SSE Half Yearly Report

[Dod101]

Thanks Bouleversee. Maybe a cruise is a good idea, but I don't really fancy that.

The Reuters report may I think be reporting from the point of view of RWE. I have no idea about the fall out for SSE should the deal not go through but frankly it does not bother me now. How things have changed because for years SSE has been a mainstay for my HYP and it performed very well. In fact this must be the first time since about 1994 that I have not held SSE or its predecessor.

I suspect that today's rise was as much relief as anything else, because the results are not very inspiring.

Dod

[Gengulphus]

Headline results (excluding SSE Energy Services)

Excluding SSE Energy Services, which is held for disposal:

· adjusted earnings per share is 19.6 pence (down 39.9%); etc.etc.

Why are they excluding Energy Services - wouldn't the inclusion of this arm of operations drag the reported profits down even further? They can't just ignore it as the deal might not go through!

Or...are they planning on using this as a baseline to measure the next set of results against by assuming the deal is done? Hmm!

What do you suggest they should have said instead in their headlines that would have taken both the possibility that the deal does go through and the possibility that it doesn't into account?

They could have just said what the whole company's results were, ignoring the fact that Energy Services is being disposed of. But if they'd done that, they could very reasonably be accused of presenting a thoroughly misleading picture of what can reasonably be expected of the company in the future.

They could have made their headlines present figures both with and without Energy Services, and been accused of producing 'headlines' that are a mass of detail, which definitely isn't the generally-accepted idea of a 'headline'...

I don't know of any solution to this, other than to accept what appears to be the normal convention about the function of 'headlines' in company reporting, which is for the directors to present the best face of the company they feel they can while sticking to the facts and not making the position they're taking clearly ridiculous. So IMHO the best way to look at the headlines of company results is to consider them a look at the company through rose-tinted classes - though just how deep a shade of rose will vary. And also to check them carefully for 'weasel words' - in the case of that particular quote, they are "excluding SSE Energy Services" (which you've identified) and also "adjusted". Then dig into the detail of the results to find what lies behind them. I'm short of time right now, so won't post any detail, but as a minor hint what lies behind "adjusted" is much bigger than what lies behind "excluding SSE Energy Services". That's only a comment on the size of the differences they make, not of how reasonable those differences are, by the way - I haven't formed an opinion on the latter yet...

Gengulphus

[Walrus]

Thanks Bouleversee. Maybe a cruise is a good idea, but I don't really fancy that.

The Reuters report may I think be reporting from the point of view of RWE. I have no idea about the fall out for SSE should the deal not go through but frankly it does not bother me now. How things have changed because for years SSE has been a mainstay for my HYP and it performed very well. In fact this must be the first time since about 1994 that I have not held SSE or its predecessor.

I suspect that today's rise was as much relief as anything else, because the results are not very inspiring.

Dod

I'm inclined to agree Sir. The results make pretty grim reading to me. I also think the accounts are looking far more opaque than I remember them looking but from what I can tell the numbers are pretty dreadful so I really am struggling with today's moves.

The funny thing is when things were more expensive and yields were 4 to 5 percent I was bemoaning the lack of opportunities. Now we have so many of these shares yielding frankly crazy yields to my mind but I'm really struggling to pull the trigger and most of it stems from my consideration of whether I want to hold these things long term. At this rate I'll be moving to a tracker before the year is out.

[monabri]

What do you suggest they should have said instead in their headlines that would have taken both the possibility that the deal does go through and the possibility that it doesn't into account?

They could have just said what the whole company's results were, ignoring the fact that Energy Services is being disposed of. But if they'd done that, they could very reasonably be accused of presenting a thoroughly misleading picture of what can reasonably be expected of the company in the future.

Gengulphus

As the "split" has not happened they should ( IMHO) have reported on the business as it is now..not how they would like it. Then we could compare these results with the previous. At that point, I'm guessing it would have been even grimmer reading, bearing in mind the recently reported losses at nPower ( ok, I'll admit I'm using read across).

Alternatively, assuming Energy Services goes ahead...just what is the position? After the split, holders will have:-

New SSE shares ...results as above.

