Dividend Targets to 2013

RNS Number : 1601M

Scottish & Southern Energy PLC

19 May 2010

 



SCOTTISH AND SOUTHERN ENERGY PLC

DIVIDEND TARGETS TO 2013

SSE (Scottish and Southern Energy plc) has set a target to increase its full-year dividend per share by at least 2% more than Retail Price Index (RPI) inflation* in each of the three financial years to March 2013, with annual above-inflation increases also being targeted for the subsequent years.

Between 2007 and 2010, SSE has targeted dividend increases of at least 4% above inflation in each of the three financial years, with sustained real growth thereafter.  It has decided to recommend to shareholders a final dividend of 49p per share for the year to March 2010, making a full-year dividend of 70p, an increase of 6.1% on the previous year. 

The first full-year dividend (25.7p per share) paid by SSE after it was formed was in 1999.  The recommended full-year dividend increase of 6.1% for 2010 represents its eleventh successive annual above-inflation dividend increase.  SSE is one of just seven FTSE 100 companies to have delivered better-than-inflation dividend growth every year during this period. 

The achievement of the targets for the next three years will mean SSE will have delivered 14 successive above-inflation annual dividend increases.  Assuming inflation of 2.8% (the average rate in the five years to March 2010) over each of the next three years, the achievement of these above-inflation targets will mean SSE's full-year dividend per share in 2013 will reach at least 80p, which is more than three times the first dividend it paid, in 1999.

Lord Smith of Kelvin, Chairman of SSE, said:

"Our first responsibility to shareholders is to deliver sustained real growth in the dividend.  Having assessed the progress made over the past few years, and the options for growth that we have developed for the next few years, the Board is confident that SSE can achieve these new targets for above-inflation dividend growth.

"The next few years will present major challenges in SSE's sector, including evolving energy markets.  Our strategy of balancing market-based and economically-regulated businesses gives SSE an in-built resilience and a breadth of opportunities to achieve the new dividend targets to 2013 and the scope to build on them with further real growth in the years beyond."

Ian Marchant, Chief Executive of SSE, said:

"Investors and pension funds rely on dividends for income, but dividend payments by UK companies fell by 15% last year.  In setting these new dividend targets, we have been very conscious of the need to make sure they are realistic and attainable, to give shareholders the fullest possible confidence in their achievability.  We believe they can be achieved while maintaining a dividend cover consistent with our established range.

"The new targets are consistent with financing future investment in assets which, in turn, will provide the additional cash flows to support dividend growth beyond 2013.  Those assets are needed to help deliver the secure, lower carbon supplies of energy on which people in the UK and Ireland will depend in the coming years."

* Based on the average annual rate of inflation in each of the 12 months to March

 

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