TIDMSSE
RNS Number : 4630T
SSE PLC
15 November 2023
SSE PLC: interim results for the
six months ended 30 September 2023
15 November 2023
creating value by Delivering on critical infrastructure
-- Major progress on flagship projects including first power at
Dogger Bank and full power at Seagreen offshore wind farms, and
planning and supply chain secured for Eastern Green Link 2 subsea
transmission cable.
-- Reporting adjusted earnings per share of 37.0p , ahead of
pre-close guidance and reflecting the normal seasonal nature of
operations that deliver the majority of annual earnings in the
second half of SSE's financial year.
-- Maintaining balance sheet strength with 91% of adjusted debt
paying a fixed rate and less than GBP1.5bn long-term debt
refinancing required over the next 24 months.
-- Focus on safety remains the number one priority for the
group, with initiatives put in place as increased construction
activity contributes to a Total Recordable Injury Rate of 0.24, an
increase from 0.15.
-- Reaffirming guidance for full year 2023/24 of more than 150p adjusted earnings per share .
increasing visibility over medium-term outlook
-- Delivery, capital discipline and optionality provide greater
certainty over Net Zero Acceleration Programme Plus (NZAP Plus)
targets for the five years to 2026/27:
-- Capital investment expectations upgraded to GBP20.5bn for the
five-year programme reflecting increasing visibility over regulated
networks spend and associated supply chain costs, with around 90%
of the upweighted investment plan expected to be invested in
electricity networks and renewables.
-- Continue to target c.5GW net renewables capacity additions
over the period and, given the additional clarity over networks
investment, now expecting to grow net electricity networks RAV to
more than GBP15bn by 2027 from the previous net target of GBP12 -
14bn.
-- Increased investment provides greater certainty that we will
be comfortably within an adjusted EPS CAGR of 13 - 16% over the
five-year period, excluding developer profits, with the existing
operational assets and committed capex together expected to
contribute around 95% of 2026/27 adjusted EPS target.
-- Investment plan remains fully funded, supported by strong
balance sheet with a continued expectation to stay within or below
a 3.5 - 4.0x net debt / EBITDA range across the plan.
-- Reiterating commitment to target annual dividend increases of
between 5 - 10% to 2026/27 , based on an expected 60 pence full
year dividend for 2023/24, with retention of the scrip option and
dilution from uptake capped at 25%.
Alistair Phillips-Davies, Chief Executive, said:
"Our performance in the first half of 2023/24 demonstrates SSE's
well-balanced business mix and our ability to adapt and create
value while maintaining capital discipline in a fast-evolving
energy landscape. As visibility of growth options improves, we have
upweighted our capex plans to meet the ambitions of the NZAP Plus
plan.
"With an enduring broad political consensus behind the need to
build the electricity infrastructure required for net zero, a
supportive power price outlook, balance sheet strength underpinned
by world-class assets and unrivalled optionality across the clean
energy value chain, we have increased confidence in our earnings
forecasts not only for this year, but out to 2026/27."
FINANCIAL SUMMARY (continuing operations(1) )
Adjusted Reported
======================================================= ============================
Sep 2023 Sep 2022 % mvmt Sep Sep 2022 % mvmt
2023
========================= ========= ========= ======= ======== ========= =======
Operating profit /
(loss) (GBPm) 693.2 716.0 (3%) 602.3 (635.1) 195%
========================= ========= ========= ======= ======== ========= =======
Profit / (loss) before
tax (GBPm) 565.2 559.4 1% 573.3 (511.0) 212%
========================= ========= ========= ======= ======== ========= =======
Earnings / (loss)
per share (p) 37.0 41.8 (11%) 28.3 (39.7) 171%
========================= ========= ========= ======= ======== ========= =======
Investment, capital
& acquisitions (GBPm) 1,054.3 1,743.2 (40%) 1,320.4 1,432.6 (8%)
========================= ========= ========= ======= ======== ========= =======
Net Debt and Hybrid
Capital (GBPbn)(2) (8.9) (10.0) (11%) (8.1) (9.1) (11%)
========================= ========= ========= ======= ======== ========= =======
(1) Excluded discontinued operation relates to the disposal of
the Gas Production business which contributed GBP35.0m to Reported
profit for the period ended 30 September 2022 (30 September 2023:
GBPnil). (2) Reported numbers exclude equity accounted hybrid
capital.
Strategic Highlights
-- Historic moment for GB energy system as first power achieved
by SSE Renewables at Dogger Bank, which will be the world's largest
offshore farm at 3.6GW.
-- Critical milestones also reached at 1.1GW Seagreen offshore
wind farm where full power achieved and 440MW Viking onshore wind
farm where the final turbines have been installed.
-- Successful in AR5, the UK's fifth Contract for Difference
auction, with 605MW of onshore wind contracted as well as Ireland's
third RESS process where the 101MW Yellow River onshore wind farm
secured a contract.
-- Installation of SSEN Transmission's Shetland HVDC on track
for energisation in Summer 2024 whilst approval of need agreed with
Ofgem on reinforcements at Orkney, Skye and Argyll.
-- Secured supply chain and planning consent for Eastern Green
Link 2, a 2GW subsea HVDC which will help unlock renewable resource
in Scotland and be delivered in partnership with National Grid.
-- First RIIO-ED2 Uncertainty Mechanism funding secured by SSEN
Distribution as it makes a strong start to delivering increasing
investment under its new price control.
financial highlights
-- Adjusted earnings per share of 37.0p , ahead of pre-close
guidance reflecting stronger operational performance combined with
a lower anticipated effective rate of tax for the full year.
-- Reported earnings per share of 28.3p , as a non-cash
accounting impairment on Triton Power and a movement on financial
guarantee liabilities were only partially offset by a favourable
fair value movement on derivatives.
-- Greater investment led to increasing profitability in SSEN Transmission, offset by the 25% non-controlling interest divested in November 2022, whilst the timing of cost inflation recovery in SSEN Distribution principally led to lower profitability.
-- Profitability in Renewables reflects higher hedged prices
combined with lower hedge buybacks required, albeit with
unfavourable weather conditions leading to a shortfall against
planned output.
-- Strong financial performance in SSE Thermal with additional
year-on-year capacity from Triton Power and Keadby 2 offering
increased flexibility to the market and supporting security of
supply.
-- Gas Storage recorded seasonal half-year loss due to inventory
churn , expected to revert back to profitability of more than
GBP75m for the full financial year as gas is sold over the
winter.
-- EUR750m eight-year Green Bond successfully issued in
September 2023 at a fixed coupon of 4.0% and nearly three-times
oversubscribed. SSE is now the UK's largest issuer of Green
Bonds.
-- Adjusted investment, capital and acquisition expenditure of GBP1.1bn.
-- Adjusted net debt and hybrid capital at GBP8.9bn, broadly
unchanged after the first six months of the financial year and in
line with pre-close guidance.
interim dividend in line with growth-enabling plan
-- Announced an interim dividend of 20p for payment on 8 March 2024.
-- Interim dividend represents a third of the expected full year dividend of 60p per share.
Key Performance Indicators
Key Financial Indicators Adjusted Reported
====================================== ==================== =====================
(continuing operations) Sep 2023 Sep 2022 Sep 2023 Sep 2022
====================================== ========= ========= ========= ==========
Operating profit / (loss) by
business GBPm
====================================== ========= ========= ========= ==========
- SSEN Transmission 215.6 208.4 287.3 208.4
====================================== ========= ========= ========= ==========
- SSEN Distribution 120.1 174.6 120.1 174.6
====================================== ========= ========= ========= ==========
- SSE Renewables 86.8 15.0 (23.7) (36.8)
====================================== ========= ========= ========= ==========
- SSE Thermal & Gas Storage 226.2 248.2 143.3 887.5
====================================== ========= ========= ========= ==========
- Other businesses inc. corporate
unallocated 44.5 69.8 75.3 (1,868.8)
====================================== ========= ========= ========= ==========
Operating profit / (loss) GBPm 693.2 716.0 602.3 (635.1)
====================================== ========= ========= ========= ==========
EBITDA GBPm 1,109.6 1,109.3 1,050.2 (224.7)
====================================== ========= ========= ========= ==========
Profit / (loss) before tax GBPm 565.2 559.4 573.3 (511.0)
====================================== ========= ========= ========= ==========
Earnings / (loss) per share
(EPS) pence 37.0 41.8 28.3 (39.7)
====================================== ========= ========= ========= ==========
Interim dividend per share (DPS)
pence 20.0 29.0
====================================== ========= ========= ========= ==========
Investment and capital expenditure
GBPm
====================================== ========= ========= ========= ==========
- SSEN Transmission 242.6 270.9 324.8 270.9
====================================== ========= ========= ========= ==========
- SSEN Distribution 245.5 175.8 336.9 222.0
====================================== ========= ========= ========= ==========
- SSE Renewables 447.1 477.8 381.2 686.9
====================================== ========= ========= ========= ==========
- SSE Thermal & Gas Storage 38.4 95.7 20.8 37.8
====================================== ========= ========= ========= ==========
- Other businesses 80.7 83.0 256.7 215.0
====================================== ========= ========= ========= ==========
Acquisition consideration GBPm - 640.0 - -
====================================== ========= ========= ========= ==========
Investment, capital and acquisitions
GBPm 1,054.3 1,743.2 1,320.4 1,432.6
====================================== ========= ========= ========= ==========
Net debt and hybrid capital
GBPm 8,943.8 9,988.6 8,050.6 9,076.4
====================================== ========= ========= ========= ==========
Notes: HY2022/23 segmental numbers above restated to reflect
movement of Solar and Battery business to SSE Renewables and
Building Energy Management Systems to Business Energy, both
previously reported under SSE Enterprise. Excluded discontinued
operation relates to the disposal of the Gas Production business
which contributed GBP35.0m to Reported profit for the period ended
30 September 2022 (30 September 2023: GBPnil).
Operational Key Performance Indicators Sep 2023 Sep 2022
================================================= ========= =========
Thermal generation - GWh(1) 7,020 9,158
================================================= ========= =========
Renewable generation - GWh (inc. pumped storage
and constrained off in GB) 3,723 3,725
================================================= ========= =========
Distributed Energy - GWh 49 38
================================================= ========= =========
Total generation output - all plant - GWh 10,792 12,921
================================================= ========= =========
SSEN Transmission RAV - GBPm(2) 5,289 4,590
================================================= ========= =========
SSEN Distribution RAV - GBPm 5,138 4,525
================================================= ========= =========
SSE Total Electricity Networks RAV - GBPm(2) 10,427 9,115
================================================= ========= =========
Business Energy Electricity Sold - GWh 5,203 5,806
================================================= ========= =========
Business Energy Gas Sold - mtherms 60.8 65
================================================= ========= =========
Airtricity Electricity Sold - GWh 3,110 2,693
================================================= ========= =========
Airtricity Gas Sold - mtherms 67 69
================================================= ========= =========
(1) HY2022/23 excludes 651GWh of pre-commissioning output from
Keadby 2 which entered commercial operation on 15 March 2023
(2) Gross of 25% non-controlling interest in SSEN
Transmission
ESG Key Performance Indicators Sep 2023 March 2023 Sep 2022
=========================================== =============== ============ ===============
Carbon emissions (scopes 1&2) MtCO(2) 2.14 (6 months) 6.52 (12 3.26 (6 months)
e months)
=========================================== =============== ============ ===============
Scope 1 GHG intensity gCO(2) e/kWh 232 254 271
=========================================== =============== ============ ===============
Total water consumed (million cubic
meters) - 1.4 -
=========================================== =============== ============ ===============
Total recordable injury rate per 100,000
hours worked 0.24 0.19 0.15
=========================================== =============== ============ ===============
Total economic contribution - UK/Ireland
(GBPbn/EURm)(1) - 6.0/429 -
=========================================== =============== ============ ===============
Jobs supported - UK/Ireland (headcount)(2) - 39,940/2,430 -
=========================================== =============== ============ ===============
Total taxes paid UK/Ireland (GBPm/EURm) - 501.7/53.8 -
=========================================== =============== ============ ===============
Employee retention/turnover rate (%)(3) - 89.5/10.5 -
=========================================== =============== ============ ===============
Employee engagement index (%)(4) 85 84 84
=========================================== =============== ============ ===============
Average board tenure - years(5) 3.3 4.4 3.9
=========================================== =============== ============ ===============
Female board members (%)(6) 42 46 46
=========================================== =============== ============ ===============
Independent board members (%)(6) 73 75 75
=========================================== =============== ============ ===============
Total number of board members 12 13 13
=========================================== =============== ============ ===============
(1) Direct, indirect and induced Gross Value Added, from PwC
analysis; (2) Direct, indirect and induced jobs supported, PwC
analysis.
(3) Includes voluntary and involuntary turnover, excludes end of
fixed term contracts and internal transfers.
(4) Results from SSE's annual employee engagement survey.
(5) Non-Executive directors including non-Executive Chair 6
Excludes non-Executive Chair.
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.
Important note: Discontinued Operations - Gas Production
On 14 October 2021, the Group completed the sale of its Gas
Production business which had been presented as a discontinued
operation prior to disposal as the transaction constituted the exit
of all activity in that industry. The Group's adjusted measures
therefore exclude the contribution from this business in all
periods presented. The Group continues to retain a 60% share of the
decommissioning obligation of the Gas Production business following
disposal. Any adjustments to the decommissioning obligation are
accounted for through the Group's consolidated income statement and
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.
Important note: Non-controlling equity stake sale
On 30 November 2022, the Group completed the sale of a 25%
non-controlling equity stake in Scottish Hydro Electric
Transmission plc ('SHET') (see note 11 of the Interim Financial
Statements).
As this transaction did not result in a loss of control, the
business continues to be classified as a continuing operation and
its result continues to be included within the Group's adjusted
profit-based measures, after removing the relevant share of profit
attributable to holders of non-controlling equity stakes from the
point when the ownership structure changed in accordance with the
APM definitions
Strategic Overview
DELIVERY, DRIVE AND DISCIPLINE
Recent months have shown yet again the benefit that both
shareholders and society derive from a truly balanced energy
business with an unwavering strategic focus on a value-creating
transition to net zero.
We continue to make excellent progress against our plans, but we
are sensitive to events in the world around us and so far in
2023/24 there has been much for us to consider and navigate. We
have seen abnormal weather patterns and meteorological events,
geopolitical conflict on two fronts with related economic
aftershocks, and heightened uncertainty over short-term domestic
policy as a UK General Election approaches.
Through it all, at SSE we have concentrated on a purpose that
enjoys broad political and societal consensus. We are delivering on
the execution of a long-term, climate-based strategy, and
maintained our commitment to health and safety.
BUILDING MOMENTUM BEHIND OUR STRATEGY
In practice, this has meant building even more momentum behind
our Net Zero Acceleration Programme Plus and creating real value
for all of our stakeholders.
Our strategy is built on the knowledge that networks, renewables
and flexible thermal generation will be major features of a future
energy system with electricity at its heart. And while the policy
and delivery pace of all three will shift over time, there are
tailwinds behind each of them and a wealth of increasing
opportunities for value and growth as we transition to net
zero.
The unrivalled optionality and balance of the SSE business mix
means that our capital allocation will move across the value chain,
reflecting changes to the visibility of growth opportunities and
the relative attractiveness of returns. The changes to the capex
weightings within the NZAP Plus as announced today are evidence of
that strategy in action.
delivering on INVESTMENT
We have further strengthened our standing as a national clean
energy champion, investing GBP10m a day over the five years of the
NZAP Plus plan in the critical infrastructure that is so clearly
needed for a future energy system that is cleaner, more secure and
more affordable.
Dogger Bank, which will be the world's biggest offshore wind
farm, exported first power last month; Seagreen offshore wind farm
is now fully operational, with capacity to power 1.6m UK homes; and
Viking, which will be Europe's most productive onshore wind farm,
has all of its turbines installed on Shetland. These flagship
renewables projects support our growth targets and earnings
guidance as they enter a market that is offering prices that are
likely to be higher for longer, but equally will help keep those
prices lower for consumers than they would otherwise be.
At the same time, Ofgem's Large Onshore Transmission Investments
(LOTI) re-opener and the Accelerated Strategic Transmission
Investment (ASTI) framework have given SSEN Transmission greater
visibility of future growth. This visibility, along with greater
certainty over supply chain costs, has allowed us to update our
investment forecasts and we now expect GBP2.5bn of additional capex
to be spent across the five years to 2026/27 in that business -
contributing to a net increase to the NZAP Plus investment of
GBP20.5bn.
Investment on this scale comes with a surge in construction
activity, and with it an increased level of physical risk. This has
been reflected in a regrettable rise in our TRIR measure of safety
performance in the first half. Getting people home safe at the end
of each working day remains SSE's primary objective; we take our
responsibility in this regard very seriously, and we have put
measures in place to address the underlying causes of the recent
rise in incidents.
DRIVING SUSTAINABLE EARNINGS
We have stability, reliable earnings and natural hedges right
across the Group. The networks and renewables businesses are highly
complementary in terms of their growth characteristics, asset
focus, and combined financial strength, whilst elsewhere in our
energy businesses we have assets that offer important flexibility
to manage the variability of wind.
Networks have long been an underlying value driver for SSE, and
that is even clearer now. The resulting revision to our capex plan
not only grows our regulated asset base, but also gives us greater
confidence in being comfortably within our earnings guidance to
2026/27.
In the near term, attractive returns are being delivered from
our existing portfolio of world-class assets. Over the medium term
we expect our large, multi-year capital programmes to increase
earnings over the course of the NZAP Plus. And looking to the long
term, our growing development pipeline promises more value over the
decade to come and beyond.
mAINTAINING CAPITAL DISCIPLINE
Our capital discipline has stood us in good stead in the recent
market environment. In the Contracts for Difference Allocation
Round 5 we held back from an offshore process that did not meet our
investment criteria, but onshore we were rewarded with contracts
secured for over 600MW at attractive returns.
Put simply, when we cannot see attractive returns from
contracts, or where seabed is too expensive, we will exercise
discretion in our decision making. Our very deliberate business mix
supports this approach by providing wide-ranging optionality.
We have the flexibility to dial our capital allocation up or
down - prioritising investment to the asset classes offering the
best returns in the prevailing market conditions. With this in
mind, on a risk-adjusted basis, increasing investment in regulated
networks is the sensible choice right now.
This disciplined approach extends to new technologies too. As we
transition to net zero, we will need lower-carbon thermal
generation such as hydrogen and carbon capture and storage; and
pumped hydro storage; but our commitment to development expenditure
is measured, and clarity on supportive policy is needed for us to
invest at scale. All credible pathways to existing government
targets indicate these assets will be needed quickly and we expect
policy to recognise this.
mEETING LONG-Term, ESG-ALIGNED, TARGETS
SSE is an ESG-rated stock with business goals aligned to a
1.5degC global warming pathway. The revised targets we set out in
May as part of the NZAP Plus contribute to those goals and are well
within reach. But those targets were only ever a floor, not a
ceiling, to our ambitions and today we have made further
refinements to our capex projections.
With the increase in networks investment announced today, we
have already secured the vast majority of the assets that will
deliver our expected earnings growth to 2026/27. Our balanced
portfolio of regulated and market-based businesses provides us with
a defensive earnings mix which has significant indexation to
inflation and is supported by a strong balance sheet, with the vast
majority of debt held at fixed rates.
SSE is a long-term business with excellent prospects over the
next decade and beyond. Credit for much of this goes to Gregor
Alexander. His stewardship as Finance Director has been central to
leading us to the strong position we are in today. I thank him for
his 33 years of tireless service with the Company to date, and wish
him well in his continued involvement as Chair of the SSEN
Transmission Board and as a member of the Neos Networks Board.
We have a highly capable successor to Gregor in Barry O'Regan.
In his role as Chief Financial Officer, I have every confidence
that Barry will help us meet our targets and build on a compelling
investment proposition featuring exposure across the clean energy
value chain; balance sheet strength; exceptional optionality and
capability; and visibility of sustainable earnings growth.
Alistair Phillips-Davies
Chief Executive
SSE plc
Group financial review
six months ended 30 september 2023
This Group Financial Review sets out the financial performance
of the SSE Group for the six months ended 30 September 2023. See
also the separate sections on Group Financial Outlook, 2023/24 and
beyond, and Supplemental Financial Information.
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.
Both the SSE Renewables and SSE Enterprise comparative results
have been restated to reflect the transfer of responsibility for
the Solar and Battery business to SSE Renewables from April
2023.
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 .
Key Financial Metrics Adjusted Reported
======================================== ==================== ====================
(continuing operations)(1) Sep 2023 Sep 2022 Sep 2023 Sep 2022
GBPm GBPm GBPm GBPm
======================================== ========= ========= ========= =========
Operating profit / (loss) 693.2 716.0 602.3 (635.1)
======================================== ========= ========= ========= =========
Net finance (costs) / income (128.0) (156.6) (29.0) 124.1
======================================== ========= ========= ========= =========
Profit / (loss) before tax 565.2 559.4 573.3 (511.0)
======================================== ========= ========= ========= =========
Current tax (charge) / credit (88.4) (70.3) (140.0) 122.4
======================================== ========= ========= ========= =========
Effective current tax rate
(%) 15.6 12.6 24.4 24.0
======================================== ========= ========= ========= =========
Profit / (loss) after tax 476.8 489.1 433.3 (388.6)
======================================== ========= ========= ========= =========
Less: hybrid equity coupon
payments (73.1) (38.8) (73.1) (38.8)
======================================== ========= ========= ========= =========
Less: profits attributable - - (51.2) -
to non-controlling interests
======================================== ========= ========= ========= =========
Profit / (loss) after tax attributable
to ordinary shareholders 403.7 450.3 309.0 (427.4)
======================================== ========= ========= ========= =========
Earnings / (loss) per share
(pence) 37.0 41.8 28.3 (39.7)
======================================== ========= ========= ========= =========
Number of shares for basic/reported
and adjusted EPS (million) 1,090.4 1,077.2 1,090.4 1,077.2
======================================== ========= ========= ========= =========
Shares in issue at 30 September
(million)(2) 1,092.1 1,085.9 1,092.1 1,085.9
======================================== ========= ========= ========= =========
(1) Excluded discontinued operation relates to the disposal of
the Gas Production business which contributed GBP35.0m to Reported
profit for the period ended 30 September 2022 (30 September 2023:
GBPnil).
(2) Excludes Treasury shares
Dividend per Share (pence) Mar 2024 Mar 2023
============================ ========= =========
Interim Dividend 20.0 29.0
============================ ========= =========
Final Dividend(1) 40.0 67.7
============================ ========= =========
Full Year Dividend 60.0 96.7
============================ ========= =========
(1) Final dividend 2023/24 expected to be recommended by the
Directors for approval by shareholders at the 2024 AGM.
Operating profit performance for the six months to 30 september
2023
Business-by-business segmental Adjusted Reported
====================================== ==================== =====================
(continuing operations) Sep 2023 Sep 2022 Sep 2023 Sep 2022
GBPm GBPm GBPm GBPm
====================================== ========= ========= ========= ==========
Operating profit / (loss)
====================================== ========= ========= ========= ==========
SSEN Transmission 215.6 208.4 287.3 208.4
====================================== ========= ========= ========= ==========
SSEN Distribution 120.1 174.6 120.1 174.6
====================================== ========= ========= ========= ==========
Electricity networks total 335.7 383.0 407.4 383.0
====================================== ========= ========= ========= ==========
SSE Renewables 86.8 15.0 (23.7) (36.8)
====================================== ========= ========= ========= ==========
SSE Thermal 312.9 100.4 234.6 342.7
====================================== ========= ========= ========= ==========
Gas Storage (86.7) 147.8 (91.3) 544.8
====================================== ========= ========= ========= ==========
Thermal Total 226.2 248.2 143.3 887.5
====================================== ========= ========= ========= ==========
GB Business Energy 88.0 59.4 88.0 59.4
====================================== ========= ========= ========= ==========
SSE Airtricity (NI and Ire) 5.8 14.9 5.3 14.8
====================================== ========= ========= ========= ==========
Energy Customer Solutions
Total 93.8 74.3 93.3 74.2
====================================== ========= ========= ========= ==========
SSE Energy Markets (formerly
EPM) 9.0 30.3 88.9 (1,958.0)
====================================== ========= ========= ========= ==========
SSE Enterprise (formerly Distributed
Energy) (8.4) 0.6 (8.4) 0.6
====================================== ========= ========= ========= ==========
Neos Networks (14.7) (6.5) (16.3) (11.2)
====================================== ========= ========= ========= ==========
Corporate unallocated (35.2) (28.9) (82.2) 25.6
====================================== ========= ========= ========= ==========
Total operating profit / (loss) 693.2 716.0 602.3 (635.1)
====================================== ========= ========= ========= ==========
Net finance (costs) / income (128.0) (156.6) (29.0) 124.1
====================================== ========= ========= ========= ==========
Profit / (loss) before tax 565.2 559.4 573.3 (511.0)
====================================== ========= ========= ========= ==========
Notes: HY2022/23 segmental numbers above restated to reflect
movement of Solar and Battery business to SSE Renewables and
Building Energy Management Systems to Business Energy, both
previously reported under SSE Enterprise. Excluded discontinued
operation relates to the disposal of the Gas Production business
which contributed GBP35.0m to Reported profit for the period ended
30 September 2022 (30 September 2023: GBPnil).
Segmental EBITDA results are included in Note 5(d) to the
Interim Financial Statements.
Operating profit
Adjusted and reported operating profits/losses in SSE's business
segments for the six months to 30 September 2023 are set out below;
comparisons are with the same period to 30 September 2022 unless
otherwise stated.
SSEN Transmission: Adjusted operating profit increased by 3% to
GBP215.6m, despite a GBP(71.7)m basis difference to reflect the
non-controlling interest share of operating profit in the current
period following the 25% divestment of this business on 30 November
2022. SSEN Transmission's higher allowed revenues, together with a
positive timing variance following under-recovery of revenues in
the previous year, were partially offset by increases in operating
costs and depreciation charges as the business continues to expand
its asset base and operational capabilities under the RIIO-T2 price
control.
Reported operating profit increased by 38% to GBP287.3m,
reflecting all of the adjustments above except for the
non-controlling interest basis difference, as non-controlling
interests are fully consolidated for all profit metrics under
IFRS.
SSEN Distribution: Adjusted and reported operating profit
reduced by 31% to GBP120.1m in the period. The allowed revenue
under the price control for FY24 is based on tariffs which were set
in December 2021 and therefore do not reflect the inflationary
increases to the operating cost base since that date. As a result,
the increase in operating costs is the main driver of the
year-on-year variance in operating profit, with increases in
employee costs due to inflation and additional headcount, alongside
higher network costs due to maintenance volumes, and depreciation
reflecting the continually increasing asset base.
SSE Renewables: Adjusted operating profit increased by 479% to
GBP86.8m. The increase in profitability was driven primarily
through onshore and offshore wind revenues which achieved higher
average hedge prices whilst incurring lower levels of costs
associated with hedged output buy-backs in a less volatile market.
Output for the period was driven by exceptionally still and dry
weather conditions, particularly in the first quarter of 2023/24,
and additional but delayed capacity as Seagreen offshore wind farm
commissioned left SSE Renewables' output around 0.8TWh or 19%
behind planned levels year to date (representing around 7% of the
full year volume budget) but broadly in line with the prior
period.
The SSE Renewables reported operating result improved to
GBP(23.7)m versus GBP(36.8)m in the prior period. In addition to
the factors noted above, the reported loss reflects an increase in
the share of Joint Venture interest and tax of GBP(6.7)m and an
exceptional remeasurement in the current period of GBP(51.5)m
mainly relating to net movement on remeasurement of SSE's affiliate
CfD with Seagreen for c.30% of the project's output.
SSE Thermal: Adjusted operating profit increased 212% to
GBP312.9m, compared to GBP100.4m in the prior period. The first
half of the year saw lower year-on-year output as lower spark
spreads and volatility combined with planned and unplanned outages
across the summer. However, additional capacity in the period from
Triton Power (acquired on 1 September 2022) and Keadby 2 (entered
commercial operation on 15 March 2023) together contributed GBP103m
adjusted operating profit, excluding capacity market income. This
additional capacity combined with a lower financial impact from
plant outages, and an increase in capacity market earnings of
GBP72m relative to prior period, saw earnings increase
significantly year-on-year.
Reported operating profit decreased by 32% to GBP234.6m,
compared to GBP342.7m in the prior period which included GBP247.6m
of non-recurring gains from the acquisition of Triton Power, the
disposal of Fiddler's Ferry land and the reversal of historic Great
Island impairment charges. The current period result includes a
GBP63.2m accounting impairment charge in addition to a GBP13.5m
adverse mark-to-market movement on operating derivatives, both
driven by decreases in observable forward commodity prices and both
relating to the Triton Power Joint Venture.
Gas Storage: Adjusted operating profit decreased by 159% to a
loss of GBP(86.7)m, compared to GBP147.8m of profit 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 the winter months when prices are higher. The first half of the
current financial year has seen significant trading churn of the
injected gas held in storage, which has the effect of lowering the
average cost of gas and creating an adjusted operating loss. This
stored gas has been sold forward into the second half of the year
and therefore the business is expected to record a full-year profit
of more than GBP75m after gas is withdrawn over the winter months.
The prior period result reflected a higher and more volatile gas
market as well as an inversion of the typical spread between
higher-priced winter gas and lower-priced summer gas due to low
Russian gas supplies and high demand as gas stores were built
up.
Reported operating profit decreased by 117% to a loss of
GBP(91.3)m in the period. In addition to the factors outlined
above, the reported result for the current period accounts for a
GBP(4.6)m mark-to-market loss on the fair value of physical gas
inventory compared to a GBP195.9m uplift recorded for the same
purpose in the prior period. As has been noted in prior years, this
does not take account of mark-to-market movements on forward
contracted sales and therefore does not reflect valuation movements
expected to be realised by the business. In addition to that fair
value movement, the prior period also included a GBP201m impairment
reversal which represented a full reversal of historic impairments
on the Aldbrough Gas Storage assets.
GB Business Energy: Adjusted and reported profitability
increased by 48% to GBP88.0m of profit in the period due in the
main to the seasonal phasing of margins; with greater margins
expected to be achieved in the first half and profitability
expected to partially reverse to a lower level for the full
financial year. It remains a challenging environment for consumers
and customer-facing businesses with bad debt expenses increasing by
c.25% on the prior period to GBP(56.6)m. A customer support fund of
GBP15m was established in the period to support customers including
small businesses, voluntary and charitable organisations.
SSE Airtricity: Adjusted profitability decreased to GBP5.8m from
GBP14.9m in the prior period. Airtricity's primary focus remains
supporting customers through the ongoing cost-of-living crisis and
at the start of the current period it honoured its commitment to
give all FY23 profits back to households in Ireland via a household
credit. Lower margins resulting from higher commodity costs and
higher indirect costs including bad debt expenses were partially
offset by upside from REFIT onshore wind contracts which are
recorded within SSE Airtricity.
Reported profitability has decreased to GBP5.3m from GBP14.8m in
the prior period reflecting the movements above, as well as a
GBP(0.5)m share of interest and tax in the current year from Joint
Ventures.
SSE Energy Markets (formerly Energy Portfolio Management):
Adjusted operating profit has decreased to GBP9.0m from a GBP30.3m
profit in the prior period. Energy Markets continues to generate a
relatively low level of baseline operating earnings through service
provision to those SSE businesses requiring access to the Energy
Markets. In addition to this, the business is permitted to take
small optimisation opportunities whilst managing liquidity and
shape on external trades but these optimisation opportunities are
subject to strict internal VAR limits and controls. The decrease in
profitability is mainly due to a lower level of volatility and
price of power and gas trades in the market, which has driven lower
profits from the trading and optimisation activities.
A reported operating profit of GBP88.9m was recognised in the
period, compared to a GBP(1,958.0)m loss in the prior period. In
addition to the movements above, the reported operating result
includes the net remeasurement gain in the current period and loss
in the prior period on forward commodity derivatives in the period
which are fair valued in accordance with IFRS 9. In line with
previous years, this excludes any remeasurement on 'own use'
contracts and is unrelated to underlying operating performance.
