Perth-based energy giant SSE said on Thursday its plan to demerge its household energy and services business in Great Britain with Innogy subsidiary Npower to form a new listed UK company “remains on course but its timing, if approved, is not certain.”
The combination, if allowed, would create the UK’s second largest energy supplier.
On February 28, the UK’s Competition and Markets Authority (CMA) said it opened an investigation into whether the proposed merger of SSE Retail and Npower “could significantly reduce competition in the supply of energy to domestic customers in the UK.”
In a stock exchange statement on Thursday, SSE said: “The 2018-19 financial year is expected to be one of transition for the SSE group.
“The planned demerger of SSE’s GB household energy supply and services business remains on course but its timing, if approved, is not certain.
“Furthermore, within 2018-19, the impact and timing of the Domestic Gas and Electricity (Tariff) Cap Bill, if enacted, is unclear.
“Despite these uncertainties and their potential impact on adjusted earnings per share, SSE continues to target an annual increase in the full-year dividend for 201-19 that is at least equal to RPI inflation.”
SSE finance director Gregor Alexander said: “As expected, 2017-18 has involved a number of significant challenges, but SSE is a robust, sustainable business that has kept its strong operational focus on meeting the needs of customers.
“It has also kept its focus on efficient investment in the energy assets needed now and in the future.
“This means we are in a good position to deliver financial results ahead of our expectations at the start of this financial year.
“The challenges are not expected to relent in 2018-19, and it will be a year of major transition and change for SSE.
“Throughout the year, we will retain our strong operational and investment focus, while preparing the businesses in the SSE group for the important developments that lie ahead.
“In this way, we will do the best possible job for customers and other stakeholders, and build options and opportunities for the future, while delivering on our dividend commitment to investors.”
SSE said it expects to report that all three of its business segments — Wholesale, Networks and Retail — will have been profitable during 2017/18.
“Adjusted operating profit for Wholesale is expected to be significantly higher than in 2016-17, mainly reflecting the increase in electricity output from SSE’s renewable and gas-fired generation plant.
“As previously stated, adjusted operating profit for Networks is expected to be around £150 million lower than in 2016-17 …
“Adjusted operating profit for Retail is expected to be broadly in line with that earned in 2016-17.”