SSE PLC Results

[idpickering]

Overview of 2017/18

SSE's financial highlights for the year to 31 March 2018 are set out below and are in line with its Notification of Closed Period statement of 29 March 2018, with adjusted earnings per share ahead of expectations at the start of the financial year. Comparisons are with the previous financial year unless otherwise stated.

· Recommended full-year dividend up 3.7% to 94.7p;

· Adjusted earnings per share down 3.6% to 121.1p;

· Adjusted operating profit down 2.4% to £1,828.7m#;

· Adjusted profit before tax down 6.0% to £1,453.2m;

· Net exceptional charges of £213.3m;

· Investment and capital expenditure down 12.9% to £1,503.0m;

· Adjusted net debt and hybrid capital up 8.7% to £9.2bn at 31 March 2018;

· Reported operating profit down 28.9 % to £1,379.2m;

· Reported profit before tax down 38.9% to £1,086.2m; and

· Reported earnings per share down 48.7% to 81.3p.

Ex div 26 Jul 18, paid on 21 Sep 18.

https://www.investegate.co.uk/sse-plc-- ... 00062670P/

[mike]

Most importantly, the dividend is being cut the year after next

For 2018/19, SSE is intending to recommend a full-year dividend of 97.5 pence per share, an increase of 3% on 2017/18, which is broadly in line with expectations for RPI inflation. This provides clarity in a year of transition and is not subject to the timing of either the SSE Energy Services transaction or the Domestic Gas and Electricity (Tariff Cap Bill).

For 2019/20, SSE is planning to set the first post-transaction dividend at 80.0 pence per share, which reflects the impact of the changes in the SSE group expected to take effect by then. This provides a sustainable basis for future dividend growth.

[idpickering]

Most importantly, the dividend is being cut the year after next

For 2018/19, SSE is intending to recommend a full-year dividend of 97.5 pence per share, an increase of 3% on 2017/18, which is broadly in line with expectations for RPI inflation. This provides clarity in a year of transition and is not subject to the timing of either the SSE Energy Services transaction or the Domestic Gas and Electricity (Tariff Cap Bill).

For 2019/20, SSE is planning to set the first post-transaction dividend at 80.0 pence per share, which reflects the impact of the changes in the SSE group expected to take effect by then. This provides a sustainable basis for future dividend growth.

Disappointing indeed mike. Shame because they gob off about the importance of dividend often enough. I shall continue to hold, but am unlikely to top up further currently.

Ian.

[maximan]

I am not sure by any means but does the cut in dividend reflect the restructure of the company after the split.
Key developments in 2018/19

In its Notification of Close Period statement on 29 March, SSE said that the 2018/19 financial year is expected to be one of transition for the SSE group. Key developments are expected to include:

· The planned transaction* relating to SSE's GB household energy supply and services business (now named SSE Energy Services), subject to approvals, which remains on track for completion in the last quarter of 2018 or the first quarter of 2019. SSE shareholders will retain their existing SSE shares and will also hold one share in the newly-listed business for every existing SSE share they hold at demerger record date; and from that point, SSE will no longer derive cash flow or earnings from supplying energy and services to households in GB.

· The expected enactment later this year of the Domestic Gas and Electricity (Tariff Cap) Bill and subsequent introduction of a temporary cap on the price of standard variable and default electricity and gas tariffs. It is intended to be in place for the winter of 2018/19.

https://www.investegate.co.uk/sse-plc-- ... 00062670P/

*See: Important note: planned SSE Energy Services transaction above

[mike]

I am not sure by any means but does the cut in dividend reflect the restructure of the company after the split.

Yes maxi, thanks, on second reading that looks to be the reason.

Whether the (or indeed any) dividend from the new company makes up for the cut remains to be seen. But if not, the new company shares can always be sold to obtain income elsewhere.