SSE Enterprise (formerly Distributed Energy): An adjusted and
reported operating loss of GBP(8.4)m was recognised, compared to a
profit of GBP0.6m in the prior period. The business continues to
incur losses as it invests to support business growth in localised
and flexible, smart energy infrastructure.
Neos Networks: SSE's remaining 50% share in the Telecoms
business Neos Networks Limited recorded an adjusted operating loss
of GBP(14.7)m compared to GBP(6.5)m in the prior period, and a
reported operating loss of GBP(16.3)m compared to a loss of
GBP(11.2)m in the prior period. These results reflect losses
incurred to support future business growth.
Corporate Unallocated: Adjusted operating loss of GBP(35.2)m
compares against a loss of GBP(28.9)m in the prior period. This
reflects the continuing unwind of income from historic transitional
service agreements with Energy Services (disposed to Ovo in January
2020), Neos Networks (part-disposed in January 2019) and SSE
Contracting (disposed to Aurelius in July 2021), as well as
increasing overhead costs.
Reported operating loss of GBP(82.2)m compares against a profit
of GBP(25.6)m in the prior period. The current period included a
GBP(50.5)m exceptional charge which relates to the movement on the
Group's exposure to financial guarantee liabilities relating to
disposed businesses following adoption of IFRS 17, and a GBP3.5m
positive revaluation adjustment relating to the legacy Gas
Production decommissioning provision. In the previous period, a
GBP54.5m positive revaluation adjustment was recognised on the same
provision.
Adoption of IFRS 17 "Insurance Contracts"
On 1 April 2023, the Group adopted IFRS 17 'Insurance Contracts'
on a modified retrospective basis from the earliest period
presented in this Interim Results Statement.
The Group provides guarantees in respect of certain activities
of former subsidiaries and to certain current joint venture
investments. Prior to adoption of IFRS 17, these contracts were
designated as insurance contracts under IFRS4, where existing
accounting practices were grandfathered and the contracts were
treated as contingent liabilities until such time as it became
probable the Group would be required to make payment to settle the
obligation. The adoption of IFRS 17 from 1 April 2022 resulted in a
reassessment of these contracts and the Group elected to apply the
valuation principles of IFRS 9 to these contracts. Adoption
resulted in the fair value recognition of financial guarantee
liabilities of GBP(45.4)m; a GBP17.6m increase in equity
investments in joint ventures and associates; a related deferred
tax liability of GBP1.1m; and a GBP28.9m adjustment to retained
earnings. On 1 September 2022, the Group acquired a 50% joint
venture in Triton Power Holdings Limited and provided parent
company guarantees to Saltend Cogeneration Company Limited
(acquired as part of the Triton Power 50% equity accounted joint
venture). In the comparative 6 month period to 30 September 2022,
the Group has therefore recognised a further GBP(16.0)m increase to
the Group's financial guarantee liabilities to reflect this
guarantee and a GBP16.0m increase to the Group's equity investment
in Triton.
During the 6 month period to 30 September 2023, the Group
recognised a net charge of GBP(46.5)m, of which a GBP(50.5)m
expense has been treated as an exceptional charge, in relation to
the increase in liabilities associated with certain guarantee
contracts under IFRS 17.
Adjusted Earnings per share
To monitor its financial performance over the medium term, SSE
reports on its adjusted earnings per share measure. This measure is
calculated by excluding the charge for deferred tax, interest costs
on net pension liabilities, exceptional items, depreciation on fair
value adjustments, revaluation adjustments to the retained 60% Gas
Production decommissioning obligation, results attributable to
non-controlling interest holders and the impact of certain
remeasurements.
SSE's adjusted EPS measure provides an important and meaningful
measure of underlying financial performance. In adjusting for these
items, adjusted EPS reflects SSE's internal performance management,
avoids the volatility associated with mark-to-market IFRS 9
remeasurements and means that items deemed to be exceptional due to
their nature and scale do not distort the presentation of SSE's
underlying results. For more detail on these and other adjusted
items please refer to the Adjusted Performance Measures section of
this statement.
In the six months ended 30 September 2023, SSE's adjusted
earnings per share on continuing operations was 37.0p. This
compares to 41.8p for the previous year and reflects the movements
in adjusted operating profit outlined in the section above, as well
as the normal seasonal nature of operations that deliver the
majority of annual earnings in the second half of SSE's financial
year.
Group financial outlook - 2023/24
and beyond
FINANCIAL OUTLOOK for 2023/24
SSE's balanced portfolio of economically-regulated and
market-based businesses have continued to navigate the risks and
opportunities from variable market conditions in the first half of
the year. In particular, whilst renewables output has been
significantly below expectations, the flexible thermal generation
portfolio has continued to perform well in the market thereby
demonstrating the portfolio effect of the two technologies.
SSE remains focused on delivering long-term sustainable
financial performance. Whilst energy prices and energy price
volatility continue to fall from the highs of the last financial
year, the group remains confident that its businesses will
collectively deliver strong adjusted operating profit in the
2023/24 financial year, specifically:
-- SSEN Transmission : Expect adjusted operating profit to be
higher than the previous financial year, even after taking account
of an additional 8 months of non-controlling interest.
-- SSEN Distribution : Expect adjusted operating profit to be
lower than the previous financial year, as inflationary impacts on
the operating cost base will not be reflected in regulatory tariffs
until FY25.
-- SSE Renewables : Following Seagreen reaching full commercial
operations in October 2023, continue to expect to deliver to the
planned levels of output for the second half of the year, excluding
any Dogger Bank A commissioning volumes and subject to normal
weather conditions.
-- SSE Thermal and Gas Storage : Assuming normal plant
availability and supportive market conditions, adjusted operating
profit for both businesses is expected to be more than GBP750m, of
which Gas Storage is expected to contribute adjusted operating
profit of more than GBP75m.
Taking the above factors into account, and with the key winter
months to come, SSE continues to expect to report full-year 2023/24
adjusted Earnings Per Share of more than 150 pence and expects to
provide updated EPS guidance later in the financial year.
The Group is on course to report capital, investment and
acquisition expenditure for 2023/24 of around GBP2.5bn with
leverage as at March 2024 expected to be below the target of 3.5 -
4.0x net debt to EBITDA.
Net Zero Acceleration Programme PLUS
Further upgrading capital investment plan to 2027
In May 2023, SSE announced an update to the Net Zero
Acceleration Programme or NZAP (originally presented November 2021)
which rolled the plan forward by 12 months whilst also upgrading
the targets, ambitions and investment mix. In the six months since
that update was announced, the Group has been focussed on delivery
of that strategy whilst recognising the impact from a changing
macroeconomic environment.
As a result of increased visibility over the scale of investment
opportunities available within the SSEN Transmission business, SSE
has further revised its plan by increasing the expected investment
by GBP2.5bn to around GBP20.5bn over the five years to 2026/27.
This increase to SSE's capital investment plans - which is solely
allocated to the regulated SSEN Transmission business - has the
effect of upweighting the proportion of Electricity Networks spend
as outlined below:
Investment Plan NZAP (Nov 2021) NZAP+ (May 2023) NZAP+ Nov 23 update
(5 years)
=========================== ================ ================= ====================
Total adjusted investment GBP12.5bn GBP18.0bn GBP20.5bn
=========================== ================ ================= ====================
- Electricity Networks 40% 50% 55%
=========================== ================ ================= ====================
- Market based 60% 50% 45%
=========================== ================ ================= ====================
Following this increase, SSE anticipates the investment will be
focussed on:
-- SSEN Transmission (37% or GBP7.5bn) to continue to comprise
the majority of expected investment in regulated electricity
networks. With the RIIO-T2 baseline investment programme continuing
at pace, the GBP2.5bn increase in capital investment is expected to
be incurred across the three Large Onshore Transmission Investment
('LOTI') projects that have received approval of need from Ofgem,
in addition to increased visibility over the early construction
costs expected on the Accelerated Strategic Transmission Investment
('ASTI') framework projects - the first of which is Eastern Green
Link 2. This increased investment is expected to increase gross RAV
to more than GBP10bn by the end of 2026/27, whilst delivering
expected adjusted operating profits (net of 25% Non-Controlling
Interest) of more than GBP400m on average across the five year
plan.
-- SSEN Distribution (17% or GBP3.5bn) remains on track to
deliver its GBP3.6bn RIIO-ED2 investment programme which -
alongside growth opportunities from Uncertainty Mechanisms, the
first of which has already been secured - continues to expect gross
RAV to increase to between GBP6 - 7bn by the end of 2026/27 and
deliver expected adjusted operating profits of at least GBP450m on
average across the five year plan.
-- SSE Renewables (34% or GBP7bn) is continuing to deliver on
its ambitious construction programme, with critical milestones
achieved in the period such as first power from Dogger Bank
offshore wind farm and full power from Seagreen offshore wind farm.
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 value
accretive. With that focus, the allocation of capital continues to
move across a diverse mix of renewable technologies such as the
investment in over 500MW of battery storage projects that are
currently under construction. As such, the business continues to
expect to invest around GBP7bn net across the five-year period and
is expected to deliver a 20% adjusted profit CAGR across the
five-year plan subject to normal weather and a c.GBP85/MWh baseload
power price in 2026/27.
-- SSE Thermal and other businesses (12% or GBP2.5bn) comprise
the remaining expected investment, with SSE Thermal's pipeline of
low-carbon thermal generation projects - such as sustainable
biofuels, carbon capture and ultimately hydrogen - making solid
progress over the last six months with the existing efficient,
flexible thermal fleet continuing to expect to deliver adjusted
operating profits of around GBP500m on average across the remaining
four years to 2026/27.
With around 90% of the upweighted investment plan expected to be
invested in electricity networks and renewables, the substantial
majority is focussed 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.
Upweighted investment plan remains fully-funded, with continued
strong balance sheet
SSE has continued to demonstrate its ability to realise value
from disposals, create sustainable earnings growth and raising
capital at highly attractive terms, most recently the EUR750m
8-year Green Bond issued in September 2023 at a fixed coupon of
4.0%.
The Group's business mix, capital investment and funding plans
continue to be designed to ensure that it retains an investment
grade credit rating which provides capacity to reach a 4.5x net
debt / EBITDA ratio.
And whilst the incremental GBP2.5bn investment is expected to be
mainly funded by the issuance of around GBP2bn of additional debt
towards the end of the five year plan, the financial strength of
the Group and continued earnings growth means that it expects to
still be within the target 3.5 - 4.0x net debt / EBITDA by the end
of 2026/27.
Maintaining disciplined investment and returns
SSE maintains its focus on allocating capital based on clear
internal investment criteria intended to maximise investment
returns whilst ensuring strategic alignment with SSE's vision to be
a leading energy company in a net zero world.
With the backdrop of a changing macroeconomic environment, SSE
remains fully committed to its disciplined approach of focussing
investment on high-quality assets where SSE's capabilities can
deliver favourable risk-adjusted project returns, namely continuing
to target:
-- Solar : returns between 50-300 bps over WACC for unlevered
projects, depending on the balance of merchant, technology and
construction risk for each project;
-- Onshore wind : returns between 100-300 bps over WACC for
unlevered projects, also depending on the balance of merchant,
technology and construction risk for each project;
-- Offshore wind : more than 11% equity returns (excluding
developer profits but including seabed lease fees) for project
financed developments;
-- Networks : between 7 - 9% return on equity assuming a level
of outperformance, CPIH inflation of 2% p.a. and an average gearing
ratio of 60%; and
-- Emerging technologies (principally Batteries, CCS and
Hydrogen) : between 300-500 bps over WACC for unlevered projects,
reflecting the expected increased operating and technology risk
from newer, first of a kind technologies.
These investment criteria - and targeted returns - continue to
be applied in both domestic and overseas markets.
Reaffirming expected earnings growth and dividend plan
Taking account of the Group's latest view of Renewables and
Networks project delivery out to 2026/27, in addition to the
upweighted investment in Networks announced today, SSE now has
greater confidence in being comfortably within its 175 - 200p
adjusted earnings per share guidance range for 2026/27. This
increased visibility over investment means that existing
operational assets and committed capex are together expected to
deliver around 95% of the 2026/27 EPS guidance, with key
assumptions remaining unchanged since May 2023. These include an
GBP85/MWh nominal baseload power price for Renewable output in
2026/27; no assumed developer profits on project sell-downs; normal
weather and plant availability; a 4.5% average cost of debt across
the plan which in turn assumes a 5.5% coupon on new debt issuance;
and an 16% average effective tax rate across the plan.
Reflecting the SSE Boards' confidence in delivering this future
earnings growth, the commitment to target dividend increases
following the rebase to 60 pence per share in 2023/24 of between 5
to 10% per year across 2024/25, 2025/26 and 2026/27 remains
unaffected by the upweighted investment plan. 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
Sep 2023 Sep 2023 Sep 2022
Share GBPm GBPm
Adjusted Investment and Capex Summary %
=============================================== ========= ========= =========
SSEN Transmission (excluding 25% MI
from 1 Dec 2022) 23% 242.6 270.9
=============================================== ========= ========= =========
SSEN Distribution 23% 245.5 175.8
=============================================== ========= ========= =========
Regulated networks total 46% 488.1 446.7
=============================================== ========= ========= =========
SSE Renewables 43% 447.1 477.8
=============================================== ========= ========= =========
SSE Thermal 4% 38.2 89.2
=============================================== ========= ========= =========
Gas Storage - 0.2 6.5
=============================================== ========= ========= =========
Thermal Energy Total 4% 38.4 95.7
=============================================== ========= ========= =========
Energy Customer Solutions 4% 36.8 26.2
=============================================== ========= ========= =========
SSE Energy Markets (formerly Energy
Portfolio Management) - 3.4 2.3
=============================================== ========= ========= =========
SSE Enterprise (formerly Distributed
Energy) 1% 15.2 10.5
=============================================== ========= ========= =========
Corporate unallocated 2% 25.3 44.0
=============================================== ========= ========= =========
Adjusted investment and capital expenditure 100% 1,054.3 1,103.2
=============================================== ========= ========= =========
Acquisitions - 640.0
=============================================== ========= ========= =========
Adjusted investment, capital and acquisitions
expenditure 1,054.3 1,743.2
=============================================== ========= ========= =========
Note: HY2022/23 segmental numbers above restated to reflect
movement of Solar and Battery business to SSE Renewables and
Building Energy Management Systems to Business Energy, both
previously reported under SSE Enterprise
SSE'S Capital Expenditure Programme
During the six months to 30 September 2023, SSE's adjusted
investment, capital and acquisitions expenditure totalled
GBP1,054.3m, compared to GBP1,743.2m in the same period last year.
The reduction is driven primarily by prior period acquisition
expenditure relating to the purchase of the Southern European
onshore wind development platform, and the acquisition of Triton
Power Holdings, in separate transactions which both completed on 1
September 2022.
Investment in the reporting period was driven mainly by SSE's
Renewables and Electricity Networks divisions, with limited
deployment of capital in Thermal Energy and other businesses, and
no acquisitions expenditure.
In SSEN Transmission, GBP242.6m net capex was delivered,
including GBP59m on the next stage of the Shetland connection with
the entire 260km HVDC cable now laid beneath the North sea, albeit
some cable protection has still to be installed. The East Coast
Upgrade also progresses at pace including a further GBP11m invested
at Kintore during the period. First energisation of Phase 1 at
Kintore was completed successfully in October 2023, with this phase
due for completion towards the end of FY24; and all 3 Phases of
this 400kV upgrade and 132kV substation replacement due by 2026.
This site will be a world leader in 400kV SF6 free Gas Insulated
Switchgear.
In the first 6 months of RIIO-ED2, SSEN Distribution invested
GBP116.9m in the North network across a broad range of projects.
Within this, GBP49m was invested in subsea cables, including the
Pentland Firth East cable which energised during the period. In the
South, total capex of GBP128.6m was delivered during the period
covering a broad range of projects, with significant investment in
Bramley Thatcham and Iver Reinforcement.
SSE Renewables invested a total of GBP447.1m during the period,
including GBP161.4m on Viking onshore wind farm on Shetland, where
all turbines have now been installed and commissioning is underway.
In Ireland, GBP47.3m of capex was delivered on the construction of
the 101MW Yellow River project, which is expected to be
commissioned in early 2025. In the North Sea, GBP52.5m equity was
drawn down to fund the final stages of construction of Seagreen
offshore wind farm, which reached commercial operations in October
2023. In addition, the first equity contribution to Dogger Bank A
of GBP2m was drawn down in the period, the project having
previously been funded by non-recourse project financing in the
Joint Venture.
In SSE Thermal, around GBP18m of the GBP38.2m investment in the
period was incurred on the continued construction of the 50MW
Slough Multifuel station, a joint venture with CIP, which is
progressing towards handover during 2024/25.
SSE's Hedging Position at 30 September 2023
SSE has an established approach to hedging through which it
generally seeks to reduce its broad exposure to commodity price
variation at least 12 months in advance of delivery. SSE continues
to monitor market developments and conditions and alters its
hedging approach in response to changes in its exposure profile.
SSE will continue to provide a summary of its hedging approach,
including details of any changes in the period, within its Interim
and Full-year Results Statements.
A summary of the hedging position for each of SSE's market-based
businesses is set out below.
SSE Renewables - GB wind and hydro:
In previous reporting periods, energy output hedges have been
progressively established through the forward sale of either
electricity, or gas and carbon equivalents. This approach was
developed in response to lower levels of available market depth and
liquidity for electricity forward sales - particularly more than 12
months out - and therefore facilitated the continued reduction of
exposure to volatile spot market outcomes.
During the period, the emerging pricing dislocation between UK
Carbon and EU Carbon - combined with poor liquidity in forward
periods for UK Carbon - has meant that a proportion of forward
hedging has been conducted in gas equivalents only. This serves to
anchor the underlying energy value for future output, whilst
recognising that carbon and spark spread exposures remain, which
will be managed as liquidity emerges on nearer term markets.
For transparency, the table below has been expanded to note both
the proportion of hedges and prices of those hedges for electricity
and equivalents (i.e. where gas and carbon equivalents have been
hedged) and for gas alone (i.e. where the carbon leg has been
unable to be hedged).
At 31 March Update at 30 September
2023 2023
======================================= ============ =========================
2023/24 2024/25 2025/26
======================================= ============ ============ ===========
Wind
======================================= ============ ============ ===========
Expected volume - TWh 6.5 6.8 6.8
======================================= ============ ============ ===========
Volume hedged - % 85% 84% 44%
======================================= ============ ============ ===========
- Hedge in electricity & equivalents
- TWh 5.5 2.1 0.8
======================================= ============ ============ ===========
- Electricity hedge price - GBP75 GBP97 GBP109
GBPMWh
======================================= ============ ============ ===========
- Hedge in Gas - TWh - 3.6 2.1
======================================= ============ ============ ===========
- Gas hedge price - p/therm - 138p 117p
======================================= ============ ============ ===========
Hydro
======================================= ============ ============ ===========
Expected volume - TWh 3.5 3.6 3.6
======================================= ============ ============ ===========
Volume hedged - % 85% 79% 43%
======================================= ============ ============ ===========
- Hedge in electricity & equivalents
- TWh 3.0 1.0 0.1
======================================= ============ ============ ===========
- Electricity hedge price - GBP86 GBP103 GBP107
GBPMWh
======================================= ============ ============ ===========
- Hedge in Gas - TWh - 1.7 1.2
======================================= ============ ============ ===========
- Gas hedge price - p/therm - 138p 120p
======================================= ============ ============ ===========
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.
The table excludes additional volumes and income for Balancing
Mechanism activity, ROCs, ancillary services, capacity mechanism
and shape variations and optimisations. It also excludes volumes
and income relating to Irish wind output, pumped storage and
CfDs.
The expected volumes include SSE's equity share of forecast
pre-CFD volumes from Seagreen offshore wind farm. No volumes have
been included for Viking onshore wind farm nor Dogger Bank offshore
wind farm as hedging for these assets has not yet commenced.
For wind energy output, SSE's established approach to hedging
seeks to minimise the volumetric downside risk 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 the coming twelve
months from that date.
Energy output hedges for both wind and hydro are progressively
established over the 36 months prior to delivery (although the
extent of hedging activity for future periods depends on the level
of available market depth and liquidity).
Where possible, target hedge levels are achieved through the
forward sale of either electricity, or gas and carbon equivalents.
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.
However, where the market depth and liquidity significantly
differs between gas and carbon, the hedging approach allows for the
separate forward sale of either commodity, and for time periods
beyond the 36 months prior to delivery, where it is believed that
it would reduce risk against or secure value for generation assets.
This approach aims to reduce the exposure of these wind assets to
volatile spot power market outcomes whilst still providing an
underlying commodity price hedge. When gas hedges are subsequently
converted into electricity hedges ahead of delivery, a carbon and
spark spread value is realised which will lead to changes in the
average hedge price expected.
GB Thermal: In the six months prior to delivery, SSE aims to
hedge all of the expected economic output of its CCGT assets,
having progressively established this hedge over the 18 months
prior to delivery.
This hedging approach is adjusted to take into account any
changes in exposures as a result of current market conditions, such
as the plant availability exposure, counterparty credit risk, and
changes to cost of capital for collateral.
Hedging activity also depends on the availability of sufficient
market depth and liquidity, which can be limited, particularly for
periods further into the future.
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 2023, 109 mTh of gas inventory was physically held which
represents c.58% of SSE's share of capacity (at 30 September 2022,
151mTh of gas inventory representing c.90% of SSE's share of
capacity).
GB 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, Business Energy is
dynamically monitoring nearer term consumption actuals for any
early signs of demand variability and adjusting future volumes
hedged accordingly.
SSE Energy Markets (formerly EPM): 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 small position-taking to permit this
business to manage around shape and liquidity whilst taking small
optimisation opportunities. This is contained within a total VAR
limit of GBP5m.
Ireland: Vertical integration of the generation and customer
businesses in Ireland limits the Group's commodity exposure in that
market.
Summarising movements on exceptional items
and certain remeasurements
Exceptional items
In the six months ended 30 September 2023, SSE recognised a net
exceptional charge within continuing operations of GBP(113.5)m
before tax. The following table provides a summary of the key
components making up the net charge:
Exceptional credits / (charges) Total
within continuing operations GBPm
============================================================ ========
Thermal Generation impairment of Triton Power investment (63.2)
============================================================ ========
Movement on financial guarantee liabilities relating to
disposed businesses following adoption of IFRS 17 (50.5)
============================================================ ========
Unwind of discounting on deferred consideration in respect
of a historic disposal 0.2
============================================================ ========
Total exceptional charge (113.5)
============================================================ ========
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 six months ended 30 September 2023, SSE recognised a
favourable net remeasurement within continuing operations of
GBP55.9m before tax. The following table provides a summary of the
key components making up the favourable movement:
Certain remeasurements Total
within continuing operations GBPm
========================================================= ======
Operating derivatives (including Joint Ventures, before
tax) 19.5
========================================================= ======
Commodity stocks held at fair value (4.6)
========================================================= ======
Financing derivatives 41.0
========================================================= ======
Total net favourable remeasurement 55.9
========================================================= ======
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 2023 is expected to be within the next 6 -
12 months.
The change in the operating derivative mark-to-market valuation
was a GBP19.5m positive movement from the start of the year,
reflecting a GBP1.2m positive movement on fully consolidated
operating derivatives combined with a GBP18.3m share of positive
movement on derivatives in jointly controlled entities (before tax)
driven by commodity contract revaluations mainly in the Seagreen
and Triton Power Joint Ventures.
The positive movement of GBP1.2m on fully consolidated operating
derivatives includes:
-- Settlement during the period of GBP499.4m of previously net
"out-of-the-money" contracts in line with the contracted delivery
periods; and
-- An adverse net mark-to-market remeasurement of GBP(498.2)m on
unsettled contracts including affiliate CfDs, largely entered into
during the course of 2022/23 and 2023/24 and in line with the
Group's stated approach to hedging. This mark-to-market
remeasurement - which compares to a GBP(1,044.0)m adverse movement
in the prior period - reflects the reduced volatility seen in
commodity markets during the period.
As in prior years, 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. The GBP(4.6)m adverse
movement in the year reflects the lower current forward market
price when compared to the actual weighted average cost of gas
stored at the period end.
However, whilst this movement reflects 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, we do not expect that this valuation
movement will reflect the final result realised by the
business.
Financing derivatives
In addition to the movements above, a positive movement of
GBP41.0m was recognised on financing derivatives in the period
ended 30 September 2023, 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 movement in the
value of net debt is predominately offset by a movement in the
derivative position. The adjustment was primarily driven by
continued higher interest rates driving reductions in the "out of
the money" position on SSE's fixed rate swaps, in addition to
settlement of previously "out-of-the-money" contracts in line with
the contracted delivery periods.
These remeasurements are presented separately as they do not
represent underlying business performance in the period. The result
on financing derivatives will be recognised in adjusted profit
before tax when the derivatives are settled.
Reported profit before tax and earnings per share
Taking all of the above into account, reported results for the
six months to 30 September 2023 are significantly higher than the
previous year. In addition to the GBP55.9m net pre-tax gain on
forward commodity, gas inventory and financing derivative fair
value remeasurements and the GBP(113.5)m net pre-tax exceptional
charge noted above - reported results also include GBP12.8m of
interest income on the net pension asset and GBP68.4m of share of
profits attributable to non-controlling interests.
Reported results in the prior period reflected pre-tax certain
re-measurement losses of GBP(1,548.7)m mainly driven by the
significant volatility in commodity markets in the prior period, as
well as historic impairment reversals of GBP219m and net gains on
acquisitions / disposals of GBP230m.
Financial management and balance sheet
Debt metrics Sep 2023 March 2023 Sep 2022
GBPm GBPm GBPm
====================================== ========== =========== ==========
Net Debt / EBITDA* N/A 2.7x N/A
====================================== ========== =========== ==========
Adjusted net debt and hybrid capital
(GBPm) (8,943.8) (8,894.1) (9,988.6)
====================================== ========== =========== ==========
Average debt maturity (years) 5.9 6.4 6.5
====================================== ========== =========== ==========
Adjusted interest cover 3.9 7.6x 4.2x
====================================== ========== =========== ==========
Average cost of debt at period
end (including all hybrid coupon
payments) 4.02% 3.92% 3.83%
====================================== ========== =========== ==========
* Note: Net debt represents the group adjusted net debt and
hybrid capital. EBITDA represents the full year group adjusted
EBITDA, less GBP147m (at March 2023) for the proportion of adjusted
EBITDA from equity-accounted Joint Ventures relating to project
financed debt.
Net finance costs reconciliation Sep 2023 Sep 2022
GBPm GBPm
========================================= ========= =========
Adjusted net finance costs 128.0 156.6
========================================= ========= =========
Add/(less):
========================================= ========= =========
Lease interest charges (11.7) (14.1)
========================================= ========= =========
Notional interest arising on discounted
provisions (11.0) (7.1)
========================================= ========= =========
Hybrid equity coupon payment 73.1 38.8
========================================= ========= =========
Adjusted finance costs for interest
cover calculation 178.4 174.2
========================================= ========= =========
SSE Principal Sources of debt Sep 2023 Mar 2023 Sep 2022
funding
=================================== ========= ========= =========
Bonds 54% 54% 52%
=================================== ========= ========= =========
Hybrid debt and equity securities 18% 18% 18%
=================================== ========= ========= =========
European investment bank loans 5% 5% 7%
=================================== ========= ========= =========
US private placement 8% 10% 10%
=================================== ========= ========= =========
Short-term funding 11% 9% 10%
=================================== ========= ========= =========
Index -linked debt 4% 4% 3%
=================================== ========= ========= =========
% Of which has been secured at
a fixed rate 91% 92% 92%
=================================== ========= ========= =========
Rating Agency Rating Criteria Date of Issue
============== =============== ==================================== ==============
Moody's Baa1 'stable 'Low teens' Retained Cash March 2023
outlook' Flow/Net Debt
============== =============== ==================================== ==============
Standard and BBB+ 'positive About 18% Funds From Operations/Net September
Poor's stable' Debt 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.
While there may be short-term fluctuations in leverage as
demonstrated by the 2.7 net debt/EBITDA achieved at 31 March 2023
(2022: 4.0x), it is expected that this ratio will generally fall
between 3.5 - 4.0x across the five years to 31 March 2027.
SSE's S&P credit rating were updated in December 2022 to
BBB+ 'positive outlook' and its Moody's rating was reaffirmed in
March 2023 at Baa1 with 'stable outlook'.
Adjusted net debt and hybrid capital
SSE's adjusted net debt and hybrid capital was GBP8.9bn at 30
September 2023, broadly unchanged from 31 March 2023. With no
significant acquisitions or divestments in the period, the debt
movement relates to dividends, capex spends and revaluation of
currency debt as well as various working capital movements being
offset by operating cash flows.
Debt summary as at 30 September 2023
The Group issued EUR750m of new medium- long-term debt in the
first half of the financial year whilst also continuing to roll
Commercial Paper at the same level as at 31 March 2023:
-- In September 2023, SSE plc issued an 8 year EUR750m Eurobond
at a coupon of 4.0% with an all-in cost of funding rate of just
above 4% once fees have been included. The bond was left in Euros
as a net investment hedge for the Group's Euro denominated
subsidiaries.
-- Over the course of the year, SSE plc rolled maturing
short-term debt which takes the total outstanding Commercial Paper
at 30 September 2023 to EUR1,048m (GBP902m). Commercial Paper has
been issued in Euros and swapped back to Sterling at an average
cost of debt of 5.92% and matures between October 2023 and January
2024.
In the six months to 30 September 2023, GBP0.7bn of
medium-to-long-term debt has matured comprising GBP155m (US Private
Placement) which matured in April 2023 and September 2023, EUR700m
(GBP514m) (Eurobond) which matured in September 2023 and GBP50m
European Investment Bank fixed rate loan which matured in September
2023.
In the next twelve months, there is a further GBP204m of
medium-to-long-term debt maturing being GBP204m US Private
Placement maturing in April 2024. As noted above, EUR1,048m
(GBP902m) of short-term debt in the form of Commercial Paper is
also due to mature in the second half of 2023/24, however the
current intention is to roll this maturing short-term debt forward
throughout the 2023/24 financial year. In addition to these
contractual maturities, it is anticipated that any capital
expenditure related draw-downs of the Transmission RCF facility
will be refinanced with long-term debt in the future, with GBP220m
drawn on that facility at 30 September 2023.
Hybrid bonds summary as at 30 September 2023
Hybrid bonds are a valuable part of SSE's capital structure,
helping to diversify SSE's investor base and most importantly to
support credit rating ratios, with their 50% equity treatment by
the rating agencies being positive for SSE's credit metrics.
A summary of SSE's hybrid bonds as at 31 March 2023 can be found
below:
Issued Hybrid Bond All in rate(2) First Call Accounting
Value(1) Date Treatment
=========== ================== =============== =========== =================
July 2020 GBP600m 3.74% Apr 2026 Equity accounted
=========== ================== =============== =========== =================
July 2020 EUR500m (GBP453m) 3.68% July 2027 Equity accounted
=========== ================== =============== =========== =================
April 2022 EUR1bn (GBP831m) 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 13 to
the Interim Financial Statements and a table noting the amounts,
timing and accounting treatment of coupon payments is shown
below:
Hybrid coupon payments 2023/24 2022/23
================================ ================ ================
HYe FYe HYa FYa
================================ ======= ======= ======= =======
Total equity (cash) accounted GBP73m GBP73m GBP39m GBP39m
================================ ======= ======= ======= =======
Total debt (accrual) accounted - - GBP21m GBP21m
================================ ======= ======= ======= =======
Total hybrid coupon GBP73m GBP73m GBP60m GBP60m
================================ ======= ======= ======= =======
SSE's July 2020 and April 2022 hybrid bonds are perpetual
instruments and are therefore accounted for as part of equity
within the Interim Financial Statements but, consistent with
previous years, 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. The
March 2017 hybrid bonds - which were called and settled in April
2022 - had a fixed redemption date and were therefore debt
accounted with coupon payments treated as finance costs under IFRS
9 "Financial Instruments".
