SSE profits spike after price hike and cold winter

published 22 May 2013

Energy group SSE enjoyed a strong increase in profits in the year to March thanks a rise in prices and a cold and long winter period.

The group, formerly known as Scottish & Southern Energy, saw adjusted pre-tax profits tax rise 5.6% to £1.4bn as it cut investment and capital expenditure 13% to £1.5bn.

In his last set of results before stepping down, Chief Executive Ian Marchant reported earnings up 4.7% to 4.7p per shares, the full-year dividend was hiked 5.1% to 84.2p per share.

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The board stressed that, for the current financial year and beyond, their intention was to deliver annual dividend increases greater than RPI inflation.

SSE's borrowing increased 8.7% during the year, with adjusted net debt and hybrid capital rising to £7.35bn at March 31st from £6.8bn a year earlier.

SSE, which raised domestic energy prices by 9.0% in October and saw customer complaints increase 5.1% over the year to 942, was hit just after its financial year-end by a £10.5m fine for mis-selling.

The results revealed that the group's mis-selling involved an estimated 23,000 customers being moved to a more expensive energy supply contract as a result of its sales activity.

Since April 3rd 2013, SSE has refunded around 5,000 customers a total of roughly £425,000 as redress for those who switched their energy supply to SSE after being given inaccurate information or being misled, and is continuing to assess the outstanding cases raised by customers.

As Deputy Chief Executive Alistair Phillips-Davies prepares to step up to the top role, it was reported in The Times newspaper on Tuesday that SSE may be subject to a £20-a-share bid from private equity firms.

Chairman Lord Smith of Kelvin said: "While there will be a change of chief executive in the company, and while the energy sector is subject to change driven by regulation, legislation, technology, demand for natural resources and the needs of customers, there are four things at SSE that won't change: the balanced business model; the focus on operations and investment; the dedication to customer service; and the commitment to sustained real growth in the dividend in the years ahead."