity share of the remeasurement of cash flow
hedge accounted contracts in joint ventures of £27.4m (2023: £84.4m gains,
March 2024: £40.9m losses) have been recognised in other comprehensive
income.
The re-measurements arising from IFRS 9 and the associated deferred tax are
disclosed separately to aid understanding of the underlying performance of the
Group.
7. Finance income and costs
Year ended 31 March Six months ended 30 September 2024 Six months ended 30 September 2023
2024
£m £m £m
Finance income:
60.3 Interest income from short term deposits 11.6 32.4
26.2 Interest on net pension assets 10.2 12.8
Other interest receivable:
78.4 Joint ventures and associates 60.1 34.4
34.2 Other receivable 15.9 24.2
112.6 76.0 58.6
199.1 Total finance income 97.8 103.8
Finance costs:
(77.4) Bank loans and overdrafts (28.0) (37.1)
(274.3) Other loans and charges (146.6) (144.0)
(25.2) Notional interest arising on discounted provisions (13.2) (11.0)
(25.8) Lease charges (11.0) (11.7)
84.4 Less: interest capitalised 48.7 30.0
(318.3) Total finance costs (150.1) (173.8)
6.1 Changes in fair value of financing derivative assets or liabilities at fair (4.6) 41.0
value through profit or loss
(113.1) Net finance costs (56.9) (29.0)
Presented as:
205.2 Finance income 97.8 144.8
(318.3) Finance costs (154.7) (173.8)
(113.1) Net finance costs (56.9) (29.0)
Adjusted net finance costs are arrived at after the following adjustments:
Year ended 31 March Six months ended 30 Six months ended 30
September
September
2024
2024
2023
£m £m £m
(113.1) Net finance costs (56.9) (29.0)
(add)/less:
(110.7) Share of interest from joint ventures and associates (86.2) (47.8)
(26.2) Interest on net pension assets (10.2) (12.8)
(6.1) Movement on financing derivatives (note 16) 4.6 (41.0)
(0.3) Exceptional item (0.3) (0.2)
4.7 Share of net finance cost attributable to non-controlling interests 3.3 2.8
(251.7) Adjusted net finance costs (145.7) (128.0)
25.2 Notional interest arising on discounted provisions 13.2 11.0
25.8 Lease charges 11.0 11.7
(73.1) Hybrid coupon payment (73.7) (73.1)
(273.8) Adjusted net finance costs for interest cover calculations (195.2) (178.4)
8. Taxation
The income tax expense for the interim period is calculated in accordance with
the principles of IAS 34, where the forecast effective rate of tax for the
year is applied to the profits for the period, with discrete items arising in
the interim period being separately treated.
The income tax expense reflects the anticipated effective rate of tax on
profits before taxation for the Group for the year ending 31 March 2025,
taking account of the movement in the deferred tax provision in the period so
far as it relates to items recognised in the income statement. The reported
tax rate on the profit before tax before exceptional items and certain
re-measurements on continuing operations is 24.3% (2023: 21.3%, March 2024:
23.1%). The reported tax rate on the profit before tax after exceptional items
and certain remeasurements is 25.2% (2023: 25.3% restated, March 2024: 24.5%).
The charge recognised in the income statement is as follows:
Six months ended 30 September 2024 Six months ended 30 September 2023
Before exceptional items and remeasurements Exceptional items and remeasurements Total Before exceptional items and remeasurements Exceptional items and remeasurements (restated*) Total (restated*)
£m £m £m £m £m £m
Current tax
Corporation tax 104.2 11.1 115.3 97.3 (6.9) 90.4
Adjustments in respect of previous periods - - - (15.0) - (15.0)
Total current tax 104.2 11.1 115.3 82.3 (6.9) 75.4
Deferred tax
Current period 84.5 13.5 98.0 52.9 27.6 80.5
Total deferred tax 84.5 13.5 98.0 52.9 27.6 80.5
Total taxation charge 188.7 24.6 213.3 135.2 20.7 155.9
Year ended 31 March 2024
Before exceptional items and remeasurements Exceptional items and remeasurements Total
£m £m £m
Current tax
Corporation tax 366.1 (36.5) 329.6
Adjustments in respect of previous years (25.6) 31.8 6.2
Total current tax 340.5 (4.7) 335.8
Deferred tax
Current year 155.3 128.2 283.5
Adjustments in respect of previous years 23.2 (31.8) (8.6)
Total deferred tax 178.5 96.4 274.9
Total taxation charge 519.0 91.7 610.7
The 'adjusted current tax charge' and the 'adjusted effective rate of tax',
which are presented in order to best represent underlying performance by
making similar adjustments to the 'adjusted profit before tax' measure, are
arrived at after the following adjustments:
Year ended Six months ended Six months ended
30 September 2024
30 September 2023 (restated*)
31 March 2024
£m % £m % £m %
Continuing operations
610.7 25.6 Group tax charge and effective rate 213.3 24.5 155.9 24.7
(274.9) (11.5) Add: reported deferred tax charge and effective rate (98.0) (11.3) (80.5) (12.8)
335.8 14.1 Reported current tax charge and effective rate 115.3 13.2 75.4 11.9
1.3 Effect of adjusting items 2.9 1.4
335.8 15.4 Reported current tax charge and effective rate on adjusted basis 115.3 16.1 75.4 13.3
add:
38.5 1.8 Share of current tax from joint ventures and associates (13.7) (1.9) 10.5 1.9
less:
4.7 0.2 Current tax charge on exceptional items (11.1) (1.6) 6.9 1.2
(8.0) (0.3) Share of current tax attributable to non-controlling interests 5.5 0.8 (4.4) (0.8)
371.0 17.1 Adjusted current tax charge and effective rate 96.0 13.4 88.4 15.6
*The comparative has been restated. See note 2(v).
The adjusted effective current tax rate for the period after adjusting for
discrete events arising in the first half of the year is 13.4% (2023: 15.6%).
The forecast full-year effective current tax rate is expected to be 13.4%.
8. Taxation (continued)
Change in UK corporation tax rates
There are no announced or enacted changes in corporation tax rates in the
interim period.
Finance Bill 2023 introduced legislation, initially as a temporary measure but
then being made permanent in the Autumn Statement, to allow 'Full Expensing'
of 100% General Pool plant and machinery, alongside 50% for Special Rate Pool
plant and machinery. These changes significantly increase the deductions for
Capital Allowances on capital expenditure incurred from 1 April 2023.
Finance Act (No.2) 2023 also introduced legislation in respect of
Multinational Top-up Tax in line with OECD BEPS Pillar Two principles. The
Group has applied the exemption from recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes
as required by the amendments to IAS 12 - International Tax Reform - Pillar
Two Model Rules, which was issued in May 2023. The legislation is in force for
the year ended 31 March 2025, including this interim period. Similar draft
legislation has been introduced in the Republic of Ireland and other EU
jurisdictions. The Group has undertaken modelling and does not expect a
material impact to arise as tax rates, including deferred tax, in the
countries in which the Group operates are expected to exceed 15%.