Managing net finance Income / (costs)
SSE's adjusted net finance costs - which included interest on
debt accounted hybrid bonds but not equity accounted hybrid bonds -
were GBP128.0m in the half year ended 30 September 2023, compared
to GBP156.6m in the previous period. The lower level of finance
costs from period to period mainly reflects the refinancing of debt
accounted hybrid bonds with equity accounted hybrid capital in
April 2022, combined with slightly higher capitalised interest
costs reflecting increasing construction activity.
Reported net finance costs were (GBP29.0m) compared to a
reported net finance income of GBP124.1m in the previous period,
mainly reflecting a GBP202.7m decrease in the movement on financing
derivatives as previously referenced, combined with an GBP18.7m
increase in joint venture interest and tax.
Summarising cash and cash equivalents
At 30 September 2023, SSE's adjusted net debt included cash and
cash equivalents of GBP0.9bn, which is the same level as the
GBP0.9bn at March 2023.
The cash collateral position has decreased from GBP316.3m of
cash provided as collateral at 31 March 2023 to GBP140.6m of cash
provided at 30 September 2023. Cash collateral is only required for
forward commodity contracts traded through commodity exchanges, and
generally comprises an 'initial margin' element based on the size
and period of the trade and a 'variation margin' element which will
change from day to day depending on the fair value of that trade
each day. The level of cash collateral either provided or received
therefore depends on the volume of trading through the exchanges,
the periods being traded and the associated price volatility. As
collateral is only required on a portion of trades, the movement in
collateral provided or received will not correlate to the IFRS 9
fair value movement recognised, which also only covers a portion of
the total Group trading activity. The decrease in cash collateral
reflects the lower forward power and gas price environment,
alongside reduced-price volatility in those markets.
Revolving Credit Facility / SHORT-TERM FUNDING
SSE has GBP3.5bn of committed bank facilities in place 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 SSE plc Syndicated Revolving Credit Facility 2026 GBP1.3bn
19 with 10 Relationship Banks
===== ========== ===================================== ===== =========
Oct SSE plc Revolving Credit Facility with Bank 2026 GBP200m
19 of China
===== ========== ===================================== ===== =========
Nov SHET plc Syndicated Revolving Credit Facility 2026 GBP750m
22 with 11 Relationship Banks
===== ========== ===================================== ===== =========
Nov SHEPD plc Syndicated Revolving Credit Facility 2026 GBP250m
22 and SEPD with 11 Relationship Banks
plc
===== ========== ===================================== ===== =========
Feb SSE plc Syndicated Revolving Credit Facility 2024 GBP1.0bn
23 with 10 Relationship Banks
===== ========== ===================================== ===== =========
Ahead of the 25% non-controlling interest stake disposal, SSEN
Transmission entered a three-year GBP750m facility, including two
one-year optional extensions with the first year's option exercised
in September 2023. This facility was entered into to help cover the
future long-term funding requirements and the working capital of
this business as it looks to become financially independent of the
Group. A GBP250m facility on the same terms has been entered into
by SSEN Distribution. These facilities support the ongoing capital
expenditure investment programmes that are required to deliver
their ambitious future growth plans and will be drawn on a regular
basis.
The GBP1bn facility signed in February 2023 was executed to
cover potential cash collateral requirements required to cover
commodity positions on exchanges or via credit support annexes on
bilateral contracts.
The facilities can also be utilised to cover short-term funding
requirements; however, the majority remain undrawn for most of the
time and at 30 September 2023, GBP220m was drawn on the GBP750m
Scottish Hydro Electric Transmission plc facility.
The two SSE plc facilities totalling GBP1.5bn that mature in
2026 are classified as sustainable facilities with interest rate
and fees paid dependant on SSE's performance in environmental,
social and governance matters, as assessed independently by Moody's
ESG Solutions. The new GBP750m Transmission facility is also
classified as a sustainable facility with interest rate and fees
paid dependant on four ESG-related KPI's 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 the next three years. At 30
September 2023, no drawings have been made on this facility.
In addition to these committed bank facilities, the Group has
access to a GBP15m 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 2023, 91% of SSE's borrowings were at
fixed rates.
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 to the circumstances on a case-by-case
basis.
Ensuring a strong debt structure 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
GBP9.5bn and SSE's objective is to maintain a reasonable range of
debt maturities.
Its average debt maturity, excluding hybrid securities, at 30
September 2023 was 6.4 years, consistent with the position at 31
March 2023. This position reflects the GBP0.7bn of new long-term
debt issued in the last six months, which has been entirely offset
by maturing long term debt.
SSE's average cost of debt is now 4.02%, compared to 3.92% at 31
March 2023. The increase relates to rates moving higher during the
year predominately on short term funding partially offset by higher
floating rate fixings on fixed rate swaps.
Going Concern
The Directors consider that the Group has adequate resources to
continue in operational existence for the period to 31 December
2024. The 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 12) 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 2024.
The Group has an established EUR1.5bn Euro commercial paper
programme (paper can be issued in a range of currencies and swapped
into Sterling) and as at 30 September 2023 there was GBP903m
commercial paper outstanding (31 March 2023: GBP919m). In the six
months ended 30 September 2023, the Group has issued new debt
instruments totalling GBP650m and has redeemed GBP204m of maturing
debt in the period. The Group also continues to have access to its
GBP3.5bn of revolving credit facilities. As at 30 September 2023
there were GBP220m of drawings against these committed facilities
being less than 6% utilisation. The details of the five committed
facilities at 30 September 2023 are:
-- a GBP1.3bn revolving credit facility for SSE plc maturing March 2026;
-- a GBP0.2bn bilateral facility for SSE plc maturing October 2026;
-- a GBP0.75bn facility for Scottish Hydro Electric Transmission plc maturing November 2026;
-- a GBP0.25bn facility for Scottish Hydro Electric Power
Distribution plc and Southern Electric Power Distribution plc
maturing November 2026; and
-- a GBP1.0bn committed facility for SSE plc maturing February 2024.
The GBP1.3bn revolving credit facility and GBP0.2bn bilateral
facility are 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, both of which
have 1 year extension options at the borrower's discretion, were
entered into to help cover the capital expenditure and working
capital of those businesses. The GBP1bn committed facility at SSE
plc has a 1 year extension option at the lender's discretion and
was entered into to provide cover for potential cash collateral
requirements, if periods of extreme volatility return to the
commodity markets. The only facility that was drawn at 30 September
2023 was the GBP750m Transmission facility, with GBP220m drawn to
cover capital expenditure requirements.
Operating a Scrip Dividend Scheme
SSE's Scrip Dividend Scheme was last renewed for a three-year
period at the 2021 AGM and continues to be offered to all
shareholders. For the period out to 2026/27, take-up from the Scrip
Dividend Scheme will be capped at 25%. SSE plans to implement this
cap by means of a share repurchase programme, or 'buyback', in
October each year 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.
Following approval of the dividend at the Annual General Meeting
on 20 July 2023, and receipt of the final dividend scrip elections
on 24 August 2023, the overall scrip dividend take-up for the
financial year was less than the 25% threshold and therefore no
buy-back to limit scrip dilution was required.
SSE believes limiting the dilutive effect of the Scrip in this
way strikes the right balance in terms of giving shareholders
choice, potentially securing cash dividend payment savings and
managing the number of additional shares issued.
SSE's 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 GBP3.4bn as at 30 September
2023.
SSE principal Asset type SSE SSE share of SSE Shareholder
JVs and associates(1) holding external debt loans
as at 30 Sep as at 30 Sep
2023 2023
======================= ======================= ========= =============== =====================
Marchwood Power 920MW CCGT 50% No external GBP19m
Ltd debt
======================= ======================= ========= =============== =====================
Seabank Power 1,234MW CCGT 50% No external No loans outstanding
Ltd debt
======================= ======================= ========= =============== =====================
SSE Slough Multifuel 50MW energy-from-waste 50% No external GBP144m
Ltd facility debt
======================= ======================= ========= =============== =====================
Triton Power Holdings 1,200MW CCGT 50% No external No loans outstanding
Ltd & 140MW OCGT debt
======================= ======================= ========= =============== =====================
Beatrice Offshore 588MW offshore 40% GBP648m Project financed
Windfarm Ltd wind farm
======================= ======================= ========= =============== =====================
Dogger Bank A 1,200MW offshore 40% GBP900m Project financed
Wind Farm wind farm
======================= ======================= ========= =============== =====================
Dogger Bank B 1,200MW offshore 40% GBP728m Project financed
Wind Farm wind farm
======================= ======================= ========= =============== =====================
Dogger Bank C 1,200MW offshore 40% GBP454m Project financed
Wind Farm wind farm
======================= ======================= ========= =============== =====================
Ossian Offshore ScotWind seabed 40% No external No loans outstanding
Windfarm Ltd debt
======================= ======================= ========= =============== =====================
Seagreen Wind 1,075MW offshore 49% GBP670m GBP868m(2)
Energy Ltd wind farm
======================= ======================= ========= =============== =====================
Seagreen 1a Ltd Offshore wind 49% No external GBP18m
farm extension debt
======================= ======================= ========= =============== =====================
Clyde Windfarm 522MW onshore 50.1% No external GBP127m
(Scotland) Ltd wind farm debt
======================= ======================= ========= =============== =====================
Dunmaglass Windfarm 94MW onshore 50.1% No external GBP46m
Ltd windfarm debt
======================= ======================= ========= =============== =====================
Stronelairg Windfarm 228MW onshore 50.1% No external GBP88m
Ltd wind farm debt
======================= ======================= ========= =============== =====================
Neos Networks Private telecoms 50% No external GBP103m
Ltd network debt
======================= ======================= ========= =============== =====================
Notes:
(1) Greater Gabbard, a 504MW offshore windfarm and North Falls
Offshore Wind Farm Ltd (a further 504MW extension to Greater
Gabbard, SSE share 50%) are proportionally consolidated and
reported as Joint Operations with no loans outstanding.
(2) For accounting purposes, GBP257m of the GBP868m of SSE
Shareholder loans advanced to Seagreen Wind Energy Limited as at 30
September 2023 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.
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 already stated above, 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 2023, based on adjusted profit
before tax, is 15.6%, as compared with 12.6% for the same period
last year on the same basis, and after discrete items. The increase
in rate is largely driven by an increase to the headline rate of
tax from 19% to 25% and higher expected profit before tax across
the full year, less increased capital allowances.
The adoption during the period of the amendments to IAS 12
"Income Taxes" resulted in an increase of GBP50.1m (2022: GBP22.8m,
March 2023: GBP45.5m) to the Group's gross deferred tax assets and
gross deferred tax liabilities recognised in relation to the
Group's decommissioning obligations. Adoption had no impact on
retained earnings or profits recognised in presented periods.
On 23 March 2023, the Group's case concerning the availability
of capital allowances on Glendoe Hydro Electric Station was heard
at the Supreme Court. On 17 May 2023, the Supreme Court released
its decision, which rejected HMRC's appeal in full. The matter is
now concluded and is not subject to further appeal. Accordingly,
the financial statements to 31 March 2023 reflected the release of
the Group's provision on its uncertain tax position of GBP27.9m and
the associated recognition of GBP23.4m deferred tax liabilities in
relation to Glendoe's capital allowances.
The UK Budget in March 2023 introduced "full expensing" for
qualifying capital expenditure incurred during the period from 1
April 2023 to 31 March 2026. Capital allowances rates of 100% and
50% replace the existing rates of 18% and 6% respectively for
qualifying capital expenditure in that period, significantly
increasing the amount of capital allowances available on the
Group'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. Similar draft legislation
has been introduced in the Republic of Ireland and other EU
jurisdictions. The Group is assessing the impact of the changes but
does not expect a material impact to arise.
Pensions
Contributing to employees' pension Sept 23 March 23 Sept 22
schemes - IAS 19
======================================== ======== ========= ========
Net pension scheme asset / (liability)
recognised in the balance sheet
before deferred tax GBPm 411.0 541.1 648.5
======================================== ======== ========= ========
Employer cash contributions Scottish
Hydro Electric scheme GBPm 0.5 1.0 0.5
======================================== ======== ========= ========
Employer cash contributions Southern
Electric scheme GBPm 15.2 52.1 26.8
======================================== ======== ========= ========
Deficit repair contribution included
above GBPm 9.1 38.0 18.8
======================================== ======== ========= ========
In the 6 months to 30 September 2023, the surplus across SSE's
two pension schemes decreased by GBP(130.1)m, from GBP541.1m to
GBP411.0m, primarily due to actuarial losses of GBP(149.8)m which
were partially offset by contributions made to the schemes.
The valuation of the SSE Southern scheme decreased by GBP87.7m
in the six month period primarily due to actuarial losses of
GBP102.1m, as losses on plan assets were partially offset by the
impact of higher discount rates.
The Scottish Hydro Electric scheme has partly 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 decreased by GBP42.4m. This decrease also mainly
related to actuarial losses from plan assets, which were partially
offset by the increased discount rates.
Additional information on employee pension schemes can be found
in Note 16 to the Interim Financial Statements.
BUSINESS OPERATING REVIEW
SSE's strategy of sustainably developing, building, operating
and investing in the electricity infrastructure and businesses
needed in the transition to net zero is delivered through a focused
mix of market-based and economically-regulated energy
businesses.
SSE's businesses are highly complementary with significant
growth potential given their key role in enabling a net zero
economy. With common skills and capabilities in the development,
construction, financing and operation of highly technical and
world-class electricity assets, there are strong synergies between
them. SSE's business mix is very deliberate, highly effective,
fully focused and well set to prosper on the journey to net zero,
whilst contributing to energy security and affordability.
The review of the Business Units that follows provides details
of performance and future priorities.
Economically-regulated networks
SSE's regulated electricity networks businesses benefit from
inflation-linked remuneration under the RIIO (Revenue = Incentives
+ Innovation + Outputs) framework set by Ofgem. The regulator
determines an annual allowed level of required capital expenditure
and operating costs to meet required network outputs. These are
added together to form total expenditure or 'totex', which is split
by defined capitalisation rates which differ between networks.
Regulatory operational expenditure ('fast money') flows into
revenue, whereas regulatory capex ('slow money') is added to the
regulatory asset value ('RAV') for each network. Both SSEN
Transmission and SSEN Distribution earn a return on regulatory
equity and receive an allowance for the cost of debt, both of which
are calculated based on a notional split of their RAV. Under the
RIIO T2 and ED2 regulatory mechanisms, revenues and RAV for both
businesses are CPIH index-linked, providing a valuable hedge
against rising inflation.
Each business can earn above its base return on equity through
delivering efficiency totex savings that flow through to customer
bills. If service levels improve against targets, there is also an
opportunity to earn additional income through incentives. If
service levels fall below targets set out in the price control, a
penalty is incurred which reduces network revenue and therefore
customer bills. In addition, RIIO-2 Uncertainty Mechanisms provide
opportunities for each business to progress projects not included
within their original business plans, or to recover supplementary
costs which were not anticipated when the baseline expenditure was
agreed.
SSEN Transmission, is paid by the Electricity System Operator
based on a forecast of allowed revenue amount set three months in
advance of the regulatory year. Revenue varies depending on
collected actual versus forecast volumes transported and over- or
under-recovered volumes are accommodated in allowed revenue in the
following regulatory year.
In SSEN Distribution, charges per MWh ('tariffs') are set by
licensees 15 months in advance of the regulatory year and based on
forecasts of: (a) revenue which licensees are entitled to collect
in respect of the regulatory year ('allowed revenue'); (b) the
incentives and totex outperformance for the last three months of
the year in which the tariffs are set; and (c) the level of volumes
which will be distributed within the regulatory year. Differences
in collected versus allowed revenue (referred to as 'over- or
under-recovery') are accommodated in allowed revenue two years
after the year in which they occur.
SSEN Transmission
SSEN Transmission Sep 23 Sep 22
=================================================== ======= =======
Transmission adjusted operating profit(1)
- GBPm 215.6 208.4
=================================================== ======= =======
Transmission reported operating profit
- GBPm 287.3 208.4
=================================================== ======= =======
Transmission adjusted investment and capital
expenditure - GBPm 242.6 270.9
=================================================== ======= =======
Gross Regulated Asset Value (RAV) - GBPm 5,289 4,590
=================================================== ======= =======
SSE Share Regulated Asset Value (RAV)
(1) - GBPm 3,967 4,590
=================================================== ======= =======
Renewable Capacity connected to SSEN Transmission
Network(2) - MW 9,217 7,870
=================================================== ======= =======
(1) Excludes 25% non-controlling interest
from 1 December 2022
(2) September 2023 includes full Seagreen
Transmission Entry Capacity
SSEN Transmission overview
SSEN Transmission owns, operates and develops the high voltage
electricity transmission system in the North of Scotland and its
islands. The business is well placed to capture the significant
long-term growth opportunities from the development of renewables
across the North of Scotland and the North Sea. Following a
minority stake sale completed on 30 November 2022, the business is
owned 75% by SSE plc and 25% by Ontario Teachers' Pension Plan
Board. All capex and RAV references in this update relate to 100%
of the business unless otherwise stated.
Operational delivery
In the six months to 30 September 2023, SSEN Transmission
delivered a strong operational performance and remains on track to
achieve the maximum reward available through the 'Energy Not
Supplied Incentive' for the fourth consecutive year, which equates
to GBP770k pa in 18/19 prices. This consistency is underpinned by a
robust and ongoing programme of inspection, maintenance,
refurbishment and replacement of SSEN Transmission's assets,
keeping the lights on for communities across the North of Scotland
and ensuring reliable network access for electricity generators to
support security of supply in Great Britain.
SSEN Transmission's capital investment programme continues to
make good progress across its major RIIO-T2 projects. This includes
the second phase of the Inveraray-Crossaig overhead line
replacement project, which was successfully energised in June 2023.
As well as maintaining and enhancing network reliability to the
communities it serves, the Inveraray-Crossaig project will also
enable the growth in renewable electricity generation across the
region as part of the wider Argyll and Kintyre 275kV Strategy.
The Shetland High Voltage Direct Current (HVDC) link also
continues to make excellent progress with all 260km of subsea cable
now installed. Cable protection works continue, with rock placement
expected to be completed in early 2024. The project remains on
track for completion and full energisation in summer 2024.
Following the Scottish Government granting consent for the
Kergord to Gremista 132kV Section 37 connection in May 2023, work
is now underway on this project which will connect Shetland's
electricity distribution network to the Shetland HVDC link and
therefore connecting Shetland's homes and business to the GB
electricity network for the first time.
Good progress continues to be made to increase the capacity of
the North East Scotland transmission network to 400kV, where the
first circuits were completed and energised in October 2023, with
the final circuits on track for completion and energisation before
the end of 2023. Work to incrementally increase the east coast
transmission network - to 275kV by the end of 2023 and then to
400kV by 2026 - are also progressing.
These strategic investments in new and upgraded infrastructure
are key to enabling the continued growth in renewable electricity
generation across the North of Scotland.
As at 30 September 2023, the total installed capacity of the
North of Scotland transmission network was around 10.5GW, of which
just over 9.2GW is from renewable sources.
Factoring in the forecast growth in renewables in the remaining
years of the RIIO-T2 period, SSEN Transmission remains well on
track to meeting, if not exceeding, its goal to transport the
renewable electricity that powers 10m homes.
For financial performance commentary please refer to the Group
Financial Review.
Growth opportunities in RIIO-T2
Uncertainty Mechanism Projects
The business has made significant progress in unlocking several
major investments over and above its baseline investment case
secured at the start of RIIO-T2. Some of these additional projects
are being taken forward through Ofgem's Large Onshore Transmission
Investment (LOTI) Uncertainty Mechanism and have been in
development for several years. These will make a substantial
contribution to delivering a pathway to net zero, help support GB
energy security, and minimise constraint costs.
Large Onshore Transmission Investment ('LOTI') Projects
The LOTI projects are all wholly owned by SSEN Transmission:
Project Asset Type
Name
======== ==================================================
Skye Overhead Line & substations
======== ==================================================
Argyll Overhead Line & substations
======== ==================================================
Orkney HVDC Subsea cable & land-based convertor stations
======== ==================================================
SSEN Transmission is owned 75% SSE Plc, 25% OTPP (Ontario
Teachers Pension Plan) from 1 December 2022
In July 2023, Ofgem approved the Final Needs Case for the Orkney
transmission link, the final piece in the jigsaw in connecting all
three of Scotland's main island groups to the GB electricity
network. The Orkney transmission link will accommodate around 220MW
of renewable electricity generation, helping further unlock
Orkney's vast renewable potential alongside supporting the
continued development and growth of Orkney's marine energy sector.
Main construction works are due to commence in summer 2024, with
full energisation expected in 2028.
In August 2023, Ofgem also approved the Final Needs Case for the
Skye reinforcement project, which will see the replacement and
upgrade of the existing Fort Augustus to Skye transmission line.
The replacement line is required to maintain security of supply and
enable the connection of renewable electricity generation along its
route. A decision on the Section 37 planning application is
expected in early 2024 with construction works due to commence in
2024, with full energisation in 2028.
In October 2023, Ofgem approved the Final Needs Case for the
Argyll and Kintyre 275kV Reinforcement, subject to all material
planning consents being secured. The Argyll 275kV Reinforcement is
required to upgrade the local transmission network from 132kV to
275kV operation, supporting the forecast growth in renewables in
the region.
With all substation planning consents now secured, SSEN
Transmission awaits the outcome of the Inveraray to Creagh Dhubh
275kV connection Section 37 planning application and the Public
Local Inquiry for the Creag Dhubh to Dalmally 275kV connection,
both of which are expected in 2024. Construction is planned to
commence in 2024, with full energisation in 2028.
Further growth Opportunities
Accelerated Strategic Transmission Investment ('ASTI')
Projects
The SSEN Transmission ASTI projects identified as part of the
Holistic Network Design (HND1) include several subsea cables,
overhead line and substation installations and upgrades to support
the connection of offshore wind and onshore electricity generation.
Based on latest estimates, SSEN Transmission's share of all ASTI
projects are collectively expected to total around GBP17bn of
capital expenditure on a nominal basis (excluding capitalised
interest).
The ASTI Projects are wholly owned by SSEN Transmission, with
the exception of EGL2 and EGL3, which are Joint Ventures with
National Grid:
Project Name Asset Type
========================== =========================================
Beauly - Spittal Overhead Line & substations
========================== =========================================
Beauly - Peterhead Overhead Line & substations
========================== =========================================
Beauly - Denny upgrade Overhead Line & substations
========================== =========================================
Kintore - Westfield Overhead Line & substations
========================== =========================================
Western Isle Link HVDC Subsea cable & land-based convertor
stations
========================== =========================================
Spittal - Peterhead HVDC Subsea cable & land-based convertor
stations
========================== =========================================
Peterhead - Drax (EGL2) HVDC Subsea cable & land-based convertor
stations
========================== =========================================
Peterhead - Humber (ELG3) HVDC Subsea cable & land-based convertor
stations
========================== =========================================
SSEN Transmission is owned 75% SSE Plc, 25% OTPP (Ontario
Teachers Pension Plan) from 1 December 2022
Securing the Supply Chain and Planning Consents for ASTI
Investment
Supply chain management will be crucial in delivering these
growth opportunities and importantly, the business has secured the
supply chain for its 100% owned ASTI projects and the Eastern Green
Link (EGL2) joint venture with National Grid Electricity
Transmission.
In May 2023, Marine Scotland granted a Marine Licence for cable
protection measures for the EGL2 project, which will see the
installation of a 2GW subsea superhighway of electricity
transmission between Peterhead in the north east of Scotland and
Drax in Yorkshire. The project has also reached preferred bidder
status and entered into Capacity Reservation Agreements with the
supply chain for both the HVDC cable and convertor station
components. With the onshore works for EGL2 now underway in
Peterhead, the project remains on track for completion in 2029.
Also in May 2023, SSEN Transmission reached 'preferred bidder'
status with its supply chain partners for its ASTI subsea HVDC
projects, Spittal to Peterhead and the Western Isles. In August
2023, it then entered into Capacity Reservation Agreements for the
HVDC cable and converter stations, securing supply chain
manufacturing capacity in what is an extremely competitive and
constrained global supply chain market.
In August 2023, SSEN Transmission reached 'preferred bidder'
status for all of its onshore ASTI projects, a key milestone in
securing the supply chain for the delivery of all overhead line,
cabling and substation components.
Work to progress the Eastern Green Link 3 project, another joint
venture with NGET, is also progressing, with the supply chain
tender expected before the end of 2023.
SSEN Transmission has also concluded its first round of public
consultation across its 100% owned onshore and subsea ASTI
projects. Further consultation is planned in early 2024, with a
final round of public consultation expected next summer in advance
of submitting consent applications to the relevant consenting
authorities.
Subject to timely and positive planning decisions and the
successful conclusion of supply chain contract awards for delivery
of these projects, SSEN Transmission is committed to 2030 delivery
of these projects.
Other Growth Projects
Further investment beyond the Pathway to 2030 will be required
to unlock the North of Scotland's full renewable potential and to
deliver energy security and net zero targets. This includes the
Scottish Government's target for an additional 12GW of onshore wind
by 2030.
These additional onshore and offshore network reinforcements are
expected to be set out by National Grid Electricity System Operator
through the publication of the second transitional Centralised
Strategic Network Plan (tCSNP) in early 2024. This will include the
Holistic Network Design Follow Up Exercise (HNDFUE) and is expected
to include several new transmission reinforcements in SSEN
Transmission's network region.
These further potential growth and investment opportunities,
alongside UK and Scottish Government energy targets and ambitions,
underline the importance of the Transmission network, particularly
in the North of Scotland, in delivering energy security and
transitioning the GB energy system to net zero.
In October 2023, Ofgem published its decision on the Future
System and Network Regulation (FSNR) framework, an important first
step in the next price control review process. SSEN Transmission
will work constructively with Ofgem and wider stakeholders through
the development of the Sector Specific Methodology to ensure the
future regulatory framework provides the flexibility and agility
required to deliver the unprecedented level of investment in
infrastructure necessary to secure the country's future energy
independence and fully decarbonise our economy.
Given the scale of investment required to deliver net zero, it
is crucial that the policy landscape and regulatory framework,
particularly financial parameters, continue to attract the
investment required to support delivery of the most ambitious
investment plan in low carbon infrastructure for a generation.
SSEN Distribution
SSEN Distribution Sep 23 Sep 22
======================================= ======= =======
Distribution adjusted and reported
operating profit - GBPm 120.1 174.6
======================================= ======= =======
Regulated Asset Value (RAV) - GBPm 5,138 4,525
======================================= ======= =======
Distribution adjusted investment and
capital expenditure - GBPm 245.5 175.8
======================================= ======= =======
Electricity Distributed - TWh 16.7 16.7
======================================= ======= =======
Customer minutes lost (SHEPD) average
per customer 28 27
======================================= ======= =======
Customer minutes lost (SEPD) average
per customer 27 24
======================================= ======= =======
Customer interruptions (SHEPD) per
100 customers 25 30
======================================= ======= =======
Customer interruptions (SEPD) per 100
customers 26 23
======================================= ======= =======
SSEN Distribution overview
SSEN Distribution, operating under licence as Scottish Hydro
Electric Power Distribution plc (SHEPD) and Southern Electric Power
Distribution plc (SEPD), is responsible for safely and reliably
maintaining the electricity distribution networks supplying 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 with over
75,000km(2) 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.
Operational delivery
On 1 April 2023, SSEN Distribution started operating under the
new RIIO-ED2 price control period, in accordance with Ofgem's
December 2022 Final Determination. The price control, which will
run until March 2028, will see Distribution deliver GBP3.6bn of
baseline expenditure, representing an increase of 22% on respective
ED1 levels, alongside the opportunity to trigger up to GBP700m in
additional funding under Uncertainty Mechanisms. This will include
investment to meet new generation and demand growth and improve
subsea cable resilience for the Scottish Islands.
SSEN Distribution is working closely with the regulator and
other stakeholders to ensure that the price control has the agility
and flexibility required to deliver infrastructure in line with net
zero requirements. This is aided by a three-point strategy centred
on growing the RAV and underpinning the net zero transition;
enabling targeted improvements in customer performance and
operational efficiency; and taking the lead on delivering the
future energy system.
Major capital investment to underpin net zero transition
The start of the new price control period has seen an
acceleration of SSEN Distribution's major capital investment
programme across both its networks, delivering continued
improvements in performance, benefits for customers and supporting
future earnings growth.
In the SEPD licence area, the completion of a new RIIO-ED2
contracting strategy will enable the efficient delivery of the
investment required for future net zero growth and increased asset
resilience. With an investment envelope of over GBP1bn,
representing 25% of ED2 plan volume, this is the largest programme
of contract awards ever issued by SSEN Distribution. Three UK
companies, Keltbray, OCU and Clancy will share over GBP1bn in
investment, with each firm being responsible for a regional
delivery zone. This new approach will reduce supply chain risk and
is expected to deliver material efficiency benefits compared to a
disaggregated programme.
Improving customer performance and operational efficiency
Under the RIIO regulatory regime, SSEN Distribution is
incentivised to improve service levels for its customers. Incentive
rewards will typically be collected two years after they are
earned. In RIIO-ED2 the ability to secure higher incentive returns
has been tightened in comparison to previous price controls.
Under the Interruptions Incentive Scheme (IIS), SSEN
Distribution is incentivised on its performance against the loss of
electricity supply through the recording of Customer Interruptions
(CI) and Customer Minutes Lost (CML), which includes both planned
and unplanned supply interruptions.
SHEPD CI performance has improved compared to the same point
last year. The CML performance is broadly in line with performance
for the first six months of 2022/23. In SEPD, very hot and dry
conditions followed by very wet and windy weather over the summer
of 2023 significantly impacted network performance whilst not
qualifying as exceptional under IIS provisions. This has led to a
three-point decrease on CI and CML performance from the same period
last year. We are investing in automation across both our networks,
and work continues on a targeted change and investment programme to
improve performance in the SEPD licence area.
SSEN Distribution's Customer Satisfaction performance remains a
clear focus for the business, increasing to an average of 89%
compared to 88% at this point last year. While significantly
tougher targets will apply in the RIIO-ED2 period, our performance
trend compares favourably to the rest of the industry, where
customer satisfaction is improving at seven times the rate of the
industry average as a direct result of customer service
improvements across the business.
A programme to deliver ongoing efficiencies across the new price
control has commenced.
For financial performance commentary please refer to the Group
Financial Review.
Growth opportunities
SSEN Distribution's RIIO-ED2 Business Plan, which was co-created
with stakeholders, is a core component of SSE Group's NZAP+ plan.
In addition to the total base expenditure of GBP3.6bn, there are
further investment opportunities of up to GBP700m over the period
through Uncertainty Mechanisms and reopeners.
In the six months to 31 September 2023, SSEN Distribution has
already successfully triggered its first uncertainty mechanism with
Ofgem approving over GBP30m in additional funding for cyber
security following a submission in April 2023. A further submission
has been made in the October 2023 reopener window.
SSEN Distribution continues to work proactively with its
stakeholders and the regulator to prepare robust, evidence-based
submissions for a range of uncertainty mechanisms due to trigger in
the second half of the financial year.
Looking further ahead to load-related uncertainty mechanisms
which will open for submissions in January 2025, SSEN Distribution
is leading the way in taking a 'Net Zero First' approach to
investment in distribution infrastructure to meet future generation
and demand needs.
Leading on the delivery of the future system
SSEN Distribution is seeing a significant rise in the uptake of
low-carbon technologies across its licence areas, both at a demand
and generation level and, in many cases, beyond both national and
regional projections. For example, SSEN Distribution's current
pipeline of distributed generation projects, at 23.8 GW, is already
double the 10.9 GW that was forecast to come forward by 2030.
