National Grid Finals

[idpickering]

Report for the year ended
31 March 2019
Operational Highlights
• £4.5bn of capital investment leading to strong asset growth of 7.2%
• Cadent sale expected to complete in June with £2bn in equity proceeds
• Good regulatory progress in the US with all our companies now operating under refreshed rates
• Launched new cost efficiency programmes in both the UK and US
• Significant progress on interconnector portfolio
• Major milestone achieved for Property business with sale of Fulham site to St William JV
• Reached agreement on new employment terms with unions in Massachusetts Gas
Financial Performance
• Underlying operating profit down 2% to £3.4bn (4% at constant currency) reflecting expected return of Avonmouth allowances and US tax reform, partly offset by higher property profit and favourable US legal settlements
• Statutory operating profit down 18% to £2.9bn
• Underlying EPS up 5% to 58.9p reflecting a lower share count
• Statutory EPS of 44.3p due to exceptional charges: Massachusetts Gas; new efficiency programmes; cancellation of nuclear connection agreements
• Group RoE of 11.8% (2018: 12.3%)
• Recommended full year dividend of 47.34p

And later;

Dividend increase of 3.07% recommended for 2018/19
Our dividend policy aims to grow the ordinary dividend per share at least in line with the rate of RPI inflation each year for the foreseeable future.
The Board has recommended an increase in the final dividend to 31.26p per ordinary share ($2.0256 per American Depositary Share) which will be paid to shareholders on the register as at 31 May 2019. If approved, this will bring the full year dividend to 47.34p per ordinary share, an increase of 3.07% over the 45.93p per ordinary share in respect of the financial year ending 31 March 2018. This 3.07% rise is in line with the increase in UK RPI for the twelve months to 31 March 2019 as set out in the policy announcement of 28 March 2013.

https://investors.nationalgrid.com/~/me ... 018-19.pdf

[Steveam]

Payable 14-August-2019

[Dod101]

This is the only utility I still hold. But for the nationalisation threat it is fine. As a business I think it is good and the dividend is ticking along well.

Corbyn may never happen.

Dod

[EssDeeAitch]

This is the only utility I still hold. But for the nationalisation threat it is fine. As a business I think it is good and the dividend is ticking along well.

Corbyn may never happen.

Dod

You are right, Corbyn may never happen (but he is receiving tremendous help from the current government), nonetheless I have just sold at a modest profit as there is too much negativity around utilities.

[idpickering]

This is the only utility I still hold. But for the nationalisation threat it is fine. As a business I think it is good and the dividend is ticking along well.

Corbyn may never happen.

Dod

Very true Dod, but I regretfully doubt it, the way The Tories are doing. I hold National Grid, Sse plc, and United Utilities, and don't mind admitting I'm concerned at the threat of Corbyn. The other issue is where else to place your bets in our ever shrinking viable HYP share universe?

Ian.

[Dod101]

I thought of selling National Grid when I sold SSE around the end of last year but something stopped me so I still have it and will most likely continue to do so, partly I guess because of Ian's concern about the shrinking universe of HYPable shares. I will also need to trim Unilever before long as well, simply because it is sitting at around 8% of my capital in my high yield portfolio.

Dod

[Lootman]

This is the only utility I still hold. But for the nationalisation threat it is fine. As a business I think it is good and the dividend is ticking along well. Corbyn may never happen.

Very true Dod, but I regretfully doubt it, the way The Tories are doing. I hold National Grid, Sse plc, and United Utilities, and don't mind admitting I'm concerned at the threat of Corbyn. The other issue is where else to place your bets in our ever shrinking viable HYP share universe?

I sold all my Ute's a while ago because of the perceived risk from Corbyn and what I believed were unsustainable yields. With the exception of NG but that will be going soon as well.

In each case I sold at a profit and personally I never have a problem with taking a good income AND then selling with a gain.

As for the dwindling choice that is a factor of the decline of many traditionally high yielding sectors, the political risk and the gradual drip-drip of takeovers of some of the better picks. And there seem to have been more than a few "accidents" in recent years. For all these reasons I am happy these days with a lower running yield with a greater focus on growth, cover, sustainability and political immunity.

[idpickering]

As for the dwindling choice that is a factor of the decline of many traditionally high yielding sectors, the political risk and the gradual drip-drip of takeovers of some of the better picks. And there seem to have been more than a few "accidents" in recent years. For all these reasons I am happy these days with a lower running yield with a greater focus on growth, cover, sustainability and political immunity.

Funnily enough I was just thinking the same, in that we may have to get used to the fact that our HYP overall yield might be lower going forward. Peace of mind is important too, so I agree with the later portion of your comment. Something to Pickering about methinks?

Ian.

[Julian]

I thought of selling National Grid when I sold SSE around the end of last year but something stopped me so I still have it and will most likely continue to do so, partly I guess because of Ian's concern about the shrinking universe of HYPable shares. I will also need to trim Unilever before long as well, simply because it is sitting at around 8% of my capital in my high yield portfolio.

Dod

That Unilever part is quite handy though if you were to sell some/all of your NG. shares because, at a current yield of 2.87%, it would probably cushion the blow a bit when added into the NG funds that at today's prices are yielding 5.61%.