9. Dividends
Ordinary dividends
Year ended 31 March 2024 Six months ended 30 September 2024 Six months ended 30 September 2023
Total £m Settled via scrip £m Pence per ordinary share Total Settled Pence per ordinary share Total £m Settled Pence per ordinary share
£m via scrip via scrip £m
£m
- - - Final - year ended 31 March 2024 437.3 225.5 40.0 - - -
218.3 8.8 20.0 Interim - year ended 31 March 2024 - - - - - -
738.1 29.8 67.7 Final - year ended 31 March 2023 - - - 738.1 29.8 67.7
956.4 38.6 437.3 225.5 738.1 29.8
The final dividend of 40.0p per ordinary share declared in respect of the
financial year ended 31 March 2024 (2023: 67.7p) was approved at the Annual
General Meeting on 18 July 2024 and was paid to shareholders on 19 September
2024. Shareholders were able to elect to receive ordinary shares credited as
fully paid instead of the cash dividend under the terms of the Company's scrip
dividend scheme.
For dividends paid in relation to the financial year ended 31 March 2022 and
in relation to the subsequent years to 31 March 2027, the Group's policy is to
repurchase shares to reduce the scrip's dilutive effects, if the scrip take-up
exceeds 25% of the full year dividend in any given year. The overall scrip
dividend take-up for the financial year ended 31 March 2024 was 35.7% (March
2023: 18.0% - no Scrip buyback). SSE initiated a share buyback in the period
following the final dividend payment for the year ended 31 March 2024. The
number of ordinary shares to be purchased will not exceed 3,806,467 ordinary
shares, and the maximum amount allocated to the Scrip buyback is £75.0m. SSE
completed the Share buyback process on 16 October 2024.
An interim dividend of 21.2p per ordinary share has been proposed and is due
to be paid on 27 February 2025 to those shareholders on the SSE plc share
register on 3 January 2025. The proposed interim dividend has not been
included as a liability in these financial statements. A scrip dividend will
be offered as an alternative.
10. Earnings per share
Basic earnings per share
The calculation of basic earnings per ordinary share at 30 September 2024 is
based on the net profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding during the period ended
30 September 2024.
Adjusted earnings per share
Adjusted earnings per share has been calculated by excluding the charge for
deferred tax, interest on net pension assets under IAS 19, retained Gas
Production decommissioning costs, the depreciation expense on fair value
uplifts, the share of profit attributable to non-controlling interests and the
impact of exceptional items and certain re-measurements.
10. Earnings per share (continued)
Continuing operations
Year ended Six months ended Six months ended
30 September 2024
30 September 2023
31 March 2024
(restated*)
Earnings Earnings per share Earnings Earnings per share Earnings Earnings per share
£m pence £m pence £m pence
1,710.5 156.7 Basic earnings attributable to ordinary shareholders on continuing operations 522.1 47.7 335.1 30.7
used to calculate adjusted EPS
(155.8) (14.3) Exceptional items and certain re-measurements (note 6) (43.7) (4.0) 40.9 3.7
1,554.7 142.4 Basic excluding exceptional items and certain re- measurements 478.4 43.7 376.0 34.4
Adjusted for:
9.9 0.9 Gas Production decommissioning provision movement (10.8) (1.0) (3.5) (0.3)
19.0 1.7 Depreciation expense on fair value uplifts 9.9 0.9 9.4 0.9
(26.2) (2.4) Interest on net pension assets (note 7) (10.2) (0.9) (12.8) (1.2)
178.5 16.3 Deferred tax 84.5 7.7 52.9 4.9
20.3 1.9 Deferred tax from share of joint ventures and associates 10.8 1.0 (12.8) (1.2)
(25.6) (2.3) Deferred tax on non-controlling interest (17.8) (1.6) (5.5) (0.5)
1,730.6 158.5 Adjusted 544.8 49.8 403.7 37.0
Reported earnings per share
Year ended Six months ended Six months ended
30 September 2024
30 September 2023
31 March 2024
(restated*)
Earnings Earnings per share Earnings Earnings per share Earnings Earnings per share
£m pence £m pence £m pence
1,710.5 156.7 Basic earnings per share attributable to ordinary shareholders 522.1 47.7 335.1 30.7
- (0.2) Dilutive effect of outstanding share options - (0.1) - -
1,710.5 156.5 Diluted 522.1 47.6 335.1 30.7
*The comparative has been restated. See note 2(v).
The weighted average number of shares used in each calculation is as follows:
Year ended 31 March 2024 Six months ended Six months ended
Number of shares 30 September 2024 30 September 2023
(millions) Number of shares Number of shares
(millions) (millions)
1,091.8 For basic and adjusted earnings per share 1,094.2 1,090.4
1.5 Effect of exercise of share options 2.2 2.0
1,093.3 For diluted earnings per share 1,096.4 1,092.4
11. Acquisitions and disposals
Acquisitions and disposals in the current period
There have been no significant acquisitions and disposals in the current
period.
During the period ended 30 September 2024, the Group made an asset acquisition
(of a special purchase vehicle as opposed to a business) for cash
consideration of £15.4m and sold a 50% equity share in SSE DE EV Hold Co
Limited to form a 50:50 joint venture with TotalEnergies Marketing UK Limited
for cash consideration of £16.5m.
11. Acquisitions and disposals (continued)
Prior year acquisitions
Enerveo acquisition
On 22 March 2024, the Group completed the acquisition of Enerveo from Aurelius
for cash consideration of £1.0m. Enerveo (formerly named SSE Contracting
Limited) is a former subsidiary of the Group that was disposed to Aurelius on
30 June 2021. The reacquisition of Enerveo resulted in a gain of £4.6m in the
year ended 31 March 2024, which was recognised as an exceptional item.
Following completion, SSE restructured and settled external liabilities
totalling £15.2m and settled certain balances of £30.9m due to SSE companies
which are included in the acquired balances below. At 31 March 2024, the
goodwill balance of £5.6m implied by the transaction was written off. This
write-off was included within the total gain of £4.6m referred to above. The
following table summarises the assets and liabilities acquired in the
transaction.
Fair value at
22 March 2024
£m
Assets acquired and liabilities assumed
Property, plant and equipment 11.7
Intangible assets 2.5
Inventories 3.9
Trade and other receivables 40.1
Prepayments and accrued income 55.1
Cash 13.2
Trade and other payables (91.0)
Deferred income (20.0)
Lease liabilities (12.8)
Provisions (7.3)
Total net liabilities acquired (4.6)
Goodwill 5.6
Cash consideration 1.0
As referred to at note 6.1(i), on 3 October 2024, the Group entered into an
agreement with HUK 144 Limited to dispose of the Infrastructure Solutions
component of Enerveo for consideration of £1 less costs. The transaction is
expected to complete in the second half of the year.
12. Impairment testing
At 30 September 2024, the Group has reviewed the carrying value of certain
assets and has assessed whether there are any indicators that an impairment
may have arisen. Where an impairment indicator exists, then a formal
impairment assessment has been performed.