Demand connections are also rising, with a three-fold increase in
the number of electric vehicles connecting in the last two
years.
This increased growth in low carbon development is welcome and
SSEN Distribution is committed to ensuring its network acts as an
enabler to net zero goals. This includes playing a leading role in
collaborating with transmission companies, the Electricity System
Operator and other Distribution Network Operators to modernise the
connections system to facilitate more connection-ready projects and
reduce the impact of first-come, first served queuing. As an early
test case, the adoption of new thresholds and phased connections in
West London, allowed 80% of small demand connections to progress
behind wider transmission constraints.
SSEN Distribution's Net Zero First investment approach will
enable strategic investment to go ahead now to meet 2035 and
2045/2050 goals. In that context, SSEN Distribution also continues
to increase and develop its relationships with Local Authorities,
with advanced Local Area Energy Planning (LAEP) programmes under
way with 15 authorities. To extend this reach and further support
LAEP development, SSEN Distribution recently launched a free Local
Energy Net Zero Accelerator (LENZA) tool which links network and
spatial planning, allowing local authorities to road test solutions
against available capacity and SSEN to secure the robust evidence
for regulatory funding of future network investment.
On a practical level, SSEN Distribution is also increasing
tendering of flexibility services in areas where localised high
demand can be offset to extend overall network capacity. In the
first six months of 2023/24, SSEN contracted 259MW of flexibility
services for dispatch in ED2, and a global flexibility call
launched between now and March 2024 will drive further progress
towards target of 5GW by end of RIIO-ED2.
SSE Renewables
SSE Renewables Sep Sep 22
23
=================================================== ======= =====================
Renewables adjusted operating profit - GBPm 86.8 15.0
=================================================== ======= =====================
Renewables reported operating (loss) - GBPm (23.7) (36.8)
=================================================== ======= =====================
Renewables adjusted investment and capital
expenditure before acquisitions - GBPm 447.1 477.8
=================================================== ======= =====================
Generation capacity - MW
=================================================== ======= =====================
Onshore wind capacity (GB) - MW 1,285 1,285
=================================================== ======= =====================
Onshore wind capacity (NI) - MW 117 122
=================================================== ======= =====================
Onshore wind capacity (ROI) - MW 567 567
=================================================== ======= =====================
Total onshore wind capacity - MW 1,969 1,974
=================================================== ======= =====================
Offshore wind capacity (GB) - MW 1,014 487
=================================================== ======= =====================
Conventional hydro capacity (GB) - MW 1,159 1,159
=================================================== ======= =====================
Pumped storage capacity (GB) - MW 300 300
=================================================== ======= =====================
Total renewable generation capacity (inc.
pumped storage) - MW 4,442 3,920
=================================================== ======= =====================
Contracted capacity 3,015 2,792
=================================================== ======= =====================
Generation output - GWh
=================================================== ======= =====================
Onshore wind output (GB) - GWh 788 1,207
=================================================== ======= =====================
Onshore wind output (NI) - GWh 98 112
=================================================== ======= =====================
Onshore wind output (ROI) - GWh 532 509
=================================================== ======= =====================
Total onshore wind output - GWh 1,418 1,828
=================================================== ======= =====================
Offshore wind output (GB) - GWh 944 558
=================================================== ======= =====================
Conventional hydro output (GB) - GWh 884 1,020
=================================================== ======= =====================
Pumped storage output (GB) - GWh 144 113
=================================================== ======= =====================
Total renewable generation (inc. pumped storage)
- GWh 3,390 3,519
=================================================== ======= =====================
Total renewable generation (also inc. constrained
off in GB) - GWh 3,723 3,725
=================================================== ======= =====================
Note 1: Capacity and output based on 100% of wholly owned sites
and share of joint ventures
Note 2: Contracted capacity includes sites with a CfD, eligible
for ROCs, or contracted under REFIT
Note 3: Onshore wind output in GB excludes 272GWh of constrained
off generation in HY2023/24 and 134GWh in HY2022/23; Offshore wind
output in GB excludes 62GWh constrained off generation in HY2023/24
and 72GWh in HY2022/23
Note 4: Biomass capacity of 15MW and output of 37GWh in
HY2023/24 and 30GWh HY2022/23 is excluded, with the associated
operating profit or loss reported within SSE Enterprise
Note 5: Offshore capacity increased by 527MW with all turbines
having been installed at Seagreen offshore windfarm by the period
end and the windfarm fully operational on 17 October 2023
Note 6: Onshore NI reduced by 5MW in the period following the
sale of Bessy Bell I in July 2022
SSE Renewables overview
SSE Renewables develops and generates zero carbon electricity at
scale from wind farms and provides clean flexible power from its
hydro schemes. The business comprises existing operational assets
and those under development in onshore wind, offshore wind,
flexible hydro electricity, run-of-river hydro electricity, pumped
storage, as well as grid-scale solar and battery storage. The
business' operational offshore wind installed capacity is 1,014MW
with its onshore wind and hydroelectric installed capacity at
1,969MW and 1,459MW respectively.
Operational delivery
In the first six months of the financial year, operational
onshore and offshore wind fleet availability remained high whilst
the Hydro Operations teams managed an intensive period of summer
maintenance outages, the majority of which were delivered to plan.
The early summer saw prolonged low wind speeds, particularly in the
first quarter of the financial year, in addition to a delayed
commissioning profile at the now fully-operational Seagreen
project. This leaves onshore wind 14% behind and offshore wind 23%
behind planned volume levels for the six month period.
In hydro, production is around 22% below plan for the first six
months. This reflects a very dry summer with extreme droughts in
the far northwest of Scotland earlier in the period, partially
offset by well above average rain in September. These wet
conditions enabled an above average storage position at the period
end and continued into October, providing a strong start to hydro
production in the second half of the financial year.
Collectively, this leaves the business 19% below planned output
for the first six months, which equates to around 7% behind on the
full year planned level of output.
For financial performance commentary please refer to the Group
Financial Review.
delivering world-class assets
Seagreen 1 (1,075MW, SSE share 49%) formally entered into
commercial operations in October 2023 with all 114 Vestas V164-10.0
MW turbines now fully operational . Seagreen is now Scotland's
largest wind farm as well as the world's deepest fixed-bottom
offshore wind farm, with its deepest foundation installed at 58.7
metres below sea level.
All three phases of the world's largest offshore wind farm at
Dogger Bank (each 1,200MW, SSE share 40%) continue to progress.
First power was achieved at Dogger Bank A on 8 October 2023 with
power transmitted via Dogger Bank's HVDC transmission system,
making it the first project in the UK to use this technology which
ensures that losses are minimised in the efficient transmission of
electricity over long distances. This also represents the first
time that GE's Haliade-X 13MW turbine units have been energised
offshore anywhere in the world.
The Dogger Bank A foundation installation campaign continues.
All 95 monopiles have been installed and foundation transition
pieces have been installed in 56 of the locations. The inter-array
cable installation is also well underway with 34 cables installed
to date. SSE Renewables is leading the construction and build out
phase of the project together with Tier 1 suppliers, including GE
Vernova. The project is working towards its commercial operations
date for Dogger Bank A of the second half of 2024.
Onshore, construction is progressing well on Viking (443MW) in
Shetland with all turbines erected in August 2023, ahead of
schedule. Turbine commissioning is well underway, with the first
power made to a load bank in September. Viking is expected to be
fully operational by the second half of 2024.
SSE Renewables is also adding portfolio diversity through the
progression of its secured 1.2GW pipeline of near-term solar and
battery projects across the UK and Ireland. Battery storage is a
key part of the net zero jigsaw providing flexibility to the grid
and helping to manage peaks in energy demand.
All the battery units have been delivered to the 50MW Salisbury
site, which will be the first battery project in SSE's portfolio to
go operational when it comes online in early 2024. Construction
continues at the 150MW battery storage project at Ferrybridge, with
completion expected at the end of 2024.
Construction will begin in earnest at the 30MW solar project at
Littleton by the end of this year and it is also due to become
operational later in 2024.
In November, SSE Renewables took a final investment decision to
build one of the UK's largest battery storage sites - a 320MW
project at Monk Fryston in Yorkshire - with construction expected
to start in early 2024.
In hydro, SSE Renewables is making good progress with the Tummel
Bridge power station refurbishment project with the final
components for the second turbine delivered at the end of
September. Aqueduct works are also progressing well, remaining
aligned with the power station replant works and completion of the
project is expected in early 2024.
In Ireland, construction is progressing on Lenalea onshore wind
farm (30MW, SSE share 50%) and, having reached full power on 31
October 2023, it is scheduled to be fully operational towards the
end of November.
Construction is ongoing at Yellow River (101MW) and is on track
to be completed by Summer 2024 with commissioning expected in early
2025. Yellow River secured a CfD under RESS 3 for all of the site's
planned installed capacity. The contract is due to commence shortly
after commissioning.
SSE's first onshore wind project in France, the c. 28MW
Chaintrix project, is now in construction. The project, which is
also the first to be constructed from the Southern Europe
development portfolio acquired in 2022, will see the installation
of eight Siemens Gamesa SG 3.4-132 turbines and is targeting
commissioning at the end of 2024.
Growth opportunities - DOMESTIC
SSE Renewables' core markets of the UK and Ireland continue to
offer considerable growth opportunities for the Group.
In September 2023, SSE Renewables was the biggest winner in the
UK Government's fifth Contracts for Difference (CfD) Allocation
Round. Strathy South, Aberarder, and Bhlaraidh Extension onshore
wind farm projects in the Scottish Highlands, and the Viking Wind
Farm project, currently under construction, secured CfDs for a
total of 605MW at a guaranteed strike price of GBP52.29/MWh, based
on 2012 prices but annually indexed for CPI inflation. The
Aberarder, Bhlaraidh Extension, and Strathy South projects are each
at late-stage of development, having previously been granted
planning consents by the Scottish Government, and will be targeting
final investment decisions in 2024. As previously announced, SSE
Renewables did not enter Seagreen 1A offshore wind farm into the
auction. It will continue to seek a route to market to progress
this project.
Located in the North Sea, in the outer Firth of Forth, Berwick
Bank Wind Farm has the potential to deliver 4.1GW of installed
capacity, making it one of the largest offshore opportunities in
the world. The project is currently awaiting consent for the
offshore array from the Scottish Government which is expected in
2024. The first grid connection date is scheduled for 2027 and,
subject to taking a final investment decision, the full project
could be complete in time to contribute to our 2032 NZAP+
ambitions.
SSE Renewables is actively developing a fourth phase of Dogger
Bank wind farm, Dogger Bank D (up to 2GW, SSE share 50%). The
project is considering different opportunities to utilise the
energy that would be produced: Dogger Bank D could provide
electricity for homes and businesses by linking to the transmission
system, either via a connection into the UK national grid or a
connection offshore to a wider coordinated network to Europe; or
producing green hydrogen. The project's progression remains subject
to agreement with The Crown Estate which in early November set out
its intention to establish an assessment process to unlock
additional capacity in the UK offshore wind portfolio in an
efficient way, with the aim of seeking a determination of
additional capacity within 12 months, subject to regulated planning
processes.
Exploratory tunnelling at Coire Glas pumped hydro storage
project (c. 1,300MW) is over halfway complete, with the tunnel now
measuring over 500m deep. SSE Renewables awaits the expected
announcement from the UK Government regarding a revenue
stabilisation mechanism for long duration electricity storage which
could enable Coire Glas to play a significant role in the UK
Government's 2035 target for a decarbonised power system.
In Ireland, the business remains committed to delivering Arklow
Bank Wind Park 2 (up to 800MW), despite being unsuccessful in
Ireland's first Offshore Renewable Energy Support Scheme (ORESS)
auction in May 2023. It will proceed to submit a planning
application in early 2024 to Ireland's planning board, An Bord
Pleanála, and will continue to demonstrate discipline whilst it
considers alternative routes to market.
The Irish Government has confirmed a target of 5GW of offshore
wind by 2030, 20GW by 2040 and 32GW by 2050. The next Offshore
auction (ORESS 2.1) is expected to take place in the in the second
half 2024 in line with 'plan-led' designated zones identified by
the Government. A third auction (ORESS 2.2) is likely to take place
following the conclusion of ORESS 2.1.
Growth opportunities - international
Europe
SSE Renewables is progressing its Southern Europe development
portfolio with over 150MW of projects aiming for a final investment
decision in the next twelve months.
SSE Renewables sees solar photovoltaics ('solar PV') as a
complementary technology to sit alongside wind in its European
markets' portfolio with significant growth potential over the
coming decades. In addition to the co-located and standalone solar
PV opportunities being developed by the Southern Europe team, SSE
Renewables has acquired circa 500MW of early-stage solar PV
projects in Poland to be progressed under a Developer Services
Agreement with local developer, Optisol. Poland has ambitious
renewables targets required to deliver deeper decarbonisation of
its economy.
SSE Renewables also remains focused on selective offshore wind
opportunities in Northern Europe. In the Netherlands, it continues
to work on the upcoming Ijmuiden Ver zone tenders (2 x 2GW), with
bids now expected in Q1 2024. The group will continue to assess its
potential participation in a number of upcoming offshore leasing
rounds across selected markets in Northern Europe, where it
believes those opportunities offer attractive returns.
Asia-Pacific
SSE Renewables is continuing to pursue offshore wind
opportunities in Japan through its joint venture SSE Pacifico (80%
stake). The Japanese Government has announced future promising
zones which is a step towards designation for future auction
rounds. The government also continues to develop its plans related
to potential future floating wind projects in its Exclusive
Economic Zone (beyond 12 nautical miles from shore).
Project Location Technology Capacity (MW) SSE Share
(MW)
----------------------- ----------- ----------------- -------------- ----------
In construction
======================= =========== ================= ============== ==========
Dogger Bank
A GB Offshore wind 1,200 480
======================= =========== ================= ============== ==========
Dogger Bank
B GB Offshore wind 1,200 480
======================= =========== ================= ============== ==========
Dogger Bank
C GB Offshore wind 1,200 480
======================= =========== ================= ============== ==========
Viking GB Onshore wind 443 443
======================= =========== ================= ============== ==========
Yellow River Ireland Onshore wind 101 101
======================= =========== ================= ============== ==========
Lenalea Ireland Onshore wind 30 15
======================= =========== ================= ============== ==========
Chaintrix France Onshore wind 28 28
======================= =========== ================= ============== ==========
Littleton GB Solar 30 30
======================= =========== ================= ============== ==========
Salisbury GB Battery 50 50
======================= =========== ================= ============== ==========
Ferrybridge GB Battery 150 150
======================= =========== ================= ============== ==========
Monk Fryston GB Battery 320 320
======================= =========== ================= ============== ==========
Total in construction 2.6GW
======================= =========== ================= ============== ==========
Late-stage
development
======================= =========== ================= ============== ==========
Seagreen 1A GB Offshore wind 500 245
======================= =========== ================= ============== ==========
Strathy South GB Onshore wind 208 208
======================= =========== ================= ============== ==========
Aberarder GB Onshore wind 50 50
======================= =========== ================= ============== ==========
Bhlaraidh Extension GB Onshore wind 99 99
======================= =========== ================= ============== ==========
Other GB &
Ireland GB & Ire. Onshore wind 117 87
======================= =========== ================= ============== ==========
Spanish projects Spain Onshore wind(1) 319 319
======================= =========== ================= ============== ==========
France, Italy
and Greece Various Onshore wind(1) 100 100
======================= =========== ================= ============== ==========
Coire Glas GB Pumped storage 1,300 1,300
======================= =========== ================= ============== ==========
ByPass GB Solar 50 50
======================= =========== ================= ============== ==========
Fiddler's Ferry GB Battery 150 150
======================= =========== ================= ============== ==========
Tawnaghmore GB Battery 100 100
======================= =========== ================= ============== ==========
Total late-stage 2.7GW
development
======================= =========== ================= ============== ==========
Early-stage
development
======================= =========== ================= ============== ==========
Berwick Bank GB Offshore wind 4,100 4,100
======================= =========== ================= ============== ==========
Ossian GB Offshore wind 3,600 1,440
======================= =========== ================= ============== ==========
Arklow Bank
2 Ireland Offshore wind 800 800
======================= =========== ================= ============== ==========
North Falls GB Offshore wind 504 252
======================= =========== ================= ============== ==========
Cloiche GB Onshore wind 125 125
======================= =========== ================= ============== ==========
Other GB &
Ireland GB & Ire. Onshore wind - 319
======================= =========== ================= ============== ==========
Spanish projects Spain Onshore wind(1) 636 636
======================= =========== ================= ============== ==========
France, Italy
and Greece Various Onshore wind(1) 1,247 1,247
======================= =========== ================= ============== ==========
Staythorpe GB Battery 350 350
======================= =========== ================= ============== ==========
Total early-stage 9.3GW
development
======================= =========== ================= ============== ==========
TOTAL SECURED 14.5GW
PIPELINE
======================= =========== ================= ============== ==========
Other Future
prospects
======================= =========== ================= ============== ==========
Dogger Bank
D(2) GB Offshore wind 2,000 1,000
======================= =========== ================= ============== ==========
Ireland Ireland Offshore wind 3,000 3,000
======================= =========== ================= ============== ==========
Japanese projects Japan Offshore wind 6,000 4,800
======================= =========== ================= ============== ==========
Other GB GB Onshore wind - 450
======================= =========== ================= ============== ==========
Other Ireland Ire Onshore wind - 200
======================= =========== ================= ============== ==========
Spanish projects Spain Onshore wind(1) 1,750 1,750
======================= =========== ================= ============== ==========
France, Italy
and Greece Various Onshore wind(1) 450 450
======================= =========== ================= ============== ==========
Other GB Hydro GB Hydro 75 75
======================= =========== ================= ============== ==========
Other GB Solar GB Solar 400 400
======================= =========== ================= ============== ==========
Poland Solar Poland Solar 500 500
======================= =========== ================= ============== ==========
Other Battery GB Battery 900 900
======================= =========== ================= ============== ==========
Total future >13GW
prospects
======================================================= ============== ==========
Notes: All capacities are subject to change as projects refined.
Table reflects ownership and development status as at May 2023.
Late-stage is consented in GB and grid or land security elsewhere,
early-stage has land rights in GB and some security over planning
or land elsewhere. Future prospects are named sites where
non-exclusive development activity is under way. Additional solar
and battery storage projects reflects Solar and Battery team now
forming part of SSE Renewables.
Note 1: Includes solar hybridisation. Note 2: Current grid
connection offer for 1,320MW (SSE share 660MW) with potential
capacity up to 2,000MW.
SSE Thermal
SSE Thermal key performance indicators
SSE Thermal Sep 23 Sep 22
====================================================== ======= =======
Thermal adjusted operating profit - GBPm 312.9 100.4
====================================================== ======= =======
Thermal reported operating profit - GBPm 234.6 342.7
====================================================== ======= =======
Thermal adjusted investment and capital expenditure,
before acquisitions - GBPm 38.2 89.2
====================================================== ======= =======
Generation capacity - MW
====================================================== ======= =======
Gas- and oil-fired generation capacity (GB)
- MW 5,538 4,645
====================================================== ======= =======
Gas- and oil-fired generation capacity (ROI)
- MW 672 1,292
====================================================== ======= =======
Total thermal generation capacity - MW 6,210 5,937
====================================================== ======= =======
Generation output - GWh
====================================================== ======= =======
Gas- and oil-fired output (GB) - GWh 6,099 8,715
====================================================== ======= =======
Gas- and oil-fired output (ROI) - GWh 921 443
====================================================== ======= =======
Total thermal generation - GWh 7,020 9,158
====================================================== ======= =======
Note 1: Capacity is wholly owned and share of joint ventures,
and reflects Transmission Entry Capacity
Note 2: Output is based on SSE 100% share of wholly owned sites
and 100% share of Marchwood PPAs due to the contractual
arrangement.
Note 3: Keadby 2 CCGT commissioned 15 March 2023 and is
reflected in September 2023 GB capacity, GB output in six months to
September 2022 excluding 651GWh of Keadby 2 pre-commissioning
output.
Note 4: ROI capacity in September 2023 reflects closure of the
Tarbert oil-fired station.
SSE Thermal overview
SSE Thermal owns and operates conventional flexible thermal
generation in GB and Ireland which provide much-needed system
flexibility. SSE Thermal is actively developing options to
progressively decarbonise its portfolio, most notably in carbon
capture and storage and hydrogen technologies, with sustainable
biofuels as a bridge to hydrogen.
Operational delivery
The Thermal fleet continues to use its inherent flexibility to
sell output to the market and contract ahead of delivery, capturing
value through forward spark spreads, while optimising in response
to market conditions. The first half of the year saw lower spark
spreads and volatility in GB than 2022/23, despite low wind
periods, as a result of increased interconnector imports. This,
combined with planned and unplanned outages across the summer, has
resulted in comparably lower output for the year to date.
Managing availability responsibly continues to be a key focus
for SSE Thermal. A programme of outages across the summer is an
important part of a robust asset management approach. This has
included planned outages at Keadby 1, Keadby 2 and Peterhead ahead
of the winter.
Keadby 2, which entered commercial operation in March 2023,
includes a first-of-a-kind turbine which means it is Europe's most
efficient CCGT, displacing older more carbon intensive plant on the
system. A planned outage is underway at Keadby 2, with all major
works having been completed and the asset entering the
recommissioning stage. Keadby 2's 15-year Capacity Market agreement
commenced in October 2023, with all milestones to secure this
agreement having been completed.
In Ireland, Great Island has seen increased output year-on-year,
demonstrating the ongoing need for dispatchable plant in that
constrained market. Following the announcement in March 2023 that
Tarbert oil-fired power station would close by the end of December
2023, in line with requirements under the Industrial Emissions
Directive, its final capacity contracts expired at the end of
September 2023.
To underline the importance of asset management for a flexible
fleet, in April 2023, SSE Thermal secured ISO 55001 certification
for Peterhead and its two gas storage facilities in the Humber.
This is an international asset management standard which underlines
the approach we take to ensure effective management of asset
availability across the lifecycle of our portfolio. Work is now
underway to secure the certification for the remaining operational
sites within the SSE Thermal portfolio, all of which already hold
ISO 45001 (health and safety) and ISO 14001 (environment)
certification.
For financial performance commentary please refer to the Group
Financial Review.
SSE Thermal Capacity Contract Awards
The following agreements have been awarded through competitive
auctions:
Station Asset type Station SSE share Capacity obligation
Capacity of contract
================= =============== ========== ============= ============================
Medway (GB) CCGT 735MW 100% To September 2027
================= =============== ========== ============= ============================
Keadby (GB) CCGT 755MW 100% To September 2027
================= =============== ========== ============= ============================
Keadby 2 (GB) CCGT 893MW 100% 16 years commencing October
2022
================= =============== ========== ============= ============================
Peterhead (GB) CCGT 1,180MW 100% To September 2027
================= =============== ========== ============= ============================
Seabank (GB) CCGT 1,234MW 50% To September 2027
================= =============== ========== ============= ============================
Marchwood (GB) CCGT 920MW 100% To September 2027
================= =============== ========== ============= ============================
Saltend (GB) CCGT 1,200MW 50% To September 2027
================= =============== ========== ============= ============================
Indian Queens OCGT 140MW 50% To September 2027
(GB)
================= =============== ========== ============= ============================
Slough Multifuel Energy from 50MW 50% 15 years commencing October
(GB) Waste 2024
================= =============== ========== ============= ============================
Burghfield (GB) OCGT 45MW 100% To September 2027
================= =============== ========== ============= ============================
Chickerell (GB) OCGT 45MW 100% To September 2027
================= =============== ========== ============= ============================
Great Island CCGT 464MW 100% To September 2028*
(Ire)
================= =============== ========== ============= ============================
Rhode (Ire) Gas/oil peaker 104MW 100% To September 2028*
================= =============== ========== ============= ============================
Tawnaghmore Gas/oil peaker 104MW 100% To September 2028*
(Ire)
================= =============== ========== ============= ============================
Tarbert (Ire) Biofuel 300MW 100% 10 years commencing October
2026
================= =============== ========== ============= ============================
Platin (Ire) Biofuel 150MW 100% 10 years commencing October
2026
================= =============== ========== ============= ============================
Capacity contracts are based on de-rating factors issued by the
delivery body for each contract year, therefore will not directly
match SSE's published station capacity which reflect Transmission
Entry Capacity.
Marchwood (SSE equity share 50%) tolling arrangement means SSE
receives 100% of economic benefit from capacity contract
Keadby 1 has capacity obligation in 2023/24, 2025/26 and 2026/27
but none in 2024/25.
Medway has capacity obligation in 2023/24and 2026/27 but none in
2024/25 and 2025/26.
Keadby 2 16 year obligation comprised of a T-1 and a 15 year
contract.
The Tarbert oil-fired station previously reported was closed in
September 2023.
*2027/28 Irish capacity contracts reflect provisional results
which are subject to approval.
CONSTRUCTION PROGRAMME
Construction activity continues on Slough Multifuel - a 50:50
Joint Venture with Copenhagen Infrastructure Partners - and remains
on track to complete in summer 2024.
At the request of the Irish authorities, construction activity
has commenced to deliver a Temporary Emergency Generation unit at
Tarbert. Following legislation and a site selection process
undertaken by EirGrid, approved by the Commission for the
Regulation of Utilities, the Tarbert site was selected to host
150MW of generation capacity, to run on distillate oil. It will
operate as an emergency plant with a maximum running time of 500
hours per annum. Under the Irish Government's emergency generation
legislation, this capacity is to cease operations as soon as the
temporary electricity emergency has been addressed, and no later
than March 2028. The unit would only be utilised when it is clear
that market-sourced generation will not be sufficient to meet
system needs.
Growth opportunities
Developing decarbonised alternatives to the existing CCGT fleet
will be vital to deliver SSE's goal to cut carbon intensity by 80%
by 2030 and achieve its science-based carbon reduction targets,
aligned with a 1.5 deg C global warming scenario.
In GB, SSE Thermal is developing projects that include carbon
capture and storage (CCS) and hydrogen; technologies that will be
critical to the transition to net zero, enabling enhanced
renewables deployment by balancing the system. CCS and hydrogen
remain at the heart of the UK Government's plans.
The UK Government has identified a need for up to 10GW of power
CCS capacity by 2035 to meet Carbon Budget Six requirements. To
facilitate the delivery of further CCS projects, Acorn in Scotland
and Viking in the Humber have been confirmed as Track 2 clusters
for the deployment of shared CCS infrastructure. Proposals have
also been shared with industry for additional emitter projects to
access the already identified Track 1 clusters in north-east and
north-west England. There are opportunities for Keadby 3 Carbon
Capture Power Station to access CO2 storage through either Track 1
or Track 2 clusters, and Peterhead Carbon Capture Power Station
remains well-placed to access CO2 storage through Acorn, with both
being developed jointly with Equinor and seeking to participate in
future allocation processes for a Dispatchable Power Agreement.
Next steps on cluster sequencing are expected later in 2023 and
FEED work is continuing for both projects.
In Ireland, SSE Thermal is advancing projects using sustainable
biofuel as a lower carbon alternative to fossil-fuels and as a
bridge to hydrogen. Since securing 10-year Capacity Market
agreements for two new low-carbon power stations to commence in
2026/27 delivery year, work is underway to secure planning consents
for Tarbert Next Generation Power Station and Platin Power
Station.
A planning application for the Tarbert project is expected to be
submitted later in 2023, with a planning application lodged with
Meath County Council in August 2023 for Platin Power Station.
The proposed low-carbon units at Tarbert in Co. Kerry and Platin
in Co. Meath would help to protect security of supply and provide
flexible backup to Ireland's growing renewables sector. The
proposed units will initially run on Hydrotreated Vegetable Oil
(HVO), which is produced by processing waste oils to create a
fossil-free alternative to diesel in accordance with EU
sustainability standards. This would provide a bridge to a hydrogen
future with both units having the potential to convert to the fuel.
As with Aldbrough Hydrogen Pathfinder in the UK, these projects
reflect the expected role peaking generation will play in the
system.
Recognising the centrality of low carbon hydrogen to the SSE
Thermal strategy, a hydrogen centre of excellence has been
established within SSE Thermal to consolidate expertise and provide
a service to other SSE business units with an interest in hydrogen.
Aldbrough Hydrogen Pathfinder and Gordonbush Hydrogen have both
progressed to the next stage of the UK Government's Net Zero
Hydrogen Fund, which can provide capital and revenue support for
electrolytic, or green, hydrogen production projects. SSE is also
exploring other options to develop electrolytic hydrogen production
at its existing sites, including Ferrybridge and Peterhead, in
addition to assessing partnership options for alternative
production of hydrogen.
This sits alongside the UK Government's support for CCS-enabled,
or blue, hydrogen production projects through the development of
industrial clusters. Both green and blue hydrogen are expected to
play an important role in the development of a UK hydrogen economy,
including future hydrogen-fired power generation as set out in the
Climate Change Committee's report on delivering a reliable and
decarbonised power system.
SSE is continuing to develop options for hydrogen blending into
Keadby 2, with pre-FEED activity under way. Option assessment and
scoping activity for a further 100% hydrogen-fired CCGT at Keadby
also continues. The Triton Power portfolio, a joint venture with
Equinor, adds to this hydrogen pipeline, with plans to blend up to
30% low carbon hydrogen.
Gas Storage
Gas Storage Sep 23 Sep 22
======================================= ======= =======
Gas Storage adjusted operating (loss)
/ profit - GBPm (86.7) 147.8
======================================= ======= =======
Gas Storage reported operating (loss)
/ profit - GBPm (91.3) 544.8
======================================= ======= =======
Gas storage adjusted investment and
capital expenditure - GBPm 0.2 6.5
======================================= ======= =======
Gas storage level at period end - mTh 109 151
======================================= ======= =======
Gas storage level at period end - % 58 90
======================================= ======= =======
Gas Storage overview
SSE Thermal holds around 40% of the UK's conventional
underground gas storage capacity. These assets support stability
and security of gas supply and can potentially be converted to
hydrogen storage for a net zero future.
Operational delivery
SSE Gas Storage 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 to the Group's generation portfolio
by offering short-notice flexibility to mitigate exposures from
wind speeds and demand variability.
The patterns of operation, withdrawing gas when the system needs
and injecting gas when the market incentivises it, give rise to
seasonal variations in financial performance depending on the
market dynamics.
In Aldbrough, after successfully returning to service ahead of
winter 2022/23, Caverns 6 and 9 have continued to perform well,
providing valuable additional capacity and deliverability to the UK
system. And with the equivalent of two caverns being added over the
past three years at Atwick, work to optimise maximum and minimum
operation pressures also continues.
In April 2023 SSE Gas Storage secured ISO 55001 certification,
an international asset management standard, for Atwick and
Aldbrough facilities.
For financial performance commentary please refer to the Group
Financial Review.
GROWTH OPPORTUNITIES
Underlining the clear societal value these assets provide, the
UK Government's Powering Up Britain Energy Security Plan, published
in March, highlighted that gas storage had operated successfully
over the winter helping to meet demand caused by cold weather
spells. The UK Government will consider the future role that
storage can play in the longer term, considering the need to align
with future plans for hydrogen and CO2 storage with an update
expected from UK Government on this in due course. SSE Thermal
remains committed to working with UK Government departments and
Ofgem to ensure the critical role of UK storage is properly valued,
and low-carbon options can be delivered in tandem.
The UK Government has published its minded-to position on the
design of a business model to support investments in nationally
strategic assets such as Aldbrough Hydrogen Storage. The minded-to
position proposes a revenue floor to mitigate demand risk for
storage providers, with geological storage, such as salt caverns,
being the initial focus of support. The UK Government is aiming to
deliver Hydrogen Storage Business Model support by 2025.
Energy Customer Solutions
Energy customer solutions overview
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 during
the first six months of the financial year has been on supporting
customers, managing external market volatility, modernising systems
and expanding the green energy product offering to enable customers
to reduce their energy consumption.
