9th Nov 2016 08:15
LONDON (Alliance News) - SSE PLC on Wednesday said it has increased its interim dividend payment and also confirmed it plans to return GBP500.0 million to shareholders next year, as the utility firm reported a decline in adjusted profit for the first half of the year.
The FTSE 100-listed company had previously guided that it would look to use the proceeds from the sale of part of its stake in UK gas distribution network SGN, and confirmed Wednesday that it will return the majority of the net proceeds to shareholders before December 2017 by way of a share buyback.
Alongside the GBP500.0 million to be returned, the remaining GBP100.0 million of net proceeds will be used to invest in the Stronelairg wind farm in Scotland. SSE said, by the time that investment has been made and the share buyback has been completed, then the impact on earnings thereafter should be "broadly neutral".
In addition, SSE upped its interim dividend payment for the six months to the end of September by 1.9% to 27.4 pence per share from 26.9 pence, despite reporting a large decline in adjusted profit in the period due to lower margins within both the retail and wholesale units and an "unusually high proportion" of hybrid bond coupon payments in the period.
Adjusted profit before tax, which strips out exceptional items, dropped to GBP475.8 million in the first half of 2016 from GBP548.8 million a year ago - but SSE stressed it is still the second largest profit it has ever reported in the first half of a year.
Statutory pretax profit in the first half, however, soared year-on-year to GBP615.9 million from GBP230.9 million a year ago.
Adjusted operating profit fell to GBP637.2 million from GBP701.9 million, with the networks division the only segment managing to report a rise in the first half of the year.
Networks delivered adjusted operating profit of GBP455.9 million from GBP451.6 million a year ago, while profit from wholesale fell to GBP121.0 million from GBP159.6 million and the retail unit's profit fell to GBP60.5 million from GBP101.5 million.
On a statutory basis, the wholesale division turned from an operating loss last year to make a profit, retail profit still almost halved while the network division still reported a year-on-year rise.
Overall adjusted earnings per share dropped to 34.2 pence from 45.9 pence a year ago.
SSE said it aims to deliver full year adjusted earnings per share of "at least" 120.0 pence. The rise in the annual dividend will also continue to increase in line with inflation, with a longer term aim of achieving a dividend cover within a range of around 1.2 times to 1.4 times over the three years to March 2019.
Capital investment will also reach its highest annual level ever at GBP1.85 billion this year, SSE said, with a total of GBP6.00 billion being invested by March 2020.
SSE shares were down 1.2% to 1,558.0 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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