Investment plan

SSE plans share sales, cut dividends to fund £ 12.5 billion investment plan; Fall Sharing Update

By Jaime Llinares Taboada

SSE PLC shares fell on Wednesday morning after the company revealed its intention to cut the dividend and sell stakes in its power grid divisions to accelerate investments in energy infrastructure through fiscal 2026.

The energy company’s net zero acceleration program includes a capital investment plan of £ 12.5 billion ($ 16.79 billion) through 2026, he said. This represents a 65% increase in annual investment over the previous plan, or £ 1bn per year. The money allocated to develop the renewable energy activity will represent 40% of the total and has more than doubled compared to the previous program.

To fund it, SSE plans to rebase the dividend to 60 pence per share in fiscal 2024, the company said. This compares to plans to pay 81 pence plus inflation for the current year ending March 31, 2022. SSE said the dividend cut will be followed by annual growth of at least 5% through March 2026, and that it expects to pay at least 350 pence per share in the five years up to fiscal 2026.

In addition, the investment plan will also be funded through the sale of a 25% stake in the businesses of SSEN Transmission and SSEN Distribution, the company said.

During the six-month period ended September 30, SSE reported that these two divisions contributed £ 335.0million to the group’s adjusted operating profit of £ 376.8million as renewable energy production was affected. by adverse weather conditions.

“The big question for the market before today was how [capital-expenditure plans] would be funded. SSE has taken the proven route of asset disposals and confirmed market fears that this will be accompanied by lower dividends, ”said RBC Capital Markets.

Shares at 08:39 GMT were down 5.4% to 1,569 pence.

SSE said the investment plan will add 4 gigawatts of renewable capacity, doubling current capacity, and increase the value of its power grid assets to £ 9 billion – net of supposed sales by 25%.

As a result, the company said it plans to increase its adjusted earnings per share at a compound annual growth rate of 5% to 7% through March 2026.

“Today’s announcement means that SSE will maximize its long-term potential and seize growth opportunities during a critical period for the energy sector, strengthening and expanding its core businesses, creating jobs, helping society at large and delivering attractive returns for shareholders, ”Alistair Phillips, Managing Director. -Davies said.

Write to Jaime Llinares Taboada at [email protected]; @JaimeLlinaresT