SSE Business Energy
GB Business Energy key performance indicators
GB Business Energy Sep 23 Sep 22
======================================= ======= =======
Business Energy adjusted and reported
operating profit/(loss) - GBPm 88.0 (59.4)
======================================= ======= =======
Electricity Sold - GWh 5,203 5,806
======================================= ======= =======
Gas Sold - mtherms 60.8 65.2
======================================= ======= =======
Aged Debt (60 days past due) - GBPm 230.3 127.3
======================================= ======= =======
Bad debt expense - GBPm 59.1 47.4
======================================= ======= =======
Bad debt provision - GBPm
======================================= ======= =======
Energy customers' accounts - m 0.41 0.46
======================================= ======= =======
Operational delivery
In the first half, Business Energy continued to prioritise the
roll out of smart meters that give valuable consumption trends and
enables customers to better manage their overall demand. It also
saw increased demand for Corporate Power Purchase Agreements that
provide access to SSE's renewable resources.
As customers continued to deal with the cost-of-living crisis,
the business supported the roll out of government support schemes
providing alternate payment and contract options for customers. In
addition, it also announced a GBP15m customer support fund in
September 2023, targeting support towards approximately 20,000
customers on fixed long-term contracts who were worst affected by
peak market volatility. Under the support scheme, 8,000 businesses
with registered charitable status are expected to receive a GBP500
credit to their bills.
Business Energy also signed up to National Grid ESO's Demand
Flexibility Service (DFS) for Winter 23/24 on a trial basis. The
trial includes specific cohorts of SSE smart metered customers,
facilitating greater efficiency in the management of energy on the
grid.
SSE Airtricity
SSE Airtricity key performance indicators
SSE Airtricity Sep 23 Sep 22
====================================== ======= ====================
Airtricity adjusted operating profit
- GBPm 5.8 14.9
====================================== ======= ====================
Airtricity reported operating profit
- GBPm 5.3 14.8
====================================== ======= ====================
Aged Debt (60 days past due) - GBPm 19.8 9.7
====================================== ======= ====================
Bad debt expense - GBPm 5.4 1.8
====================================== ======= ====================
Airtricity Electricity Sold - GWh 3,110 2,693
====================================== ======= ====================
Airtricity Gas Sold - mtherms 67.0 68.8
====================================== ======= ====================
All Ireland energy market customers
(Ire) - m 0.74 0.73
====================================== ======= ====================
Operational delivery
The business delivered new products including launching its
premium microgen tariff, with joint venture partners Active8 solar
energies. This is a first-to-market innovation that directly links
solar installation to an exclusive export rate thereby
incentivising decarbonisation. The business also installed its
500(th) EV charger in Northern Ireland.
In keeping with its commitment to supporting customers through
the cost-of-living crisis SSE Airtricity announced tariff
reductions in September 2023 for domestic customers in the Republic
of Ireland, in addition to reductions for household electricity
customers in Northern Ireland. Its support fund continued to
benefit households including giving free home energy upgrades as
part of a programme that will eventually see 600 vulnerable
households, including those completed in partnership with Bryson
Charitable Group in Northern Ireland. The business was awarded Gold
and Silver at the All-Island Sustainability Awards for its
partnership with Dun-Laoghaire Rathdown County Council on the
Beaufort home energy upgrade project. The business is also
expanding its offering in business-to-business markets in both the
Republic of Ireland and NI markets, as well as delivering 45,000
home retrofits under the ROI national retrofit programme.
SSE Airtricity was also recognised with the Social
Responsibility Award at the annual Business & Finance ESG
awards; and was named 'Outstanding Company' at the GALAS, Ireland's
LGBTQ+ awards programme for commitment to LGBT Q+ initiatives.
For additional financial performance commentary please refer to
the Group Financial Review.
SSE enterprise
SSE enterprise key performance indicators
SSE ENTERPRISE Sep 23 Sep 22
========================================== ======= =======
SSE Enterprise adjusted and reported
operating (loss)/profit - GBPm (8.4) 0.6
========================================== ======= =======
SSE Heat Network Customer Accounts 11,493 11,799
========================================== ======= =======
Biomass, heat network and other capacity
- MW 26 26
========================================== ======= =======
Biomass, heat network and other output
- GWh 49 38
========================================== ======= =======
SSE enterprise overview
SSE Enterprise (formerly known as Distributed Energy) brings
low-carbon energy solutions to business-to-business markets -
including major regional and partnership opportunities. With
private wires, heat networks, behind-the-meter solar and battery,
EV charging and competitive networks all part of the UK's net zero
plans, it is well positioned for future growth.
Operational delivery
In addition to continuing to operate its heat networks and
deliver electric, water and steam at Slough Trading Estate, SSE
Enterprise initiated innovative behind-the-meter collaborations
with Medway Council and Sky Studios at Elstree, introducing
localised solutions to drive energy decarbonisation. These projects
involve the implementation of advanced energy management systems,
on-site renewable energy generation and energy storage solutions,
all aimed at reducing carbon emissions and enhancing energy
sustainability within these communities.
The business continued to advance its electric vehicle (EV)
charging hub infrastructure with new facilities opened in Gapton
Hall, Great Yarmouth, and Melksham, Wiltshire.
For financial performance commentary please refer to the Group
Financial Review.
Growth opportunities
The decarbonisation of large-scale energy users such as ports
and airports, as well as providing smart grid solutions to
potential gigafactories offers a significant long-term growth
opportunity for SSE Enterprise. Similarly, the decarbonisation of
transport, and particularly, the strong demand for electric vehicle
infrastructure will also underpin the build-out of its EV charging
hubs with construction underway in Lough Sheever, in the Republic
of Ireland, and Myrekirk and Kingsway in Dundee, Scotland.
The business is also pursuing opportunities to help regional
authorities decarbonise and has signed a strategic partnership with
the West Midlands Combined Authority. This will focus on executing
green energy projects in the region, including the establishment of
HGV EV refuelling hubs.
In heat networks, the business continues to prioritise deep
geothermal, data centre, transformer, and 'Energy from Waste' heat
sources and has secured government funding to help advance these
efforts.
SSE Energy Markets
SSE ENERGY MARKETS key performance indicators
SSE ENERGY MARKETS Sep 23 Sep 22
======================================= ======= ==========
SSE Energy Markets adjusted operating
profit - GBPm 9.0 30.3
======================================= ======= ==========
SSE Energy Markets reported operating
profit/(loss) - GBPm 88.9 (1,958.0)
======================================= ======= ==========
SSE Energy Markets overview
Formerly known as Energy Portfolio Management, or EPM, Energy
Markets trades commodities for SSE's market-based Business Units,
securing value on behalf of SSE's asset portfolios in wholesale
energy markets and managing volatility through risk managed trading
of energy-related commodities for SSE's market-based Business
Units.
SSE trades the principal commodities to which its 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.
See also SSE's Hedging Position earlier in this document.
Operational Delivery
Energy Markets continues to navigate energy market volatility,
with a focus on short term trading decisions, on behalf of
market-based business units.
As such, the value Energy Markets secured for SSE's asset
portfolio continues to be reported against individual Business
Units.
Over the last two years, Energy Markets has worked to establish
a centre of excellence for electricity market related trading
decisions. With the successful implementation of this approach,
Energy Markets will be able to optimise the group's assets as one
across all trading periods.
For financial performance commentary please refer to the Group
Financial Review.
Growth Opportunities
Alongside focusing on core delivery and developments in market
modelling, assurance, data governance and analytics, European
trading volumes continue to increase during the period.
Additionally, in advance of SSE Renewables' first battery storage
project coming online in 2024, a process has been developed to
optimise batteries using Energy Markets' growing advanced data
analytics function, adding further asset optimisation capability to
the business.
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.
-- Debt measures allow management to record and monitor both
operating cash generation and the Group's ongoing financing and
liquidity position.
The following section explains the key APMs applied by the Group
and referred to in these statements:
Profit measures
Closest
equivalent Adjustments to reconcile to primary
Group APM Purpose IFRS measure financial statements
Adjusted Profit Operating
EBITDA (earnings measure profit * Movement on operating and joint venture operating
before interest, derivatives ('certain re-measurements')
tax, depreciation
and amortisation)
* 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 Profit Operating
Operating measure profit * Movement on operating and joint venture operating
Profit 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 Profit before
Profit Before measure tax * Movement on operating and financing derivatives
Tax ('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 Profit Net finance
Net Finance measure costs * Exceptional items
Costs
* 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 Profit Tax charge
Current measure * Share of joint ventures and associates' tax
Tax Charge
* 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 Profit Earnings
Earnings measure per share * Exceptional items
Per Share
* 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 (formerly Energy Portfolio Management ('EPM')) 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 GB Business Energy and Airtricity
operating units, or to optimise the value of the production from
its 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
accounting fair value uplift to the opening assets acquired. 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 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 year
from its adjusted EBITDA metric as it principally relates to
customer contributions against depreciating assets. As the metric
adds back depreciation, the income 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 under IFRS. The most significant of those is SSEN
Transmission, a 25% stake in which was divested on 30 November 2022
(see note 11 for more details of that transaction). In the current
period ended 30 September 2023 and the year ended 31 March 2023 the
Group has removed the share of profit attributable to holders of
non-controlling equity stakes in such businesses from the point
when the ownership structure changed (i.e. for SSEN Transmission,
with effect from 1 December 2022) from all of its profit measures,
to report all metrics based on the 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. There is no impact to
disclosures for 30 September 2022.
30 September 2023
Share
Adjustments Joint Interest of profits
to Gas venture on attributable
Continuing Movement Production Depreciation interest net to
operations on Exceptional decommissioning on FV and pension Deferred non-controlling
(GBPm) Reported derivatives items provision uplifts tax asset tax interests Adjusted
---------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Operating
profit/(loss) 602.3 (14.9) 113.7 (3.5) 9.4 57.4 - - (71.2) 693.2
Net finance
(costs)/income (29.0) (41.0) (0.2) - - (47.8) (12.8) - 2.8 (128.0)
---------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Profit/(loss)
before
taxation 573.3 (55.9) 113.5 (3.5) 9.4 9.6 (12.8) - (68.4) 565.2
---------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Taxation (140.0) 12.6 (3.2) - - (9.6) - 47.4 4.4 (88.4)
---------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Profit/(loss)
after taxation 433.3 (43.3) 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/(loss)
attributable
to ordinary
shareholders 309.0 (43.3) 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 28.3 37.0
---------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Adjusted EBITDA
30 September 2023
Share of
depreciation,
impairment
and amortisation
before
exceptional
Adjusted Share of joint Depreciation, items
operating venture and impairment attributable
profit associates' Release of and amortisation to
from continuing depreciation deferred Depreciation before exceptional non-controlling Adjusted
operations and amortisation income on FV uplifts charges interests EBITDA
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
693.2 104.3 (6.4) (9.4) 343.6 (15.7) 1,109.6
------------------ ----------------- ---------------------------- ------------------ ----------------------------------- ------------------ -----------
30 September 2022
Adjustments Joint Interest
to Gas venture on
Continuing Movement Production Depreciation interest net
operations on Exceptional decommissioning on FV and pension Deferred
(GBPm) Reported derivatives items provision uplifts tax asset tax Adjusted
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
Operating
(loss)/profit (635.1) 1,792.4 (448.7) (54.5) 9.4 52.5 - - 716.0
Net finance
income/(costs) 124.1 (243.7) - - - (29.1) (7.9) - (156.6)
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
(Loss)/profit
before taxation (511.0) 1,548.7 (448.7) (54.5) 9.4 23.4 (7.9) - 559.4
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
Taxation 122.4 (275.4) 63.5 - - (23.4) - 42.6 (70.3)
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
(Loss)/profit
after taxation (388.6) 1,273.3 (385.2) (54.5) 9.4 - (7.9) 42.6 489.1
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
Attributable
to other
equity holders (38.8) - - - - - - - (38.8)
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
(Loss)/profit
attributable
to ordinary
shareholders (427.4) 1,273.3 (385.2) (54.5) 9.4 - (7.9) 42.6 450.3
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
Number of
shares for
EPS 1,077.2 1,077.2
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
(Losses)/earnings
per share (39.7) 41.8
-------------------- ------------- -------------- ------------ ------------------ --------------- --------- --------- ---------------- -----------
Adjusted EBITDA
30 September 2022
Depreciation,
Share of joint impairment and
Adjusted operating venture and associates' Release amortisation
profit from depreciation of deferred Depreciation before exceptional Adjusted
continuing operations and amortisation income on FV uplifts charges EBITDA
GBPm GBPm GBPm GBPm GBPm GBPm
716.0 76.1 (7.7) (9.4) 334.3 1,109.3
----------------------- ------------------------- ------------- --------------- -------------------- ---------
31 March 2023
Share
Adjustments Joint Interest of profits
to Gas venture on attributable
Continuing Movement Production Depreciation interest net to
operations on Exceptional decommissioning on FV and pension Deferred non-controlling
(GBPm) Reported derivatives items provision uplifts tax asset tax interests Adjusted
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Operating
(loss)/profit (146.3) 2,514.3 0.6 (50.5) 28.8 213.2 - - (30.9) 2,529.2
Net finance
costs (59.3) (201.9) (0.2) - - (70.1) (16.2) - 2.1 (345.6)
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
(Loss)/profit
before
taxation (205.6) 2,312.4 0.4 (50.5) 28.8 143.1 (16.2) - (28.8) 2,183.6
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Taxation 110.0 (460.5) 34.1 - - (143.1) - 99.6 1.1 (358.8)
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
(Loss)/profit
after
taxation (95.6) 1,851.9 34.5 (50.5) 28.8 - (16.2) 99.6 (27.7) 1,824.8
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Attributable
to other
equity
holders (62.4) - - - - - - (4.1) 27.7 (38.8)
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
(Loss)/profit
attributable
to ordinary
shareholders (158.0) 1,851.9 34.5 (50.5) 28.8 - (16.2) 95.5 - 1,786.0
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Number of
shares for
EPS 1,075.6 1,075.6
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
(Losses)/
earnings
Per Share (14.7) 166.0
--------------- --------- ------------ ------------ ---------------- ------------- --------- --------- --------- ---------------- ---------
Adjusted EBITDA
31 March 2023
Share of
depreciation,
impairment
and amortisation
before
Depreciation, exceptional
Adjusted Share of joint impairment items
operating venture and and amortisation attributable
profit associates' Release of before to
from continuing depreciation deferred Depreciation exceptional non-controlling Adjusted
operations and amortisation income on FV uplifts charges interests EBITDA
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
2,529.2 201.1 (13.9) (28.8) 704.2 (9.7) 3,382.1
----------------- ------------------ ----------- --------------- ------------------ ------------------ ---------
debt measure
Group APM Purpose Closest equivalent IFRS measure Adjustments to reconcile to primary financial statements
Adjusted Debt Unadjusted net debt
Net Debt measure * Hybrid equity
and Hybrid
Capital
* Cash 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 IFRS.
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 posted as collateral
Cash posted as collateral are SSE cash balances held by
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, 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
(see note 11 for more details of that transaction). 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 September
2023 2023 2022
GBPm GBPm GBPm
---------- ------------------------------------- ---------- ----------
(8,168.1) Unadjusted net debt (8,050.6) (9,076.4)
316.3 Cash posted as collateral 140.6 581.3
405.9 Lease obligations 394.4 388.9
External net debt attributable to
434.2 non-controlling interests 454.2 -
---------- ------------------------------------- ---------- ----------
(7,011.7) Adjusted Net Debt (7,061.4) (8,106.2)
(1,882.4) Hybrid equity (1,882.4) (1,882.4)
---------- ------------------------------------- ---------- ----------
(8,894.1) Adjusted Net Debt and Hybrid Capital (8,943.8) (9,988.6)
---------- ------------------------------------- ---------- ----------
capital measures
Closest
equivalent Adjustments to reconcile to primary
Group APM Purpose IFRS measure financial statements
Adjusted Capex Capital
Investment measure additions * Customer funded additions
and Capital to intangible
Expenditure assets and
property, * Allowances and certificates
plant and
equipment
* Additions acquired through business combinations
* Joint ventures and associates' additions funding
* Non-controlling share of capital expenditure
* Lease asset additions
--------- --------------- --------------------------------------------------------
Adjusted Capital Capital
Investment, measure additions * Customer funded additions
Capital to intangible
and Acquisition assets and
Expenditure property, * Allowances and certificates
plant and
equipment
* 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 represents additions to electricity
and other networks funded by customer contributions. Given these
are directly funded by customers, these 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. Please refer to note 11 for
detail of the Group's acquisitions in the prior year.
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
(see note 11 for more details of that transaction). 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 (i.e. for SSEN
Transmission, with effect from 1 December 2022) 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. This has no impact on the prior period
metrics for September 2022.
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.
March September September
2023 2023 2022
GBPm GBPm GBPm
-------- ---------------------------------------- ---------- ----------
Capital additions to intangible
1,688.6 assets 381.0 765.4
Capital additions to property,
1,500.1 plant and equipment 939.4 667.2
-------- ---------------------------------------- ---------- ----------
Capital additions to intangible
assets and property, plant and
3,188.7 equipment 1,320.4 1,432.6
-------- ---------------------------------------- ---------- ----------
(80.9) Customer funded additions (91.4) (54.0)
(805.2) Allowances and certificates (163.3) (122.4)
(515.2) Additions through business combinations - (488.7)
Joint ventures and associates'
498.4 additions 94.3 363.1
Non-controlled interests share
(46.7) of capital expenditure (80.8) -
(78.5) Lease asset additions (24.9) (27.4)
-------- ---------------------------------------- ---------- ----------
Adjusted Investment and Capital
2,160.6 Expenditure 1,054.3 1,103.2
-------- ---------------------------------------- ---------- ----------
642.7 Acquisition cash consideration - 640.0
Adjusted Investment, Capital
2,803.3 and Acquisition Expenditure 1,054.3 1,743.2
-------- ---------------------------------------- ---------- ----------
INTERIM FINANCIAL STATEMENTS
Consolidated Income Statement
for the period 1 April 2023 to 30 September 2023
2023 2022
Exceptional Exceptional
Before items Before items
exceptional and certain exceptional and certain
items re-measure-ments items re-measure-ments
and certain (note and certain (note
re-measure-ments 6) Total re-measure-ments 6) Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
Revenue 5 4,790.5 - 4,790.5 5,629.4 - 5,629.4
Cost of sales (3,295.3) (3.4) (3,298.7) (4,333.7) (1,792.4) (6,126.1)
----------------- ----------------- ---------- ----------------- ----------------- ----------
Gross
profit/(loss) 1,495.2 (3.4) 1,491.8 1,295.7 (1,792.4) (496.7)
Operating
(costs)/income (734.2) (113.7) (847.9) (614.9) 218.9 (396.0)
Debt impairment
charges (64.7) - (64.7) (49.6) - (49.6)
Other operating
income 16.3 - 16.3 3.2 89.1 92.3
Operating
profit/(loss)
before joint
ventures
and associates 712.6 (117.1) 595.5 634.4 (1,484.4) (850.0)
------------------- ----- ----------------- ----------------- ---------- ----------------- ----------------- ----------
Joint ventures and
associates:
Share of operating
profit 45.9 - 45.9 126.7 140.7 267.4
Share of interest (47.8) - (47.8) (29.1) - (29.1)
Share of movement
in derivatives - 18.3 18.3 - - -
Share of tax (5.0) (4.6) (9.6) (23.4) - (23.4)
------------------- ----- ----------------- ----------------- ---------- ----------------- ----------------- ----------
Share of profit on
joint
ventures and
associates (6.9) 13.7 6.8 74.2 140.7 214.9
----------------- ----------------- ---------- ----------------- ----------------- ----------
Operating
profit/(loss)
from continuing
operations 5 705.7 (103.4) 602.3 708.6 (1,343.7) (635.1)
Finance income 7 103.6 41.2 144.8 58.2 243.7 301.9
Finance costs 7 (173.8) - (173.8) (177.8) - (177.8)
----------------- ----------------- ---------- ----------------- ----------------- ----------
Profit/(loss)
before
taxation 635.5 (62.2) 573.3 589.0 (1,100.0) (511.0)
Taxation 8 (135.2) (4.8) (140.0) (89.5) 211.9 122.4
----------------- ----------------- ---------- ----------------- ----------------- ----------
Profit/(loss) for
the
period from
continuing
operations 500.3 (67.0) 433.3 499.5 (888.1) (388.6)
----------------- ----------------- ---------- ----------------- ----------------- ----------
Discontinued
operations
Profit from
discontinued
operations, net
of tax 6 - - - - 35.0 35.0
----------------- ----------------- ---------- ----------------- ----------------- ----------
Profit/(loss) for
the
period 500.3 (67.0) 433.3 499.5 (853.1) (353.6)
----------------- ----------------- ---------- ----------------- ----------------- ----------
Attributable to:
Ordinary
shareholders
of the parent 376.0 (67.0) 309.0 460.7 (853.1) (392.4)
Non-controlling
interests 51.2 - 51.2 - - -
Other equity
holders 73.1 - 73.1 38.8 - 38.8
----------------- ----------------- ---------- ----------------- ----------------- ----------
Earnings/(losses)
per
share
Basic (pence) 10 28.3 (36.4)
Diluted (pence) 10 28.3 (36.4)
----------------- ----------------- ---------- ----------------- ----------------- ----------
Earnings/(losses)
per
share - continuing
operations
Basic (pence) 10 28.3 (39.7)
Diluted (pence) 10 28.3 (39.7)
----------------- ----------------- ---------- ----------------- ----------------- ----------
The accompanying notes are an integral part of this interim
statement.
Consolidated Income Statement
for the year ended 31 March 2023
Exceptional
Before items
exceptional and certain
items re-measure-ments
and certain (note
re-measure-ments 6) Total
Note GBPm GBPm GBPm
Continuing operations
Revenue 5 12,490.7 - 12,490.7
Cost of sales (9,933.2) (2,717.2) (12,650.4)
------------------ ------------------ -----------
Gross profit/(loss) 2,557.5 (2,717.2) (159.7)
Operating costs (1,431.6) (230.4) (1,662.0)
Debt impairment charges (91.0) - (91.0)
Other operating income 1,015.0 89.1 1,104.1
------------------ ------------------ -----------
Operating profit/(loss) before joint
ventures and associates 2,049.9 (2,858.5) (808.6)
-------------------------------------------- ----- ------------------ ------------------ -----------
Joint ventures and associates:
Share of operating profit 531.9 140.7 672.6
Share of interest (70.1) - (70.1)
Share of movement in derivatives - 202.9 202.9
Share of tax (104.0) (39.1) (143.1)
----- ------------------ ------------------ -----------
Share of profit on joint ventures and
associates 357.8 304.5 662.3
------------------ ------------------ -----------
Operating profit/(loss) from continuing
operations 5 2,407.7 (2,554.0) (146.3)
Finance income 7 135.3 202.1 337.4
Finance costs 7 (396.7) - (396.7)
------------------ ------------------ -----------
Profit/(loss) before taxation 2,146.3 (2,351.9) (205.6)
Taxation 8 (355.5) 465.5 110.0
------------------ ------------------ -----------
Profit/(loss) for the year from continuing
operations 1,790.8 (1,886.4) (95.6)
------------------ ------------------ -----------
Discontinued operations
Profit from discontinued operations, net
of tax 6 - 35.0 35.0
------------------ ------------------ -----------
Profit/(loss) for the year 1,790.8 (1,851.4) (60.6)
------------------ ------------------ -----------
Attributable to:
Ordinary shareholders of the parent 1,728.4 (1,851.4) (123.0)
Non-controlling interests 23.6 - 23.6
Other equity holders 38.8 - 38.8
Losses per share
Basic (pence) 10 (11.4)
Diluted (pence) 10 (11.4)
------------------ ------------------ -----------
Losses per share - continuing operations
Basic (pence) 10 (14.7)
Diluted (pence) 10 (14.7)
------------------ ------------------ -----------
The accompanying notes are an integral part of this interim
statement.
Consolidated Statement of Comprehensive Income
for the period 1 April 2023 to 30 September 2023
Six
Year months Six months
ended ended ended
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
Profit/(loss) for the period
(95.6) Continuing operations 433.3 (388.6)
35.0 Discontinued operations - 35.0
---------- ------------------------------------------------- --------------- --------------
(60.6) 433.3 (353.6)
Other comprehensive income:
Items that will be reclassified subsequently
to profit or loss:
43.3 Net gains on cash flow hedges 41.3 147.9
Transferred to assets and liabilities on cash
(12.7) flow hedges 1.9 3.5
(8.1) Taxation on cash flow hedges (10.2) (33.5)
---------- ------------------------------------------------- --------------- --------------
22.5 33.0 117.9
342.4 Share of other comprehensive income of joint 84.4 508.2
ventures and associates, net of taxation
72.5 Exchange difference on translation of foreign (27.1) 72.5
operations
(43.1) Gain/(loss) on net investment hedge 7.4 (41.6)
---------- ------------------------------------------------- --------------- --------------
394.3 97.7 657.0
Items that will not be reclassified to profit
or loss:
(59.4) Actuarial (loss)/gain on retirement benefit (112.3) 33.3
schemes, net of taxation
(0.4) Losses on revaluation of investments in equity - -
instruments, net of taxation
(59.8) (112.3) 33.3
---------- ------------------------------------------------- --------------- --------------
334.5 Other comprehensive gain/(loss), net of taxation (14.6) 690.3
---------- ------------------------------------------------- --------------- --------------
273.9 Total comprehensive income for the period 418.7 336.7
---------- ------------------------------------------------- --------------- --------------
Total comprehensive income for the period arises
from:
238.9 Continuing operations 418.7 301.7
Discontinued operations
35.0 Profit from discontinued operations - 35.0
---------- ------------------------------------------------- --------------- --------------
35.0 Total comprehensive income from discontinued - 35.0
operations
---------- ------------------------------------------------- --------------- --------------
273.9 Total comprehensive income for the period 418.7 336.7
---------- ------------------------------------------------- --------------- --------------
Attributable to:
206.4 Ordinary shareholders of the parent 291.3 289.9
28.7 Non-controlling interest 54.3 8.0
38.8 Other equity holders 73.1 38.8
---------- ------------------------------------------------- --------------- --------------
273.9 418.7 336.7
---------- ------------------------------------------------- --------------- --------------
The accompanying notes are an integral part of this interim
statement.
Consolidated Balance Sheet
as at 30 September 2023
At
31 March At
30 September
2023 2022
At 30
September
(restated*) 2023 (restated*)
GBPm Note GBPm GBPm
Assets
15,395.9 Property, plant and equipment 15,986.8 15,049.8
1,960.3 Goodwill and other intangible assets 2,122.1 1,796.3
Equity investments in joint ventures
1,970.6 and associates 2,004.1 2,265.9
1,115.4 Loans to joint ventures and associates 1,196.8 886.0
27.4 Other investments 2.9 18.0
149.5 Other receivables 159.5 145.2
246.0 Derivative financial assets 15 132.4 1,124.7
541.1 Retirement benefit assets 16 411.0 648.5
-------------
21,406.2 Non-current assets 22,015.6 21,934.4
----------- --------------
454.9 Intangible assets 263.9 169.7
394.9 Inventories 246.0 501.4
3,245.1 Trade and other receivables 2,343.5 2,954.3
19.9 Current tax asset 75.1 38.3
891.8 Cash and cash equivalents 902.4 289.3
759.2 Derivative financial assets 15 262.6 2,677.2
5,765.8 Current assets 4,093.5 6,630.2
------------- ----------- --------------
27,172.0 Total assets 26,109.1 28,564.6
------------- ----------- --------------
Liabilities
1,820.6 Loans and other borrowings 12 1,394.9 1,399.7
2,658.6 Trade and other payables 2,545.5 2,943.7
9.1 Current tax liabilities - -
4.0 Financial guarantee liabilities 47.0 4.0
29.4 Provisions 21.8 29.3
243.3 Derivative financial liabilities 15 505.2 2,195.4
----------- --------------
4,765.0 Current liabilities 4,514.4 6,572.1
------------- ----------- --------------
7,239.3 Loans and other borrowings 12 7,558.1 7,966.0
1,300.2 Deferred tax liabilities 1,352.9 1,521.1
959.9 Trade and other payables 1,034.1 927.6
57.4 Financial guarantee liabilities 34.5 57.4
742.7 Provisions 701.9 751.1
1,021.0 Derivative financial liabilities 15 197.9 956.7
------------- ----------- --------------
11,320.5 Non-current liabilities 10,879.4 12,179.9
------------- ----------- --------------
16,085.5 Total liabilities 15,393.8 18,752.0
------------- ----------- --------------
11,086.5 Net assets 10,715.3 9,812.6
------------- ----------- --------------
Equity:
547.0 Share capital 14 547.9 545.6
821.2 Share premium 820.3 826.0
52.6 Capital redemption reserve 52.6 49.2
441.2 Hedge reserve 556.0 703.6
32.1 Translation reserve 11.9 29.5
6,660.9 Retained earnings 6,140.8 5,727.7
----------- --------------
Equity attributable to ordinary shareholders
8,555.0 of the parent 8,129.5 7,881.6
1,882.4 Hybrid equity 13 1,882.4 1,882.4
649.1 Attributable to non-controlling interests 703.4 48.6
------------- ----------- --------------
Total equity attributable to equity
11,086.5 holders of the parent 10,715.3 9,812.6
------------- ----------- --------------
*The comparative Consolidated Balance Sheet has been restated.
See note 3.1.
The accompanying notes are an integral part of this interim
statement.
Consolidated Statement of Changes in EQuity
for the period 1 April 2023 to 30 September 2023
Total
Total equity
Capital attributable before
Share Share redemption Hedge Translation Retained to ordinary Hybrid non-controlling Non-controlling Total
capital premium reserve reserve reserve earnings shareholders equity interest interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2023
(restated*) 547.0 821.2 52.6 441.2 32.1 6,660.9 8,555.0 1,882.4 10,437.4 649.1 11,086.5
Profit for
the period - - - - - 309.0 309.0 73.1 382.1 51.2 433.3
Other
comprehensive
income/(loss) - - - 114.8 (20.2) (112.3) (17.7) - (17.7) 3.1 (14.6)
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- --------
Total
comprehensive
income for
the period - - - 114.8 (20.2) 196.7 291.3 73.1 364.4 54.3 418.7
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 547.9 820.3 52.6 556.0 11.9 6,140.8 8,129.5 1,882.4 10,011.9 703.4 10,715.3
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- --------
*The comparative Consolidated Statement of Changes in Equity has
been restated. See note 3.1.
