SSE profits fall; considers sale of SGN gas stake

Perth-based energy giant SSE said on Wednesday its profits fell in the year to March 31 and that it is considering the sale of up to one third of its 50% stake in gas distribution business SGN, “with any proceeds being used to return or create value for shareholders.”

Analysts estimated SSE could raise around £1 billion from the sale.

SSE said its adjusted profit before tax fell 3.3% to £1.51 billion, and reported profit before tax fell 19.3% to £593.3 million.

The company’s chief executive said SSE’s operating environment “presented a number of complex issues, including the impact of prevailing commodity prices and intense retail market competition.”

But CEO Alistair Phillips-Davies said there were grounds for “some cautious optimism” for the next couple of years.

Adjusted operating profit at the company’s wholesale business was £442.5 million, down 6.6%.

Its networks business earned £926.6 million, down 1.1%.

And SSE’s retail business earned £455.2 million, down 0.4%.

SSE said it recorded net exceptional charges of £889.8 million before tax, mainly related to “impairment of certain wholesale assets.”

“Against this, SSE also recorded a gain on the disposal of an interest in its Clyde wind farm of £138.6 million which was recorded directly in equity,” the company said.

SSE said its total investment and capital expenditure is expected to be around £1.75 billion in 2016-17 and between £5.5 billion and £6 billion in the four years to March 2020.

“SSE continues to focus on operational efficiency and has also secured over £1 billion from its asset disposal programme,” said the firm.

Phillips-Davies said: “It has been another year in which SSE has delivered what it said it would.

“Nevertheless, the operating environment presented a number of complex issues, including the impact of prevailing commodity prices and intense retail market competition.

“At the same time, SSE has continued to demonstrate financial discipline and commitment to its long-term strategic framework.

“The fact that some of the mist is beginning to clear around the legislative, political and regulatory environment means there are grounds for some cautious optimism for the next couple of years.

“SSE continues to invest for the future and in the year ahead plans almost £1.75 billion of investment into new energy infrastructure in the UK and Ireland and improvements in services for our customers.

“SSE will continue to identify opportunities for growth, whilst maintaining its financial discipline, enabling it to deliver for customers, achieve its core purpose and meet its dividend commitments.”

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Mark McSherry
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