European Utilities Key Player Profiles: SSE

Table of Contents

• CATALYST
• SUMMARY
• METHODOLOGY
• ANALYSIS
  • Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
  • Key Players dominate power generation capacity market share in the Wmed competitive arena
  • Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
  • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
  • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
    • The Key Player Scorecard assesses utilities across four pillars: Performance, Scale, Growth and Exposure
      • The Performance pillar combines 5 financial metrics to measure business performance
      • The Scale pillar combines financial and operational metrics to measure the size of a utility
      • The Growth pillar measures the rate of growth of a utility' s financial and energy resources
      • The Exposure pillar combines both operational and financial measurements of risk
  • SSE scores 27.5/100 on Datamonitor' s European Utility Scorecard and ranks 24 out of the 31 Key Players covered
  • SSE' s ranking varies widely across the four pillars
    • SSE achieves an overall ranking of 24, with a utility score of 27.5
    • SSE scores well below the Key Player averages on the Growth and Exposure pillars
    • SSE is ahead of the average Key Player in Performance, yet with a slightly higher than average level of risk
    • SSE underperforms the Key Player average on both Scale and Growth
  • SSE Performance rank of 15 is buoyed by strong scores in return on energy volume and return on investment
    • SSE' s financial Performance score of 10.6 beats the Key Player average of 10.4
    • SSE beats the Key Player average and some top ten utilities on return on fixed assets, yet lags on other metrics
    • SSE significantly outperforms the Key Player average, and many top ten utilities, on return on energy volume and investment
  • SSE ranks 14 on the Scale pillar, despite a lack of gas supply volume
    • SSE scores below average on each metric, yet ranks above average on all but gas supply volume
    • In generation capacity, SSE ranks 15 with 10 GW
    • SSE is focused wholly on power, with a supply volume of 50 TWh
    • SSE has a 3.6% share of Key Player power customers
    • At 50 TWh, SSE ranks 14 in terms of power volume
    • SSE does not have a gas business
    • SSE ranks 12 and 17 in revenue and net income, respectively
  • SSE' s ranks 27 on the Growth pillar, despite a rank of 4 in revenue growth
    • SSE falls well below the Key Player average on the operating cash flow metric
    • SSE has a roughly average price earnings ratio, despite having a below average operating profit margin
    • SSE' s average annual revenue growth from 2001-2005 (17.6%) outpaced profit growth of 8.3%
    • From 2004-2005, SSE' s operating cash flow declined steeply (-33.4%), despite power supply volume growth of 4.6%
  • SSE' s Exposure rank of 25 is affected by a significant decline in operating cash flow
    • Only on the power NTR metric does SSE rank at the Key Player average
    • SSE has a short power NTR of -17.4%
    • SSE' s power supply obligations exceed its generation capacity, resulting in a short power NTR of 8,828 GW
    • SSE is heavily leveraged, with a debt to equity ratio of 101.6%
    • SSE ranks 18 of the 31 Key Players in terms of debt leverage
    • SSE' s operating cash flow has dropped -33.4%, while power volume has grown by 4.6%
  • SSE operations and customers are UK-based
    • Gas and coal are SSE' s main fuels for power generation
    • SSE has a 3.6% share of Key Player power customers
• APPENDIX
  • Definitions
  • Datamonitor Consulting
  • List of Tables
    • Table 1: The Key Players are drawn from across a diverse range of markets
    • Table 2: The Performance pillar combines 5 financial metrics to measure business performance
    • Table 3: The Scale pillar combines financial and operational metrics to measure the size of a utility
    • Table 4: The Growth pillar measures the rate of growth of a utility' s financial and energy resources
    • Table 5: The Exposure pillar combines both operational and financial measurements of risk
    • Table 6: SSE scores 27.5/100 on Datamonitor' s European Utility Scorecard and ranks 24 out of the 31 Key Players covered
    • Table 7: SSE scores 10.6/25 on the Performance pillar, and ranks 15 out of 31 on this measurement
