REG - SSE Plc - SSE Reaffirms Net Zero Acceleration Programme

SSEAnnouncement

08/12/2021 15:30

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RNS Number : 0240V  SSE PLC  08 December 2021

SSE plc

SSE reaffirms commitment to Net Zero Acceleration Programme

8 December 2021

The SSE plc Board ("the Board") notes the publication of a letter from Elliott
Advisors to Sir John Manzoni on 7 December.

On 17 November 2021, SSE announced its 'Net Zero Acceleration Programme' to
accelerate sustainable, clean growth, lead the energy transition and maximise
value for all stakeholders. The plans include a substantially increased, fully
funded £12.5bn strategic capital investment plan to 2026 as well as ambitious
targets to 2031.

The Board's evaluation of SSE's strategic review

As part of SSE's strategy review, the Board evaluated and constructively
challenged a wide range of possible strategic options, across both electricity
networks and SSE Renewables, including the separation of SSE Renewables. This
was a rigorous and comprehensive process that involved independent financial
and external legal advice, including independent testing by a third-party
investment bank appointed by the Board specifically for this purpose. It was
informed by constructive engagement with a broad array of shareholders and
culminated in the Board's unanimous approval of the strategic plan that was
presented to shareholders in November.

The Board is confident that the Net Zero Acceleration Programme represents the
optimal pathway for creating long-term value for shareholders and that SSE is
best positioned to capture the substantial growth opportunities arising from
net zero as an integrated low-carbon electricity infrastructure company.

The Net Zero Acceleration Programme positions SSE as the UK's clean energy
champion:

·      doubling existing renewables capacity by 2026;

·      increasing and maintaining a development pipeline in excess of
15GW and targeting a fivefold increase in renewables output by 2031;

·      delivering strong investment in electricity networks with a c10%
gross RAV CAGR; and

·      deploying flexible energy solutions and exporting its renewables
capabilities overseas.

It does so through a fully funded £12.5bn programme which is supported by
ratings agencies and which delivers attractive returns to shareholders through
an adjusted EPS CAGR of 5-7% and a dividend of at least £3.50 through to
2026.

Having carefully considered it among other options, the Board concluded
categorically that the separation of SSE Renewables would not be the best
route to maximise growth, execution and value creation for all stakeholders.
Full detail on SSE's strategic review and the reasons behind this conclusion
is available at the links provided below.

Board composition and expertise

SSE upholds the highest levels of governance and brings a range of
perspectives and a breadth of relevant skills and deep experience in energy,
including in renewables, critical infrastructure and large project delivery.
Furthermore, the Board has substantial experience in finance, government and
wider stakeholder engagement.  SSE's Board comprises eight independent
non-executive directors and three executive directors, and is led by the
Chair, who was first appointed to the Board in September 2020 and became Chair
on 1 April 2021.

Positive stakeholder reaction

The entire £12.5bn investment programme is fully funded and SSE has received
positive initial feedback from shareholders. It prompted Moody's to affirm
SSE's Baa1 rating and upgrade their outlook to stable, with S&P since
affirming SSE's rating at BBB+. The significant increase in investment in net
zero critical projects, which will see SSE enable over 25% of the UK
Government's 2030 40GW offshore wind target and over 20% of upcoming UK
electricity networks investment, was also welcomed across a wide range of
stakeholders, including the UK Prime Minister, Chancellor of the Exchequer,
Secretary of State for Business, Energy and Industrial Strategy, and Energy
Minister.

Establishing SSE as a clean energy champion in a net zero world

SSE is well positioned to capture the attractive growth opportunities under
the Net Zero Acceleration Programme due to the significant work that has been
undertaken in recent years to sharpen its focus on the electricity assets
needed in the energy transition. This transformation began with the sale of
the GB household retail supply business to OVO and continued through a
successful disposals programme that generated proceeds of £2.8bn (including
SGN, Energy from Waste, E&P and Contracting) and has delivered attractive
shareholder returns to date. Since SSE first announced the disposal of its
domestic retail business to OVO in September 2019, SSE has achieved a TSR of
54%, which compares to a TSR of 6% and 24% for the FTSE100 and Euro Stoxx
Utilities Index respectively.

Sir John Manzoni, Chair of SSE plc, said:

"The SSE Board is absolutely clear that the accelerated growth plan we set out
on 17 November is the right one, and that we have the capacity and strength to
deliver it, with a management team that is overseeing the construction of more
offshore wind than any other company in the world. We are now focused on
execution in order to fulfil the growth potential available to the Group
thanks to its clear net zero aligned strategy. The Board maintains the highest
corporate governance standards and remains fully engaged on the evolution of
the strategy to maximise shareholder value. The carefully chosen composition
of the Group means we benefit from a clear focus on low-carbon electricity
while also maintaining a unique range of options in high-growth areas right
across the net zero value chain."

Alistair Phillips-Davies, Chief Executive, said:

"Our Net Zero Acceleration Programme represents the optimal pathway
to accelerate clean growth, lead the energy transition and create value for
all stakeholders. Since its launch, we've continued to have constructive and
supportive discussions with our major shareholders and stakeholders about the
plan.

"We are the UK's clean energy champion; our plans maximise our potential and
will mean that we are investing around £7million a day, enabling delivery of
over 25% of the UK Government's 2030 40GW offshore wind target and over 20% of
upcoming UK electricity networks investment, whilst deploying flexibility
solutions and exporting our renewables capabilities overseas.

"Separation puts at risk valuable growth options across the clean energy value
chain, would jeopardise our ability to finance and deliver the major
infrastructure the UK needs to create jobs and achieve net zero, and would
lose shared skills that benefit the group."

 

ENDS

 

SSE's Net Zero Acceleration Plan announcement can be found here, with the
rationale for deciding against separation of SSE Renewables outlined on page
4:
https://www.sse.com/media/hiipityg/net-zero-acceleration-programme-rns-final.pdf
(https://www.sse.com/media/hiipityg/net-zero-acceleration-programme-rns-final.pdf)
 

 

An accompanying shareholder Q&A was published here, with the question as
to whether the Board had considered a separation of SSE Renewables answered in
detail on slide 5:

https://www.sse.com/media/2fgpxtbo/strategic-update-appendix-shareholder-q-a-final.pdf
(https://www.sse.com/media/2fgpxtbo/strategic-update-appendix-shareholder-q-a-final.pdf)

 

Contact:

 

Media:

 

SSE plc (Glenn Barber, Lee-Ann Fullerton, Kenny Angove)

 

media@sse.com (mailto:media@sse.com)   |  +44 (0)345 0760 530

 

MHP Communications (Oliver Hughes / Simon Hockridge)

 

sse@mhpc.com (mailto:sse@mhpc.com)    |  +44 (0)788 5224 532 / +44 (0)770
9496 125

 

Investors:

 

SSE plc (Sally Fairbairn, Michael Livingston)

 

ir@sse.com (mailto:ir@sse.com)   |  +44 (0)345 0760 530

 

 

 

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