SSE publishes half-year financial results

As a UK-listed business, SSE has today published its financial results for the six months ending 30 September 2013, announcing a year-on-year drop in Group profits of 12 per cent and an operating loss of £115 million in its Energy Supply business.

When SSE announced changes to its domestic energy prices from 15 November, it explained that the cost of buying energy on global markets, transporting it to customers and paying for government-imposed social and environmental schemes had all risen. These higher costs are reflected in the losses sustained in Energy Supply for the first half of the year and contributed to a loss in the wider Retail business of £89 million.

During what was a challenging period, operating profit in Energy Portfolio Management and Electricity Generation also fell by 13%, while SSE’s Networks business saw operating profit increase by 14%.

SSE has continued to invest heavily into the energy infrastructure of Great Britain and Ireland, with investment and capital expenditure up 15% year-on-year at £804 million, or the equivalent of almost £4.5 million every day. This investment included new electricity transmission links in the North of Scotland and over £210 million of investment into renewables such as the 32MW Calliacher onshore wind farm.

In today’s publication (available on www.sse.com), SSE reported that in the six months to 30 September:

  • Adjusted profit before tax* fell by 11.7% to £354.0m;
  • Adjusted earnings per share* fell by 17.4% to 29.4 pence;
  • Interim dividend increased by 3.2% to 26.0 pence per share;
  • Investment and capital expenditure increased by 15.0% to £804.3m; and
  • Adjusted net debt and hybrid capital rose by £450m to £7.8bn.

Highlights of the first half of 2013/14 also included SSE becoming the UK’s biggest Living Wage employer, becoming the first energy supplier to end cold calling and committing to end automatic contract rollovers for small business customers.

Lord Smith of Kelvin, Chairman of SSE, said: "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.  SSE proudly ticks all three boxes.  The current debate about how to meet the country’s energy needs at the lowest possible cost to consumers while protecting the environment will hopefully lead to decisions that contribute to the long-term economic, social and environmental well-being of the UK and Ireland.

”Energy market conditions generally have been difficult for some time.  SSE’s balanced model of market-based and economically-regulated businesses means the company is in a good position to perform well even in testing environments such as this, and at times of greater uncertainty, SSE’s commitment to operational and financial discipline is particularly important.  In practice, that means helping Retail customers mitigate the impact of the increase in unit electricity and gas prices we unfortunately had to announce last month and also maintaining reliable supplies of electricity for our Networks customers through the winter months.  When looking at future investments, it also means taking account of the fact that key questions on energy policy in the UK are not yet resolved. 

“For this reason, 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 fulfil 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.”

*Adjusted profit before tax describes profit before tax before exceptional items, re-measurements arising from IAS 39 and after the removal of taxation on profits from jointly-controlled entities and associates. Following the adoption of IAS 19R, adjusted profit before tax is stated excluding interest costs on net pension scheme liabilities.