Shares of Perth-based renewable energy and electricity networks giant SSE plc rose 9% on Wednesday after it committed to building the largest onshore wind farm in the UK — and said its adjusted profit before tax rose 49% to £1.023 billion in the year to March 31, 2020.
The Perth firm said it has recommended a final dividend of 56p per share — making a full year dividend of 80p — and said it will continue to target delivery of its strong five-year dividend plan to 2022-23.
SSE said it has approved a final investment decision for the 103-turbine, 443MW Viking onshore wind farm in Shetland, which will be the largest onshore wind farm in the UK in terms of annual electricity output.
SSE shares rose 9% to about £13.85 to give the Perth company a stock market value of around £14.5 billion.
Reported profit before tax fell 55% to £587.6 million. “Reported results for the year to 31 March 2020 were significantly lower than the previous year, reflecting pre-tax exceptional charges of £738.7m recognised during the year …” said SSE.
SSE said it made £7.7 billion total contribution to the UK’s GDP and supported 83,040 UK jobs during the year.
In its outlook for 2020-21 and beyond, SSE said the impact of the coronavirus pandemic on operating profit is “estimated between £150m and £250m before mitigation.”
SSE chair Richard Gillingwater said: “2019/20 was a year of progress for SSE. Financially, there was a solid recovery from the previous year.
“Strategically, we reshaped the group with the sale of Energy Services and increased our focus on our core businesses of regulated electricity networks and renewable energy.
“Operationally, these businesses made significant progress towards our strategic priorities and ambition to be a leading energy company in a net zero world.
“Since March, SSE’s overriding priority has been to support the safe and reliable supply of the electricity upon which the people and organisations responding directly to coronavirus depend and the commitment of people across SSE in challenging circumstances has been outstanding.
“It is still too soon to predict with accuracy the full human, social, economic and business impact of coronavirus; but we have put in place a comprehensive plan to achieve the related objectives of sustaining the dividend payments which provides vital income for people’s pensions and savings – income which is now more important than ever; and promoting the long-term success of SSE for the benefit of all its stakeholders.
“Climate change remains a critical issue and we see significant opportunities to create sustainable value for shareholders and society through contributing to a much-needed green economic recovery and supporting the transition to net zero emissions.”
SSE has approved a final investment decision for the 103-turbine, 443MW Viking onshore wind farm in Shetland.
Viking is wholly owned by SSE Renewables and was developed in partnership with Viking Energy Shetland.
“SSE now awaits the outcome of the consultation on Ofgem’s minded-to position to approve a 600MW transmission connection from Shetland to the GB mainland, expected in July 2020,” said the Perth firm.
“Final approval from Ofgem was conditional on Viking wind farm reaching a positive final investment decision which this announcement confirms. The transmission connection is critical for Viking to proceed.
“SSE’s decision is conditional on the outcome of several industry code modifications which are currently in progress.
“These include the code changes which facilitate the contribution from the Distribution Network Operator, SHEPD, to the cost of the transmission link.
“Ofgem is expected to publish a decision on these ahead of the decision on the Needs Case.
“SSE’s capital expenditure on the wind farm is estimated to be around £580m, and this forms part of updated capital expenditure plans which are set out as part of SSE’s preliminary results on 17 June.
“Construction on the enabling works for the transmission link has started, with works on the wind farm starting late summer.
“Viking is the anchor project that commercially underpins the transmission link, which will play a critical role in Shetland’s security of supply needs.
“Both the wind farm and the link will bring vital socio-economic benefits to the islands, opening up much needed and sustainable diversification of the Shetland economy.”
SSE Renewables managing director Jim Smith, said: “Viking wind farm will help kickstart the green economic recovery, bringing much needed low-carbon investment to Shetland.
“In doing so, it will trigger the building of the associated transmission connection to the islands, which will itself help resolve longstanding security of supply issues on the island.”
Scottish Government Energy Minister Paul Wheelhouse, said: “This is excellent news for Shetland, and for Scotland’s renewable energy and climate change ambitions.
“The Viking wind farm project is also a great symbol for the green recovery that the Scottish Government is determined to foster and encourage, as we move through and beyond the current Coronavirus pandemic.
“This decision is of sufficient scale to act as the trigger to unlock the much anticipated major investment in a high voltage connection from Shetland to mainland Scotland, subject to a final decision by Ofgem which we expect shortly.
“It is essential that the community of Shetland benefits from this project and we look forward to further news of contracts being awarded to local businesses, as well as Scotland as a whole, during the construction phase.
“I am determined that this excellent outcome should be a starting point for similar investments and connections to unlock equivalent potential and benefits on the Western Isles and in Orkney.”