Plus shares in

"Energy Services" - comprising roughly 1/3rd nPower (big big losses) and 2/3rd of ???? results.

I reckon Dod did the right thing!

[Bouleversee]

What do you suggest they should have said instead in their headlines that would have taken both the possibility that the deal does go through and the possibility that it doesn't into account?

They could have just said what the whole company's results were, ignoring the fact that Energy Services is being disposed of. But if they'd done that, they could very reasonably be accused of presenting a thoroughly misleading picture of what can reasonably be expected of the company in the future.

Gengulphus

As the "split" has not happened they should ( IMHO) have reported on the business as it is now..not how they would like it. Then we could compare these results with the previous. At that point, I'm guessing it would have been even grimmer reading, bearing in mind the recently reported losses at nPower ( ok, I'll admit I'm using read across).

Alternatively, assuming Energy Services goes ahead...just what is the position? After the split, holders will have:-

New SSE shares ...results as above.

Plus shares in

"Energy Services" - comprising roughly 1/3rd nPower (big big losses) and 2/3rd of ???? results.

I reckon Dod did the right thing!

I can understand why they wouldn't want to lump them together but I can't see why they couldn't have reported on both divisions separately, equally deserving of a mention in the headlines IMHO, especially as there must be many like me who don't get into the detail as they can't interpret balance sheets and reports. The results for the supposedly better section were pretty grim so I would really like to know what those of the dodgy side were like. No time to plough through umpteen pages of impenetrable statistics, however, so perhaps Gengulphus or someone else who can make sense of the figures could kindly enlighten us. There has to be a reason why the s.p. shot up today despite what looked like poor results without delving and a dive in the index at the end of the day and I'd love to know what it was. I would have expected the s.p. to move in the other direction in view of all the Brexit shenanigans, with an election and a Corbyn govt. beginning to look a distinct possibility.

[monabri]

I agree with TMF for once and in fact have just sold my remaining holding in SSE, into a strong market and got £12. Difficult to throw away the yield I know but I have no faith in the company. Now what do I buy?

Dod

Timed well ..down over 7% today.

[moorfield]

Timed well ..down over 7% today.

Messrs Corbyn and McDonell are a step closer perhaps to turning your shares into gilts ...

[Gengulphus]

As the "split" has not happened they should ( IMHO) have reported on the business as it is now..not how they would like it. ...

I can understand why they wouldn't want to lump them together but I can't see why they couldn't have reported on both divisions separately, ...

They did report on both separately - for instance, the income statement reports "Continuing operations" and "Discontinued operations" as separate items, and although the "Discontinued operations" section of the statement itself is very short in comparison, it references note 9, which starts by saying exactly what those operations are ("The discontinued operations represent the GB domestic supply and energy related services business (SSE Energy Services).") and goes on to give a similar breakdown of them as that for the "Continuing operations" in the main statement, followed by similar stuff for the cashflow statement and the balance sheet.

This is a very standard way of dealing with operations that have been disposed of or shut down, or that will certainly or highly probably become so in the next year - sufficiently standard that I strongly suspect they would have been subjected to considerable criticism if they did otherwise.

... equally deserving of a mention in the headlines IMHO, ...

Just to be clear, I'm not taking a position on what is deserving of a headline - just pointing out that choosing headlines inevitably involves a compromise between being comprehensive and keeping their number small enough that they can reasonably be called "headlines". Directors (of any company, not just SSE) are bound to leave some shareholders dissatisfied no matter how they make that compromise.

... especially as there must be many like me who don't get into the detail as they can't interpret balance sheets and reports.

I'm afraid that if someone has problems interpreting a document such as a company report, that's a problem they themselves need to solve. There are many possible solutions, some of them being to decide on a course of action that doesn't require them to interpret the document, to learn how to interpret such documents (at least enough to get the answers they want) and to ask others who do know how to interpret them for the answers (for instance on this board). On the last, by the way, asking for some answers one wants is not the same thing as asking why the document summary doesn't contain those answers.

Gengulphus