NOTIFICATION OF PRE-CLOSE PERIOD AND MAJOR PROJECT

RNS Number : 9698D

Scottish & Southern Energy PLC

31 March 2011

 



SCOTTISH AND SOUTHERN ENERGY PLC

NOTIFICATION OF PRE-CLOSE PERIOD AND MAJOR PROJECTS UPDATE

SSE (Scottish and Southern Energy plc) will enter its close period on 1 April 2011, prior to the publication on Friday 20 May 2011 of its financial report for the year to 31 March 2011.

It expects to deliver a full-year dividend increase of at least 2% more than RPI inflation, and of at least 74.5 pence per share, and to report a level of adjusted profit before tax for 2010/11 which is in line with the consensus of analysts' forecasts *.

SSE's capital and investment expenditure for 2010/11 is forecast to be around £1.5bn.  It is designed to support future dividend growth and SSE continues to prioritise the successful completion of key large capital projects:

·     Clyde onshore wind farm(350MW development): Construction work is continuing at the site.   Consent has been secured from North Lanarkshire Council for the development of a permanent new primary radar facility to provide the necessary level of coverage for the site, and construction work on the new facility has begun.  It should become operational in early 2012.  The Civil Aviation Authority has concluded that a temporary Transponder Mandatory Zone over the wind farm is not a proportionate way of ensuring aviation safety in advance of that, but constructive discussions are continuing with NATS (En Route) plc and an alternative temporary solution is now being taken forward with the support of NATS and the CAA, with implementation planned for the next few weeks. Subject to that, the most advanced of the wind farm's three sections, South (130MW), should still be completed by the end of 2011, with the wind farm as a whole on course for completion in 2012. The wind farm is expected to produce over 1,000GWh of electricity in a typical year and its total construction cost is expected to be around £500m.

·     Griffin onshore wind farm(156MW development): Construction work is well under way at the site, and the delivery of turbines to the site has started, with installation also now getting under way. The wind farm should be completed in 2012. The electricity output is expected to be between 350GWh and 400GWh in a typical year and the construction cost is expected to be over £200m.

·     Greater Gabbard offshore wind farm (500MW development; SSE stake in Greater Gabbard Offshore Winds Limited - 50%): All 140 monopile foundations are in place at the wind farm and 100 turbines have now been installed. The first 18 turbines have now been energised.  GGOWL remains in a contractual dispute with Fluor Limited, the principal contractor for the wind farm, relating to the need for assurance of the quality of potentially up to 56 of the turbine foundations used in the early stages of development, and in relation to which GGOWL has received a claim for additional costs. Subject to the resolution of the dispute, the wind farm should be completed as planned in 2012. The total annual electricity output is expected to be around 1,900GWh in a typical year and SSE's share of the construction cost is expected to be around £650m (excluding connection to the electricity grid). 

·     Walney offshore wind farm (367MW development; SSE stake in Walney (UK) Offshore Windfarms Ltd - 25.1%): All 51 turbines for the first phase of the wind farm have been installed and all the array cables have been put in place and connected to the turbines.  The first 20 turbines have now been energised and the whole of phase one of the wind farm (183.6MW) is expected to be completed in the next few months. Construction of the second phase of the wind farm is now under way, with the wind farm as a whole on schedule for full commercial operation by 2012. SSE's share of the construction cost is expected to be around £250m (excluding connection to the electricity grid). 

·     Beauly-Denny replacement electricity transmission line (SSE section Beauly to Wharry Burn): Construction works in line with the £58.8m of initial funding authorised by Ofgem in September are well under way.  Substantive progress has been made in satisfying conditions associated with Scottish Ministers' consent to replace the line which apply to the SSE section and proposals were submitted to Ofgem in December for the remainder of SSE's share of the project expenditure (around £500m). Subject to continued progress, full construction work on the replacement line should begin in the new financial year, with completion in 2014.

·     Aldbrough gas storage capacity(around 350mcm development; SSE stake in joint venture with Statoil (UK) Ltd - 66.6%): SSE and Statoil (UK) Ltd are continuing to make solid progress at Aldbrough and have completed successfully the next major project milestone with six caverns now in commercial operation. These caverns will ultimately provide the opportunity to store more than 175 mcm (million cubic metres) or half of the ultimate working capacity for the development as a whole.  Construction work should be completed in 2012 and SSE's forecast total investment for the development remains around £290m.

Glendoe hydro electric scheme update:  The first of the two new tunnels required to     by-pass the blockage in the existing tunnel carrying water from the reservoir to the power station has been completed and the second tunnel has progressed beyond the geological fault zone at the site.  Electricity generation should resume in the first half of 2012. 

Ian Marchant, Chief Executive of SSE, said:

"Our programme of investment is designed to deliver assets in renewable energy, electricity networks and gas storage which will contribute to lower-carbon and secure supplies of energy and support SSE's long-term commitment to above-inflation dividend growth. We have made solid progress in recent months.  Discipline in project assessment, development and execution remains paramount for the rest of this financial year and beyond."

* Based on the consensus for adjusted profit before tax of £1,301m calculated as the average of analysts' forecasts at 25 March 2011. SSE delivered adjusted profit before tax of £1,290m in the previous financial year, 2009/10.

 

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