The Group has an early-stage renewable development portfolio in Southern
Europe which is sensitive to changes in certain assumptions supporting the
Group's valuation. During the period to 30 September 2024, discount rates in
Southern Europe have increased, and the Group has experienced some delays in
progressing projects through the planning and consenting processes. These
factors were considered impairment triggers, necessitating a formal impairment
review.
The Group also holds a 50% investment stake in Triton Power Holdings Limited
('Triton'), following its acquisition on 1 September 2022. While the
investment is an equity accounted joint venture, the investment has been
impaired in previous periods and is sensitive to market movements. During the
period, there has been a decrease in short term observable spark spreads,
offset by increases in Capacity Mechanism price assumptions. The movements in
these assumptions have been considered impairment triggers, necessitating a
formal impairment review. The Group's remaining CCGT fleet are held at
historic cost and displayed significant headroom during the 31 March 2024
impairment review. Therefore, while the movements in spark spreads and
Capacity Mechanism prices have been considered impairment triggers
or the Group's investment in Triton, the Group's remaining CCGT fleet continue
to demonstrate headroom above their carrying values and have not been included
in the review below.
12. Impairment testing (continued)
The results of the impairment assessments in relation to SSE Southern Europe
and Triton were as follows:
Assets Cash flow period assumption Operating and other valuation assumptions Commentary and impairment conclusions
SSE Southern Europe Period to end of life of portfolio assets Modelling methodology and assumptions Impairment conclusion
A discounted cash flow analysis is used to test the carrying value of £405.1m The recoverable amount of the Southern Europe windfarm CGU is £557.4m (March
of goodwill (March 2024: £416.8m) and £145.6m of capitalised development 2024: £572.8m), resulting in minimal headroom. While the recoverable amount
assets (March 2024: £120.5m) for impairment. As the Southern Europe platform reflects current market challenges, it continues to exceed the carrying value
is in early-stage development, the assessment was based on the discounted of the goodwill and intangible development assets. Therefore, no impairment
pre-tax cash flows using a comparable methodology to the acquisition model but has been recognised at 30 September 2024.
updated to reflect changes to specific project circumstances and wider market
developments since acquisition. The impairment assessment is highly sensitive to fluctuations in key
assumptions due to the relatively small headroom above carrying value. The
The Southern Europe CGU includes cashflows for early-stage development assets, Group continues to monitor both the portfolio and the Southern European market
being 77 individual windfarm and co-located solar projects across Spain, closely for further developments.
France, Italy and Greece that have been assigned a probability of success.
While there are other projects in the portfolio, these have not been assigned
a probability of success and have been excluded from the valuation.
Sensitivity analysis
Cashflows for the CGUs are based on the expected average annual generation
output for each project, valued using forward power price projections. These The principal assumptions impacting the valuation model of the Southern Europe
factors are subject to management review. The prices applied to projected windfarm CGU are generation volume; development probability of success;
outputs are based on observable market information as at 30 September 2024. discount rate; and power price.
Assumptions have also been made on the Spanish, French, Italian and Greek While cash flow projections are subject to inherent uncertainty, a 10%
government's support for the development of wind projects and expected reduction in greenfield generation volume was modelled which indicated an
governmental support under CfD subsidies. Cash outflows are based on planned impairment of £25.8m (March 2024: headroom of £3.4m).
and expected maintenance profiles and other capital or replacement costs.
A 5% reduction in the probability of success attributed to the development
The cash flow projections are based on European power prices between €40 - projects would result in an impairment of £62.4m (March 2024: impairment of
€172 per MWh (March 2024: €38 - €141 per MWh) and have been discounted £2.6m).
applying a pre-tax real discount rate between 6.6% and 7.5% (March 2024: 6.2%
and 6.7%) based on technology and market risks. An increase of 0.1% in the respective pre-tax real discount rates (Spain: 6.6%
France: 7.5%, Italy: 7.2% and Greece: 7.1%) results in an impairment of
£20.8m and a 0.5% increase in the respective pre-tax real discount rates
indicates an impairment of £120.6m (March 2024: impairment of £100.0m).
The Group has assessed that many of the projects in Spain, Italy and France
will obtain a revenue support contract. If this assumption were changed and
the projects were developed on a merchant basis, the price assumptions applied
in the model would increase, although would likely be offset by a compensatory
increase in the discount rate. A £0.1m impairment would be recognised if the
projects are developed on a merchant basis and power prices decrease by 3.8%.
12. Impairment testing (continued)
Assets Cash flow period assumption Operating and other valuation assumptions Commentary and impairment conclusions
Equity investment in Triton Power Holdings Limited Period to end of life Modelling methodology and assumptions Conclusion
The Group has valued its 50% equity investment in Triton based on projected The recoverable amount of the Group's equity investment in Triton is £139.1m
cashflows that will be derived from the joint venture investment on a value in (2024: £153.9m), which is £2.7m higher than the carrying value. As the
use ('VIU') basis. difference is low and has been assessed as part of a range of positive and
negative reasonable possible outcomes, no adjustment has been recognised at 30
The VIU assessment of the Triton power stations (Saltend, Indian Queens and September 2024.
Deeside) is used to test the carrying value of the equity investment of
£136.4m (2024: £152.5m). The assessments were based on pre-tax discounted The Group acquired its investment in Triton on 1 September 2022 during a
cash flows expected to be generated by each power station, based on period of significant volatility in the UK power market. On acquisition the
management's view of operating prospects and operational flexibility within Group recorded an exceptional gain on acquisition due to movements in short
the GB wholesale market, including capacity market clearing prices. Cash flows term gas and power prices between the purchase agreement and completion dates.
are subject to a pre-tax real discount rate of 13.0% (blended) (2024: 13.2% While the investment is an equity accounted joint venture, the investment has
(blended)). been impaired in previous periods and is sensitive to market movements.
Sensitivity analysis
The principal assumptions impacting the valuation model of Triton are discount
rate; gross margin; and non-contracted capacity market price.
A 0.5% increase in the discount rate would result in an impairment at 30
September 2024 of £1.6m. A 0.5% decrease in the discount rate would increase
the headroom from £2.7m to £7.2m and the impairment reversal would be
recognised.
A 20% increase in gross margin would result in an impairment reversal of
£22.3m, and a 20% decrease in gross margin would result in an impairment of
£17.9m.
A £10/KW increase in non-contracted capacity market price would result in an
impairment reversal of £17.8m, and a £10/KW decrease would result in an
impairment charge of £12.5m.
13. Sources of finance
13.1 Capital management
The Board's policy is to maintain a strong balance sheet and credit rating to
support investor, counterparty and market confidence in the Group and to
underpin future development of the business. The Group's credit ratings are
also important in maintaining an efficient cost of capital and in determining
collateral requirements throughout the Group. As at 30 September 2024, the
Group's long term credit rating was BBB+ positive outlook for Standard &
Poor's and Baa1 stable outlook for Moody's. The Group is also BBB+ stable
outlook with Fitch however this rating is on an unsolicited basis.
The maintenance of a medium-term corporate model is a key control in
monitoring the development of the Group's capital structure and allows for
detailed scenarios and sensitivity testing. Key ratios drawn from this
analysis underpin regular updates to the Board and include the ratios used by
the rating agencies in assessing the Group's credit ratings.
