SSE plc will publish its financial results for the year to 31 March 2018, on Friday 25 May. It expects earnings ahead of guidance for the 2017/2018 financial period, but says “the 2018/19 financial year is expected to be one of transition for the SSE group”.
The uncertainty is linked to the company’s ongoing plans to merge its UK retail business with Innogy’s to form a new independent supplier, but also, it says, because there is ambivalence over whether or not a legislation will be enacted to cap domestic gas and electricity tariffs.
But despite these concerns, “and their potential impact on adjusted earnings per share” it said in a statement it continues to target an annual increase in the full-year dividend for 2018/19 that is at least equal to inflation.
As to the proposed merger, it said “SSE will shortly complete the transfer of the GB energy supply and services businesses that are expected to be the subject of the planned demerger and subsequent merger with Npower to a wholly-owned subsidiary named SSE Energy Services Group.”
It added the new retail group will mean the transfer of 8,800 employees and said the timings of the merger are “still unclear”.
SSE finance director Gregor Alexander said the 2017/18 financial year had involved “significant challenges”, which he added “are not expected to relent” in the coming year.
He said: “Throughout the year, we will retain our strong operational and investment focus, while preparing the businesses in the SSE group for the important developments that lie ahead.”
The company said it was expecting to report adjusted earnings per share of just over 120p for 2017/2018, with adjusted operating profit from its wholesale division set to be “significantly higher” than a year earlier, thanks to increased output from its renewable and gas-fired generating plant.
But profits from its networks unit are expected to be £150 million lower than in 2016/2017, while its retail division will be broadly in line with the previous year.
The Competition and Markets Authority (CMA) is currently assessing whether the merger between SSE and Npower could significantly reduce competition in the supply of energy to domestic customers in the UK.