LORD Smith of Kelvin has announced he is to step down from his £362,000-a-year role as chairman of SSE.

The experienced businessman said he felt it was the right time for him to move on from the post that he took up in 2005 having first been appointed to the board in 2003.

He will be replaced by the company's senior independent director Richard Gillingwater.

Yesterday Lord Smith said: "It is a question of good corporate governance. When you have been on a board [for a long time] it is time to move on and give someone else a chance.

"Richard is an excellent man. He has a wealth of experience, has chaired lots of other companies and knows this industry inside out. I think he is just the person to take this onward."

Mr Gillingwater, on the SSE board since 2007, has previously been chairman of European Investment Banking at Credit Suisse First Boston and Dean of the Cass Business School.

He will become deputy chairman on January 1 next year with Lord Smith stepping down on January 1 2016 after 13 years with SSE.

The changes on the board came as the utility unveiled a 4.6 per cent rise in half-year interim profits to £370.3 million. Revenue in the six months to September 30 came in at £12.4 billion, down from £13.57bn in the prior year.

However SSE trimmed its annual profit forecast amid weak energy prices and the warmer-than-expected weather.

It also continued to see a loss of customers in the period with a further 100,000 departures since June.

That means customer numbers have fallen by close to 500,000 over the past 12 months, although SSE still has 8.89 million gas and electricity customer accounts.

The drain on customer numbers was put down to growing competition between large suppliers as well as new entrants into the market.

The retail business made an operating profit of £37.3m in the period, compared to a £71.4m loss in the prior year.

However operating profits in its wholesale business fell by more than 80 per cent 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 per cent to £13.3m.

The electricity transmission division reported a 46.3 per cent increase in operating profit to £98.9m, which SSE said was a result of major investment.

The electricity distribution arm saw a fall in operating profit from £232m to £215.7m while Scotia Gas Networks was up from £138.2m to £143.8m.

SSE's capital spending in the period was £679.3m, which included investments such as the Strathy wind farm in Sutherland and replacing sections of the Beauly to Denny power line.

While the company said it expects annual earnings per share to be at the lower end of market expectations, it maintained a commitment to raising its dividend.

Separately SSE confirmed it has sold its interest in seven street-lighting projects in England to an Equitix infrastructure fund.

SSE said it was receiving cash of £97.5m, which along with the removal of debt associated with the lighting contracts would reduce its net debt by £326.4m.

A further four street-lighting projects which SSE has an interest in are also to be up for sale, the company added.

Alongside those developments SSE confirmed it is looking at ways to grow its provision of home telephone and broadband services, although plans are at an early stage.

SSE shares closed down 44p, or 2.8 per cent, at 1536p.