[daveh]

Most importantly, the dividend is being cut the year after next

For 2018/19, SSE is intending to recommend a full-year dividend of 97.5 pence per share, an increase of 3% on 2017/18, which is broadly in line with expectations for RPI inflation. This provides clarity in a year of transition and is not subject to the timing of either the SSE Energy Services transaction or the Domestic Gas and Electricity (Tariff Cap Bill).

For 2019/20, SSE is planning to set the first post-transaction dividend at 80.0 pence per share, which reflects the impact of the changes in the SSE group expected to take effect by then. This provides a sustainable basis for future dividend growth.

Disappointing indeed mike. Shame because they gob off about the importance of dividend often enough. I shall continue to hold, but am unlikely to top up further currently.

Ian.

Not necessarily a cut in the dividend as after the transaction we will also have a holding in the consumer business that consists of SSE retail and Npower*, which may also be paying a dividend (I hope it will at any rate). So the total amount received in dividends could still be more than now.

* assuming the deal goes ahead in the present form.

[PaulBullet]

so that's 66.3p paid on the 21/9/18

Paul

[kempiejon]

Not necessarily a cut in the dividend as after the transaction we will also have a holding in the consumer business that consists of SSE retail and Npower*, which may also be paying a dividend (I hope it will at any rate). So the total amount received in dividends could still be more than now.* assuming the deal goes ahead in the present form

That was my understanding, or as mike suggested one could swap the new company for an income producer. In my HYP I see that utilities weigh in about 6% of my income and SSE 2.5%.

[Dod101]

I am puzzled by these results. Their finances are stretched I think but it would be good to know from them (I have not studied their words of wisdom) if the reduction in the dividend next year simply reflects the earnings they are giving away or if it is a reduction in any case. Anyway it leaves us all a bit vulnerable because we do not know if the demerger will be approved by the regulators and how the price cap will affect those earnings in any case. And then of course we do not know what the new company, if it comes about, will have as its policy re dividends.

In all I am rather glad that I reduced my holding somewhat in January 2018.

Sorry just add to the above having read the announcement in more detail. The dividend for this year is up 3.7% and for next year they intend an increase of 3%. Only in the following year will the cut be made to reflect the fact that the demerger will have taken place. So in the short term it is not bad news except that their earnings are down and borrowings up, which is not good.

Dod

[monabri]

Dividend increase to one side, the results above are not encouraging! I'm somewhat surprised that the share price didn't tank this morning.

[idpickering]

Dividend increase to one side, the results above are not encouraging! I'm somewhat surprised that the share price didn't tank this morning.

I agree monabri. Barely a wiggle really, currently up 0.3%, as is the FTSE100. SSE are currently 3.1% in capital value terms of my HYP.

Ian.

[kenko92]

BBC says that SSE have lost 430k customers.No wonder they want rid of retail.

[tjh290633]

I think that you lot need to read the RNS more closely.

In its Notification of Close Period statement on 29 March, SSE said that the 2018/19 financial year is expected to be one of transition for the SSE group. Key developments are expected to include:

· The planned transaction* relating to SSE's GB household energy supply and services business (now named SSE Energy Services), subject to approvals, which remains on track for completion in the last quarter of 2018 or the first quarter of 2019. SSE shareholders will retain their existing SSE shares and will also hold one share in the newly-listed business for every existing SSE share they hold at demerger record date; and from that point, SSE will no longer derive cash flow or earnings from supplying energy and services to households in GB.

· The expected enactment later this year of the Domestic Gas and Electricity (Tariff Cap) Bill and subsequent introduction of a temporary cap on the price of standard variable and default electricity and gas tariffs. It is intended to be in place for the winter of 2018/19.

and
In order to give clarity in respect of what is expected to be a year of transition for SSE, the target full-year dividend for 2018/19 is 97.5 pence per share, a 3% increase based on forecasts for RPI inflation. For 2019/20, following the proposed SSE Energy Services transaction that was announced in November 2017 and the changes it will mean for the SSE group, SSE is targeting a full-year dividend of 80.0 pence per share. This reflects the quality and nature of SSE's assets and operations following the proposed SSE Energy Services transaction, the earnings derived from them and the longer-term financial outlook.

