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SSE swings back to profit as retail sale on track for “early 2020” sale

For the six months to 30 September, swung back to a reported profit of £128.9mln from losses of £284.6mln a year ago

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SSE is more reliant on wind and hydro power these days

SSE PLC (LON:SSE) said completion of the sale of its retail energy arm to OVO is on course for completion in “early 2020” as it reported improved earning from the rest of its business in the first half of 2019.

The FTSE 100-listed group, which agreed the retail arm disposal in September after previous plans for a tie-up with Npower collapsed at the start of the year, revealed operating losses of £511.8mln for the outgoing business after it wrote down the carrying value of its assets by £489.1mln to reflect the sale price and expected transaction fees.

SSE has also agreed the disposal of its interest in certain gas production assets, but the retention of gas hedging contracts means that full-year earnings per share are estimated to be slightly higher, 83p-88p rather than the 80p-85p previously indicated. 

Furthermore, as the European Commission gave the green light for the capacity market, SSE said this means forecast adjusted earnings per share (EPS) is no longer subject to the receipt of £110mln of capacity market payments since the suspension was lifted until the end of September.

Excluding the residential arm, the power company is becoming increasingly focused on regulated electricity networks and renewable energy, especially having decided to shut down its last coal-fired plant by next March.

Wet and windy weather since the end of the half-year also bodes well for the contribution from hydro and wind assets to full-year adjusted EPS, with renewable output for the year to date “slightly ahead of plan”.

For the six months to end-September, adjusted pretax profits on continuing operations were up 15% year on year to £263.4mln, while at the reported level the group swung back to a profit of £128.9mln from losses of £284.6mln.

The interim dividend was reduced by 18% to 24p, reflecting the reduced long-term dividend policy outlined in May.

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