20th May 2015 07:35
LONDON (Alliance News) - SSE PLC Wednesday reported annual results that were in line with analyst expectations, with profit experiencing a lift, as all of the power company's divisions remained profitable despite its wholesale division experiencing a fall in profit.
The FTSE 100 company reported an adjusted pretax profit, or before exceptional items and remeasurements, of GBP1.56 billion for the year ended March 31, up 0.9% year on year from GBP1.55 billion a year. SSE's wholesale, networks and retail segments were all profitable, whilst its total operating profit came in at GBP1.881 billion, experiencing a tiny lift from GBP1.880 billion.
Both adjusted pretax profit and operating profit were in line with analyst consensus, whilst pretax profit after exceptional items and remeasurements came in at GBP735.2 million, up from GBP592.5 million in the last financial year.
Revenue for the period totalled GBP31.65 billion, also up from GBP30.58 billion the year before.
The wholesale division reported an operating profit of GBP473.8 million, down from GBP634.6 million as it experienced a lower output of electricity from renewable and thermal energy sources and lower gas prices. SSE also said "very difficult market conditions" affecting thermal plants have continued to "persist for several years".
The networks division reported a rise in operating profit to GBP936.8 million from GBP920.3 million, reflecting investment in the asset base of electricity transmission, resulting in higher income.
The retail division reported a GBP456.8 million operating profit, up from GBP327.1 million a year earlier, which SSE said restored the division to a "similar level to that achieved in 2012/2013".
SSE raised its dividend for the full year by 2% to 88.4 pence per share, and said it "believes that the quality of its operations, assets and investment opportunities means it can continue to deliver a full-year dividend that at least keeps pace with RPI inflation in 2015/16 and in the subsequent years."
In the year, investment and capital expenditure fell by 6.8% to GBP1.47 billion compared to GBP1.58 billion a year earlier. In the current financial year, capital expenditure is expected to be around GBP1.75 billion.
In a separate statement on Wednesday, SSE said it had completed an assessment of the longevity of its remaining coal-fired generation capacity that it announced in March, and concluded that it should close the remaining 1,014 megawatts of capacity at the coal-fired Ferrybridge plant in Yorkshire by the end of March 2016.
"Market conditions for thermal power stations have been persistently difficult, requiring us to take the difficult decision we have announced this morning to end coal-fired generation at Ferrybridge power station by next March," it said in a statement.
SSE will retain the 1,995 megawatts of capacity at the Fiddler's Ferry plant in Lancashire, which will be entered into the auction for electricity generation at the end of 2015 for the period starting in 20198/2020. Current operations at Fiddler's Ferry remain unaffected, it said.
"The retention of some coal-fired capacity contributes to the diversity of SSE's generation portfolio and maintains Fiddler's Ferry's contribution to the security of electricity supplies," SSE said.
"The outcome of the review is consistent with SSE's long-standing objective to transition its generation assets from a portfolio weighted towards gas and coal towards a portfolio more weighted towards gas and renewable sources of energy," it said in a statement.
SSE said the age and economic viability of its coal fired stations was a factor in its decision, with some stations approaching 50 years old, meaning they require increasing levels of capital expenditure to maintain as well as struggling to meet environmental regulations and carbon reduction targets. It also cited the gas price "enjoying a comparative advantage over coal".
"Looking ahead, the expected pressures on adjusted earnings per share are likely to make themselves felt to some extent in 2015/16 but the company is well-placed to deliver in 2015/16 and beyond an annual dividend increase that at least keeps pace with inflation, while engaging constructively to secure positive outcomes for customers and investors as the new UK government sets out its energy priorities and as the Competition and Market Authority's market study moves towards its conclusion," said Chief Executive Alistair Phillips-Davies.
SSE shares were down 1.7% to 1,668.00 pence per share on Wednesday morning, the second worst FTSE 100 performer after Burberry Group PLC.
By Joshua Warner; [email protected]; @JoshAlliance
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