The high-profile chairman of Perth-based utility giant SSE is to step down but not for another year.
Lord Smith of Kelvin, the man leading the Scottish devolution commission tasked with exploring what new powers Holyrood should receive following September’s independence referendum, will leave the energy giant in January 2016.
The chairman of the Glasgow Commonwealth Games organising committee and UK Green Investment Bank is expected to be replaced by director Richard Gillingwater, who will take over the deputy chairman role in January and move into the top post a year later subject to shareholder approval.
Lord Smith said Mr Gillingwater was the perfect choice for the utility’s next chairman.
“He will bring to both roles extensive knowledge of the sector, outstanding experience of dealing with business issues in an FTSE 100 company, and first-class judgment in addressing the needs of all of SSE’s stakeholders, from customers to investors.”
The boardroom reshuffle came as SSE revealed an operating loss of £16.9 million in its energy supply division in the last six months.
The reverse, said to be a result of the competitive market and warm weather, was lower than in 2013 when rising costs forced SSE to increase household energy prices.
Operating profit in its wholesale business fell 83.4% to £26.7m as a result of lower electricity output from renewable sources due to the milder weather, and lower profitability in gas production which slumped by 80.7% to £13.3m.
Overall preliminary results for the six months to the end of September showed that the adjusted profit before tax rose by 4.6% to £370.3m.
This followed significant investment in the electricity network and the benefits of the value programme of asset and business disposals and operational efficiencies.
SSE’s retail group, which supports domestic and business customers, reported an overall operating profit of £37.3m, compared to an operating loss of £71.4m in the same period last year.
The networks business posted an increase in operating profit of 4.7% to £458.4m, reflecting continuing major investment in the infrastructure, pipes and wires used to transmit and distribute energy to homes and businesses across Great Britain.
Total capital expenditure and investment of £679.3m in Britain and Ireland was reported to help ensure a secure and affordable supply of energy to customers in future years.
Recognising the investment, an independent report by PwC found that SSE had delivered a £26.33 billion contribution to the economy in the last three years and supported on average 112,000 jobs.
SSE’s capital investment and expenditure for 2014/15 is now forecast to total just under £1.6bn.
Chief executive Alistair Phillips-Davies said: “In tough market conditions we have been able to deliver solid business results at the same time as being a responsible company that does the right thing by its employees and its customers.
“Successful energy companies are needed to invest in the UK and Ireland, and we are contributing around £9bn a year to the wider UK economy. But we think it’s also important to take a stand on issues for our customers and employees by committing to things like the Living Wage, the Fair Tax Mark and our own price freeze.”
Shares in SSE fell 2.8% or 44p to 1,536p.
Meanwhile, SSE has sold its Special Purpose Entities for seven street lighting projects in England to Equitix Infrastructure 3 Limited (Equitix).
The SPEs were established under the Private Finance Initiative, and are funded through a mix of senior debt and equity. The sale will have the immediate effect of reducing SSE’s net debt by £326.4m.