The Group's debt requirements are principally met through issuing bonds
denominated in Sterling and Euros as well as private placements and
medium-term bank loans including those with the European Investment Bank.
SSE's adjusted net debt and hybrid capital was £9.8bn at 30 September 2024,
compared with £9.4bn at 31 March 2024.
13. Sources of finance (continued)
Adjusted net debt and hybrid capital is stated after removing lease
obligations, external net debt attributable to non-controlling interests and
cash held and posted as collateral in line with the Group's presentation basis
which is explained at note 2(i). The adjustment related to the non-controlling
interest share of Scottish Hydro Electric Transmission plc external net debt
is £586.2m at 30 September 2024 (2023: £454.2m; March 2024: £490.2m) and
relates to 25% of external loans of £2,930.1m (2023: £1,815.1m; March 2024:
£2,088.0m) net of cash and cash equivalents of £585.4m (2023: £1.6m
overdrawn; March 2024: cash equivalent of £127.4m). Cash held and posted as
collateral refers to amounts received and deposited on commodity trading
exchanges which are reported within 'Trade and other payables' and 'Trade and
other receivables' respectively on the face of the balance sheet.
At 30 September 2024 the collateral balance was a net liability of £260.2m,
consisting of a liability of £264.6m and an asset of £4.4m (2023: £140.6m
asset, March 2024: £353.2m net liability). The movement since March 2024
reflects a reduction in the variation margin on 'in the money' positions due
to higher commodity prices in the six months, along with 'in the money'
positions maturing during the period.
Borrowing facilities
The Group has an established €1.5bn Euro commercial paper programme (paper
can be issued in a range of currencies and swapped into Sterling) and as at 30
September 2024 there was £799m commercial paper outstanding (March 2024:
£840m).
As at 30 September 2024, the Group continues to have access to £3.5bn of
revolving credit facilities (March 2024: £3.5bn), which includes £750m
(March 2024: £750m) relating to Scottish Hydro Electric Transmission plc. As
at 30 September 2024 there were no drawings against these committed facilities
(March 2024: nil utilisation).
The details of the five committed facilities as at 30 September 2024 are:
· a £1.3bn revolving credit facility for SSE plc maturing March
2026 (March 2024: £1.3bn);
· a £0.2bn bilateral facility for SSE plc maturing October 2026
(March 2024: £0.2bn);
· a £0.75bn facility for Scottish Hydro Electric Transmission plc
maturing November 2026 (March 2024: £0.75bn);
· a £0.25bn facility for Scottish Hydro Electric Distribution plc
and Southern Electric Power Distribution plc maturing November 2026 (March
2024: £0.25bn); and
· a £1.0bn committed facility for SSE plc maturing February 2025
(March 2024: £1.0bn).
At 30 September 2024, the £1.3bn revolving credit facility and £0.2bn
bilateral facility were both in place to provide back-up to the commercial
paper programme and support the Group's capital expenditure plans. The
Transmission and Distribution related facilities were in place to help cover
the capital expenditure and working capital of those businesses. The £1bn
committed facility for SSE plc provided cover for potential cash collateral
requirements. At 30 September 2024 and 31 March 2024 there were no drawings on
the SSE plc, Distribution and Transmission facilities.
On 23 October 2024 the above facilities have been re-financed with the
£0.75bn facility relating to Scottish Hydro Electric Transmission plc being
increased to £1.5bn, and the £2.75bn of facilities relating to SSE plc and
Distribution being reduced to £1.5bn. This reduction relates to the
cancellation of the £1.0bn facility due to mature in February 2025, and the
£0.25bn Distribution facility that is no longer required.
This results in the Group having the following committed facilities:
· a £1.5bn revolving credit facility for SSE plc maturing October
2029 with two 1 year extension options; and
· a £1.5bn revolving credit facility for Scottish Hydro Electric
Transmission plc maturing October 2029 with two 1 year extension options.
Debt maturities and new debt issued
During the period, SSE plc issued £0.8bn of debt and had £1.0bn of debt
maturities. The £0.8bn of issued debt relates to Commercial Paper being
rolled at maturity, which also accounts for £0.8bn of the debt maturities,
with the only additional debt maturity being €320m (£204m) of 12 year US
Private Placements that matured in April 2024.
During the period Scottish Hydro Electric Transmission plc issued £0.9bn of
new debt and had no debt maturities. The three issuances of new debt were as
follows:
· August 2024 - €850m (£715m) 8 year green Eurobond maturing
September 2032 with a coupon of 3.375% and an all-in GBP cost of 4.9127% once
swapped back to Sterling;
· June 2024 - 1.5bn NOK (£111m) 10 year private placement maturing
June 2034 with a coupon of 4.731% and an all-in GBP cost of 5.3315% once
swapped back to Sterling; and
· July 2024 - £30m 15 year private placement maturing July 2039
with a coupon of 5.591%.
13. Sources of finance (continued)
The Group capital comprises:
March September September
2024 2024 2023
(restated*)
£m £m £m
8,726.2 Total borrowings (excluding lease obligations) 9,178.2 8,558.6
(1,035.9) Less: Cash and cash equivalents (890.8) (902.4)
7,690.3 Net debt (excluding hybrid equity) 8,287.4 7,656.2
1,882.4 Hybrid equity 1,882.4 1,882.4
(490.2) External net debt attributable to non-controlling interests (586.2) (454.2)
353.2 Cash held/(posted) as collateral and other short-term loans 260.2 (140.6)
9,435.7 Adjusted net debt and hybrid capital 9,843.8 8,943.8
9,170.8 Equity attributable to shareholders of the parent 9,406.9 8,152.3
18,606.5 Total capital excluding lease obligations 19,250.7 17,096.1
*The comparative information has been restated. See note 2(v).
13.2 Loans and other borrowings
March 2024 September 2024 September 2023
£m £m £m
Current
1,044.5 Short term loans 1,829.0 1,313.3
83.5 Lease obligations 74.9 81.6
1,128.0 1,903.9 1,394.9
Non-current
7,681.7 Loans 7,349.2 7,245.3
324.0 Lease obligations 326.5 312.8
8,005.7 7,675.7 7,558.1
9,133.7 Total loans and borrowings 9,579.6 8,953.0
(1,035.9) Cash and cash equivalents (890.8) (902.4)
8,097.8 Unadjusted net debt 8,688.8 8,050.6
Add/(less):
1,882.4 Hybrid equity (note 14) 1,882.4 1,882.4
(490.2) External net debt attributable to non-controlling interests (586.2) (454.2)
(407.5) Lease obligations (401.4) (394.4)
353.2 Cash held/(posted) as collateral and other short term loans 260.2 (140.6)
9,435.7 Adjusted net debt and hybrid capital 9,843.8 8,943.8
SSE's adjusted net debt and hybrid capital was £9.8bn at 30 September 2024,
compared with £9.4bn at 31 March 2024 and £8.9bn at 30 September 2023.
