SSE’s Preliminary Results for the year to 31 March 2017

SSE’s Preliminary Results for the year to 31 March 2017

  • Adjusted profit before tax up 2.1%, to £1,545.9m;
  • Wholesale operating profit of £514.6m, up 16.3% from last year’s £442.5m - due to improved financial performance in thermal generation and Energy Portfolio Management and despite lower renewable energy output;
  • Networks operating profit up 1.1% to £936.5m from last year’s £926.6m - due to an increase in Electricity Distribution offsetting reductions in operating profits from Electricity Transmission and SGN;
  • Retail operating profit down 7.2% to £422.3m from last year’s £455.2m - due to increases in non-energy costs, the impact of the household gas tariff reduction in March 2016 and falling customer numbers – 8 million at 31 March 2017;
  • Economic contribution to UK economy of around £9.3bn; taking the total for the last five years to £46.3bn;
  • Investment and capital and investment expenditure up 6.6% to £1.7bn; with around £6bn to be invested across the four years 2016-2020.

SSE has today announced its preliminary results for the year to 31 March 2017 during which adjusted profit before tax was up by 2.1% to £1,545.9m. SSE recorded revenues of £29,037.9m, up slightly from £28,781.3m in 2016. In the Republic of Ireland, revenues increased in the last financial year to £746.6m from £745.9m. 

Despite a small increase in adjusted profits, as set out in its Notification of Close Period Statement on 30 March 2017, SSE currently anticipates a number of items will have an impact on the operating profit earned in the next financial year.

Profits from its Networks businesses, including SGN, are expected to be around £150m lower in 2017/18 compared with 2016/17 - or £100m on a like for like basis before including the impact of the SGN divestment.

A lower than expected clearing price in the 2017 Capacity Market Year-Ahead Auction, mean that, subject to the factors that affect profit in its market-based businesses, SSE continues to expect its dividend cover for 2017/18 will be within, but towards the bottom of, the expected range of around 1.2 times to around 1.4 times.

Richard Gillingwater, Chairman of SSE, said:

“The operating environment has presented a number of complex challenges to manage, but SSE is a resilient business with a clearly defined and long-term strategic framework comprising operational efficiency, disciplined investment in new assets and a balanced range of energy businesses. The complex challenges continue, but this strategy puts the company in good stead for the future and SSE is committed to delivering for its customers and its investors alike in the years ahead, and to continuing to meet its first financial objective of annual dividend growth of at least RPI inflation.”

Alistair Phillips-Davies, Chief Executive of SSE, said:

“We have been clear for some time that 2017/18 presents challenges, and the need to engage constructively with a new UK government as it takes forward energy policy will be a key priority for the year ahead and beyond. SSE will continue to focus on securing maximum value from our portfolio of Wholesale assets, achieving further efficiencies and customer service improvements in our Networks businesses, responding positively to evolution and change in our Retail markets and creating long-term value through investment of around £1.7bn in new assets in 2017/18.

“We’re proud to make around £9bn contribution to the UK economy every year, as well as directly or indirectly supporting 100,000 jobs. SSE continues to invest in the UK and Ireland to the sum of £1.7bn last year, with similar levels of investment expected next year and out to 2020.”

SSE has again published its economic contribution to the UK and Ireland alongside its financial results. It demonstrates the vast scale of economic activity SSE’s operations support in Scotland, the UK as a whole, and in Ireland.  2016/17 was a particularly strong year, with a £9.3bn contribution to the UK economy, representing 0.5% the entire UK’s entire Gross Domestic Product in the same year.  Furthermore, the Scottish contribution was especially significant with a contribution of £1.9bn to Scottish GDP, representing 1.4% of the Scottish economy.  The contribution to Ireland, while down slightly from previous years, still stands at €779m.

SSE is the only energy company in the UK to be involved in electricity transmission, electricity distribution and gas distribution. Its Wholesale segment consists of three business areas: Energy Portfolio Management (EPM) and Electricity Generation; Gas Storage; and Gas Production. SSE’s Retail segment supplies electricity and gas to 8 million household and business accounts. It also provides other related products and services, including telephone, broadband and boiler care, to household and business customers. The Enterprise business provides energy-related services to meet the needs of businesses and public sector organisations in a reliable and sustainable way.

The full statement can be viewed here.