13th Nov 2013 08:31
LONDON (Alliance News) - SSE PLC said Wednesday pretax profits were down 11.7% for the six months to September 30, as its Wholesale and Networks divisions recorded strong operating profits but the firm's retail arm was hit with losses.
Pretax profit for the six month period was GBP354.0 million and adjusted earnings per share fell by 17.4% to 29.4 pence.
The firm has increased its interim dividend by 3.2% to 26.0 pence per share, stating that it remains on course to deliver a full-year dividend increase for 2013/14 that is greater than RPI inflation and to deliver above-RPI inflation dividend increases in the years after that.
SSE's Wholesale and Network divisions record operating profit for the period of GBP160.4 million and GBP455.8 million, respectively. The retail arm generated a GBP89.4 million operating loss for the period.
The company said that within its Networks division, 'Electricity Transmission' operating profit rose by 39.4% to GBP67.6 million, reflecting the major increase in investment in the asset base since 2010, and 'Electricity Distribution' operating profit rose by 9.0% to GBP232.0 million, reflecting the level and timing of revenue received and continuing efficiencies. The business line also benefited from SSE's share of Scotia Gas Networks as its operating profit rose by 12.6% to GBP138.2 million. The firm said 'Other Networks' operating profit increased by 22.4% to GBP18.0 million, reflecting in particular higher profits in its lighting arm.
The Wholesale division delivered mixed results; its 'Energy Portfolio Management and Electricity Generation' divisions saw operating profit fall by 13.4% to GBP86.2 million, reflecting the introduction of auctions for all CO2 emissions permits for generators and continued difficult market conditions for gas-fired generation, said SSE. Operating profit in 'Gas Production' jumped from GBP16.5 million to GBP69.0 million, reflecting output from the increased asset base resulting from acquisitions, in particular the purchase of a 50% interest in the Sean gas production assets in April 2013. The 'Gas Storage' line also recorded an operating profit fall of 24.6% to GBP5.2 million. SSE said this business continues to be hit by seasonal differentials in gas prices.
The Retail arm's 'Energy Supply' line recorded an operating loss of GBP115.4 million, compared with an operating profit of GBP48.3 million, reflecting the impact of higher wholesale gas, distribution, environmental and social costs, said SSE. 'Energy-related Services' operating profit also fell, down 3.7% to GBP26.0 million.
During the six month period, there was also capital and investment expenditure of GBP17.5 million, split between: Gas Production (GBP15.7 million); and Gas Storage (GBP1.8 million). In addition SSE invested GBP127.6 million, including working capital, to acquire a 50% stake in the Sean gas production assets.
The latest results come just weeks after the energy firm raised its household electricity and gas prices by 8.2% on average, for customers in Great Britain. One of the 'Big Six' suppliers in the UK, the rise came after British Gas and NPower raised their prices, followed by Scottish Power and EDF since, sparking further parliamentary debate on the topic.
UK Prime Minster David Cameron in October announced a review of green energy taxes after admitting they have contributed to recent increases in the average energy bill. The prime minister told MPs that household bills have been pushed up to "unacceptable" levels and he wants to cut back environmental regulations and charges which he said the last Labour government allowed to get out of control.
Green taxes, he said, accounted for GBP112 of the average annual dual fuel bill, equivalent to 9% of what customers are paying, and could be reduced.
Lord Smith of Kelvin, Chairman of SSE, said in a statement, "We will work constructively with politicians of all the major parties, and that is what we are doing. Looking ahead, we believe that operational and financial discipline is the best way to ensure we can continue to fulfill our core purpose of providing the energy people need in a reliable and sustainable way and therefore remunerate shareholders for their investment with sustained real dividend growth."
He adds, "As a business, SSE has a key role to play in addressing the energy 'trilemma' of security of supply, decarbonisation and affordability. That is a responsibility and privilege that this company does not take lightly. At times such as this, there is a great need for responsible companies which are committed to this country, committed to their customers and committed to financial discipline."
The firm also said it expects its reportable sectors, especially its Retail and Wholesale divisions to continue to fluctuate ahead of full-year reports.
Shares in SSE are trading up 0.9% at 1,417.00 pence per share in early trading Wednesday, making the energy firm one of the biggest movers on the FTSE 100.
By Alice Attwood; [email protected]; @AliceAtAlliance
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