Adjusted net debt and hybrid capital is stated after removing lease
obligations, external net debt attributed to non-controlling interests and
cash held and posted as collateral in line with the Group's presentation basis
which is explained at note 2(i). Cash held and posted as collateral refers to
amounts received and deposited on commodity trading exchanges which are
reported within 'Trade and other payables' and 'Trade and other receivables'
on the face of the balance sheet.
13.3 Reconciliation of net increase in cash and cash equivalents to movement
in adjusted net debt and hybrid capital
March 2024 September 2024 September 2023
£m £m £m
144.1 Increase/(decrease) in cash and cash equivalents (145.1) 10.6
Add/(less)
(1,982.2) New borrowing proceeds (1,655.6) (1,751.0)
1,744.0 Repayment of borrowings 1,047.0 1,738.8
166.0 Non-cash movement on borrowings 156.6 107.6
56.0 Increase in external net debt attributable to non-controlling interests 96.0 20.0
(669.5) (Decrease)/increase in cash held/posted as collateral and other short term 93.0 (175.7)
loans
(541.6) Increase in adjusted net debt and hybrid capital (408.1) (49.7)
13.4 Equity attributable to non-controlling interests
This relates to equity attributable to non-wholly owned but controlled
subsidiaries which are consolidated within the condensed Interim Financial
Statements of the Group. At 30 September 2024 the amount attributable to
non-controlling interests is £781.3m (2023: £703.4m; March 2024: £749.9m),
which relates to SHET of £742.8m (2023: £660.8m; March 2024: £709.1m) and
SSE Pacifico £38.5m (2023: £42.6m; March 2024 £40.8m). The profit and loss
attributable to non-controlling interests for the period ended 30 September
2024 is £36.8m profit (2023: £51.2m; March 2024: £100.8m), which relates to
SHET £36.9m profit (2023: £51.7m profit, March 2024: £101.5m) and SSE
Pacifico £0.1m loss (2023: £0.5m loss; March 2024: £0.7m loss).
14. Hybrid Equity
March 2024 September 2024 September 2023
£m Perpetual subordinated capital securities £m £m
598.0 GBP 600m 3.74% perpetual subordinated capital securities (i) 598.0 598.0
453.0 EUR 500m 3.125% perpetual subordinated capital securities (i) 453.0 453.0
831.4 EUR 1,000m 4.00% perpetual subordinated capital securities (ii) 831.4 831.4
1,882.4 1,882.4 1,882.4
(i) 2 July 2020 £600m and €500m Hybrid Capital Bonds
The hybrid capital bonds issued in July 2020 have no fixed redemption date,
but the Company may, at its sole discretion, redeem all but not part of the
capital securities at their principal amount. The date for the first potential
discretionary redemption of the £600m hybrid bond is 14 April 2026 and then
every 5 years thereafter. The date for the first potential discretionary
redemption of the €500m hybrid capital bond is 14 July 2027 and then every 5
years thereafter. For the £600m hybrid the discretionary coupon payments are
made annually on 14 April and for the €500m hybrid the discretionary coupon
payments are made annually on 14 July.
(ii) 12 April 2022 €1,000m Hybrid Capital Bonds
The hybrid capital bond issued in April 2022 has no fixed redemption date, but
the Company may, at its sole discretion, redeem all but not part of the
capital securities at their principal amount. The date for the first potential
discretionary redemption is 21 April 2028 and then every 5 years thereafter.
The discretionary hybrid coupon payments are made annually on 21 April.
Coupon Payments
In relation to the £600m hybrid equity bond a discretionary coupon payment of
£22.4m (March 2024: £22.4m) was made on 14 April 2024, for the €500m
hybrid equity bond a discretionary coupon payment of £16.5m (March 2024:
£16.5m) was made on 14 July 2024 and for the €1bn hybrid equity bond a
discretionary payment of £34.8m was paid on 21 April 2024 (March 2024:
£34.2m).
The coupon payments in the six month period to 30 September 2024 consequently
totalled £73.7m (2023: £73.1m) and the Company has the option to defer
coupon payments on the bonds on any relevant payment date, as long as a
dividend on the ordinary shares has not been declared. Deferred coupons shall
be satisfied only on redemption; or on a dividend payment on ordinary shares,
both of which occur at the sole option of the Company. Interest will accrue on
any deferred coupon.
15. Share capital
Number £m
(millions)
Allotted, called up and fully paid:
At 1 April 2024 1,096.2 548.1
Issue of shares 12.2 6.1
At 30 September 2024 1,108.4 554.2
The Company has one class of ordinary share which carries no right to fixed
income. The holders of ordinary shares are entitled to receive dividends as
declared and are entitled to one vote per share at meetings of the Company.
Shareholders were able to elect to receive ordinary shares in place of the
final dividend for the year to 31 March 2024 of 40.0p per ordinary share
(2023: 67.7p in relation to the final dividend for the year to 31 March 2023;
March 2024: 20.0p in relation to the interim dividend for the year to 31 March
2024) under the terms of the Company's scrip dividend scheme. This resulted in
the issue of 12,203,570 (2023: 1,779,529; March 2024: 1,779,529 and 493,654)
new fully paid ordinary shares.
In addition, the Company issued 53k shares (2023: 40k, March 2024: 0.8m)
during the period under the savings-related share option schemes and
discretionary share option schemes (all of which were settled by shares held
in Treasury) for a consideration of £0.7m (2023: £0.4m, March 2024: £9.2m).
On 29 August 2024 the Group entered into an irrevocable non-discretionary
share buyback programme of up to a maximum of £75.0m in own shares to be held
as treasury shares pending their cancellation or re-issue in due course. As
the share buyback was irrevocable the full value was recognised as a liability
at 30 September 2024. The share repurchase scheme commenced on 30 September
2024, with 227k of shares repurchased in the period for a total consideration
of £4.3m (including stamp duty and commission). SSE completed the share
buyback process on 16 October 2024. There were no share buybacks in the
financial year ended 31 March 2024.
Of the 1,108.4m (2023: 1,095.7m, March 2024: 1,096.2m) shares in issue, 3.0m
(2023: 3.6m, March 2024: 2.8m) are held as treasury shares. These shares will
be held by the Group and used to award shares to employees under the Sharesave
schemes in the UK.
During the period, on behalf of the Company, the employee share trust
purchased 0.1m shares (2023: 1.2m, March 2024: 1.3m) for a consideration of
£2.2m (2023: £19.7m, March 2024: £21.8m) to be held in trust for the
benefit of employee share schemes.
16. Financial risk management
The Board has overall responsibility for the establishment and oversight of
the Group's risk management framework. The Group's policies for risk
management are established to identify the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to
limits. Exposure to commodity, currency and interest rate risks arise in the
normal course of the Group's business and derivative financial instruments are
entered into to hedge exposure to these risks.
SSE has a Group wide Risk Committee reporting to the Group Executive
Committee, which is responsible for reviewing the strategic, market, credit,
operational and liquidity risks and exposures that arise from the Group's
operating activities. In addition, the Group has two dedicated Energy Market
risk committees reporting to the Group Executive Committee and Board
respectively, with the Group Executive Sub-committee chaired by the Group
Chief Operating Officer (the "Group Energy Markets Exposures Risk Committee")
and the Board Sub-committee chaired by Non-Executive Director Tony Cocker (the
"Energy Markets Risk Committee (EMRC)"). These Committees oversee the Group's
management of its energy market exposures, including its approach to
hedging.
