OREANDA-NEWS. SSE plc has today announced its preliminary results for the year to 31 March 2015 during which adjusted profit before tax rose by 0.9% to ?1.56bn.

The broadly flat profits reflect a challenging year for the business with tough market conditions and lower output in its wholesale division.

Following a comprehensive review of its coal-fired power stations, SSE has today taken the difficult decision to close Ferrybridge C Power Station in Yorkshire by 31st March 2016.

Costs at the 48-year-old power station have been rising due to its age and it is forecast to lose ?100m over the next five years.  This combined with the impact of environmental legislation and tough market conditions make it unsustainable.

As the UK moves towards a cleaner and more sustainable energy mix, coal is gradually being phased out and the Government and other parties have made it clear that unabated coal doesn’t have a role in the future.

Due to more favourable forecasts for gas fired plant, SSE today announced it intends to re-open its Keadby Gas Fired Power Station in Lincolnshire by end of October 2015. SSE hopes to redeploy some Ferrybridge staff there and across other parts of the SSE group and will do everything it can to avoid compulsory redundancies.

Its Networks business saw operating profits up by 1.8% to ?936.8m due to continuing major investment in Transmission business and efficiencies in gas distribution.

SSE’s Retail group reported an operating profit of ?456.8m.  Within this division profits in energy supply, the part of the business that supplies energy to customers, are naturally volatile.  This year it reported a profit of ?368.7m, a return to a more typical level of profit and similar to 2012/13.  This was due to a sustained focus on driving operational efficiencies after a difficult 2013/14.

Its Energy Supply profit margin for the year 2014/15 was 4.6%, compared with 2.9% in 2013/14 and 4.2% in 2012/13, equating to ?69 per year for a typical dual fuel customer.  However SSE again expects to see a reduction in Energy Supply profit during 2015/16.  

Alistair Phillips-Davies, Chief Executive of SSE, said:
“It’s been a challenging year with some difficult decisions being made but it is a year in which we have continued to deliver for customers.  In a very competitive market we’ve cut prices twice in 13 months and extended our price guarantee which will mean SSE customers will have seen no increases for at least two and a half years.

“Every day SSE invests ?4m in Great Britain and Ireland – in jobs, in infrastructure and in the economy and it’s doing it responsibly.  This year we earned the Fair Tax Mark which guarantees we pay the right amount, at the right time and in the right way and we are one of the largest Living Wage employers in the UK.

“We will continue to engage constructively as the new UK government sets out its energy priorities and are keen to work with them to keep bills as low as possible and deliver a stable framework to facilitate much needed investment in energy infrastructure.”

Lord Smith of Kelvin, Chairman of SSE, said:
"The 2014/15 financial year was expected to present a number of major challenges, and it certainly did.  Politics and regulation loomed large with the first-ever auction for electricity generation capacity, the CMA investigation into the energy market, final proposals from Ofgem on the eight-year price control in electricity distribution and the extended build-up to the recent UK general election.

“Market conditions for thermal power stations have been persistently difficult, requiring us to take the difficult decision we have announced this morning to end coal-fired generation at Ferrybridge power station by next March; the new price control in distribution is driving significant change; and energy supply has once again proved to be a highly competitive business.

"We have throughout this maintained a strong focus on the needs of customers, with a significant reduction in the number and duration of power cuts experienced by our distribution customers; a price reduction and extended price freeze for our household energy customers across Britain; and new, integrated services for our business customers.  This focus on customers has been allied to strong financial discipline, with the value programme to streamline and simplify the business delivering significant cost and other efficiencies.  As I prepare to step down from the Board in July, I am confident that SSE is on a very sound footing to maintain its position as one of the most reliable dividend-paying stocks in the FTSE 100.”

SSE reports in three segments, reflecting its business structure.