Overview
SSE has met its main financial objective of an annual increase in the full-year dividend that is at least equal to RPI inflation - recommended full-year dividend up 1.1% to 89.4p;
Adjusted earnings per share down 3.7% to 119.5p but ahead of target of at least 115p;
Dividend cover of 1.34 times, which is within the expected range of 1.2 times-1.4 times;
SSE is targeting a return to growth and adjusted earnings per share of at least 120p in 2016/17; and delivery of a full-year dividend that at least keeps pace with RPI inflation in 2016/17 and in the subsequent years;
Taking account of the general uncertainties in the operating environment, SSE expects its dividend cover could range from around 1.2 times to around 1.4 times over the three years to 2018/19, based on dividend increases that at least keep pace with RPI inflation;
Adjusted profit before tax fell by 3.3% to £1,513.5mand reported profit before tax fell by 19.3% to £593.3m;
All three reportable business segments contributed adjusted operating profit during 2015/16: Wholesale earned £442.5m, down 6.6%; Networks earned £926.6m, down 1.1% and Retail (including Enterprise) earned £455.2m, down 0.4%. Overall, operating profit is as expected when SSE published its Notification of Close Period on 24 March 2016, although the mix of operating profit is slightly different;
SSE recorded net exceptional charges of £889.8m before tax which was predominately related to impairment of certain Wholesale assets. Against this, SSE also recorded a gain on the disposal of an interest in its Clyde wind farm of £138.6m which was recorded directly in equity.
Capital and investment expenditure totalled £1.6bn and adjusted net debt and hybrid capital was £8.4bn at 31 March 2016, compared to £7.9bn at 30 September 2015. While underlying cash flows remain strong, the increase in adjusted net debt follows the acquisition of, and resulting investment in, new gas production and infrastructure assets acquired in October 2015, and unfavourable movements in foreign exchange rates;
SSE's total investment and capital expenditure is expected to be around £1.75bn in 2016/17 and in the range of £5.5-£6bn across the four years to March 2020;
SSE continues to focus on operational efficiency and has also secured over £1bn from its asset disposal programme. With a small amount still to complete, this programme has already achieved its objectives and will support future operations and investment;
SSE considers disposal of up to one third of its 50% equity stake in SGN Limited, with any proceeds being used to return or create value for shareholders; and
SSE continues to engage constructively with policy-makers and regulators. There is now increased clarity on aspects of the external operating environment with the conclusion of the CMA consideration of the RIIO ED1 framework, planned revisions to the UK Capacity Market and the Provisional Decision on Remedies from the CMA investigation into the supply and acquisition of energy.