During the period ended 30 September 2024, the Group continued to be exposed
to the economic conditions impacting the primary commodities to which it is
exposed (Gas, Carbon and Power). The Group's approach to hedging, and the
diversity of its energy portfolios (across Wind, Hydro, Thermal and Customers)
has provided significant certain mitigation of these exposures.
The Group's policy in relation to liquidity risk continues to be to ensure, in
so far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to its reputation. Further
detail is noted in the Group's financial statements at 31 March 2024.
For financial reporting purposes, the Group has classified derivative
financial instruments into two categories, operating derivatives and financing
derivatives. Operating derivatives relate to all qualifying commodity
contracts including those for electricity, gas, oil, coal and carbon and the
post-day 1 fair value movements on non-government backed contracts for
difference in SSE Renewables. Financing derivatives include all fair value and
cash flow interest rate hedges, non-hedge accounted (mark-to-market) interest
rate derivatives, cash flow foreign exchange hedges and non-hedge accounted
foreign exchange contracts. Non-hedge accounted contracts are treated as held
for trading.
The net movement reflected in the interim income statement can be summarised
as follows:
Year ended 31 March 2024 Six months ended 30 September 2024 Six months ended 30 September 2023 (restated*)
£m £m £m
Operating derivatives
(573.1) Total result on operating derivatives (i) 51.6 (434.5)
1,025.3 Less: amounts settled (ii) 67.1 499.4
452.2 Movement in unrealised derivatives 118.7 64.9
Financing derivatives (and hedged items)
370.6 Total result on financing derivatives (i) 59.2 211.9
(364.5) Less: amounts settled (ii) (63.8) (170.9)
6.1 Movement in unrealised derivatives (4.6) 41.0
Financial guarantee liabilities
12.5 Total result on financial guarantee liabilities (iii) 0.9 (34.2)
470.8 Net income statement impact 115.0 71.7
(i) Total result on derivatives in the income statement
represents the total amounts (charged) or credited to the income statement in
respect of operating and financial derivatives.
(ii) Amounts settled in the period represent the result on
derivatives transacted which have matured or been delivered and have been
included within the total result on derivatives.
(iii) Total result on financial guarantee liabilities in the
income statement represents the total amounts credited or (charged) to the
income statement in respect of the unwind of the financial liabilities and new
or expiring contracts.
*The comparative information has been restated. See note 2(v).
The movement in unrealised operating derivatives excludes a £3.6m loss (2023:
£13.7m loss; March 2024: £8.8m loss) on proprietary trades, which has been
recognised in the underlying profit of the Group.
16. Financial risk management (continued)
The fair values of the primary financial assets and liabilities of the Group
together with their carrying values are as follows:
March 2024 September 2024 September 2023 (restated*)
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
£m £m £m £m £m £m
Financial Assets
Current
1,305.5 1,305.5 Trade receivables 1,173.7 1,173.7 1,096.7 1,096.7
4.1 4.1 Other receivables 4.2 4.2 11.1 11.1
9.3 9.3 Cash collateral and other short term loans 4.4 4.4 140.6 140.6
1,035.9 1,035.9 Cash and cash equivalents 890.8 890.8 902.4 902.4
536.1 536.1 Derivative financial assets 420.8 420.8 262.6 262.6
2,890.9 2,890.9 2,493.9 2,493.9 2,413.4 2,413.4
Non-current
3.2 3.2 Unquoted equity investments 7.6 7.6 2.9 2.9
170.1 170.1 Loan note receivable 181.6 181.6 159.5 159.5
1,352.9 1,352.9 Loans to associates and jointly controlled entities 1,484.4 1,484.4 1,196.8 1,196.8
64.2 64.2 Derivative financial assets 63.2 63.2 139.9 139.9
1,590.4 1,590.4 1,736.8 1,736.8 1,499.1 1,499.1
4,481.3 4,481.3 4,230.7 4,230.7 3,912.5 3,912.5
Financial Liabilities
Current
(656.7) (656.7) Trade payables (569.4) (569.4) (622.5) (622.5)
(362.5) (362.5) Outstanding liquid funds (264.6) (264.6) - -
(1,044.5) (1,113.6) Loans and borrowings (1,829.0) (1,831.1) (1,313.3) (1,392.4)
(83.5) (83.5) Lease liabilities (74.9) (74.9) (81.6) (81.6)
(3.1) (3.1) Financial guarantee liabilities (2.9) (2.9) (47.0) (47.0)
(345.2) (345.2) Derivative financial liabilities (250.9) (250.9) (505.2) (505.2)
(2,495.5) (2,564.6) (2,991.7) (2,993.8) (2,569.6) (2,648.7)
Non-current
(7,681.7) (7,440.6) Loans and borrowings (7,349.2) (7,295.8) (7,245.3) (6,412.5)
(324.0) (324.0) Lease liabilities (326.5) (326.5) (312.8) (312.8)
(36.4) (36.4) Financial guarantee liabilities (35.0) (35.0) (34.5) (34.5)
(222.2) (222.2) Derivative financial liabilities (208.8) (208.8) (141.7) (141.7)
(8,264.3) (8,023.2) (7,919.5) (7,866.1) (7,734.3) (6,901.5)
(10,759.8) (10,587.8) (10,911.2) (10,859.9) (10,303.9) (9,550.2)
(6,278.5) (6,106.5) Net financial liabilities (6,680.5) (6,629.2) (6,391.4) (5,637.7)
*The comparative information has been restated. See note 2(v).
Fair value hierarchy
The following tables provide an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, grouped into Levels
1 to 3 based on the degree to which the fair value is observable.
· Level 1 fair value measurements are those derived from unadjusted
quoted market prices for identical assets or liabilities.
· Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
· Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data.
September 2024 September 2023 (restated*)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m £m £m £m £m £m £m £m
Financial assets
Energy derivatives 298.8 121.0 6.2 426.0 - 224.8 7.5 232.3
Interest rate derivatives - 46.0 - 46.0 - 155.1 - 155.1
Foreign exchange derivatives - 12.0 - 12.0 - 15.1 - 15.1
Unquoted equity instruments - - 7.6 7.6 - - 2.9 2.9
298.8 179.0 13.8 491.6 - 395.0 10.4 405.4
Financial liabilities
Energy derivatives - (202.6) (53.5) (256.1) (37.3) (507.1) (24.3) (568.7)
Interest rate derivatives - (158.6) - (158.6) - (60.7) - (60.7)
Foreign exchange derivatives - (45.0) - (45.0) - (17.5) - (17.5)
Loans and borrowings* - 113.1 - 113.1 - (37.1) - (37.1)
- (293.1) (53.5) (346.6) (37.3) (622.4) (24.3) (684.0)
* The £113.1m relates to fair value hedges that are in place against the
Group's loans and borrowings and has been included in the table above within
financial liabilities, as it is presented in loans and borrowings liabilities
in the balance sheet.
