Interim Management Statement

RNS Number : 7596Z

Scottish & Southern Energy PLC

24 July 2008

 



SCOTTISH AND SOUTHERN ENERGY PLC

INTERIM MANAGEMENT STATEMENT

Scottish and Southern Energy plc ('SSE') will today advise shareholders at its Annual General Meeting in Bournemouth about its performance since the start of the current financial year, which began on 1 April 2008. It has achieved continued growth in customer numbers, a further reduction in customer complaints and progress in its major investment programme.

Operational update

In the three months to 30 June 2008:

• SSE's total customer base - including electricity, gas and home services - passed nine million for the first time;

• within this, the number of electricity and gas customers increased by around 350,000 to 8.8 million, an increase of 4.3 million since the start of 2002, and the number of home services customers increased to 250,000; 

• the number of customer complaints sent to energywatch for resolution was 55, a significant fall compared with same three months in 2007; 

• gas-fired power stations achieved 81% of their maximum availability to generate electricity, excluding planned outages; coal-fired stations achieved 94%; 

• the output from hydro electric schemes (excluding Foyers) and wind farms (including Airtricity) was 896GWh, compared with 649GWh (excluding Airtricity) in the same three months in 2007;  

• the number of units of electricity distributed was 9.9TWh, compared with 9.6TWh in the same three months in 2007; 

• the number of Customer Minutes Lost in the Scottish Hydro Electric Power Distribution area was 16, compared with 15 in the same three months in 2007; in the Southern Electric Power Distribution area it was 15, compared with 16; 

• the amount of gas transported by Scotia Gas Networks, in which SSE has a 50% stake, increased by 12.9% to 32,774GWh; and 

• major investment projects have continued to make progress. The electricity generation developments at Glendoe and Marchwood are on course to be delivered on schedule. As set out in the May 2008 preliminary results statement, the progress of installation of flue gas desulphurisation equipment at Fiddler's Ferry and Ferrybridge has been slower than expected, which has limited the stations' output in the first half of this financial year. Nevertheless, work is expected to be completed before the end of 2008. Dewatering of the first three of the nine caverns at the Aldbrough gas storage development is about to begin and, as stated in May 2008, SSE anticipates they will enter commercial operation later this year.

Key developments

Since the publication of its preliminary results, SSE has: established joint ventures to develop wind farms in Portugal and Italy; entered into a joint venture with Forth Ports plc to develop sustainable energy projects; continued its investment in emerging technologies, through Premium Power Corporation, a supplier of energy storage systems; and entered into an agreement to acquire a new customer service centre at Cumbernauld.  

On 21 July 2008 it was announced that SSE had secured consent to develop a 456MW wind farm at Clyde in southern Scotland. This takes SSE's onshore wind farm capacity in operation, construction or with consent for development, in the UK and Ireland, to almost 1,500MW.

Financial outlook

SSE remains on course to deliver sustained real dividend growth in the years ahead and, specifically, to deliver at least 4% annual real growth in respect of 2008/09 and 2009/10. Its balance sheet remains one of the strongest in the global utility sector, a point illustrated by the recently-issued credit ratings of 'A' (Standard & Poors) and 'A2' (Moody's).  

SSE will publish its interim results for 2007/08 on 12 November 2008. As previously stated, SSE's emphasis is on adjusted profit before tax on a full-year basis, as opposed to six-monthly, because interim results are more likely to fluctuate, with unusual variations or exceptional circumstances.

SSE said in its Annual Report 2008 that the majority of its adjusted profit before tax in 2007/08 was delivered in the first six months and that in 2008/09 it expected the reverse to be the case. In line with this, adjusted profit before tax for the six months to 30 September 2008 will be substantially lower than in the same six months in 2006 and 2007.

So far, 2008/09 has been characterised by extremely volatile wholesale markets for electricity and gas, and this may continue. Despite this, SSE still expects to deliver a modest increase in adjusted profit before tax in the year to 31 March 2009.

Ian Marchant, Chief Executive of SSE, said:

'At the start of this financial year, we said that our priority for 2008/09 was to deliver our target of at least 4% real growth in the dividend payable to shareholders, and we are on course to do that.

'Our commitment to maintaining our track record of dividend growth in the second decade of this century is founded on realising the benefits from our significantly-enhanced investment programme, including the many opportunities arising from our acquisition of Airtricity. There have been significant steps forward in this area, including new joint ventures in Sweden, Portugal and Italy and the consent to develop Clyde wind farm.

'The extent of the energy shock with which the entire global economy is having to contend has been well-documented, and its full impact on prices for electricity and gas in the UK has still to be felt. We are continuing to resist the pressure to put up prices for domestic customers, but doing so is becoming more difficult by the day. 

'In such uncertain times, it is clear that SSE's strategy - based on the efficient operation of, and investment in, a balanced range of regulated and non-regulated energy-related businesses - should come into its own. It provides the foundation for delivering the sustained real growth in the dividend to which we are so strongly committed.'

 

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