No price rises until October pledges SSE

The first financial metric in utility SSE's full year results is the dividend, underlining the stock's attraction as a high yielder, but the amount paid out is likely to slightly disappoint the market.

The full year dividend is up 6.8% to 80.1p from 75.0p paid the year before, but was less than the 83.58p the market had been expecting.

The group is targeting a full year dividend increase of at least two percentage points above Retail Price Index (RPI) inflation in the current financial year, and above RPI inflation increases thereafter.

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SSE is now one of just five continuing FTSE 100 companies to have delivered better-than-inflation dividend growth every year since it floated in 1999, and ranks third among that group in terms of compound annual growth rate, the group noted.

Adjusted profit before tax for the year ended March 31st was also below expectations, at £1,335.7m (consensus forecast: £1,404.8m), but was up 2.0% on the previous year's £1,310.1m.

Adjusted earnings per share (EPS) edged up to 112.7p from 112.3p. The market had been expecting EPS of 118.07p.

Revenue rose to £31.7bn from £28.3bn the year before.

"Higher wholesale gas prices, falling demand for energy and a succession of winter storms presented major challenges for the wholesale, retail and networks parts of SSE," noted Lord Smith of Kelvin, the Chairman of SSE.

"The fact that, despite all of this, SSE has again delivered increases in the full-year dividend and in adjusted profit before tax demonstrates the resilience inherent in its balanced model of market-based and economically-regulated businesses, and the robustness of its strategy of focusing on operations and investment in each of those businesses," he added.

Investment and capital expenditure during the year rose 18.2% to £1,707m from £1,444m the year before. SSE's adjusted net debt and hybrid capital was £6.76bn at March 31st 2012, compared with £5.89bn at March 31st 2011.

The number of energy supply customers in Great Britain and Ireland at the end of the reporting period had fallen by 1% to 9.55m from 9.65m the year before, though the group has taken action to reverse this with the £19.1m acquisition, announced at the same time as the full year results, of Phoenix Supply, a regulated supplier of natural gas to 130,000 customers in Northern Ireland.

Electricity supplied to each household (customers in Great Britain only) on average declined to 4,104 kilowatt-hours (kWh) from 4,408 kWh the year before, while the gas supplied household average declined to 451 kWh from 563 kWh the year before.

The Retail Energy Supply business saw operating profit decline to £271.7m from £347.7m the year before, while operating profit from energy-related services to the retail market fell to £49.9m from £52.8m.

SSE's operating profit from supplying energy to a household account in Great Britain in 2011/12 was an average of around £30. The tail-off in operating profit in Energy Supply reflects the higher wholesale gas costs, falling energy consumption and the delay until September 2011 in implementing an increase in household energy prices.

SSE will not implement an increase in the price of household electricity or gas before October 2012 at the earliest, the company pledged. Beyond that, energy prices for household customers will ultimately depend on what happens in wholesale electricity and gas markets, with public policy and regulatory decisions on energy production, distribution and consumption also having a significant impact, the group added.

JH