16. Financial risk management (continued)
March 2024
Level 1 Level 2 Level 3 Total
£m £m £m £m
Financial assets
Energy derivatives 357.7 121.6 0.5 479.8
Interest rate derivatives - 113.0 - 113.0
Foreign exchange derivatives - 7.5 - 7.5
Unquoted equity instruments - - 3.2 3.2
357.7 242.1 3.7 603.5
Financial liabilities
Energy derivatives - (327.1) (101.3) (428.4)
Interest rate derivatives - (95.8) - (95.8)
Foreign exchange derivatives - (43.2) - (43.2)
Loans and borrowings - (0.9) - (0.9)
- (467.0) (101.3) (568.3)
*The comparative information has been restated. See note 2(v).
There were no significant transfers out of Level 1 into Level 2 and out of
Level 2 into Level 1 during the 6 months ended 30 September 2024 (2023: none,
March 2024: none). There were no significant transfers out of Level 2 into
Level 3 and out of Level 3 into Level 2 during the 6 months ended 30 September
2024 (2023: none, March 2024: none).
The following table represents the difference between the Level 3 financial
instruments at fair value at the start of the reporting period and at the
reporting date:
31 March 2024 30 September 2024 30 September 2023
£m £m (restated*)
£m
25.6 Level 3 financial instruments fair value at 1 April (97.6) 25.6
(24.1) Transfer (from)/to financial assets 4.6 (24.1)
(0.4) Cash settlement 1.8 -
(0.4) Disposals in period (0.2) -
(106.0) Remeasurement (loss)/gain recognise in income statement 36.9 (15.0)
0.3 Remeasurement gain/(loss) recognised in other comprehensive income - (0.4)
11.5 Additions - new instruments entered in the period 3.0 -
(11.5) Deferred day 1 gains on instruments entered in the period (3.0) -
7.4 Amortisation of day 1 gains in the period 14.8 -
(97.6) Level 3 financial instruments fair value (39.7) (13.9)
*The comparative information has been restated. See note 2(v).
17. Retirement benefit obligations
The Group has two funded final salary pension schemes which provide defined
benefits based on final pensionable pay. The schemes are subject to
independent valuations at least every three years. The Group provides pension
benefits to most UK colleagues through SSE Pensions+, a defined contribution
master trust agreement with Aviva. The Group also operates other pension
arrangements, including a defined contribution master trust agreement with
Zurich in the Republic of Ireland and an Unfunded Unapproved Retirement
Benefit Scheme. Further details on these schemes are provided in the Group's
Financial Statements to 31 March 2024.
Summary of Defined Benefit Pension Schemes:
Movement recognised in the SoCI Movement recognised in respect of the pension asset in the SoCI Pension asset
Pension assets
March March September September September September
2024 2024 2024 2023 2024 2023
£m £m £m £m £m £m
(37.1) 339.3 Scottish Hydro Electric 15.6 (47.7) 360.3 324.2
(118.1) 82.3 SSE Southern 17.9 (102.1) 110.5 86.8
(155.2) 421.6 33.5 (149.8) 470.8 411.0
The last triennial actuarial valuation of the Scottish Hydro Electric Pension
Scheme was carried out as at 31 March 2024 and showed a surplus of £229.3m on
a projected unit basis. Following this valuation, the Group agreed a new
schedule of contributions which does not require contributions to be paid to
the scheme, unless there is a sustained deficit for two successive quarters on
the Trustees' long-term funding basis. Consequently, the Group has not and is
not expected to make contributions to the scheme in the year ending 31 March
2025.
The last triennial actuarial valuation of the SSE Southern Group of the
Electricity Supply Pension Scheme as at 31 March 2022 showed a deficit of
£79.6m on a projected unit basis. Following this valuation, the Group agreed
to a new schedule of contributions which, along with investment returns from
return-seeking assets, are expected to make good this shortfall by 31 March
2027. The Group also pays contributions in respect of current accrual. Total
contributions of approximately £28.2m are expected to be paid by the Group
during the year ending on 31 March 2025, including deficit repair
contributions of £15.5m of which £7.7m have been paid to 30 September 2024.
The deficit repair contribution will be made annually until March 2027,
increasing in line with inflation each year.
17. Retirement benefit obligations (continued)
A summary of the movement presented in the statement of comprehensive income
is shown below:
Year ended 31 March 2024 Six months ended 30 September Six months ended 30 September
2024
2023
£m
£m £m
(155.2) Actuarial (losses)/gains recognised 33.5 (149.8)
38.8 Deferred tax thereon (8.4) 37.5
(116.4) Net (loss)/gain recognised in statement of comprehensive income 25.1 (112.3)
The major assumptions used by the actuaries in both schemes in preparing the
IAS 19 valuations were:
March 2024 September 2024 September 2023
3.4% Rate of increase in pensionable salaries 3.3% 3.5%
3.1% Rate of increase in pension payments 3.1% 3.2%
4.8% Discount rate 5.1% 5.5%
3.1% Inflation rate 3.1% 3.2%
The assumptions relating to longevity underlying the pension liabilities are
based on standard actuarial mortality tables, and include an allowance for
future improvements in longevity. The assumptions, equivalent to future
longevity for members in normal health at age 65, are as follows:
March 2024 September 2024 September 2023
Male Female Male Female Male Female
Scottish Hydro Electric Pension Scheme
22 24 Currently aged 65 22 24 22 24
24 26 Currently aged 45 24 26 24 26
SSE Southern Pension Scheme
22 25 Currently aged 65 22 25 22 25
24 26 Currently aged 45 24 26 24 26
Other matters
On 16 June 2023 the High Court issued a ruling in respect of Virgin Media v
NTL Pension Trustees II Limited (and others) calling into question the
validity of rule amendments made to defined benefit pension schemes
contracted-out on a Reference Scheme Test basis between 6 April 1997 and 5
April 2016. Amendments to these pension schemes over this time required
confirmation from the Scheme Actuary that the Reference Scheme Test would
continue to be met. In the absence of such a confirmation, the Rule amendment
would be void. This ruling could have wide ranging implications for many UK
pension schemes. In July 2024 the Court of Appeal upheld the judgement.
At 30 September 2024, the Trustees of the Scottish Hydro Electric Pension
Scheme and the Trustees of the SSE Southern Pension Scheme have not performed
a detailed assessment over the potential impact of this ruling and are
considering the implications of the ruling on the schemes. The defined
benefit obligation for the Group's schemes has been calculated on the basis of
the pension benefits currently being administered. Any subsequent
developments following the Court of Appeal's judgement will be monitored.
18. Capital commitments
March 2024 September 2024 September 2023
£m £m £m
1,389.2 Capital expenditure 3,605.4 1,190.0
Contracted for but not provided
The increase from the prior year relates primarily to Transmission projects.
19. Related party transactions
The following transactions took place during the period between the Group and
entities which are related to the Group, but which are not members of the
Group. Related parties are defined as those in which the Group has control,
joint control or significant influence over.
