SSE half year results down - interim dividend up!
SSE half year results re-confirms full year inflation beating dividend increase
SSE half year results announcement on November 10th, 2010, reassured investors with profits sliding less than expected, and confirmation of its dividend still ahead of inflation, lifting interim dividend payments almost 7 per cent to 22.4 pence per share.
SSE's chief executive Ian Marchant said he had successfully "knocked on the head" this week's suggestions by analysts that SSE might freeze its dividend:
"I am very, very committed to the dividend policy.
If anything comes under discussion it would be capital expenditure."
Earlier Scottish & Southern Energy had announced a 9.4 per cent increase in its gas pricing for customers - to take effect from December 1 - due to this year's increase in gas prices, and it re-confirmed that trading conditions remained "very challenging for some time".
SSE half year results - summary
Scottish & Southern Energy reported a 6.1 per cent decline in half year adjusted pretax profits to £385.6m, from £410.5m the year before, hit by high wholesale gas prices and low renewable energy output. Adjusted earnings per share eased 2.9 per cent to 33.2 pence from 34.2 pence per share the year before.
Among other things, SSE half year results reflected a “weather-related” fall of 16% in the output of renewable energy from its hydroelectric schemes and wind farms, as well as an annual reduction in household electricity consumption of 5 per cent, while, in the same period, winning another 100.000 customer accounts.
Renewables capacity on the increase
Scottish & Southern Energy is in the process of optimisation of its wind farm portfolio, with the sale of assets in Great Britain and Europe. As well as commissioning 90MW of new onshore wind farm capacity and expecting first export of power from the Greater Gabbard offshore wind farm shortly, with the project “on course” for 2012 completion.
While overall investment was down, SSE’s investment in renewable generation was up by 17.6 per cent, from £320.8 million in the six months to the end of September 2009 to £377.4 million in the same period in 2010. In addition, £126.6 million was spent on its electricity networks during the latest period.
Around £1.3 billion in total had been invested in assets such as Greater Gabbard (in which over £600 million has now been invested, including grid connection costs), Walney and Clyde wind farms.
SSE confirmed that its investment programme, under which it will spend up to £1.7 billion in each of the five years to 2015, was well-financed following completion of "the very successful issue of hybrid capital" in September providing it with another source of attractively-priced funding.
Unfortunately Scottish & Southern Energy remains exposed to coal-fired power generation, which requires plant closures and replacement, in due course leaving the group disadvantaged for the move to decarbonisation.
The Group still hopes to open its first nuclear plant, together with consortium partners GDF Suez and Iberdrola, around 2023. The consortium has an option to buy a site for a new nuclear facility at Sellafield, Cumbria.
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