Total
Total equity
Capital attributable before
Share Share redemption Hedge Translation Retained to ordinary Hybrid non-controlling Non-controlling Total
capital premium reserve reserve reserve earnings shareholders equity interest interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2022 536.5 835.1 49.2 77.5 6.6 6,572.9 8,077.8 1,051.0 9,128.8 40.6 9,169.4
Impact of
adoption
of IFRS 17
(see note
3.1) - - - - - (28.9) (28.9) - (28.9) - (28.9)
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- -------
At 1 April
2022
(adjusted) 536.5 835.1 49.2 77.5 6.6 6,544.0 8,048.9 1,051.0 9,099.9 40.6 9,140.5
(Loss)/profit
for the
period - - - - - (392.4) (392.4) 38.8 (353.6) - (353.6)
Other
comprehensive
income - - - 626.1 22.9 33.3 682.3 - 682.3 8.0 690.3
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- -------
Total
comprehensive
income/(loss)
for the
period - - - 626.1 22.9 (359.1) 289.9 38.8 328.7 8.0 336.7
Dividends
to
shareholders - - - - - (642.6) (642.6) - (642.6) - (642.6)
Scrip dividend
related share
issue 9.1 (9.1) - - - 322.5 322.5 - 322.5 - 322.5
Issue of
treasury
shares - - - - - 0.5 0.5 - 0.5 - 0.5
Distributions
to Hybrid
equity
holders - - - - - - - (38.8) (38.8) - (38.8)
Issue of
hybrid equity - - - - - - - 831.4 831.4 - 831.4
Share buy
back - - - - - (125.0) (125.0) - (125.0) - (125.0)
Credit in
respect of
employee
share awards - - - - - 9.1 9.1 - 9.1 - 9.1
Investment
in own shares - - - - - (21.7) (21.7) - (21.7) - (21.7)
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- -------
At 30
September
2022
(restated*) 545.6 826.0 49.2 703.6 29.5 5,727.7 7,881.6 1,882.4 9,764.0 48.6 9,812.6
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- -------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2023
Total
Total equity
Capital attributable before
Share Share redemption Hedge Translation Retained to ordinary Hybrid non-controlling Non-controlling Total
capital premium reserve reserve reserve earnings shareholders equity interest interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2022 536.5 835.1 49.2 77.5 6.6 6,572.9 8,077.8 1,051.0 9,128.8 40.6 9,169.4
Impact of
adoption
of IFRS 17
(see note
3.1) - - - - - (28.9) (28.9) - (28.9) - (28.9)
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- --------
At 1 April
2022
(adjusted) 536.5 835.1 49.2 77.5 6.6 6,544.0 8,048.9 1,051.0 9,099.9 40.6 9,140.5
(Loss)/profit
for the year - - - - - (123.0) (123.0) 38.8 (84.2) 23.6 (60.6)
Other
comprehensive
income/(loss) - - - 363.7 25.5 (59.8) 329.4 - 329.4 5.1 334.5
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- --------
Total
comprehensive
income/(loss)
for the year - - - 363.7 25.5 (182.8) 206.4 38.8 245.2 28.7 273.9
Dividends
to
shareholders - - - - - (955.8) (955.8) - (955.8) - (955.8)
Scrip dividend
related share
issue 13.9 (13.9) - - - 481.5 481.5 - 481.5 - 481.5
Issue of
treasury
shares - - - - - 18.0 18.0 - 18.0 - 18.0
Distributions
to Hybrid
equity
holders - - - - - - - (38.8) (38.8) - (38.8)
Issue of
hybrid equity - - - - - - - 831.4 831.4 - 831.4
Share buy
back (3.4) - 3.4 - - (107.6) (107.6) - (107.6) - (107.6)
Partial
disposal
of interest
in SSEN
Transmission
transaction - - - - - 868.3 868.3 - 868.3 579.8 1,448.1
Credit in
respect of
employee
share awards - - - - - 18.7 18.7 - 18.7 - 18.7
Investment
in own shares - - - - - (23.4) (23.4) - (23.4) - (23.4)
At 31 March
2023
(restated*) 547.0 821.2 52.6 441.2 32.1 6,660.9 8,555.0 1,882.4 10,437.4 649.1 11,086.5
------- ------- ---------- ------- ----------- -------- ------------ ------- --------------- --------------- --------
Consolidated Cash Flow Statement
for the period 1 April 2023 to 30 September 2023
Year Six months Six months
ended ended 30 ended 30
31 March September September
2023 Note 2023 2022
GBPm GBPm GBPm
---------- -------------------------------------------- ----- ----------- -----------
Operating profit/(loss) - continuing
(146.3) operations 5 602.3 (635.1)
Less share of profit of joint ventures
(662.3) and associates (6.8) (214.9)
---------- -------------------------------------------- ----- ----------- -----------
Operating profit/(loss) before jointly
(808.6) controlled entities and associates 595.5 (850.0)
Pension service charges, less contributions
(19.2) paid (6.9) (11.3)
2,691.6 Movement on operating derivatives 12.5 1,969.0
Depreciation, amortisation, write downs
640.7 and impairments 343.6 115.3
329.3 Impairment of joint venture investment 6 63.2 -
Charge in respect of employee share awards 10.8 9.1
18.7 (before tax)
(89.1) Profit on disposal of assets and businesses - (89.1)
(114.9) Release of provisions (8.5) (57.1)
(13.9) Release of deferred income 5 (6.4) (7.7)
---------- -------------------------------------------- ----- ----------- -----------
Cash generated from operations before
2,634.6 working capital movements 1,003.8 1,078.2
---------- -------------------------------------------- ----- ----------- -----------
(137.3) (Increase)/decrease in inventories 141.2 (36.5)
(996.0) (Increase)/decrease in receivables 932.9 (713.2)
166.7 Increase in payables 36.6 257.8
(15.3) Decrease in provisions (16.8) (41.1)
---------- -------------------------------------------- ----- ----------- -----------
1,652.7 Cash generated from operations 2,097.7 545.2
---------- -------------------------------------------- ----- ----------- -----------
296.5 Dividends received from investments 112.2 144.1
(199.9) Interest paid (54.6) (103.1)
(255.3) Taxes paid (126.3) (74.9)
---------- -------------------------------------------- ----- ----------- -----------
1,494.0 Net cash from operating activities 2,029.0 511.3
---------- -------------------------------------------- ----- ----------- -----------
(1,479.7) Purchase of property, plant and equipment 5 (848.0) (620.2)
(336.4) Purchase of other intangible assets 5 (228.6) (119.7)
13.9 Deferred income received 18.8 8.5
60.0 Proceeds from disposals 6 - 60.0
Purchase of businesses, joint ventures
(642.7) and subsidiaries 11 - (640.0)
Loans and equity provided to joint ventures (133.1) (436.1)
(621.8) and associates
61.4 Loans and equity repaid by joint ventures 6.7 6.4
(19.1) Increase in other investments - (9.3)
----------
(2,964.4) Net cash from investing activities (1,184.2) (1,750.4)
---------- -------------------------------------------- ----- ----------- -----------
18.0 Proceeds from issue of share capital 14 0.4 0.5
Dividends paid to the company's equity
(474.3) holders 9 (708.3) (320.1)
(107.6) Share buy backs 14 - -
1,448.1 Proceeds from divestments - -
(38.8) Hybrid equity dividend payments 13 (73.1) (38.8)
(23.4) Employee share awards share purchase 14 (19.7) (21.7)
831.4 Issue of hybrid equity instruments 13 - 831.4
1,914.7 New borrowings 1,751.0 2,068.6
(2,242.5) Repayment of borrowings (1,786.4) (2,044.3)
(12.7) Settlement of cashflow hedges 1.9 3.5
1,312.9 Net cash from financing activities (834.2) 479.1
---------- -------------------------------------------- ----- ----------- -----------
(157.5) Net increase/(decrease) in cash and cash 10.6 (760.0)
equivalents
---------- -------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at the start
1,049.3 of period 891.8 1,049.3
Net increase/(decrease) in cash and cash 10.6 (760.0)
(157.5) equivalents
Cash and cash equivalents at the end
891.8 of period 902.4 289.3
---------- -------------------------------------------- ----- ----------- -----------
The Consolidated cash flow statement for 30 September 2022 has
been restated to remove from discontinued operating income GBP35.0m
in relation to Gas Production, which had no cash impact and was
non-operating income.
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 2023, 31 March 2023 or
30 September 2022 within the meaning of Section 435 of the
Companies Act 2006. Statutory accounts for the year ended 31 March
2023, 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 2024 will be prepared 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 at
the end of this document.
These interim statements were authorised by the Board on 14
November 2023.
2. Basis of preparation
These condensed Interim Financial Statements for the period to
30 September 2023 and the comparative information for the period to
30 September 2022 have been prepared applying the accounting
policies used in the Group's consolidated financial statements for
the year ended 31 March 2023, with the exception of the adoption of
IFRS 17 'Insurance Contracts' ("IFRS 17") and the amendment to IAS
12 'Deferred Tax relating to Assets and Liabilities arising from a
Single Transaction' ("IAS 12"), as explained at note 3.1.
(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.
(ii) Going concern
The Directors consider that the Group has adequate resources to
continue in operational existence for the period to 31 December
2024. The 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 12) 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 2024.
The Group has an established EUR1.5bn Euro commercial paper
programme (paper can be issued in a range of currencies and swapped
into Sterling) and as at 30 September 2023 there was GBP903m
commercial paper outstanding (31 March 2023: GBP919m). In the six
months ended 30 September 2023, the Group has issued new debt
instruments totalling GBP650m and has redeemed GBP204m of maturing
debt in the period. The Group also continues to have access to its
GBP3.5bn of revolving credit facilities. As at 30 September 2023
there were GBP220m of drawings against these committed facilities
being less than 6% utilisation. The details of the five committed
facilities at 30 September 2023 are:
-- a GBP1.3bn revolving credit facility for SSE plc maturing March 2026;
-- a GBP0.2bn bilateral facility for SSE plc maturing October 2026;
-- a GBP0.75bn facility for Scottish Hydro Electric Transmission plc maturing November 2026;
-- a GBP0.25bn facility for Scottish Hydro Electric Power
Distribution plc and Southern Electric Power Distribution plc
maturing November 2026; and
-- a GBP1.0bn committed facility for SSE plc maturing February 2024.
The GBP1.3bn revolving credit facility and GBP0.2bn bilateral
facility are 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, both of which
have 1 year extension options at the borrower's discretion, were
entered into to help cover the capital expenditure and working
capital of those businesses. The GBP1bn committed facility at SSE
plc has a 1 year extension option at the lender's discretion and
was entered into to provide cover for potential cash collateral
requirements, if periods of extreme volatility return to the
commodity markets. The only facility that was drawn at 30 September
2023 was the GBP750m Transmission facility, with GBP220m drawn to
cover capital expenditure requirements.
(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.
Market conditions that have deteriorated or improved
significantly over time will only be captured to the extent
observable at the balance sheet date. Examples of items that may be
considered exceptional include material asset or business
impairment charges, reversals of historic impairments, business
restructuring costs and reorganisation costs, significant realised
gains or losses on disposal, unrealised fair value adjustments on
part disposal of a subsidiary or on acquisition of an investment
and provisions in relation to significant disputes and claims.
The Group operates a policy framework for estimating whether
items are considered to be exceptional. This framework, which is
reviewed annually, estimates the materiality of each broad set of
potentially exceptional circumstances, after consideration of
strategic impact and likelihood of recurrence, by reference to the
Group's key performance measure of Adjusted Earnings Per Share.
This framework estimates that any qualifying item greater than
GBP40.0m will be considered exceptional, with lower thresholds
applied to circumstances that are considered to have a greater
strategic impact and are less likely to recur. The only exception
to this threshold is for gains or losses on disposal, or divestment
of early stage SSE Renewables 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 15.
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 are
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 remeasurements.
(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 year comparatives at 31 March 2023 and 30 September
2022 have been restated following the adoption of IFRS 17 as
disclosed in the section below.
Segments
In accordance with the requirements of IFRS 8 'Operating
Segments' the Group has aligned its segmental disclosures with its
revised internal reporting following changes to the Group's
structure and operations. These segments are used internally by the
Group Executive Committee in order to assess operating performance
and to make decisions on how to allocate capital. Consequently, the
segmental results reported in the Group's operating segments have
been restated with effect from 1 April 2022. During the period to
30 September 2023, SSE Renewables assumed responsibility for the
development, delivery and operation of battery storage and solar
assets in Great Britain from SSE Enterprise (formerly Distributed
Energy), aligning that activity with its international operations.
In addition, the Building Energy Management Systems ('BEMS')
activity has been assumed by GB Business Energy. Accordingly, the
result from the Group's battery and solar business and BEMS will
now be reported within SSE Renewables and Energy Customers
Solutions respectively. Comparative segmental information in note 5
has been re-presented to reflect the change to these segments. The
impacts of the restatements are a decrease to the adjusted
operating profit of SSE Renewables (2022: GBP7.5m, March 2023:
GBP18.2m), a decrease to the adjusted operating profit of GB
Business Energy (2022: GBP1.1m, March 2023: GBP2.2m) and a decrease
to the adjusted operating loss of SSE Enterprise (2022: GBP8.6m,
March 2023: GBP20.4m). Additionally, adjusted capital expenditure
has been re-presented with an increase to SSE Renewables (2022:
GBP51.5m, March 2023: GBP74.0m), an increase to GB Business Energy
(2022: GBP0.2m, March 2023: GBP0.4m) and a decrease to SSE
Enterprise (2022: GBP51.7m, March 2023: GBP74.4m). Revenue has been
re-presented with an increase to GB Business Energy (2022:
GBP22.9m, March 2023: GBP46.0m) and a decrease to SSE Enterprise
(2022: GBP22.9m, March 2023: GBP46.0m). Finally, note that there
were two changes to the names of segments in the period: 1)
Distributed Energy was renamed SSE Enterprise and 2) EPMI was
renamed SSE Energy Markets.
Investment presentation change
In the current period the classification of an investment of
GBP33.7m (2022: GBP14.8m, March 2023: GBP24.1m) has been reassessed
and reclassified from 'Other investments' to 'Equity investments in
joint ventures and associates'. The investment has been recognised
as an associate reflecting the Group's level of ownership and
influence over the investee; comparative amounts have not been
re-presented.
New accounting policies and reporting changes
Except for the adoption of IFRS 17 and the amendment to IAS 12,
the accounting policies applied in the preparation of these Interim
Financial Statements are consistent with those applied by the Group
in the preparation of the Financial Statements for the year ended
31 March 2023.
Set out below are revisions to accounting standards that have
become applicable in the period, or are issued but not yet
effective.
3.1 New standards, amendments and interpretations effective or adopted by the Group
On 1 April 2023, the Group adopted IFRS 17 'Insurance Contracts'
and the amendments to IAS 12 'Income Taxes' on a modified
retrospective basis from the earliest period presented in these
financial statements.
The Group provides guarantees in respect of certain activities
of former subsidiaries and to certain current joint venture
investments. Prior to adoption of IFRS 17, these contracts were
designated as insurance contracts under IFRS 4, where existing
accounting practices were grandfathered and the contracts were
treated as contingent liabilities until such time as it became
probable the Group would be required to make payment to settle the
obligation. The adoption of IFRS 17 from 1 April 2022 resulted in a
reassessment of these contracts and the Group elected to apply the
valuation principles of IFRS 9 to these contracts. Adoption
resulted in the recognition of financial guarantee liabilities of
GBP45.4m; a GBP17.6m increase in equity investments in joint
ventures and associates; a related deferred tax liability of
GBP1.1m; and a GBP28.9m adjustment to retained earnings. On 1
September 2022, the Group acquired a 50% joint venture in Triton
Power Holdings Limited and provided parent company guarantees to
Saltend Cogeneration Company Limited (acquired as part of the
Triton Power 50% equity accounted joint venture). In the
comparative 6 month period to 30 September 2022, the Group has
therefore recognised a further GBP16.0m increase to the Group's
financial guarantee liabilities to reflect this guarantee and a
GBP16.0m increase to the Group's equity investment in Triton.
During the 6 month period to 30 September 2023, the Group
recognised a net increase in financial guarantee liabilities of
GBP20.1m, a reduction in the value of its joint venture investments
of GBP14.1m and a settlement of GBP12.3m resulting in a net income
statement charge of GBP46.5m, of which a GBP50.5m expense has been
treated as an exceptional charge (see note 6 for further details)
in relation to the adoption of IFRS 17.
The adoption of the amendments to IAS 12 resulted in an increase
of GBP50.1m (2022: GBP22.8m, March 2023: GBP45.5m) to the Group's
gross deferred tax assets and gross deferred tax liabilities
recognised in relation to the Group's decommissioning obligations.
Adoption had no impact on retained earnings or profits recognised
in presented periods.
In the period, the Group also adopted the amendments to:
-- IAS 1 'Presentation of Financial Statements' and IFRS
Practice Statement 2 'Making Materiality Judgements' in relation to
disclosure of accounting policies;
-- IAS 8 'Accounting Policies, Changes in Accounting Estimates
and Errors' in relation to the definition of accounting estimates;
and
-- Pillar Two Model Rules (Amendments to IAS 12) as issued on 23
May 2023, was substantively enacted in the United Kingdom from 20
June 2023. The amendments to IAS 12 introduce a temporary mandatory
relief from accounting for deferred tax that arises from
legislation implementing OECD Pillar Two. SSE has applied the
exception to recognising and disclosing information about deferred
tax assets and liabilities related to Pillar Two income taxes.
Adoption of these amendments had no material impact on the
presentation of these Interim Financial Statements.
3.2 New standards, amendments and interpretations issued, but not yet adopted by the Group
A number of standards, amendments and interpretations have been
issued but not yet adopted by the Group within these Interim
Financial Statements, because application is not yet mandatory or
because adoption by the UK remains outstanding at the date the
financial statements were authorised for issue. These amendments
are not anticipated to have a material impact on the Group's
consolidated financial statements.
4. Accounting judgements and estimation uncertainty
In the process of applying the Group's accounting policies,
management is necessarily 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 2023, the Group has reviewed assets related to
thermal, gas storage and wind power generation for indicators of
impairment (or impairment reversal) arising since the last formal
review performed at 31 March 2023. The Group has also performed an
assessment of indicators of impairment over the carrying value of
its joint venture investments in Neos Networks Limited and Triton
Power Holdings Limited. The main assumptions in the Group's
impairment assessments performed at 31 March 2023 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, discount rates and other inputs.
In the period to 30 September 2023, observable prices for power
and gas have decreased, which is considered an indicator of
impairment necessitating the formal reassessment of the carrying
value of certain thermal assets and the Triton Power Holdings
Limited joint venture that have been impaired previously. The
conclusions from this impairment assessment are set out in note 6.1
(i). Wind generation assets in GB and Ireland, Southern Europe and
Japan have not been impaired previously and while the decline in
observable power prices is noted, no indicators of impairment were
identified in the review conducted; as a result, no formal detailed
reassessment was performed at 30 September 2023.
At 30 September 2023, the Group has reviewed its investment in
Neos Networks Limited for indicators of impairment (or impairment
reversal) arising since the last formal review performed at 31
March 2023. There were no indicators of impairment identified and
therefore no impairment assessment was performed.
The Group will reassess the assets for indicators of impairment,
or impairment reversal, at 31 March 2024.
(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 16
of these condensed Interim Financial Statements.
(iii) Revenue recognition - Customers unbilled supply of energy - estimation uncertainty
Revenue from energy supply activities undertaken by GB Business
Energy and 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 estimated customer consumption, taking account of various
factors including usage patterns, tariff changes, changes to the
proportion of customers on different contract types, levels of
unread meters, weather trends and externally notified aggregated
volumes supplied to customers from national settlement bodies.
During the period and the prior year both of the Group's Supply
businesses have administered government support backed customer
support schemes, where the Group provides discounts to customers
based on estimated usage and recovers amounts from the government
based on actual customer usage. The administration of these support
schemes has increased the complexity and level of estimation
uncertainty of the Group's unbilled calculations. The most material
support scheme administered by the Group in the year was the Energy
Bills Relief Scheme ("EBRS") within the GB Business Energy
Business. A change in the assumptions underpinning the calculation
would have an impact on the amount of revenue recognised in any
given period.
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 weather-adjusted
consumption patterns and aggregated metering data used in industry
reconciliation processes. Furthermore, actual meter readings and
billings continue to be compared to unbilled estimates between the
balance sheet date and the finalisation of the financial
statements. The estimation of the government receivable included
within the Group's unbilled revenue accrual is based on claimed and
unclaimed values based on the same customer consumption detail and
derived from consideration of tariffs applied to customers, metered
and estimated volumes and other factors. The EBRS claims submitted
by SSE will be audited by the UK government and are subject to
volumetric risk as estimated consumption data is replaced by actual
metered data over the 14 month electricity industry reconciliation
period. The value of outstanding EBRS claims recognised at 30
September 2023 was GBP13.4m (March 2023: GBP326.6m), which includes
a risk provision of GBP6.0m (March 2023: GBP15.1m) related to
amounts where the Group has provided the discount to the customer
but has assessed that it will be unable to recover the amount from
the government during the open claim window.
Given the non-routine process, the number and the extent of
differing inputs and the requirement of management to apply
judgement noted above, 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 GBP12.8m (March 2023: GBP19.4m). 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 2023 annual report.
(iv) Valuation of other receivables - financial judgement and estimation uncertainty
The Group holds a GBP100m loan note due from Ovo Energy 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 2023, the carrying value (net
of expected credit loss provision of GBP1.5m (March 2023: GBP1.5m))
is GBP159.5m (March 2023: GBP149.5m).
The Group has assessed recoverability of the loan note
receivable and has recognised a provision for expected credit loss
in accordance with the requirements of IFRS 9. Due to previous
energy supplier failures and recent market volatility, the Group's
assessment of the recoverability of the loan note is considered 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 Ovo Energy Limited, including the
31 December 2022 statutory financial statements; considering
available Government support schemes; and discussions with Ovo
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 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 Net Zero Acceleration Programme Plus ('NZAP
Plus'), to lead in the UK's transition to net zero and accordingly
aligns its investment plans and business activities to that
strategy. These plans are supported by the Group's Green Bond
framework under which the sixth green bond was issued in September
2023. The proceeds of the sixth green bond were allocated to fund
Renewables' wind 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 has 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 which is 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 2023,
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 the Saltend Power Station within the Triton
joint venture. 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 commenced commercial operation on 15
March 2023 and 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 2027 through blending up to 30%
of low-carbon hydrogen. Therefore, the Group considers that other
assets operating in the market would be more likely to close before
Keadby 2, Marchwood and Saltend and the plants will continue to be
required to balance the UK electricity market beyond 2030. As a
result, the useful economic life of the four assets have not been
shortened when preparing the 31 March 2023 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 2023 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 2023, 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 2023 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 discounted share of the Gas Production provision is
GBP201.5m (March 2023: GBP201.4m). At 30 September 2023, the impact
of discounting of this retained provision is GBP78.2m (March 2023:
GBP64.5m), which is expected to be incurred across the period to 31
March 2037. 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 2023 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 from those presented in the Group's 2023
Annual Report.
4.3 Other areas of estimation uncertainty
(i) Tax provisioning
In the condensed interim Financial Statements at 30 September
2023, the Group has no provision for uncertain tax positions
included in current tax liabilities (2022: GBP27.9m; March 2023:
GBPnil). The provision held by the Group at 30 September 2022
related to the Group's case concerning the availability of capital
allowances on Glendoe Hydro Electric Station. This case was heard
at the Supreme Court on 23 March 2023 and a final decision on the
case was released on 17 May 2023. This decision upheld SSE's
position in relation to the dispute and accordingly at 31 March
2023, the provision held was released as an adjusting post balance
sheet event and a related deferred tax liability of GBP23.4m in
relation to the associated capital allowances was recognised. The
Group has no other open tax positions against which a provision has
required to be recognised.
The Group applies IFRIC 23 'Uncertainty over Income Tax
Treatments' in respect of uncertain tax positions. Where management
makes a judgement that an outflow of funds is probable, and a
reliable estimate of the dispute can be made, provision is made for
the best estimate of the most likely liability.
In estimating any such liability, the Group applies a risk-based
approach, taking into account the specific circumstances of each
dispute based on management's interpretation of tax law and
supported, where appropriate, by discussion and analysis by
external tax advisors. These estimates are inherently judgmental
and could change substantially over time as disputes progress and
new facts emerge. Provisions are reviewed on an ongoing basis,
however, the resolution of tax issues can take a considerable
period of time to conclude and it is possible that amounts
ultimately paid will be different from the amounts provided.
(ii) 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 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 exploration and
production business where reassessment of gas and liquids reserves
and fluctuations in commodity prices can lengthen or shorten the
field life.
At 30 September 2023, the carrying value of decommissioning
provisions have decreased due to increases in discount rate and
minimal movement in inflation assumptions since 31 March 2023. With
the exception of the increase of GBP0.1m (March 2023: decrease
GBP48.1m) to the provision relating to Gas Production activities,
movements on which are recorded in the income statement, all
revaluation movements have been matched by an offsetting adjustment
to the associated asset.
5. Segmental information
The changes to the Group's segments in the period are explained
at note 2(v) and includes the realignment of the activities of the
Distributed Energy (now SSE Enterprise) business. Comparative
information has been re-presented to reflect the change to these
segments. The Group's 'Corporate unallocated' segment is the
Group's residual corporate central costs which cannot be allocated
to individual segments and includes the contribution from the
Group's Neos Networks joint venture.
The types of products and services from which each reportable
segment generates its revenue are:
Business Reported segments Description
area
--------------- ------------------- --------------------------------------------------
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. On 25 November 2022 the
Group sold a 25.0% non-controlling interest
in this business to the Ontario Teachers'
Pension Plan.
--------------- ------------------- --------------------------------------------------
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 and the development
of similar assets in Japan and Southern
Europe and the development of wind, solar
and battery opportunities. During the period,
Renewables has taken responsibility for
the development, delivery and operation
for battery storage and solar assets in
Great Britain from SSE Enterprise, aligning
that activity with its international operations.
--------------- ------------------- --------------------------------------------------
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 GB Business Energy The supply of electricity and gas to business
Customer customers in Great Britain and smart buildings
Solutions (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. As noted above, during the period,
the front of the meter battery storage and
solar assets activity in Great Britain was
transferred to SSE Renewables and smart
buildings (BEMS) activity was transferred
to GB Business Energy.
--------------- ------------------- --------------------------------------------------
SSE Energy SSE Energy Markets The provision of a route to market for the
Markets 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
2023.
5. (a) Revenue by segment
Six months ended 30 September
2022
Six months ended 30 September
2023 (restated*)
Reported Inter-segment Segment Reported Inter-segment Segment
revenue revenue revenue revenue revenue revenue
2023 2023 2023 2022 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
SSEN Transmission 441.1 - 441.1 325.4 - 325.4
SSEN Distribution 468.2 24.4 492.6 522.5 28.2 550.7
SSE Renewables 140.6 185.0 325.6 151.2 29.8 181.0
SSE Thermal 279.0 1,530.7 1,809.7 249.9 1,592.0 1,841.9
Gas Storage 4.6 1,302.3 1,306.9 5.2 1,760.0 1,765.2
Energy Customer
Solutions
GB Business Energy 1,544.5 21.0 1,565.5 1,487.9 32.4 1,520.3
SSE Airtricity 949.6 75.1 1,024.7 753.3 101.2 854.5
SSE Enterprise 38.3 10.1 48.4 38.0 8.9 46.9
SSE Energy Markets:
Gross trading 6,812.4 4,010.0 10,822.4 9,697.0 5,213.4 14,910.4
Optimisation trades(i) (5,916.2) (1,327.2) (7,243.4) (7,632.0) (1,028.0) (8,660.0)
--------------------------- ---------- -------------- ---------- ---------- -------------- ----------
Energy Markets 896.2 2,682.8 3,579.0 2,065.0 4,185.4 6,250.4
Corporate unallocated 28.4 119.0 147.4 31.0 74.1 105.1
---------- -------------- ---------- ---------- -------------- ----------
Total SSE Group 4,790.5 5,950.4 10,740.9 5,629.4 7,812.0 13,441.4
---------- -------------- ---------- ---------- -------------- ----------
Year ended 31 March 2023
(restated*)
Reported Inter-segment Segment
revenue revenue revenue
2023 2023 2023
GBPm GBPm GBPm
Continuing operations
SSEN Transmission 656.1 - 656.1
SSEN Distribution 1,102.7 81.0 1,183.7
SSE Renewables 334.8 602.7 937.5
SSE Thermal 740.4 3,863.8 4,604.2
Gas Storage 12.2 5,147.5 5,159.7
Energy Customer
Solutions
GB Business Energy 3,359.5 59.4 3,418.9
SSE Airtricity 1,776.9 233.1 2,010.0
SSE Enterprise 93.1 20.1 113.2
----------- -------------- ----------
SSE Energy Markets:
Gross trading 24,700.6 11,972.4 36,673.0
Optimisation trades(i) (20,351.8) (937.3) (21,289.1)
--------------------------------------------- -----------
SSE Energy Markets 4,348.8 11,035.1 15,383.9
Corporate unallocated 66.2 232.1 298.3
----------- -------------- ----------
Total SSE Group 12,490.7 21,274.8 33,765.5
*The comparative has been restated. See note 2(v).
(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 2023
Revenue from contracts with customers
Goods or services
Goods or services transferred at
transferred over time a point in time
Supply Total
of revenue
Use energy from
of and Construction Other contracts Other
electricity ancillary related contracted Physical Gas Other with contract
networks services services services energy storage revenue customers revenue Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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
GB 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)
Six months ended 30 September 2022 (restated*)
Revenue from contracts with customers
Goods or services
Goods or services transferred at
transferred over time a point in time
Supply Total
of revenue
Use energy from
of and Construction Other contracts Other
electricity ancillary related contracted Physical Gas Other with contract
networks services services services energy storage revenue customers revenue Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN
Transmission 316.3 - - 8.5 - - 0.6 325.4 - 325.4
SSEN
Distribution 502.0 - - 5.5 - - 7.6 515.1 7.4 522.5
SSE
Renewables - 24.6 - 39.8 77.3 - 9.5 151.2 - 151.2
SSE Thermal - 248.4 - - - - 1.5 249.9 - 249.9
Gas Storage - - - - - 5.2 - 5.2 - 5.2
Energy
Customer
Solutions
GB Business
Energy - 1,465.0 - - - - 22.9 1,487.9 - 1,487.9
SSE
Airtricity - 741.7 - 11.6 - - - 753.3 - 753.3
SSE
Enterprise 7.9 13.4 11.4 2.4 - - - 35.1 2.9 38.0
SSE Energy
Markets - - - - 1,879.5 - 185.5 2,065.0 - 2,065.0
Corporate
unallocated - - - - - - 31.0 31.0 - 31.0
Total SSE
Group 826.2 2,493.1 11.4 67.8 1,956.8 5.2 258.6 5,619.1 10.3 5,629.4
*The comparative has been restated. See note 2(v).
5. Segmental information (continued)
5. (a) Revenue by segment (continued)
Disaggregation of revenue (continued)
Year ended 31 March 2023 (restated*)
Revenue from contracts with customers
Goods or services
Goods or services transferred at
transferred over time a point in time
Supply Total
of revenue
Use energy from
of and Construction Other contracts Other
electricity ancillary related contracted Physical Gas Other with contract
networks services services services energy storage revenue customers revenue Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN
Transmission 634.0 - - 20.4 - - 1.7 656.1 - 656.1
SSEN
Distribution 1,054.0 - - 12.3 - - 17.9 1,084.2 18.5 1,102.7
SSE
Renewables - 49.7 - 87.5 184.3 - 13.3 334.8 - 334.8
SSE Thermal - 736.9 - - - - 3.5 740.4 - 740.4
Gas Storage - - - - - 12.2 - 12.2 - 12.2
Energy
Customer
Solutions
GB Business
Energy - 3,313.5 - - - - 46.0 3,359.5 - 3,359.5
SSE
Airtricity - 1,756.7 - - - - 20.2 1,776.9 - 1,776.9
SSE
Enterprise 16.4 29.5 14.4 - - - 27.0 87.3 5.8 93.1
SSE Energy
Markets - - - - 4,158.7 - 190.1 4,348.8 - 4,348.8
Corporate
unallocated - - - - - - 66.2 66.2 - 66.2
Total SSE
Group 1,704.4 5,886.3 14.4 120.2 4,343.0 12.2 385.9 12,466.4 24.3 12,490.7
*The comparative has been restated. See note 2(v).
5. Segmental information (continued)
5. (b) Operating profit/(loss) by segment
Six months ended 30 September 2023
Joint
Venture/
Adjusted Associate
operating share Adjustments Before
profit Depreciation of to Gas exceptional Exceptional
reported on fair interest Production items and items
to the value and decommissioning Non-controlling certain and certain
Board uplifts tax provision interests re-measurements re-measurements Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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 (51.5) (23.7)
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
GB 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 (14.7) - (1.6) - - (16.3) - (16.3)
Total SSE
Group 693.2 (9.4) (52.8) 3.5 71.2 705.7 (103.4) 602.3
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 charge 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 2022 (restated*)
Adjusted Joint
operating Venture/ Adjustments Before
profit Depreciation Associate to Gas exceptional Exceptional
reported on fair share Production items and items
to the value of interest decommissioning certain and certain
Board uplifts and tax provision re-measurements re-measurements Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN
Transmission 208.4 - - - 208.4 - 208.4
SSEN
Distribution 174.6 - - - 174.6 - 174.6
SSE Renewables 15.0 (9.4) (42.4) - (36.8) - (36.8)
SSE Thermal 100.4 - (5.3) - 95.1 247.6 342.7
Gas Storage 147.8 - - - 147.8 397.0 544.8
Energy Customer
Solutions
GB Business
Energy 59.4 - - - 59.4 - 59.4
SSE Airtricity 14.9 - (0.1) - 14.8 - 14.8
SSE Enterprise 0.6 - - - 0.6 - 0.6
SSE Energy
Markets 30.3 - - - 30.3 (1,988.3) (1,958.0)
Corporate
Corporate
unallocated (28.9) - - 54.5 25.6 - 25.6
Neos (6.5) - (4.7) - (11.2) - (11.2)
Total SSE Group 716.0 (9.4) (52.5) 54.5 708.6 (1,343.7) (635.1)
*The comparative has been restated. See note 2(v).