September 2024 September 2023
Sale of goods and services Purchase of goods and services Amounts owed from Amounts owed to Sale of goods and services Purchase of goods and services Amounts owed from Amounts owed to
£m £m £m £m £m £m £m £m
Joint arrangements:
Marchwood Power Limited 51.2 (74.9) - (8.9) 0.4 (17.4) - (17.7)
Clyde Windfarm (Scotland) Limited 2.7 (68.1) - (42.7) 2.8 (53.9) - (32.2)
Beatrice Offshore Windfarm Limited 2.9 (28.1) 1.3 (4.2) 2.6 (30.9) 2.7 (7.4)
Stronelairg Wind Farm Limited 1.3 (28.4) 1.3 (13.5) 1.3 (29.2) - (17.2)
Dunmaglass Wind Farm Limited 0.6 (11.6) 0.6 (5.6) 0.6 (13.2) - (7.4)
Neos Networks Limited 1.0 (12.4) 2.0 (3.8) 1.8 (14.6) 2.3 (3.9)
Seagreen Wind Energy Limited 4.4 (59.6) 18.4 (9.0) 14.3 (30.5) 10.3 (10.2)
Doggerbank A, B, C and D 17.0 - 18.5 - 17.2 - 13.0 -
Other joint arrangements 8.2 (74.8) 3.4 (43.4) 8.2 (64.5) 3.0 (45.0)
19. Related party transactions (continued)
March 2024
Sale of goods and services Purchase of goods and services Amounts owed from Amounts owed to
£m £m £m £m
Joint arrangements:
Marchwood Power Limited 42.6 (63.2) - (13.0)
Clyde Windfarm (Scotland) Limited 5.6 (153.9) - (48.7)
Beatrice Offshore Windfarm Limited 4.8 (75.5) 2.0 (6.8)
Stronelairg Wind Farm Limited 2.5 (75.6) - (20.8)
Dunmaglass Wind Farm Limited 1.1 (32.2) - (8.6)
Neos Networks Limited 3.8 (28.5) 6.1 (4.7)
Seagreen Wind Energy Limited 19.8 (113.4) 11.3 (11.7)
Doggerbank A, B, C and D 36.5 - 10.7 -
Other joint arrangements 18.0 (209.4) 6.7 (63.9)
The transactions with Marchwood Power Limited relate to the contracts for the
provision of energy or the tolling of energy under power purchase
arrangements.
The amounts outstanding are trading balances, are unsecured and will be
settled in cash.
In addition to the above at 30 September 2024, the Group was owed the
following loans from its principal joint ventures: Marchwood Power Limited
£7.7m (2023: £19.0m, March 2024: £12.2m); Clyde Windfarm (Scotland) Limited
£127.1m (2023: £127.1m, March 2024: £127.1m); Dunmaglass Wind Farm Limited
£46.6m (2023: £46.5m, March 2024: £46.6m); Stronelairg Wind Farm Limited
£88.7m (2023: £88.7m, March 2024: £88.7m); Neos Networks Limited £71.8m
(2023: £103.1m, March 2024: £57.7m); Seagreen Wind Energy Limited £691.3m
(2023: £611.4m, March 2024: £686.4m); SSE Slough Multifuel Limited £179.0m
(2023: £143.9m, March 2024: £157.8m) and Doggerbank Offshore Wind Farm
Project 1 Holdco Limited £158.5m (2023: £nil, March 2024: £87.7m).
20. Seasonality of operations
Certain activities of the Group are affected by weather and temperature
conditions and seasonal market price fluctuations. As a result of this, the
amounts reported for the interim period may not be indicative of the amounts
that will be reported for the full year due to seasonal fluctuations in
customer demand for gas, electricity and services, the impact of weather on
demand, renewable generation output and commodity prices and market changes in
commodity prices. In Transmission and Distribution, the volumes of electricity
and gas distributed or transmitted across network assets are dependent on
levels of customer demand which are generally higher in winter months. In SSE
Business Energy and SSE Airtricity, notable seasonal effects include the
impact on customer demand of warmer temperatures in the first half of the
financial year and the procurement prices in summer versus winter. In Thermal
Generation and Renewables, there is the impact of lower Renewables production
in the summer as well as the related impact on commodity prices. The weather
impact on Renewable generation production in relation to hydro and wind assets
is particularly affected by seasonal fluctuation. The impact of temperature on
customer demand for gas is more volatile than the equivalent demand for
electricity. The Gas Storage business' activity is partly to manage seasonal
risk across summer/winter gas price spreads and its profitability is impacted
by the extent to which optimisation gains or losses can be achieved.
Principal risks and Uncertainties
SSE's established Risk Management Framework and wider system of internal
control continues to inform strategic decision-making in 2024/25. This,
combined with a resilient business model, helps the Group manage and minimise
the human, operational and financial impacts from external conditions such as
commodity prices and to meet its objective of supporting the reliable supply
of electricity to those who needed it.
The Directors regularly monitor the Principal Risks and Uncertainties of the
Group and have determined that those reported in the 2024 Annual Report and
summarised below remain relevant for the remaining half of the financial year.
· Climate Change
· Cyber Security and Resilience
· Energy Affordability **
· Energy Infrastructure Failure
· Financial Liabilities
· Large Capital Projects Management
· People and Culture
· Political and Regulatory Change **
· Portfolio Exposure
· Safety and the Environment *
· Speed of Change
· Supply Chain
* Safety remains SSE's most important value, and management of this
risk remains SSE's highest priority.
* It should be noted that Energy Affordability is particularly
closely linked to - and therefore impacted by - Political and Regulatory
Change and Portfolio Exposure.
An essential tenet of SSE's Risk Management process is the consideration of
potential emerging risks and whether any of those identified have the
potential to become a Group Principal risk in the medium to long term. As
such, the number of Principal Risks increased to 12 for the 2024 year end,
with the inclusion of the newly formed "Supply Chain" risk as disclosed in the
SSE plc 2024 Annual Report. For more information on these risks, and the
wider system of internal control, please refer to pages 90 to 95 of the SSE
plc 2024 Annual Report which is available on the company website www.sse.com
(http://www.sse.com) .
Statement of directors' responsibilities in respect of the condensed interim
financial statements
We confirm that to the best of our knowledge:
i) the condensed set of financial statements has been prepared in accordance
with UK adopted IAS 34 Interim Financial Reporting;
ii) the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year;
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last Annual Report that could
do so; and
(c) DTR 4.2.10 of the Disclosure Guidance and Transparency Rules, being the
condensed set of financial statements, which has been prepared in accordance
with the applicable set of accounting standards, gives a true and fair view of
the assets, liabilities, financial position and profit or loss of the issuer,
or the undertakings included in the consolidation as a whole.
For and on behalf of the Board
Alistair
Phillips-Davies
Barry O'Regan
Chief
Executive
Chief Financial Officer
Perth
12 November 2024
Independent review report to SSE plc
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2024 which comprises Consolidated Income Statement, Consolidated
Statement of Other Comprehensive Income, Consolidated Balance Sheet,
Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement
and the related explanatory notes 1 to 20. We have read the other information
contained in the half yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2024 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
12 November 2024
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