Innogy takes £427m hit on npower value

energy: German giant, which is planning a merger with Perth’s SSE, blames competition for squeezing margins

German energy giant Innogy has cut the value of its UK energy business npower by €480 million (£427m) ahead of its plans to create a new energy supplier with Perth’s SSE.

SSE and npower announced last week they had reached an agreement to merge their operations to create a new energy supplier in the UK.

The new company will be listed on the London Stock Exchange with SSE shareholders holding 65.6% and Innogy 34.4%.

Announcing its results for the nine months ending in September, Innogy said it had taken the charge on British utility provider npower as it grapples with commercial and regulatory pressures in the UK.

It described the UK market as a “difficult situation”, with “very tough” competition squeezing margins.

Innogy reported adjusted earnings had risen 5% to €3.1 billion (£2.8bn) in the first nine months of the year.

“The competitive landscape in the UK retail business remains very tough and pressure on margins is very high,” the company said.

“The UK Government has initiated recently the legislative process to introduce a general price cap for standard variable tariffs and is proposing an expansion of the existing price cap for vulnerable households.

“As part of the annual impairment test, a goodwill impairment of €480m for the UK retail business was recognised. This impairment reflects the deterioration in commercial assumptions and tougher regulatory conditions.”

The headquarters of energy firm npower in Worcester.