5. Segmental information (continued)
5. (b) Operating profit/(loss) by segment (continued)
Year ended 31 March 2023 (restated*)
Joint
Adjusted Venture/
operating Associate Adjustments Before
profit Depreciation share to Gas exceptional Exceptional
reported on fair of Production items items
to the value interest decommissioning Non-controlling and certain and certain
Board uplifts and tax provision interests re-measurements re-measurements Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN
Transmission 372.7 - - - 32.8 405.5 - 405.5
SSEN
Distribution 382.4 - - - - 382.4 - 382.4
SSE
Renewables 561.8 (18.8) (103.0) - (1.9) 438.1 (10.0) 428.1
SSE Thermal 1,031.9 (10.0) (60.4) - - 961.5 128.0 1,089.5
Gas Storage 212.5 - - - - 212.5 36.7 249.2
Energy
Customer
Solutions
GB Business
Energy 15.7 - - - - 15.7 - 15.7
SSE
Airtricity 5.6 - (0.4) - - 5.2 - 5.2
SSE
Enterprise (7.0) - - - - (7.0) (6.1) (13.1)
SSE Energy
Markets 80.4 - - - - 80.4 (2,706.4) (2,626.0)
Corporate
Corporate
unallocated (87.0) - - 50.5 - (36.5) 9.7 (26.8)
Neos (39.8) - (10.3) - - (50.1) (5.9) (56.0)
Total SSE
Group 2,529.2 (28.8) (174.1) 50.5 30.9 2,407.7 (2,554.0) (146.3)
*The comparative has been restated. See note 2(v).
5. Segmental information (continued)
5. (c) Capital expenditure by segment
(restated*) (restated*)
Capital Capital Capital Capital Capital Capital
additions additions additions additions additions additions
to intangible to property, to intangible to property, to intangible to property,
assets plant and assets plant and assets plant and
30 September equipment 30 September equipment 31 March equipment
2023 30 September 2022 30 September 2023 31 March
GBPm 2023 GBPm 2022 GBPm 2023
GBPm GBPm GBPm
Continuing
operations
SSEN Transmission - 324.8 - 270.9 7.2 536.6
SSEN Distribution 4.7 332.2 6.7 215.3 15.2 486.8
SSE Renewables 134.4 246.8 583.1 103.8 731.5 340.5
SSE Thermal 15.4 5.2 10.5 20.8 20.8 44.5
Gas Storage - 0.2 - 6.5 - 6.3
Energy Customer
Solutions
GB Business
Energy 27.8 - 22.2 0.2 38.9 0.4
SSE Airtricity 8.6 0.4 - 3.8 10.5 -
SSE Enterprise 11.1 4.7 4.2 14.5 16.2 37.0
SSE Energy
Markets 166.7 - 124.7 - 809.9 -
Corporate
unallocated 12.3 25.1 14.0 31.4 38.4 48.0
Total SSE
Group 381.0 939.4 765.4 667.2 1,688.6 1,500.1
Increase in
prepayments
related to
capital expenditure - 76.7 - 2.1 - 6.8
Decrease/(increase)
in trade payables
related to
capital expenditure 10.9 (51.8) (34.7) 32.3 (31.8) 132.2
IFRS 15 adjustment - (91.4) - (54.0) - (80.9)
Lease asset
additions - (24.9) - (27.4) - (78.5)
Less non-cash
items:
Allowances
and certificates (68.1) - (80.3) - (208.4) -
Assets acquired
through acquisitions - - (488.7) - (515.2) -
Net cash
outflow 323.8 848.0 161.7 620.2 933.2 1,479.7
*The comparative has been restated. See note 2(v).
Capital additions do not include assets acquired in acquisitions
or assets acquired under leases. Capital additions to intangible
assets includes the cash purchase of emissions allowances and
certificates GBP95.2m (2022: GBP42.0m; March 2023: GBP596.8m).
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 2023
Capital
Investment
Capital relating
Capital additions to Joint Share
additions to Ventures Allowances Customer Lease of Adjusted
to property, and and funded asset non-controlling Investment
intangible plant and Associates certificates additions additions interests and Capital
assets equipment (i) (ii) (iii) (iv) (v) Expenditure
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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
Business
Energy 27.8 - - - - - - 27.8
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)
Six months ended 30 September 2022 (restated*)
Capital
Investment
Capital relating
Capital additions to Joint Acquired
additions to Ventures Allowances Customer through Lease Adjusted
to property, and and funded business asset Investment
intangible plant and Associates certificates additions combinations additions and Capital
assets equipment (i) (ii) (iii) (iv) (v) Expenditure
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN
Transmission - 270.9 - - - - - 270.9
SSEN
Distribution 6.7 215.3 - - (46.1) - (0.1) 175.8
SSE
Renewables 583.1 103.8 284.0 - - (488.7) (4.4) 477.8
SSE Thermal 10.5 20.8 57.9 - - - - 89.2
Gas Storage - 6.5 - - - - - 6.5
Energy
Customer
Solutions
Business
Energy 22.2 0.2 - - - - - 22.4
SSE
Airtricity - 3.8 - - - - - 3.8
SSE
Enterprise 4.2 14.5 - - (7.9) - (0.3) 10.5
SSE Energy
Markets 124.7 - - (122.4) - - - 2.3
Corporate
unallocated 14.0 31.4 21.2 - - - (22.6) 44.0
Total SSE
Group 765.4 667.2 363.1 (122.4) (54.0) (488.7) (27.4) 1,103.2
*The comparatives have been restated. See note 2(v).
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 achieved through business
combinations; for Renewables additions of GBP488.7m refer to note
11. Note that the Group's Adjusted Investment, Capital and
Acquisitions metric includes the GBP640.m cash consideration paid
for Business Combinations and totals GBP1,743.2m.
v) Represents removal of additions in respect of right of use
assets recognised on the commencement date of a lease
arrangement.
5. Segmental information (continued)
5. (c) Capital expenditure by segment (continued)
Year ended 31 March 2023 (restated*)
Capital
Capital Investment
additions relating
Capital to to Joint Acquired Share
additions property, Ventures Allowances Customer through Lease of Adjusted
to plant and and funded business asset non-controlling Investment
intangible and Associates certificates additions combinations additions interests and Capital
assets equipment (i) (ii) (iii) (iv) (v) (vi) Expenditure
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN
Transmission 7.2 536.6 - - - - (1.6) (46.7) 495.5
SSEN
Distribution 15.2 486.8 - - (80.9) - (0.1) - 421.0
SSE
Renewables 731.5 340.5 391.8 - - (515.2) (37.1) - 911.5
SSE Thermal 20.8 44.5 87.9 - - - - - 153.2
Gas Storage - 6.3 - - - - - - 6.3
Energy
Customer
Solutions
Business
Energy 38.9 0.4 - - - - - - 39.3
SSE
Airtricity 10.5 - - - - - - - 10.5
SSE
Enterprise 16.2 37.0 - - - - (2.9) - 50.3
SSE Energy
Markets 809.9 - - (805.2) - - - - 4.7
Corporate
unallocated 38.4 48.0 18.7 - - - (36.8) - 68.3
Total
SSE Group 1,688.6 1,500.1 498.4 (805.2) (80.9) (515.2) (78.5) (46.7) 2,160.6
*The comparative has been restated. See note 2(v).
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 achieved through business
combinations; for Renewables additions of GBP515.2m refer to note
11. Note that the Group's Adjusted Investment, Capital and
Acquisitions metric includes the GBP642.7m cash consideration paid
for Business Combinations and totals GBP2,803.3m.
v) Represents removal of additions in respect of right of use
assets recognised on the commencement date of a lease
arrangement.
vi) 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 2023
Joint Share
venture/ of
Adjusted Depreciation/ Associate non-controlling
operating impairment/ share interest
profit Depreciation amortisation of depreciation
reported on fair before depreciation Release and
to the value exceptional and of deferred amortisation Adjusted
Board uplifts charges amortisation income EBITDA
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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
GB 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 (14.7) - - 23.4 - - 8.7
Total SSE
Group 693.2 (9.4) 343.6 104.3 (6.4) (15.7) 1,109.6
5. Segmental information (continued)
5. (d) Earnings/(losses) before interest, taxation, depreciation
and amortisation ('Adjusted EBITDA') (continued)
30 September 2022 (restated*)
Adjusted
operating Depreciation/ Joint venture/
profit Depreciation impairment/ Associate
reported on fair amortisation share of Release
to the value before exceptional depreciation of deferred Adjusted
Board uplifts charges and amortisation income EBITDA
GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN Transmission 208.4 - 55.9 - (1.5) 262.8
SSEN Distribution 174.6 - 89.6 - (5.5) 258.7
SSE Renewables 15.0 (9.4) 82.1 42.3 - 130.0
SSE Thermal 100.4 - 49.5 10.5 - 160.4
Gas Storage 147.8 - 5.6 - - 153.4
Energy Customer
Solutions
GB Business Energy 59.4 - 2.1 - - 61.5
SSE Airtricity 14.9 - 3.6 - - 18.5
SSE Enterprise 0.6 - 2.5 - (0.2) 2.9
SSE Energy Markets 30.3 - 2.6 - - 32.9
Corporate
Corporate
unallocated (28.9) - 40.8 - (0.5) 11.4
Neos (6.5) - - 23.3 - 16.8
Total SSE Group 716.0 (9.4) 334.3 76.1 (7.7) 1,109.3
31 March 2023 (restated*)
Joint Share
Adjusted Depreciation/ venture/ of
operating impairment/ Associate non-controlling
profit Depreciation amortisation share of interest
reported on fair before depreciation Release depreciation
to the value exceptional and of deferred and Adjusted
Board uplifts charges amortisation income amortisation EBITDA
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
SSEN
Transmission 372.7 - 114.1 - (2.1) (9.7) 475.0
SSEN
Distribution 382.4 - 182.2 - (10.6) - 554.0
SSE
Renewables 561.8 (18.8) 179.8 92.8 (0.1) - 815.5
SSE Thermal 1,031.9 (10.0) 114.5 60.8 - - 1,197.2
Gas Storage 212.5 - 16.5 - - - 229.0
Energy
Customer
Solutions
GB Business
Energy 15.7 - 4.7 - - - 20.4
SSE
Airtricity 5.6 - 6.9 - - - 12.5
SSE
Enterprise (7.0) - 6.8 - (0.2) - (0.4)
SSE Energy
Markets 80.4 - 6.0 - - - 86.4
Corporate
Corporate
unallocated (87.0) - 72.7 - (0.9) - (15.2)
Neos (39.8) - - 47.5 - - 7.7
Total SSE
Group 2,529.2 (28.8) 704.2 201.1 (13.9) (9.7) 3,382.1
*The comparative has been restated. See note 2(v).
6. Exceptional items and certain re-measurements
Six months Six months
Year ended ended 30 ended 30
31 March September September
2023 2023 2022
GBPm GBPm GBPm
Continuing operations
Exceptional items (note 6.1)
Asset impairments and related (charges)
(233.6) and credits (63.2) 218.9
- Other exceptional provisions and charges (50.5) -
Net gains on acquisitions/disposals of
233.2 businesses and other assets 0.2 229.8
(0.4) Total exceptional items (113.5) 448.7
Certain re-measurements (note 6.2)
(2,708.2) Movement on operating derivatives 1.2 (1,988.3)
(9.0) Movement in fair value of commodity stocks (4.6) 195.9
201.9 Movement on financing derivatives 41.0 243.7
Share of movement on derivatives in jointly
163.8 controlled entities (net of tax) 13.7 -
(2,351.5) Total certain re-measurements 51.3 (1,548.7)
Exceptional items and certain re-measurements
(2,351.9) on continuing operations before taxation (62.2) (1,100.0)
Taxation
(34.1) Taxation on other exceptional items 3.2 (63.5)
499.6 Taxation on certain re-measurements (8.0) 275.4
465.5 Taxation (4.8) 211.9
Total exceptional items and certain re-measurements
(1,886.4) on continuing operations after taxation (67.0) (888.1)
Discontinued operations
Exceptional items (note 6.1)
Gas Production asset impairments and related
35.0 credits - 35.0
Total exceptional items on discontinued
35.0 operations after taxation - 35.0
6. Exceptional items and certain re-measurements (continued)
Exceptional items and certain re-measurements
are disclosed across the following categories
within the income statement:
Six months Six months
Year ended ended 30 ended 30
31 March September September
2023 2023 2022
GBPm GBPm GBPm
Continuing operations
Cost of sales:
Movement on operating derivatives (note
(2,708.2) 15) 1.2 (1,988.3)
(9.0) Movement in fair value of commodity stocks (4.6) 195.9
(2,717.2) (3.4) (1,792.4)
Operating costs:
(233.6) Asset impairments and reversals (63.2) 218.9
3.2 Other exceptional provisions and charges (50.5) -
(230.4) (113.7) 218.9
Operating income:
89.1 Net gains on disposals of businesses and - 89.1
other assets
89.1 - 89.1
Joint ventures and associates:
140.7 Net gains on acquisition of a joint venture - 140.7
163.8 Share of movement on derivatives in jointly 13.7 -
controlled entities (net of tax)
304.5 13.7 140.7
(2,554.0) Operating loss: (103.4) (1,343.7)
Finance costs
Movement on financing derivatives (note
201.9 15) 41.0 243.7
0.2 Interest income on deferred consideration 0.2 -
receipt
202.1 41.2 243.7
(2,351.9) Loss before taxation on continuing operations (62.2) (1,100.0)
Discontinued operations
35.0 Gas Production asset impairments and related - 35.0
credits
35.0 Profit before tax on discontinued operations - 35.0
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 2023
i) Thermal Generation - impairment
At 30 September 2023, observable prices for power and gas have
decreased significantly from prices used in the last formal
impairment assessment at 31 March 2023. This is considered an
indicator of impairment necessitating consideration in relation to
balances associated with GB CCGTs, Great Island CCGT and the
investment in Triton Power Holdings Limited. Following assessment,
it was confirmed that a formal valuation review of the investment
in Triton Power Holdings Limited and the Group's Great Island CCGT
power station was required. The result of this review has been a
recognition of an exceptional impairment of GBP63.2m against the
carrying value of the Group's investment in Triton Power Holdings
Limited and no change to the carrying value of Great Island
CCGT.
The results of this review in relation to Triton Power Holdings
Limited were as follows:
Cash flow Operating and other valuation Commentary and impairment
Assets period assumption assumptions conclusions
Investment Period to Modelling methodology Conclusion
in Triton end of life and assumptions The Group has assessed
Power Holdings The Group has valued the investment for indicators
Limited its 50% joint venture of impairment. At 30
investment Triton Power September 2023 an exceptional
Holdings Limited ('Triton') impairment of GBP63.2m
based on projected cashflows has been recognised against
that will be derived the carrying value of
from the investment on the Group's investment
a value in use ("VIU") within operating costs.
basis.
Following the impairment,
The VIU assessment of the Group's carrying
the Triton power stations value of equity investment
(Saltend, Indian Queens is GBP151.6m.
and Deeside) were based
on pre-tax discounted Sensitivity analysis
cash flows expected to A 1% decrease in the
be generated by each discount rate would decrease
plant, based on management's the impairment recognised
view of operating prospects at 30 September 2023
and operational flexibility from GBP63.2m to GBP54.4m.
within the GB wholesale A 1% increase in the
market, including capacity discount rate would increase
market clearing prices. the impairment recognised
Cash flows are subject from GBP63.2m to GBP71.2m.
to a pre-tax real discount
rate of 13.2% (blended). A 20% increase in gross
margin would result in
reduce the impairment
charge to GBP47.5m, and
a 20% decrease in gross
margin would increase
the impairment to GBP79.0m.
A GBP10/KW increase in
non-contracted capacity
market price would decrease
the impairment charge
to GBP44.7m and a GBP10/KW
decrease would increase
the impairment charge
to GBP81.9m.
ii) Other exceptional provisions and charges
On adoption of IFRS 17 on 1 April 2022, an opening balance
liability of GBP5.1m was recognised in relation to the Group's
exposure to certain guarantee contracts provided to disposed
businesses and third parties. The increase in the period of
GBP50.5m represents the Group's estimation of the increasing
likelihood of settlement in relation to these contracts including
settlement of GBP12.3m and is considered to be exceptional as it
relates to the original transactions.
iii) Other credits
At 30 September 2023, the Group recognised a further exceptional
credit of GBP0.2m 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.
Taxation
The Group has separately recognised the tax effect of the
exceptional items summarised above.
Exceptional items in the year ended 31 March 2023
i) Thermal Electricity Generation - impairment reversal
At 31 March 2023, the Group carried out a formal impairment
review to reassess the carrying value of its GB CCGT power stations
and the Group's Great Island CCGT plant in Ireland. As a result of
the review, the Group recognised an exceptional impairment reversal
of GBP17.8m to the carrying value of the Group's Great Island CCGT
plant.
ii) Gas Storage - impairment reversal
At 30 September 2022, the Group recognised an impairment
reversal of GBP201.1m reflecting future market price assumptions at
that time. The Group performed a formal impairment review at 31
March 2023 to reassess the carrying value of its Gas Storage
operations at Atwick and Aldbrough. As a result of the assessment,
the Group recognised an exceptional impairment of GBP155.4m to the
carrying value of the assets at Aldborough, resulting in a net
impairment reversal of GBP45.7m. The impairment previously
recognised in relation to Atwick was fully reversed in the year
ended 31 March 2022, and no impairment was required for the
financial year ended 31 March 2023.
iii) Fiddler's Ferry - land sale
On 30 June 2022, the Fiddlers Ferry site was sold to Peel NRE
Developments Limited for cash consideration of GBP60.0m. The Group
carried a decommissioning provision for the site of GBP53.2m and a
residual asset of GBP24.1m, both of which were disposed of as part
of the sale. As a result, the Group recognised an exceptional gain
of GBP89.1m on disposal.
6. Exceptional items and certain re-measurements (continued)
iv) Triton Power 50% joint venture - acquisition and
impairment
On 1 September 2022, the Group acquired 50% of the share capital
of Triton Power Holdings Limited from Energy Capital Partners for
headline consideration of GBP341.0m, shared equally with
co-venturers Equinor (see note 11). The purchase price was agreed
based on prices prevalent in the market during the summer, prior to
completion of the transaction on 1 September 2022. The Group
assessed that, due to movements in near term market observable
power prices between the transaction agreement date and the
completion date, the fair value of the acquisition was GBP140.7m
greater than the acquisition price. This bargain purchase was
recognised as an exceptional gain in the Group's half year results
to 30 September 2022. During the second half of the year ended 31
March 2023, the Group realised a significant proportion of the
acquired fair value of the business through trading operations of
the joint venture. As a result, the future recoverable value of the
investment was lower at 31 March 2023 than at 1 September 2022 and
the Group therefore recognised an impairment charge at 31 March
2023 of GBP291.6m. A summary of exceptional items recognised in
relation to Triton in the financial year to 31 March 2023 is set
out below:
Financial statement Exceptional
line item charge/(credit) items and certain
is included within re-measurements
GBPm
Joint venture and associates
Recognition of bargain purchase share of profit (140.7)
Impairment of investment Operating costs 291.6
Total exceptional items 150.9
Joint venture and associates
Mark-to-market movement on operating share of movement on
derivatives derivatives (213.9)
Share of tax on mark-to-market movement Joint venture and associates
on operating derivatives share of tax 41.9
Total certain remeasurements (172.0)
Total exceptional items and certain
re-measurements (21.1)
v) Neos Networks - investment impairment and adjustments to
consideration
At 31 March 2023, the Group assessed that the recoverable amount
of its investment in Neos Networks was impaired by GBP37.7m, of
which GBP5.9m was treated as exceptional. Under the Group's policy,
an impairment charge of less than GBP40.0m is not considered to be
an exceptional item. However, GBP5.9m of the impairment related to
the fair value gain previously recognised on acquisition of the
joint venture investment in March 2019, which was previously
treated as an exceptional item. Therefore, for consistent
presentation, this reversal was recognised separately. The balance
of the impairment charge, being GBP31.8m, was recognised as part of
adjusted operating profit.
vi) Other credits
At 31 March 2023, the Group recognised further exceptional
credits of GBP3.8m relating to reversal of previously recognised
exceptional charges or judgements. These included i) reassessment
of separation cost provisions associated primarily with the
disposals of SSE Energy Services and SGN (credit of GBP9.7m) ii)
credit of GBP0.2m in relation to the unwind of discounting on
deferred consideration recognised on the part disposal of SSE
Slough Multifuel Limited in the year ending 31 March 2021, iii)
reassessment of impairments associated with Heat Networks assets
credit of GBP0.4m, partially offset by iv) GBP6.5m charge
recognised in relation to provisions in connection with the sale of
the Contracting and Rail business in June 2021.
Exceptional items within discontinued operations in the year
ended 31 March 2023
vii) Gas Production - gain on disposal
On 4 November 2022, RockRose Energy Limited received HMRC
clearance in respect of tax treatment in relation to the Group's
disposal of its Gas Production business to Viaro Energy (through
its subsidiary RockRose Energy Limited), which completed on 14
October 2021. The Group had indemnified RockRose Energy Limited in
relation to certain tax liabilities that it might suffer as a
result of the transaction, and this formed part of the provision
which was recognised on the disposal of the Gas Production
business. The HMRC clearance indicated that no such tax liabilities
arise for RockRose Energy Limited and as a result the Group
released the GBP35.0m provision relating to the indemnity as an
adjustment to the loss on disposal recognised. The adjustment was
recognised in discontinued operations in the year ended 31 March
2023.
6.1. Certain re-measurements
The Group, through its SSE Energy Markets business, enters into
forward commodity purchase (and sales) contracts to meet the future
demand requirements of its GB 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 2023, changes in global commodities markets and
in SSE's contractual positions have resulted in an adverse net
mark-to-market remeasurement on commodity contracts designated as
financial instruments, contracts for difference contracts and
trading inventory of GBP3.4m (loss) (2022: GBP1,792.4m (loss),
March 2023: GBP2,717.2m (loss)). It should be noted that the net
IFRS 9 position on operating derivatives at 30 September 2023 is a
liability of GBP400.1m (March 2023: GBP386.9m liability).
6. Exceptional items and certain re-measurements (continued)
In addition, the Group has executory 'own use' designated
commodity contracts which, if classified as financial instruments
and remeasured at fair value in accordance with IFRS 9, would
improve the total fair value remeasurement and would offset the
closing liability value moving it to an asset balance. These
predominately relate to financial hedges entered into on behalf of
the SSE Renewables and SSE Thermal businesses for future sales
which were primarily entered into before the significant decrease
in market prices observed in Summer 2023. The majority of the fair
value associated with IFRS 9 'in the money' mark-to-market
contracts recorded at 30 September 2023 and unvalued 'own use'
designated commodity contracts held at the same date are expected
to reverse in the second half of the financial year as the relevant
commodity is delivered. The remaining settlement of these contracts
will predominately be within the subsequent 12 to 24 months. The
mark-to-market gain in the period has resulted in a deferred tax
charge of GBP8.0m (2022: GBP275.4m credit, March 2023: GBP499.6m
credit), which has been reported separately as part of certain
re-measurements. In addition, the Group has recognised gains of
GBP41.0m (2022: GBP243.7m gains, March 2023: GBP201.9m gains) on
the remeasurement of the certain interest rate and foreign exchange
contracts through the income statement, gains on the remeasurement
of cash flow hedge accounted contracts of GBP41.3m (2022:
GBP147.9m, March 2023:
GBP43.3m) in other comprehensive income and gains on the equity
share of the remeasurement of cash flow hedge accounted contracts
in joint ventures of GBP84.4m (2022: GBP508.2m, March 2023:
GBP342.4m).
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
Six
months Six months
Year ended ended ended
31 March 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
Finance income:
17.5 Interest income from short term deposits 32.4 7.9
16.2 Interest on pension scheme assets 12.8 7.9
Foreign exchange translation of monetary assets
- and liabilities - 0.1
Other interest receivable:
67.6 Joint ventures and associates 34.4 30.5
34.2 Other receivable 24.2 11.8
101.8 58.6 42.3
135.5 Total finance income 103.8 58.2
Finance costs:
(50.1) Bank loans and overdrafts (37.1) (14.9)
(339.1) Other loans and charges (144.0) (161.6)
(22.1) Notional interest arising on discounted provisions (11.0) (7.1)
(29.4) Lease charges (11.7) (14.1)
44.0 Less: interest capitalised 30.0 19.9
(396.7) Total finance costs (173.8) (177.8)
Changes in fair value of financing derivative
assets or liabilities at fair value through 243.7
201.9 profit or loss 41.0
(59.3) Net finance costs (29.0) 124.1
Presented as:
337.4 Finance income 144.8 301.9
(396.7) Finance costs (173.8) (177.8)
(59.3) Net finance costs (29.0) 124.1
Adjusted net finance costs are arrived at after the following
adjustments:
Six
months Six months
ended ended
Year ended 30 30
31 March September September
2023 2023 2022
GBPm GBPm GBPm
(59.3) Net finance income/(costs) (29.0) 124.1
(add)/less:
Share of interest from joint ventures and
(70.1) associates (47.8) (29.1)
(16.2) Interest on pension scheme assets (12.8) (7.9)
(201.9) Movement on financing derivatives (note 15) (41.0) (243.7)
(0.2) Exceptional item (0.2) -
2.1 Share of net finance cost attributable to -
non-controlling interests 2.8
(345.6) Adjusted net finance costs (128.0) (156.6)
22.1 Notional interest arising on discounted provisions 11.0 7.1
29.4 Lease charges 11.7 14.1
(38.8) Hybrid coupon payment (73.1) (38.8)
(332.9) Adjusted net finance costs for interest cover (174.2)
calculations (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 2024, 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 21.3% (2022: 15.2%, March 2023: 16.6%).
The reported tax rate on the profit before tax after exceptional
items and certain remeasurements is 24.4% (2022: 24.0%, March 2023:
53.5%).
The charge recognised in the income statement is as follows:
Six months ended 30 September Six months ended 30 September
2023 2022
Before
exceptional Exceptional Before exceptional Exceptional
items and items and items and items and
remeasurements remeasurements Total remeasurements remeasurements Total
GBPm GBPm GBPm GBPm GBPm GBPm
Current tax
UK corporation
tax 97.3 (22.8) 74.5 51.4 (4.7) 46.7
Adjustments in
respect of previous
years (15.0) - (15.0) - - -
Total current
tax 82.3 (22.8) 59.5 51.4 (4.7) 46.7
Deferred tax
Current year 52.9 27.6 80.5 38.1 (207.2) (169.1)
Total deferred
tax 52.9 27.6 80.5 38.1 (207.2) (169.1)
Total taxation
charge/(credit) 135.2 4.8 140.0 89.5 (211.9) (122.4)
Year ended 31 March 2023
Before exceptional Exceptional
items and items and
remeasurements remeasurements Total
GBPm GBPm GBPm
Current tax
UK corporation tax 292.3 (20.9) 271.4
Adjustments in respect
of previous years (22.0) 5.3 (16.7)
Total current tax 270.3 (15.6) 254.7
Deferred tax
Current year 72.9 (444.6) (371.7)
Adjustments in respect
of previous years 12.3 (5.3) 7.0
Total deferred tax 85.2 (449.9) (364.7)
Total taxation charge/(credit) 355.5 (465.5) (110.0)
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:
Six months Six months
Year ended ended ended
31 March 30 September 30 September
2023 2023 2022
GBPm % GBPm % GBPm %
Continuing operations
Group tax charge/(credit) and
(110.0) 12.7 effective rate 140.0 24.7 (122.4) 24.0
Add: reported deferred tax (charge)/credit
364.7 (42.0) and effective rate (80.5) (14.2) 169.1 (33.1)
Reported current tax charge and
254.7 (29.3) effective rate 59.5 10.5 46.7 (9.1)
41.0 Effect of adjusting items - 17.5
Reported current tax charge and
254.7 11.7 effective rate on adjusted basis 59.5 10.5 46.7 8.4
add:
Share of current tax from joint
89.6 4.1 ventures and associates 10.5 1.9 18.9 3.4
less:
Current tax charge on exceptional
15.6 0.7 items 22.8 4.0 4.7 0.8
Share of current tax attributable
(1.1) (0.1) to non-controlling interests (4.4) (0.8) - -
Adjusted current tax charge
358.8 16.4 and effective rate 88.4 15.6 70.3 12.6
The adjusted effective current tax rate for the period after
adjusting for discrete events arising in the first half of the year
is 15.6% (2022: 12.6%). The forecast full-year effective current
tax rate is expected to be 17.7%.
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, effective from 1 April
2023 to 31 March 2026, to allow 'Full Expensing' of 100% General
Pool plant and machinery, alongside 50% for Special Rate Pool plant
and machinery. The Group expects these changes to significantly
increase the deductions for Capital Allowances in the financial
years ending 31 March 2024 to 31 March 2026.
8. Taxation (continued)
Finance Act (No.2) 2023 also 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 issued in May 2023.The legislation will come into
force for the year ended 31 March 2025. Similar draft legislation
has been introduced in the Republic of Ireland and other EU
jurisdictions. The Group is assessing the impact of the changes but
does not expect a material impact to arise.
The Finance Bill 2021 included draft legislation in respect of
Capital Allowance 'Super-deductions' of 130% in respect of General
Pool plant and machinery, alongside First Year Allowances of 50%
for Special Rate Pool plant and machinery for the two years
commencing 1 April 2021. An estimate of the super-deduction has
been taken into account when calculating the effective tax for the
prior year.
The Group has separately recognised the tax effect of the
exceptional items and certain re-measurements summarised above.
9. Dividends
Ordinary dividends
Year ended 31 Six months ended Six months ended
March 2023 30 September 2023 30 September 2022
Settled Pence Settled Pence Settled Pence
via per via per via per
Total scrip ordinary Total scrip ordinary Total scrip ordinary
GBPm GBPm share GBPm GBPm share GBPm GBPm share
Final - year ended
- - - 31 March 2023 738.1 29.8 67.7 - - -
Interim - year ended
313.2 159.0 29.0 31 March 2023 - - - - - -
Final - year ended
642.6 322.5 60.2 31 March 2022 - - - 642.6 322.5 60.2
955.8 481.5 738.1 29.8 642.6 322.5
The final dividend of 67.7p per ordinary share declared in
respect of the financial year ended 31 March 2023 (2022: 60.2p) was
approved at the Annual General Meeting on 20 July 2023 and was paid
to shareholders on 21 September 2023. 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
2026, 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 2023 was 18.0%, and
SSE has therefore not initiated a share buy-back in the current
period. For the financial year ended 31 March 2022 the overall
scrip dividend take-up was 38.3% and therefore under the share
buyback programme 6.9m of shares were repurchased and cancelled
during the year ended 31 March 2023 for total consideration of
GBP107.6m (including stamp duty and commission).
An interim dividend of 20.0p per ordinary share (2022: 29.0p)
has been proposed and is due to be paid on 8 March 2024 to those
shareholders on the SSE plc share register on 12 January 2024. 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/(losses) per share
Basic earnings/(losses) per share
The calculation of basic earnings/(losses) per ordinary share at
30 September 2023 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
2023.