SSE is thereafter targeting annual increases in the dividend per share that at least match RPI inflation in each of the three years to 2022/23, when the current Electricity Distribution Price Control will come to an end.


It's all there if you care to look. No need to speculate.

TJH

[monabri]

A few months ago we looked at the free cash flow per share for SSE - I downloaded the info from MorningStar (today) - here's the link.

http://financials.morningstar.com/ratio ... t=xlon:sse



From the numbers above it would appear that the dividends per share are not supported by the free cash flow per share.

Then we move on to today's results where we see

- Adjusted earnings per share down 3.6% to 121.1p;
· Adjusted operating profit down 2.4% to £1,828.7m#;
· Adjusted profit before tax down 6.0% to £1,453.2m;
· Net exceptional charges of £213.3m;
· Investment and capital expenditure down 12.9% to £1,503.0m;
· Adjusted net debt and hybrid capital up 8.7% to £9.2bn at 31 March 2018;
· Reported operating profit down 28.9 % to £1,379.2m;
· Reported profit before tax down 38.9% to £1,086.2m
· Reported earnings per share down 48.7% to 81.3p.

Assuming that SSE are permitted to go ahead with "SSE Energy Services", won't shareholders be left with "new and improved SSE" and "another Centrica - like problem child" ?

The shareholder might then receive a dividend of 80p (compared to 97.5p) plus a potential dividend from SSE Energy Services (which we can then discuss with the same aire of intrepidation as Centrica).

[Dod101]

It's all there if you care to look. No need to speculate.

I agree and it is why I broke off my post to read it. There is too much immediate reaction. In fact I usually go to the company website because they often have more detail but it was not posted there when I looked.

The one thing they have not clarified is whether the reduction in the dividend in a couple of years is to reflect the actual lost earnings once the new company is spun out or whether it includes an element of rebasing as well. I would expect the latter because SSE's finances have been looking a bit stretched for some time now.

Dod

[Julian]

Most importantly, the dividend is being cut the year after next

Disappointing indeed mike. Shame because they gob off about the importance of dividend often enough. I shall continue to hold, but am unlikely to top up further currently.

Ian.

Not necessarily a cut in the dividend as after the transaction we will also have a holding in the consumer business that consists of SSE retail and Npower*, which may also be paying a dividend (I hope it will at any rate). So the total amount received in dividends could still be more than now.

* assuming the deal goes ahead in the present form.

Or, even if the consumer business isn't paying dividends or they are a token amount, the shares will have some capital value such that they could be sold off and the proceeds redeployed into HYP shares that are paying dividends. We can't make such decisions until we have dividend and price data on the new consumer shares at which point we can work out the yield and take it from there.

I really am a Doris nowadays and have been for quite a few years. I didn't even know any of this stuff was on the horizon.

- Julian

[Dod101]

Assuming that SSE are permitted to go ahead with "SSE Energy Services", won't shareholders be left with "new and improved SSE" and "another Centrica - like problem child" ?

The shareholder might then receive a dividend of 80p (compared to 97.5p) plus a potential dividend from SSE Energy Services (which we can then discuss with the same aire of intrepidation as Centrica).

That is exactly where the uncertainty I referred to in my original post comes in. I doubt that I would keep the new company because if SSE do not want it I do not think I do. As I have just said, I hope that SSE might be including an element of rebasing in their new dividend of 80p because for a long while now their finances have been looking stretched.

Not being critical, but I expect you mean 'with the same air of trepidation', not the opposite surely?

Dod

[monabri]

Not being critical, but I expect you mean 'with the same air of trepidation', not the opposite surely?

Dod

Yes, you're correct, my mistake

[jackdaww]

I have sold all mine at a modest profit and some divis.

utilities seem too difficult to me , so i have none now.

[csearle]

so that's 66.3p paid on the 21/9/18

Yes curious that the singular most important bit of information has to be searched for! Well I suppose there's not much to keep us occupied with this HYP malarkey. C.