SSE issues profit warning as it examines options for energy services business following Npower merger failure
Big Six energy company SSE today cut its earnings forecast for the year, blaming a European court decision suspending state aid for the UK’s energy capacity market.
The company said the court’s decision had the effect of removing the EU Commission’s state aid approval of the GB capacity market and introducing a “standstill period” until the scheme can be approved again.
Read more: SSE abandons takeover of rival energy provider Npower
The UK government said it intends to “ensure that suspended payments are made to holders of capacity market agreements for 2018,” however, SSE said it thinks it will not be able to recognise the remaining £60m income derived from the capacity market in the current financial year.
SSE said it expects this will reduce its expected adjusted earnings per share (EPS) by around 6p, with adjusted EPS now expected to be in the range of 64p to 69p.
The company also said that following the failed merger of its energy services business with Npower it was now examining its options for the business which could include a demerger and listing, a sale, or an alternative transaction.
If none of those options are available it said it may retain energy services as a separate, ring-fenced business within the SSE group.
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It said it would provide further updates on its plans in March.
The company reiterated its plans to deliver a full-year dividend of 97.5p per share.
Alistair Phillips-Davies, chief executive of SSE, said: "We continue to make good progress in our core businesses of regulated energy networks and renewable energy, complemented by flexible thermal generation and business energy sales. We have also demonstrated our ability to create value for shareholders through the recent sales of stakes in our telecoms business and selected onshore wind farms with expected proceeds of over £1bn. We are also making progress in assessing the options for the future of the energy services business.
"SSE has a clear strategy and good long-term prospects for its high-quality core businesses and assets that contribute to the transition to a low carbon economy and will support the creation of value and delivery of our dividend plan in the years to come."