Scottish & Southern Energy H1 Profit Rises

11/11/2009 6:01 AM ET

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(RTTNews) - British gas and electricity provider Scottish and Southern Energy Plc (SSE.L: News ) reported Wednesday an increase in first-half profit, despite a drop in revenues, reflecting lower costs for the period. The company noted that the volume of electricity distributed and gas transported declined from the prior year. SSE has proposed a higher interim dividend and also said it is on course to deliver a full-year dividend of at least 70 pence per share.

For the first six-month period, the company's profit before tax increased to GBP 514.4 million from GBP 171.1 million in the previous year. Adjusted profit before tax was GBP 410.5 million, up from GBP 302.6 million a year ago.

During the quarter, the company has recorded certain re-measurements, which include an amount credited in movement on operating derivatives of GBP 191.5 million and a charge in respect of financial derivatives of GBP 73.4 million and had an impact of GBP 84.9 million on profit after tax. According to the company, there were no exceptional items for the six-month period ended September 30.

Profit attributable to equity shareholders of parent was GBP 377.9 million or 40.9 pence per share, compared to a profit of GBP 128.2 million or 14.7 pence per share in the same period last year.

Earnings, excluding certain re-measurements, were GBP 293 million or 31.7 pence per share, higher than GBP 218.3 million or 24.9 pence per share a year ago.

Excluding charge for deferred tax, net finance income relating to pension scheme and the impact of certain re-measurements, adjusted earnings increased to GBP 315.4 million or 34.2 pence per share from GBP 229.2 million or 26.3 pence per share in the prior year.

Revenues for the first half declined to GBP 8.04 billion from GBP 9.19 billion in the year earlier.

Segment-wise, Power systems generated revenues of GBP 212.2 million, compared to GBP 208.8 million in the prior year. The segment's revenues from Scotland increased to GBP 96.8 million from GBP 90.4 million a year ago, while revenues from England slightly decreased to GBP 115.4 million from GBP 118.4 million last year.

Revenues from Generation and Supply segment decreased to GBP 7.53 billion from GBP 8.67 billion in the same period last year. Other businesses posted revenues of GBP 303.8 million, compared to GBP 304.6 million in the prior year.

Operating profit for the period surged to GBP 710.4 million from GBP 184.6 million in the comparable period last year. Excluding certain re-measurements, operating profit increased to GBP 518.9 million from GBP 359.8 million in the previous year.

Cost of sales dropped to GBP 7.05 billion from GBP 8.79 billion in the preceding year. Excluding certain re-measurements, cost of sales were GBP 7.24 billion, down from GBP 8.62 billion a year ago.

Total investment and capital expenditure decreased 9.8% to GBP 630.8 million from GBP 699.2 million in the previous year. The company now expects capital and investment expenditure to be about GBP 1.4 billion for fiscal 2010.

Lord Smith of Kelvin, chairman said, "SSE's focus is always on full-year results, but it is clearly encouraging that financial performance in the first six months is consistent with our goal of a moderate, single digit increase in adjusted profit before tax for the financial year as a whole."

According to the company, the volume of electricity distributed during the six-month period was around 4% lower than the prior-year period and the volume of gas transported during the year also fell by around 14%.

Scottish and Southern Energy noted that energy supply remains intensely competitive and gaining and retaining customers' loyalty is key to long-term success. The company said it offers a variety of incentives to help customers use less energy and earn credits as a result and the credits are then applied as a reduction to the customers' energy bills.

In addition, the company has proposed an interim dividend of 21 pence per share, up 6.1% from last year's 19.8 pence, to shareholders of record on February 19, 2010, payable on March 26.

"Creating value from investment and enhancing value from operations remain central to delivering SSE's goal of sustained annual above-inflation increases in the dividend. Today's 6.1% increase takes our interim dividend to 21 pence per share and means we are on course to deliver a full-year dividend of at least 70 pence per share," added Lord Smith of Kelvin.