SSE has appointed an executive chair and separate board to oversee its household supply arm, which the UK energy company has been trying to offload through a sale or demerger.
Katie Bickerstaffe, the former head of Dixons Carphone UK, will take up the role of executive chair in June and will have a mandate to “deliver a future” for the business outside the rest of the group, which also owns energy generation and networks.
Ms Bickerstaffe had previously been appointed to head a new company that was to be formed from the spin-off and merger of SSE’s household supply business with Npower, another of the “big six” UK energy suppliers.
That deal was called off in December after SSE and Innogy, Npower’s German parent company, failed to reach agreement on providing sufficient financial support to the new company in order to allow it to list separately on the London Stock Exchange.
SSE has since been pursuing a possible sale of the business and has simultaneously also been examining whether the business could be demerged on its own, although analysts have long expressed scepticism over whether it would gain a listing as a standalone business.
Ms Bickerstaffe said the creation of a separate board would “increase the independence and autonomy of the business” and in the short term “enable it to strengthen its focus on customers, respond with greater agility in a fast-moving market, and deliver the progress that will underpin a future outside the SSE group”.
SSE Energy Services, as the domestic supply arm has been named, suffered a big drop in profits in the year to March 31, with operating profit falling to £35.3m from £221.8m a year earlier, which the company blamed on a government-mandated cap on UK household energy bills, which came into force in January, as well as a decision not to pass on the full impact of higher wholesale prices to customers
Overall, SSE reported a 59 per cent jump in profit to £1.37bn for the year to March 31, helped by a large number of asset sales. These included stakes in three onshore wind farms and a stake in its telecoms network.
However, on an adjusted basis, which strips out factors such as businesses marked for disposal, profit fell 38 per cent to £725.7m, a performance that chairman Richard Gillingwater described as “well short of what we hoped to achieve”.
SSE had already warned in February that its full-year earnings per share would be lower than previously anticipated following the suspension last year of a UK subsidy scheme that pays energy companies to provide back-up power over the winter.
The company also warned its adjusted operating profit in the new financial year, while “improving”, was likely to be negatively affected by factors such as output from its renewable electricity generation being hedged at below current market prices.