Adjusted earnings per share
Adjusted earnings/(losses) 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 charged on fair value uplifts, the share of profit
attributable to non-controlling interests and the impact of
exceptional items and certain re-measurements.
Continuing operations
Six months Six months
Year ended ended ended
31 March 30 September 30 September
2023 2023 2022
Earnings/(losses) Earnings Earnings/(losses)
per per Earnings/ per
Earnings/(losses) share Earnings share (losses) share
GBPm pence GBPm pence GBPm pence
Earnings/(losses) attributable
(123.0) (11.4) to ordinary shareholders 309.0 28.3 (392.4) (36.4)
Less: (Earnings)/losses
attributable
(35.0) (3.3) to discontinued operations - - (35.0) (3.3)
Basic earnings on continuing
operations used to calculate
(158.0) (14.7) adjusted EPS 309.0 28.3 (427.4) (39.7)
Exceptional items and certain
1,886.4 175.4 re-measurements (note 6) 67.0 6.1 888.1 82.4
Basic excluding exceptional
items
1,728.4 160.7 and certain re- measurements 376.0 34.4 460.7 42.7
Adjusted for:
Gas Production
decommissioning
(50.5) (4.7) adjustments (3.5) (0.3) (54.5) (5.1)
Depreciation charge on fair
value
28.8 2.7 uplifts 9.4 0.9 9.4 0.9
Interest on net pension
scheme
(16.2) (1.5) assets (note 7) (12.8) (1.2) (7.9) (0.7)
85.2 7.9 Deferred tax 52.9 4.9 38.1 3.6
Deferred tax from share of
joint
14.4 1.3 ventures and associates (12.8) (1.2) 4.5 0.4
Deferred tax on
non-controlling
(4.1) (0.4) interest (5.5) (0.5) - -
1,786.0 166.0 Adjusted 403.7 37.0 450.3 41.8
10. Earnings/(losses) per share (continued)
Year ended Six months Six months
31 March ended ended
2023 30 September 30 September
2023 2022
Losses Losses
per Earnings per
Losses share Earnings per share Losses share
GBPm pence GBPm pence GBPm pence
(158.0) (14.7) Basic 309.0 28.3 (427.4) (39.7)
- - Dilutive effect of outstanding - - - -
share options
(158.0) (14.7) Diluted 309.0 28.3 (427.4) (39.7)
Reported earnings per share
Six months Six months
Year ended ended ended
31 March 30 September 30 September
2023 2023 2022
(Losses)/earnings Earnings
per per (Losses)/earnings
(Losses)/earnings share Earnings share (Losses)/earnings per share
GBPm pence GBPm pence GBPm pence
Basic
Earnings/(losses)
per share on
continuing
(158.0) (14.7) operations 309.0 28.3 (427.4) (39.7)
Earnings/(losses)
per share on
discontinued
35.0 3.3 operations - - 35.0 3.3
Earnings/(losses)
per share
attributable to
ordinary
(123.0) (11.4) shareholders 309.0 28.3 (392.4) (36.4)
- - Dilutive effect of - - - -
outstanding
share options
(123.0) (11.4) Diluted 309.0 28.3 (392.4) (36.4)
The weighted average number of shares used in each calculation
is as follows:
Six months
Year ended Six months ended 30 September
31 March 2023 ended 30 September 2022
Number of 2023 Number of
shares Number of shares shares
(millions) (millions) (millions)
For basic and adjusted earnings
1,075.6 per share 1,090.4 1,077.2
1.7 Effect of exercise of share options 2.0 2.7
1,077.3 For diluted earnings per share 1,092.4 1,079.9
11. Acquisitions and disposals
Acquisitions and disposals in the current period
There have been no significant acquisitions and disposals in the
current period.
Prior year acquisitions and disposals
Acquisitions
European onshore renewables development platform: On 1 September
2022, the Group completed the 100% acquisition of a European
onshore renewable energy development platform from Siemens Gamesa
Renewable Energy ("SGRE") for cash consideration of GBP519.5m. The
SGRE portfolio is mainly located in Spain with the remainder across
France, Italy and Greece. This acquisition is aligned to the
Group's published strategy to pursue overseas renewable
opportunities.
The intangible development assets acquired are late-stage
windfarm development costs. The goodwill recognised represents
early-stage intangible development costs that do not qualify for
separate recognition as set out in the table below.
Fair value
at 1 September
2022
GBPm
Assets acquired and liabilities assumed
Intangible development assets 104.4
Inventories 3.0
Trade and other receivables 20.3
Cash 11.5
Trade and other payables (3.5)
Deferred tax liability (27.0)
Total net assets acquired 108.7
Goodwill 410.8
Cash consideration 519.5
Due to the acquisition date being close to the balance sheet
date of 30 September 2022, SSE recognised purchase consideration
GBP488.8m as an intangible asset, as a provisional fair value and
GBP28.0m as working capital.
11. Acquisitions and disposals (continued)
Triton Power - 50% joint venture acquisition: On 1 September
2022, the Group announced that SSE Thermal and Equinor had
completed the acquisition of Triton Power Holdings Limited from
Energy Capital Partners for headline consideration of GBP341.0m
shared equally. The headline consideration included GBP96m of loans
which were settled on completion of the transaction and replaced
with shareholder loans of GBP48.0m each from SSE and Equinor. The
Group's share of the cash consideration paid for the equity
investment was therefore GBP123.2m after completion adjustments.
Triton Power operates the 1.2GW Saltend Power Station in the Humber
along with two smaller plants, Indian Queens Power Station, a 140MW
OCGT in Cornwall, and Deeside Power Station, a decommissioned CCGT
in north Wales. An exceptional gain on acquisition of GBP140.7m was
recognised at 30 September 2022 (see note 6) based on movements in
the underlying fair value of assets between agreeing and completing
the transaction. During the second half of the 2023 financial year
a fair value exercise and impairment review were completed which
resulted in an impairment loss of GBP291.6m and a GBP172.0m gain on
financial instruments (net of tax) being recognised.
The joint venture contributed GBP210.2m to operating profit
before exceptional items, but including GBP10.0m charge for fair
value adjustments, in the year to 31 March 2023 on an equity
accounted basis.
Other asset acquisitions: During the 12 months ended 31 March
2023, the Group made other smaller asset acquisitions (of special
purpose vehicles as opposed to businesses) for cash consideration
GBP19.8m and deferred consideration GBP34.9m.
The total cash consideration for business combinations during
the year ended 31 March 2023 of GBP642.7m (September 2023: GBPnil)
is included in the Group's Adjusted investment, capital and
acquisition metric.
Disposals
During the year ended 31 March 2023 the Group recognised a gain
of GBP868.3m within equity from the sale of a 25% non-controlling
equity stake in its SSEN Transmission business (being the company
Scottish Hydro Electric Transmission plc ('SHET')) and an
exceptional income statement gain of GBP89.1m from the disposal of
the Fiddlers Ferry site.
25% non-controlling equity stake in SHET : On 25 November 2022,
the Group announced it had agreed to sell a 25% non-controlling
equity stake in SHET to Ontario Teachers Pension Plan ('OTPP') for
cash consideration of GBP1,465.0m, less transactions costs of
GBP16.9m. The transaction completed on 30 November 2022, at which
time the consolidated carrying value of SHET's net assets was
GBP2,319.3m. Since the transaction did not result in a loss of
control, the Group recognised a gain of GBP868.3m within equity
attributable to owners of the parent company. The Group considered
the rights and obligations and operating protocols arising from the
disposal and has determined that the non-controlling interest in
SHET has the characteristics of equity and has classified the
non-controlling interest as such.
30 November
2022
GBPm
Carrying value of non-controlling interests
disposed (579.8)
Cash consideration paid by non-controlling
interest holder 1,465.0
Transaction costs (16.9)
Excess of consideration received recognised
in equity 868.3
Fiddler's Ferry land sale: On 30 June 2022, the Fiddlers Ferry
site was sold to Peel NRE Developments Limited for cash proceeds of
GBP60m. The Group released a decommissioning provision related to
the site, which resulted in an exceptional gain on disposal of
GBP89.1m.
12. Sources of finance
12.1 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
2023, the Group's long term credit rating was BBB+ positive outlook
for Standard & Poor's and Baa1 stable outlook for Moody's.
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.
During the period SSE plc issued an 8 year EUR750m Green Bond at
a coupon of 4.0% with an all-in cost of funding rate of just above
4% with fees included. The bond will be left in Euros as a net
investment hedge for the Group's Euro denominated subsidiaries. In
the period, SSE plc also redeemed US Private Placement debt of
combined GBP155.0m and a EUR700m Eurobond with coupon at 1.75%.
SSE's adjusted net debt and hybrid capital was GBP8.9bn at 30
September 2023, compared with GBP8.9bn at 31 March 2023.
Adjusted net debt and hybrid capital is stated after removing
lease obligations, external net debt attributable to
non-controlling interests and cash posted as collateral in line
with the Group's presentation basis which is explained at note
2(i). Cash posted as collateral refers to amounts deposited on
commodity trading exchanges which are reported within 'Trade and
other receivables' on the face of the balance sheet. That balance
was GBP140.6m (2022: GBP581.3m; March 2023: GBP316.3m) at 30
September 2023 and reflects the lower levels of initial and
variation margin required, following a reduction in risk factors
and lower commodity prices respectively, as part of the management
of the Group's exposures on commodity contracts traded on
exchanges. The adjustment related to the non-controlling interest
share of SHET external net debt is GBP454.2m at 30 September 2023
(2022: GBPnil; March 2023: GBP434.2m) and relates to 25% of
external loans of GBP1,815.1m (2022: GBPnil; March 2023:
GBP1,744.8m) and overdrawn cash equivalents of GBP1.6m (2022:
GBPnil; March 2023: cash equivalent of GBP7.8m).
The Group has an established EUR1.5bn Euro commercial paper
programme (paper can be issued in a range of currencies and swapped
into Sterling) and as at 30 September 2023 there was GBP903m
commercial paper outstanding (March 2023: GBP919m). In the six
months ended 30 September 2023, the Group has issued new debt
instruments totalling GBP650m and has redeemed GBP204m of maturing
debt in the period. The Group also continues to have access to
GBP3.5bn of revolving credit facilities (March 2023: GBP3.5bn). As
at 30 September 2023 there were GBP220m of drawings against these
committed facilities being than 6% utilisation (March 2023: 3%
utilisation).
12. Sources of finance (continued)
The details of the five committed facilities as at 30 September
2023 are:
-- a GBP1.3bn revolving credit facility for SSE plc maturing
March 2026 (March 2023: GBP1.3bn);
-- a GBP0.2bn bilateral facility for SSE plc maturing October 2026 (March 2023: GBP0.2bn);
-- a GBP0.75bn facility for Scottish Hydro Electric Transmission
plc maturing November 2026 (March 2023: GBP0.75bn);
-- a GBP0.25bn facility for Scottish Hydro Electric Distribution
plc and Southern Electric Power Distribution plc maturing November
2026 (March 2023: GBP0.25bn); and
-- a GBP1.0bn committed facility for SSE plc maturing February 2024 (March 2023: GBP1.0bn).
The GBP1.3bn revolving credit facility and GBP0.2bn bilateral
facility are 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, both of which
have 1 year extension options at the borrower's discretion, were
entered into to help cover the capital expenditure and working
capital of those businesses. The GBP1bn committed facility at SSE
plc has a 1 year extension option at the lender's discretion and
was entered into to provide cover for potential cash collateral
requirements, if periods of extreme volatility return to the
commodity markets. The only facility that was drawn at 30 September
2023 and 30 March 2023 was the GBP750m Transmission facility, with
GBP220m (March 2023: GBP100m) drawn to cover capital expenditure
requirements.
The Group capital comprises:
March September
2023 September 2022
(restated*) 2023 (restated*)
GBPm GBPm GBPm
8,654.0 Total borrowings (excluding lease obligations) 8,558.6 8,976.8
(891.8) Less: Cash and cash equivalents (902.4) (289.3)
7,762.2 Net debt (excluding hybrid equity) 7,656.2 8,687.5
1,882.4 Hybrid equity 1,882.4 1,882.4
(434.2) External net debt attributable to non-controlling
interests (454.2) -
(316.3) Cash posted as collateral and other short-term (581.3)
loans (140.6)
8,894.1 Adjusted net debt and hybrid capital 8,943.8 9,988.6
8,555.0 Equity attributable to shareholders of the 7,881.6
parent 8,129.5
17,449.1 Total capital excluding lease obligations 17,073.3 17,870.2
*The comparative information has been restated. See note
3.1.
12.2 Loans and other borrowings
March September September
2023 2023 2022
GBPm GBPm GBPm
Current
1,738.5 Short term loans 1,313.3 1,323.1
82.1 Lease obligations 81.6 76.6
1,820.6 1,394.9 1,399.7
Non-current
6,915.5 Loans 7,245.3 7,653.7
323.8 Lease obligations 312.8 312.3
7,239.3 7,558.1 7,966.0
9,059.9 Total loans and borrowings 8,953.0 9,365.7
(891.8) Cash and cash equivalents (902.4) (289.3)
8,168.1 Unadjusted net debt 8,050.6 9,076.4
Add/(less):
1,882.4 Hybrid equity (note 13) 1,882.4 1,882.4
External net debt attributable to non-controlling
(434.2) interests (454.2) -
(405.9) Lease obligations (394.4) (388.9)
(316.3) Cash posted as collateral and other short term (581.3)
loans (140.6)
8,894.1 Adjusted net debt and hybrid capital 8,943.8 9,988.6
SSE's adjusted net debt and hybrid capital was GBP8.9bn at 30
September 2023, compared with GBP8.9bn at 31 March 2023 and
GBP10.0bn at 30 September 2022.
Adjusted net debt and hybrid capital is stated after removing
lease obligations, external net debt attributed to non-controlling
interests and cash posted as collateral in line with the Group's
presentation basis which is explained at note 2(i). Cash posted as
collateral refers to amounts deposited on commodity trading
exchanges which are reported within 'Trade and other receivables'
on the face of the balance sheet.
12.3 Reconciliation of net increase in cash and cash equivalents
to movement in adjusted net debt and hybrid capital
March September September
2023 2023 2022
GBPm GBPm GBPm
(157.5) (Decrease)/increase in cash and cash equivalents 10.6 (760.0)
Add/(less)
(1,914.7) New borrowing proceeds (1,751.0) (2,068.6)
(831.4) New hybrid equity proceeds - (831.4)
2,148.1 Repayment of borrowings 1,738.8 1,998.2
(216.2) Non-cash movement on borrowings 107.6 (235.2)
434.2 External debt attributable to non-controlling -
interests 20.0
241.6 Increase/(decrease) in cash posted as collateral 506.6
and other short term loans (175.7)
(295.9) Increase in adjusted net debt and hybrid capital (49.7) (1,390.4)
12. Sources of finance (continued)
12.4 Equity attributable to non-controlling interests
Equity attributable to non-wholly owned but controlled
subsidiaries which are consolidated within the condensed interim
financial statements of the Group under IFRS. At 30 September 2023
the amount attributable to non-controlling interests is GBP703.4m
(2022: GBP48.6m; March 2023: GBP649.1m), which relates to SHET of
GBP660.8m (2022: GBPnil; March 2023: GBP606.5m) and SSE Pacifico
GBP42.6m (2022: GBP48.6m; March 2023 GBP42.6m). The profit and loss
attributable to non-controlling interests for the period ended 30
September 2023 is GBP51.2m profit (2022: GBPnil; March 2023:
GBP23.6m), which relates to SHET GBP51.7m profit (March 2023:
GBP25.5m profit) and SSE Pacifico GBP0.5m loss (March 2023: GBP1.9m
loss).
13. Hybrid Equity
March September September
2023 2023 2022
GBPm Perpetual subordinated capital securities GBPm GBPm
GBP 600m 3.74% perpetual subordinated capital
598.0 securities (i) 598.0 598.0
453.0 EUR 500m 3.125% perpetual subordinated capital 453.0
securities (i) 453.0
EUR 1,000m 4.00% perpetual subordinated
831.4 capital securities (ii) 831.4 831.4
1,882.4 1,882.4 1,882.4
(i) 2 July 2020 GBP600m and EUR500m 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 GBP600m hybrid bond is 14 April 2026 and then
every 5 years thereafter. The date for the first potential
discretionary redemption of the EUR500m hybrid capital bond is 14
July 2027 and then every 5 years thereafter. For the GBP600m hybrid
the discretionary coupon payments are made annually on 14 April and
for the EUR500m hybrid the discretionary coupon payments are made
annually on 14 July.
(ii) 12 April 2022 EUR1,000m 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 GBP600m hybrid equity bond a discretionary
coupon payment of GBP22.4m (March 2023: GBP22.4m) was made on 14
April 2023 and for the EUR500m hybrid equity bond a discretionary
coupon payment of GBP16.5m (March 2023: GBP16.4m) was made on 14
July 2023. The first discretionary coupon payment on the EUR1bn
hybrid equity bond of GBP34.2m was paid on 21 April 2023. The
coupon payments in the six month period to 30 September 2023
consequently totalled GBP73.1m (2022: GBP38.8m).
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.
14. Share capital
Number
(millions) GBPm
Allotted, called up and fully paid:
At 1 April 2023 1,093.9 547.0
Issue of shares 1.8 0.9
At 30 September 2023 1,095.7 547.9
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 2023 of 67.7p
per ordinary share (2022: 60.2p in relation to the final dividend
for the year to 31 March 2022; March 2023: 29.0p in relation to the
interim dividend for the year to 31 March 2023) under the terms of
the Company's scrip dividend scheme. This resulted in the issue of
1,779,529 (2022: 18,241,941; March 2023: 18,241,941 and 9,413,103)
new fully paid ordinary shares.
In addition, the Company issued 40k shares (2022: 33k, March
2023: 1.9m) 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
GBP0.4m (2022: GBP0.5m, March 2023: GBP18.0m).
Under the share buyback programme in the year to 31 March 2023
6.9m of shares were repurchased and cancelled for a total
consideration of GBP107.6m (including stamp duty and commission).
The nominal value of share capital repurchased and cancelled is
transferred out of share capital and into the capital redemption
reserve. The scrip dividend take-up for the financial year ended 31
March 2023 was 18.0%, which is below the 25.0% required by the
share buyback programme, therefore there will be no share buybacks
in the financial year ended 31 March 2024.
Of the 1,095.7m (2022: 1,091.3m, March 2023: 1,093.9m) shares in
issue, 3.6m (2022: 5.4m, March 2023: 3.6m) are held as treasury
shares. These shares will be held by the Group and used to award
shares to employees under the Sharesave scheme in the UK.
During the period, on behalf of the Company, the employee share
trust purchased 1.2m shares (2022: 1.3m, March 2023: 1.4m) for a
consideration of GBP19.7m (2022: GBP21.7m, March 2023: GBP23.4m) to
be held in trust for the benefit of employee share schemes.
15. 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 Finance
Director (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 2023, the Group continued
to be exposed to the economic conditions impacting the primary
commodities to which it is exposed (Gas, Carbon and Power) due to
the ongoing impacts from the war in Ukraine and other global
factors. 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 2023.
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:
Six months Six months
Year ended ended 30 ended 30
31 March September September
2023 2023 2022
GBPm GBPm GBPm
Operating derivatives
Total result on operating derivatives
(2,980.2) (i) (498.2) (1,044.0)
272.0 Less: amounts settled (ii) 499.4 (944.3)
(2,708.2) Movement in unrealised derivatives 1.2 (1,988.3)
Financing derivatives (and hedged items)
Total result on financing derivatives
81.3 (i) 211.9 225.0
120.6 Less: amounts settled (ii) (170.9) 18.7
201.9 Movement in unrealised derivatives 41.0 243.7
(2,506.3) Net income statement impact 42.2 (1,744.6)
(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.
The movement in unrealised operating derivatives excludes a
GBP13.7m loss (2022: GBP19.3m gain; March 2023: GBP16.6m gain) on
proprietary trades, which have been recognised in the underlying
profit of the Group.
15. 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:
September 2022
March 2023 (restated*) September 2023 (restated*)
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
GBPm GBPm GBPm GBPm GBPm GBPm
Financial Assets
Current
1,404.0 1,404.0 Trade receivables 1,096.7 1,096.7 1,570.3 1,570.3
12.7 12.7 Other receivables 11.1 11.1 109.2 109.2
Cash collateral
and other short
316.3 316.3 term loans 140.6 140.6 1,113.1 1,113.1
Cash and cash
891.8 891.8 equivalents 902.4 902.4 289.3 289.3
Derivative financial
759.2 759.2 assets 262.6 262.6 2,677.2 2,677.2
3,384.0 3,384.0 2,413.4 2,413.4 5,759.1 5,759.1
Non-current
Unquoted equity
27.4 27.4 investments 2.9 2.9 18.0 18.0
149.5 149.5 Loan note receivable 159.5 159.5 145.2 145.2
Loans to associates
and jointly controlled
1,114.6 1,114.6 entities 1,196.8 1,196.8 886.0 886.0
Derivative financial
246.0 246.0 assets 132.4 132.4 1,124.7 1,124.7
1,537.5 1,537.5 1,491.6 1,491.6 2,173.9 2,173.9
4,921.5 4,921.5 3,905.0 3,905.0 7,933.0 7,933.0
Financial Liabilities
Current
(694.6) (694.6) Trade payables (622.5) (622.5) (986.9) (986.9)
Outstanding liquid
- - funds - - (531.8) (531.8)
(1,738.5) (1,747.8) Loans and borrowings (1,313.3) (1,392.4) (1,323.1) (1,335.3)
(82.1) (82.1) Lease liabilities (81.6) (81.6) (76.6) (76.6)
Financial guarantee
(4.0) (4.0) liabilities (47.0) (47.0) (4.0) (4.0)
Derivative financial
(243.3) (243.3) liabilities (505.2) (505.2) (2,195.4) (2,195.4)
(2,762.5) (2,771.8) (2,569.6) (2,648.7) (5,117.8) (5,130.0)
Non-current
(6,915.5) (6,458.4) Loans and borrowings (7,245.3) (6,412.5) (7,653.7) (6,898.1)
(323.8) (323.8) Lease liabilities (312.8) (312.8) (312.3) (312.3)
Financial guarantee
(57.4) (57.4) liabilities (34.5) (34.5) (57.4) (57.4)
Derivative financial
(1,021.0) (1,021.0) liabilities (197.9) (197.9) (956.7) (956.7)
(8,317.7) (7,860.6) (7,790.5) (6,957.7) (8,980.1) (8,224.5)
(11,080.2) (10,632.4) (10,360.1) (9,606.4) (14,097.9) (13,354.5)
Net financial
(6,158.7) (5,710.9) liabilities (6,455.1) (5,701.4) (6,164.9) (5,421.5)
*The comparative information has been restated to include
financial guarantee liabilities. See note 3.1.
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 2023 September 2022
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Financial
assets
Energy derivatives - 224.8 - 224.8 - 3,402.4 - 3,402.4
Interest rate
derivatives - 155.1 - 155.1 - 360.6 - 360.6
Foreign exchange
derivatives - 15.1 - 15.1 - 38.9 - 38.9
Unquoted equity
instruments - - 2.9 2.9 - - 18.0 18.0
- 395.0 2.9 397.9 - 3,801.9 18.0 3,819.9
Financial
liabilities
Energy derivatives (37.3) (507.1) (80.5) (624.9) (9.5) (3,062.9) - (3,072.4)
Interest rate
derivatives - (60.7) - (60.7) - (54.6) - (54.6)
Foreign exchange
derivatives - (17.5) - (17.5) - (25.1) - (25.1)
Loans and borrowings - (37.1) - (37.1) - (199.3) - (199.3)
(37.3) (622.4) (80.5) (740.2) (9.5) (3,341.9) - (3,351.4)
15. Financial risk management (continued)
March 2023
Level Level Level
1 2 3 Total
GBPm GBPm GBPm GBPm
Financial assets
Energy derivatives - 743.9 22.0 765.9
Interest rate derivatives - 227.8 - 227.8
Foreign exchange derivatives - 11.5 - 11.5
Unquoted equity instruments - - 27.4 27.4
- 983.2 49.4 1,032.6
Financial liabilities
Energy derivatives (189.6) (939.4) (23.8) (1,152.8)
Interest rate derivatives - (92.6) - (92.6)
Foreign exchange derivatives - (18.9) - (18.9)
Loans and borrowings - (154.6) - (154.6)
(189.6) (1,205.5) (23.8) (1,418.9)
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 2023 (2022: none, March 2023: 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 2023 (2022:
none, March 2023: 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 30 September 30 September
2023 2023 2022
GBPm GBPm GBPm
Level 3 financial instruments fair value
8.7 at 1 April 25.6 8.7
Transfer from financial assets (note
- 2(v)) (24.1) -
18.7 Additions (cash contributions) - 9.3
Remeasurement loss recognise in income
(1.8) statement (78.7) -
Remeasurement loss recognised in other
- comprehensive income (0.4) -
Additions - new instruments entered
400.1 in the period - -
Deferred day 1 gains on instruments
(400.1) entered in the period - -
Level 3 financial instruments fair
25.6 value (77.6) 18.0
16. Retirement benefit obligations
Defined Benefit Schemes
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 also has an Employer Financed Retirement Benefit
Scheme and a defined contribution scheme, SSE Pensions+ under a
master trust with Aviva, details of which were provided in the
Group's Financial Statements to 31 March 2023.
Summary of Defined Benefit Pension Schemes:
Movement Movement recognised
recognised in respect of the
in the Pension pension asset in
SoCI asset the SoCI Pension asset
March March September September September September
2023 2023 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
(152.0) 366.6 Scottish Hydro Electric (47.7) (105.9) 324.2 413.4
72.8 174.5 SSE Southern (102.1) 150.3 86.8 235.1
Net actuarial (loss)/gain
(79.2) 541.1 and combined assets (149.8) 44.4 411.0 648.5
The last triennial actuarial valuation of the Scottish Hydro
Electric Pension Scheme was carried out as at 31 March 2021 and
showed a surplus of GBP268.3m 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 deficit on the valuation basis for two successive
quarterly valuations. Consequently, the Group has not and is not
expected to make contributions to the scheme in the year ending 31
March 2024.
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 GBP79.6m 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 GBP28.2m are expected to be paid by
the Group during the year ending on 31 March 2024, including
deficit repair contributions of GBP16.3m of which GBP9.1m have been
paid to 30 September 2023. The deficit repair contribution will be
made annually until March 2027, increasing in line with inflation
each year.
16. Retirement benefit obligations (continued)
A summary of the movement presented in the statement of
comprehensive income is shown below:
Six months Six months
Year ended ended 30 ended 30
31 March September September
2023 2023 2022
GBPm GBPm GBPm
(79.2) Actuarial (losses)/gains recognised (149.8) 44.4
19.8 Deferred tax thereon 37.5 (11.1)
Net (loss)/gain recognised in statement (112.3
(59.4) of comprehensive income ) 33.3
The major assumptions used by the actuaries in both schemes in
preparing the IAS19 valuations were:
September September
March 2023 2023 2022
3.5% Rate of increase in pensionable salaries 3.5% 4.1%
3.2% Rate of increase in pension payments 3.2% 3.6%
4.8% Discount rate 5.5% 5.2%
3.2% Inflation rate 3.2% 3.6%
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:
September September
March 2023 2023 2022
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 27
SSE Southern Pension Scheme
22 24 Currently aged 65 22 25 23 25
24 26 Currently aged 45 24 26 24 26
17. Capital commitments
September September
March 2023 2023 2022
GBPm GBPm GBPm
Capital Expenditure
1,035.6 Contracted for but not provided 1,190.0 848.2
18. 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 2023 September 2022
Sale Sale
of goods Purchase Amounts Amounts of goods Purchase Amounts Amounts
and of goods owed owed and of goods owed owed
services and services from to services and services from to
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Joint ventures:
Marchwood Power
Limited 0.4 (17.4) - (17.7) 56.7 (125.5) - (34.7)
Clyde Windfarm
(Scotland) Limited 2.8 (53.9) - (32.2) 2.4 (124.9) 1.6 (48.6)
Beatrice Offshore
Windfarm Limited 2.6 (30.9) 2.7 (7.4) 2.3 (83.9) 1.3 (18.9)
Stronelairg Windfarm
Limited 1.3 (29.2) - (17.2) 1.1 (74.1) - (28.4)
Dunmaglass Windfarm
Limited 0.6 (13.2) - (7.4) 0.5 (34.1) - (13.1)
Neos Networks Limited 1.8 (14.6) 2.3 (3.9) 2.8 (11.7) 52.8 (19.0)
Seagreen Wind Energy
Limited 14.3 (30.5) 10.3 (10.2) 14.8 (4.7) 13.7 (4.5)
Doggerbank A, B
and C 17.2 - 13.0 - 12.4 - 7.1 -
Other Joint Ventures 8.2 (64.5) 3.0 (45.0) 5.5 (90.3) 1.8 (46.6)
March 2023
Sale of Purchase Amounts Amounts
goods of goods owed owed
and services and services from to
GBPm GBPm GBPm GBPm
Joint ventures:
Marchwood Power Limited 122.4 (228.5) - (16.8)
Clyde Windfarm (Scotland) Limited 4.8 (280.5) 0.1 (49.5)
Beatrice Offshore Windfarm Limited 4.7 (176.5) 1.0 (8.7)
Stronelairg Windfarm Limited 2.4 (146.2) - (21.7)
Dunmaglass Windfarm Limited 1.1 (66.4) - (9.1)
Neos Networks Limited 3.8 (23.8) 46.2 (5.8)
Seagreen Wind Energy Limited 35.2 (44.4) 22.9 (7.5)
Doggerbank A, B and C 25.4 - 7.6 -
Other Joint Ventures 14.0 (219.2) 1.1 (50.8)
18. Related party transactions (continued)
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. No provisions have been made for doubtful
debts in respect of the amounts owed by the related parties.
In addition to the above at 30 September 2023, the Group was
owed the following loans from its principal joint ventures:
Marchwood Power Limited GBP19.0m (2022: GBP32.6m, March 2023:
GBP25.7m); Triton Power Holdings Limited GBPnil (2022: GBP48.0m,
March 2023: GBPnil); Clyde Windfarm (Scotland) Limited GBP127.1m
(2022: GBP127.1m, March 2023: GBP127.1m); Dunmaglass Windfarm
Limited GBP46.5m (2022: GBP46.5m, March 2023: GBP46.6m);
Stronelairg Windfarm Limited GBP88.7m (2022: GBP88.7m, March 2023:
GBP88.7m); Neos Networks Limited GBP103.1m (2022: GBP51.6m, March
2023: GBP56.0m); Seagreen Wind Energy Limited GBP611.4m (2022:
GBP344.1m, March 2023: GBP593.1m) and SSE Slough Multifuel Limited
GBP143.9m (2022: GBP102.0m, March 2023: GBP128.0m).
19. 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 GB 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, which was not as pronounced as in the previous year due to
more available market capacity. 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
2023/24. This, combined with a resilient business model, helps the
Group manage and minimise the human, operational and financial
impacts from external conditions such as volatile 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 2023 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
* 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. While no new emerging Principal Risks were
identified during the 22/23 review, important revisions have been
made to the descriptions of each Principal Risk to take account of
key changes and corresponding mitigations that were introduced
during the year.
For more information on these risks, and the wider system of
internal control, please refer to pages 68 to 77 of the SSE plc
2023 Annual Report which is available on the company website
www.sse.com .
Statement of director's 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 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; and
(b) DTR 4.2.8R of the Disclosure 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.
(c) DTR 4.2.10 of the Disclosure 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 Gregor Alexander
Chief Executive Finance Director
London
14 November 2023
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 2023 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 19. 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 2023 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
Glasgow
14 November 2023
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FFIEELEDSEFF
(END) Dow Jones Newswires
November 15, 2023 02:00 ET (07:00 GMT)
Sse (LSE:SSE)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Sse (LSE:SSE)
Gráfica de Acción Histórica
De May 2023 a May 2024
