TIDMSSE
RNS Number : 0240V
SSE PLC
08 December 2021
SSE plc
SSE reaffirms commitment to Net Zero Acceleration Programme
8 December 2021
The SSE plc Board ("the Board") notes the publication of a
letter from Elliott Advisors to Sir John Manzoni on 7 December.
On 17 November 2021, SSE announced its 'Net Zero Acceleration
Programme' to accelerate sustainable, clean growth, lead the energy
transition and maximise value for all stakeholders. The plans
include a substantially increased, fully funded GBP12.5bn strategic
capital investment plan to 2026 as well as ambitious targets to
2031.
The Board's evaluation of SSE's strategic review
As part of SSE's strategy review, the Board evaluated and
constructively challenged a wide range of possible strategic
options, across both electricity networks and SSE Renewables,
including the separation of SSE Renewables. This was a rigorous and
comprehensive process that involved independent financial and
external legal advice, including independent testing by a
third-party investment bank appointed by the Board specifically for
this purpose. It was informed by constructive engagement with a
broad array of shareholders and culminated in the Board's unanimous
approval of the strategic plan that was presented to shareholders
in November.
The Board is confident that the Net Zero Acceleration Programme
represents the optimal pathway for creating long-term value for
shareholders and that SSE is best positioned to capture the
substantial growth opportunities arising from net zero as an
integrated low-carbon electricity infrastructure company.
The Net Zero Acceleration Programme positions SSE as the UK's
clean energy champion:
-- doubling existing renewables capacity by 2026;
-- increasing and maintaining a development pipeline in excess
of 15GW and targeting a fivefold increase in renewables output by
2031;
-- delivering strong investment in electricity networks with a c10% gross RAV CAGR; and
-- deploying flexible energy solutions and exporting its renewables capabilities overseas.
It does so through a fully funded GBP12.5bn programme which is
supported by ratings agencies and which delivers attractive returns
to shareholders through an adjusted EPS CAGR of 5-7% and a dividend
of at least GBP3.50 through to 2026.
Having carefully considered it among other options, the Board
concluded categorically that the separation of SSE Renewables would
not be the best route to maximise growth, execution and value
creation for all stakeholders. Full detail on SSE's strategic
review and the reasons behind this conclusion is available at the
links provided below.
Board composition and expertise
SSE upholds the highest levels of governance and brings a range
of perspectives and a breadth of relevant skills and deep
experience in energy, including in renewables, critical
infrastructure and large project delivery. Furthermore, the Board
has substantial experience in finance, government and wider
stakeholder engagement. SSE's Board comprises eight independent
non-executive directors and three executive directors, and is led
by the Chair, who was first appointed to the Board in September
2020 and became Chair on 1 April 2021.
Positive stakeholder reaction
The entire GBP12.5bn investment programme is fully funded and
SSE has received positive initial feedback from shareholders. It
prompted Moody's to affirm SSE's Baa1 rating and upgrade their
outlook to stable, with S&P since affirming SSE's rating at
BBB+. The significant increase in investment in net zero critical
projects, which will see SSE enable over 25% of the UK Government's
2030 40GW offshore wind target and over 20% of upcoming UK
electricity networks investment, was also welcomed across a wide
range of stakeholders, including the UK Prime Minister, Chancellor
of the Exchequer, Secretary of State for Business, Energy and
Industrial Strategy, and Energy Minister.
Establishing SSE as a clean energy champion in a net zero
world
SSE is well positioned to capture the attractive growth
opportunities under the Net Zero Acceleration Programme due to the
significant work that has been undertaken in recent years to
sharpen its focus on the electricity assets needed in the energy
transition. This transformation began with the sale of the GB
household retail supply business to OVO and continued through a
successful disposals programme that generated proceeds of GBP2.8bn
(including SGN, Energy from Waste, E&P and Contracting) and has
delivered attractive shareholder returns to date. Since SSE first
announced the disposal of its domestic retail business to OVO in
September 2019, SSE has achieved a TSR of 54%, which compares to a
TSR of 6% and 24% for the FTSE100 and Euro Stoxx Utilities Index
respectively.
Sir John Manzoni, Chair of SSE plc, said:
"The SSE Board is absolutely clear that the accelerated growth
plan we set out on 17 November is the right one, and that we have
the capacity and strength to deliver it, with a management team
that is overseeing the construction of more offshore wind than any
other company in the world. We are now focused on execution in
order to fulfil the growth potential available to the Group thanks
to its clear net zero aligned strategy. The Board maintains the
highest corporate governance standards and remains fully engaged on
the evolution of the strategy to maximise shareholder value. The
carefully chosen composition of the Group means we benefit from a
clear focus on low-carbon electricity while also maintaining a
unique range of options in high-growth areas right across the net
zero value chain."
Alistair Phillips-Davies, Chief Executive, said:
"Our Net Zero Acceleration Programme represents the optimal
pathway to accelerate clean growth, lead the energy transition and
create value for all stakeholders. Since its launch, we've
continued to have constructive and supportive discussions with our
major shareholders and stakeholders about the plan.
"We are the UK's clean energy champion; our plans maximise our
potential and will mean that we are investing around GBP7million a
day, enabling delivery of over 25% of the UK Government's 2030 40GW
offshore wind target and over 20% of upcoming UK electricity
networks investment, whilst deploying flexibility solutions and
exporting our renewables capabilities overseas.
"Separation puts at risk valuable growth options across the
clean energy value chain, would jeopardise our ability to finance
and deliver the major infrastructure the UK needs to create jobs
and achieve net zero, and would lose shared skills that benefit the
group."
ENDS
SSE's Net Zero Acceleration Plan announcement can be found here,
with the rationale for deciding against separation of SSE
Renewables outlined on page 4:
https://www.sse.com/media/hiipityg/net-zero-acceleration-programme-rns-final.pdf
An accompanying shareholder Q&A was published here, with the
question as to whether the Board had considered a separation of SSE
Renewables answered in detail on slide 5:
https://www.sse.com/media/2fgpxtbo/strategic-update-appendix-shareholder-q-a-final.pdf
Contact:
Media:
SSE plc (Glenn Barber, Lee-Ann Fullerton, Kenny Angove)
media@sse.com | +44 (0)345 0760 530
MHP Communications (Oliver Hughes / Simon Hockridge)
sse@mhpc.com | +44 (0)788 5224 532 / +44 (0)770 9496 125
Investors:
SSE plc (Sally Fairbairn, Michael Livingston)
ir@sse.com | +44 (0)345 0760 530
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END
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December 08, 2021 10:25 ET (15:25 GMT)
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