Tim Sharp
City Editor
INVESTORS in Perth-based energy giant SSE are to benefit from a 3% dividend
hike after the company said it expected to record an 8.8% rise in earnings
this year.
The predicted earnings rise comes despite SSE, which came under fire for
hiking the average retail bill by 8.2% in November, losing 250,000
customers in the last nine months and seeing gas and electricity use fall.
SSE chief executive Alistair Phillips-Davies said: “Despite what is clearly
a difficult business environment, the overall performance of the company
has been solid in 2013/14 and the efforts of employees, shown recently in
the response to the Christmas week storms, have been excellent.
“It is encouraging that SSE is on course to deliver real growth in the
dividend and increases in adjusted earnings per share and adjusted profit
before tax.
“The operating environment is not expected to be any easier in 2014/15 but
we have a well-balanced range of businesses and a good range of assets and
we are determined to maintain our operational focus and financial
discipline for the benefit of customers and investors.”
SSE, which trades as Scottish Hydro, Southern Electric and Swalec, said it
expects to meet market expectations of adjusted pre-tax profit of £1.535
billion for the financial year to 31 March 2014, up from £1.411bn in 2013.
It also anticipates raising its final dividend by 3%, suggesting a pay-out
of around 60.77p up from 59p last year. Its full year results will be
published on May 21.
SSE said that its retail customer numbers had fallen to 9.47m to 9.22m in
the nine months to the end of 2013.
Meanwhile, consumption of electricity has fallen 4.3% and gas is down 9.5%.
Output from its gas fired power stations and renewable sources rose during
the period but output from coal power fell.
SSE reiterated its view that the independence referendum represents a risk
for the company.
“SSE does not have a view on whether Scotland should remain part of the
United Kingdom and believes that constitutional arrangements are matters
for voters,” it said.
“Determining arrangements for the energy sector would be just one aspect of
the extensive negotiations between the Scottish and UK governments which
would follow a ‘yes’ vote in the forthcoming referendum.
“As stated by SSE in February 2012, the uncertainty associated with any
constitutional change represents increased legislative and regulatory risk,
of which SSE has to take account in making decisions.”
The energy sector has succeeded in persuading the Government to shift some
green energy costs from fuel bills to general taxation but Mr
Phillips-Davies called for further changes.
He said: “An energy policy can only be sustainable if it is affordable and
December’s decision by the UK Government to make changes to reduce the
future costs associated with the Energy Company Obligation is an important
step in the right direction.
“In the interests of fairness, however, there is still more to be done to
achieve what we have argued for some time is the fairest, most progressive
solution, which is to shift the full cost burden of environmental and
social policies from the energy bill payer to the taxpayer.”
The company warned that it could cut investment spending for next year due
to uncertainty over Government backing for offshore wind farms. It expects
to invest £1.5bn this year but said the five years from 2015 could see
spending fall below the typical £1.5bn to £1.7bn range of the past few years.
SSE’s shares closed up 3p or 0.23% at 1320p.
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