SSE’s latest results have revealed an almost £500 million writedown on the value of its energy services business being sold to Ovo Energy.
The figure is included in results published today (13 November) for the six months to 30 September.
The £489.1 million impairment is reflective of the transaction price agreed with Ovo and includes an estimate of total transaction fees to be incurred.
SSE agreed to sell its retail arm to challenger brand Ovo Energy in September this year in a deal which will see all 8,000 employees transferred.
SSE’s energy services business was reported as having an adjusted operating loss of £7.4 million, compared to £62.1 million last year. The higher loss in 2018/19 reflects a delay in passing through cost increases to customers in that period.
In addition, this year’s interims exclude depreciation as a result of the business being presented as held for sale.
Meanwhile gas and electricity customer accounts were at 5.6 million as of 30 September, compared to 6.04 million last year. This represents the slowest rate of net losses in recent years.
Other results showed revenue down 8 per cent to just £3 billion with group adjusted operating profit up 14 per cent to £491.9 million. This excludes the company’s energy services business and gas production assets which were up for sale during the period. Adjusted profit before tax was up 15 per cent to £263.4 million.
Wet and windy weather since September has resulted in renewable output for the year slightly ahead of plan with SSE Renewables’ operating profit at £149.9 million.
Its energy networks business, SSEN saw a profit of £260.9 million, representing an 11 per cent reduction from £294.3 million.
Group investment and capital expenditure was £638.2 million compared to £783.4 million in 2018, while adjusted net debt was £10.3 billion, up from £9.4 billion at March.
Writing in an overview of the interim results report, SSE’s chief executive Alistair Phillips-Davies, said: “Material progress continues to be made on execution of a strategy that puts SSE at the centre of efforts to decarbonise the UK and Irish economies.
“Key to this is our clear focus on regulated electricity networks and renewable energy.
“That focus has been sharpened by the recent progress made on the planned sale of SSE Energy Services to Ovo Energy and the measures taken to prepare for the proposed divestment of gas production assets.”
Richard Gillingwater, chair of SSE, said: “SSE is progressing well in the execution of its low-carbon strategy with the sale of SSE Energy Services leading to group more focussed on renewable energy and regulated electricity networks.
“SSE Renewables has an enviable development pipeline bolstered by recent success in securing valuable Contracts for Difference and we have strong business plans for the upcoming transmission price control.
“Our growth is aligned to net zero emissions and looking ahead to COP 26 in Glasgow next year, we will be encouraging even faster decarbonisation.
“Clearly some headwinds remain in the sector with political uncertainty and aspects of UK government policy being subject to judicial process, however, we have strong optionality to create value through the low carbon transition and deliver our dividend commitments.”
In September, SSE won contracts to build the UK’s largest offshore wind farm to-date, at Doggerbank off the east coast of England.
It will also build Scotland’s largest windfarm, Seagreen, off the coast of Fife which is due to be completed in the middle of the next decade.