UK's SSE Mulls Network Sale
The UK's second-largest utility SSE reported net profits for the 12-months to end-March 2016 of £585.2mn (€756.8mn), down 12% year-on-year. Pre-tax profits were 19% lower at £593.3mn. Adjusted profit before tax fell by 3.3% to £1.51bn. SSE said it is targeting a return to growth in the current 2016/17 year.
In order to improve shareholder value, SSE said it is considering the disposal of up to one-third of its 50% stake in Scotia Gas Networks (SGN), which runs gas distribution in Scotland and southern England. SGN's other shareholders, each with 25%, are two Canadian pension funds.
SSE’s main segments – wholesale, retail and networks – all reported adjusted net profits in 2015/16. But in wholesale, gas production’s operating profit fell by 94% to £2.2mn because of lower gas prices. In retail, gas customers fell to 2.79mn at end-March 2016, from 2.96mn a year before.
SSE recorded pre-tax net exceptional charges of £889.8mn, on impairments of its gas production (£161.8mn), gas-fired (£326.4mn) and coal-fired (£287mn) generation, and gas storage (£150.9mn) assets. For production, £121.2mn of the charge related to its 20% stake in the Total-operated Laggan-Tormore gasfield. The Shetland gas plant, where offshore Laggan gas has come ashore since February, was inaugurated on May 16.
Laggan-Tormore and the onshore plant, at 100% equity, cost over £3.5bn to develop and the field has capacity to produce 500mn ft3/d (5.2bn m3/yr).
Impairments of SSE’s UK gas-fired power plants reflected ongoing low spark-spreads and “uncertainty over the enduring ability of the plants to benefit from the UK Government's Capacity Market auctions”, it said. The coal-fired charge arose from closure in March 2016 of its Ferrybridge plant in Yorkshire. However SSE recorded a £138.6m gain on the disposal of a stake in its Clyde windfarm.