Utility group Scottish & Southern Energy (LON:SSE) said this morning it had increased its full year dividend by 5p to 75p – making it one of just six FTSE 100 companies to have delivered real dividend growth every year since 1999, when it paid its first dividend. The move came as the group reported a 1.6% rise in adjusted pre-tax profits for the full year to March 31, 2011, of £1,310.1m despite higher wholesale gas prices and investment and capex costs increasing by nearly 10% to £1,443.7m. The Scottish & Southern Energy share price rose by 21p to 1,348p during the morning.
The figures were reported at the same time as an announcement that Scottish & Southern had reached an agreement on the acquisition of a wind farm close to its existing Keadby power station in North Lincolnshire, from Renewable Energy Systems Group (RES). In addition, the group’s Wind Towers Ltd joint venture with and Marsh Wind Technology Ltd has completed the purchase of the Skykon wind turbine tower manufacturing and assembly plant at Machrihanish, Campbeltown, from its administrators.
The acquisition of Keadby Wind Farm gives Sccottish & Southern access to a 34 turbine project that received planning consent in 2008. Once constructed, the project will have an installed capacity of between 68 and 85MW and provide enough clean, green energy to power the equivalent of between 38,000 and 47,000 UK homes. Keadby wind farm is the largest consented wind farm in England and will be Scottish & Southern’s first consented wind farm in the country. Subject to a final investment decision, the group expects to begin construction of the wind farm in late 2011 with an expected project completion date of early 2014.
Finally, the group’s purchase of the Skykon wind turbine tower manufacturing and assembly plant through its Wind Towers joint venture, secures the future of the Machrihanish plant. Highlands and Islands Enterprise has agreed to provide an investment of £3.4m and Argyll and Bute Council is committing to a £12m infrastructure upgrade to the local port and roads and the JV partners will now focus on delivering the order book already in place. The Wind Towers joint venture was established in February 2011 and was granted preferred bidder status by the Skykon administrator in March 2011. In addition to producing wind turbine towers for onshore wind farms, the construction of new facilities to allow the production of turbine towers for offshore wind farms at the site is almost complete, which will enable it to participate in the next phase of offshore wind developments.
Commenting on today’s results, Lord Smith of Kelvin, the chairman of Scottish & Southern, said: “Despite lower-than-expected output of renewable energy and higher-than-forecast wholesale gas prices, SSE also achieved another increase in adjusted profit before tax. This reflects the fact that SSE's balanced business model, with both economically-regulated and market-based businesses, makes the company resilient and able to deliver solid financial results and annual dividend growth even when the business environment is challenging. Despite the challenges, SSE has delivered sector-leading service to energy customers and maintained a strong record of reliability in energy networks. Important additions have been made to its asset base through its investment programme, delivery of which is beginning to gather momentum. In doing so, the groundwork has been laid upon which SSE can extend its record of annual real dividend growth, with another increase, of at least 2% more than RPI inflation, being targeted for 2011/12.”
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