    • Table 8: SSE scores 2.6/25 on the Scale pillar, and ranks 14 out of 31 on this measurement
    • Table 9: SSE scores 6.6/25 on the Growth pillar, and ranks 27 out of 31 on this measurement
    • Table 10: SSE scores 7.7/25 on the Exposure pillar, and ranks 25 out of 31 on this measurement
    • Table 11: SSE Performance rank of 15 is buoyed by strong scores in return on energy volume and return on investment
    • Table 12: SSE ranks 14 on the Scale pillar, despite a lack of gas supply volume
    • Table 13: SSE' s ranks 27 on the Growth pillar, despite a rank of 4 in revenue growth
    • Table 14: SSE' s Exposure rank of 25 is affected by a significant decline in operating cash flow
    • Table 15: Return on fixed assets
    • Table 16: Return on sales
    • Table 17: Operating profit margin
    • Table 18: Return on energy volume
    • Table 19: Return on investment
    • Table 20: Generation Capacity / EU25 market total
    • Table 21: Power Supply Volume / EU25 market total
    • Table 22: Gas Supply Volume / EU25 market total
    • Table 23: Net income / Net income of 94 leading utilities
    • Table 24: Revenue / Revenue of 94 leading utilities
    • Table 25: Revenue growth, 2001-2005 CAGR
    • Table 26: Profit growth, 2001-2005 CAGR
    • Table 27: Growth in operating cash flow, 2004 to 2005
    • Table 28: Gas supply volume growth, 2004-2005
    • Table 29: Growth in power supply volume, 2004 to 2005
    • Table 30: Power NTR / Power supply volume
    • Table 31: Gas NTR / Gas supply volume
    • Table 32: Debt leverage
    • Table 33: Growth in operational cash flow - Growth in energy volume
  • List of Figures
    • Figure 1: Datamonitor' s Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
    • Figure 2: Key Players dominate power generation capacity market share in the Wmed competitive arena
    • Figure 3: Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
    • Figure 4: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
    • Figure 5: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
    • Figure 6: SSE achieves an overall ranking of 24, with a utility score of 27.5
    • Figure 7: SSE scores well below the Key Player averages on the Growth and Exposure pillars
    • Figure 8: SSE is ahead of the average Key Player in Performance, yet with a slightly higher than average level of risk
    • Figure 9: SSE underperforms the Key Player average on both Scale and Growth
    • Figure 10: SSE' s financial Performance score of 10.6 beats the Key Player average of 10.4
    • Figure 11: SSE beats the Key Player average and some top ten utilities on return on fixed assets, yet lags on other metrics
    • Figure 12: SSE significantly outperforms the Key Player average, and many top ten utilities, on return on energy volume and investment
    • Figure 13: SSE scores below average on each metric, yet ranks above average on all but gas supply volume
    • Figure 14: In generation capacity, SSE ranks 15 with 10 GW
    • Figure 15: SSE is focused wholly on power, with a supply volume of 50 TWh
    • Figure 16: SSE has a 3.6% share of Key Player power customers
    • Figure 17: At 50 TWh, SSE ranks 14 in terms of power volume
    • Figure 18: SSE does not have a gas business
    • Figure 19: SSE ranks 12 and 17 in revenue and net income, respectively
    • Figure 20: SSE falls well below the Key Player average on the operating cash flow metric
    • Figure 21: SSE has a roughly average price earnings ratio, despite having a below average operating profit margin
    • Figure 22: SSE' s average annual revenue growth from 2001-2005 (17.6%) outpaced profit growth of 8.3%
    • Figure 23: From 2004-2005, SSE' s operating cash flow declined steeply (-33.4%), despite power supply volume growth of 4.6%
    • Figure 24: Only on the power NTR metric does SSE rank at the Key Player average
    • Figure 25: SSE has a short power NTR of -17.4%
    • Figure 26: SSE' s power supply obligations exceed its generation capacity, resulting in a short power NTR of 8,828 GW
    • Figure 27: SSE is heavily leveraged, with a debt to equity ratio of 101.6%
    • Figure 28: SSE ranks 18 of the 31 Key Players in terms of debt leverage
    • Figure 29: SSE' s operating cash flow has dropped -33.4%, while power volume has grown by 4.6%
    • Figure 30: Gas and coal are SSE' s main fuels for power generation
    • Figure 31: SSE has a 3.6% share of Key Player power customers