NG. yield isn't in the crazy CNA zone but if you were fishing in anything like the same pond as me when it comes to re-investing NG. proceeds I at least will be likely to be buying into something with a < 5.61% yield so blending in a bit of ULVR proceeds will help limit the overall yield/income drop assuming you'd be buying into something with a > 2.87% yield.

I'm going to be looking at weightings of both my ULVR and Diageo (currently 1.97% yield) holdings to see how my they look and if I can justify some top-slicing there with a view to cushioning the hit I will take by shifting capital from (currently) high-yielding utilities into something that I perceive to be safer. I also need to do a trawl to see if I hold anything else where a good capital run has reduced the yields well below 4%. I don't think there is but I need to check.

- Julian

[Dod101]

Thanks Julian. That is good logic to me. I will take a look before long and see what I might do. Nat Grid is a decent business though, one of the few I think of the utilities which is. I cannot conceive of Corbyn and his cronies running the country but stranger things have happened.

Please let me know if you stumble on some suitable share as a replacement!

Dod

[idpickering]

Please let me know if you stumble on some suitable share as a replacement!

Dod

Me too.

I just posted an item from TMF over on the company reports board about the threat towards NG. and it's shareholders from Corbyn here; viewtopic.php?f=94&t=16990&p=222077#p222077

Ian.

[idpickering]

OK, I have concerns about Corbyn, but the utility sell off as I type is a bit of a knee-jerk reaction methinks. NG. down 3.5%. It could be just market noise of course, or a bad hair day perhaps.

Ian.

[Minesadouble]

OK, I have concerns about Corbyn, but the utility sell off as I type is a bit of a knee-jerk reaction methinks. NG. down 3.5%. It could be just market noise of course, or a bad hair day perhaps.

Ian.

Labour have today explained that they will nationalise the grid and put forward the many benefits that allegedly will result from doing so: lower costs, better for the environment yadda yadda.

I sold all of my Utes* including NG a while ago now. I thought the political risk was too great then, I think it’s considerably more risky now. I don’t think you can cite Strategic Ignorance when a mainstream party embraces Marxist ideology.

*i retained Vodafone, but should have included that too.

[idpickering]

OK, I have concerns about Corbyn, but the utility sell off as I type is a bit of a knee-jerk reaction methinks. NG. down 3.5%. It could be just market noise of course, or a bad hair day perhaps.

Ian.

Labour have today explained that they will nationalise the grid and put forward the many benefits that allegedly will result from doing so: lower costs, better for the environment yadda yadda.

I sold all of my Utes* including NG a while ago now. I thought the political risk was too great then, I think it’s considerably more risky now. I don’t think you can cite Strategic Ignorance when a mainstream party embraces Marxist ideology.

*i retained Vodafone, but should have included that too.

Thanks for your input Minesadouble. Something for me to think about certainly. Did you buy into new areas or just spread the released funds amongst your other holdings? Would you care to elaborate?

Ian.

[77ss]

....I don’t think you can cite Strategic Ignorance when a mainstream party embraces Marxist ideology.

....

I'm not a big believer in 'Strategic Ignorance', but how do you feel about a mainstream party embracing the f**k business concept and the Brexit at any costs ideology?

Politically, the small investor doesn't seem to have too many friends.

[Arborbridge]

OK, I have concerns about Corbyn, but the utility sell off as I type is a bit of a knee-jerk reaction methinks. NG. down 3.5%. It could be just market noise of course, or a bad hair day perhaps.

Ian.

Labour have today explained that they will nationalise the grid and put forward the many benefits that allegedly will result from doing so: lower costs, better for the environment yadda yadda.

I sold all of my Utes* including NG a while ago now. I thought the political risk was too great then, I think it’s considerably more risky now. I don’t think you can cite Strategic Ignorance when a mainstream party embraces Marxist ideology.

*i retained Vodafone, but should have included that too.

I suppose the rejoinder to that is that SI embraces all factors affecting a business, including changes in political attitudes. The scene is quite unpredictable - we don't know what the shape of the next government will be, or even if it will have a majority, let alone what pressures will be put on it from both within and without to constrain its actions. Any government has to face practicalities of politics, economics and law and often do not achieve what they set out to do - the present government's travails are a but the latest example of that.

Having said all that: I'm feeling a bit jumpy too THere's something to be said for selling down the risk you perceive until the dust settles - but one must also admit we know nothing and market trading might still be the best option.

Arb.

[Dod101]

I am inclined to leave my National Grid in place. I do not have a very big holding by capital value anyway. By that I mean that I have lost far more capital value via the slump in the tobaccos than my entire holding in Nat Grid. Would I be right in thinking that any nationalisation would only affect the UK business? I should imagine that the company will take steps to ensure that its US business is protected. That being the case I am prepared to wait and see. As I said it may never happen anyway and even if Corbyn does get in Arb has made a number of valid points.

Dod

[Minesadouble]

OK, I have concerns about Corbyn, but the utility sell off as I type is a bit of a knee-jerk reaction methinks. NG. down 3.5%. It could be just market noise of course, or a bad hair day perhaps.

Ian.

Labour have today explained that they will nationalise the grid and put forward the many benefits that allegedly will result from doing so: lower costs, better for the environment yadda yadda.

I sold all of my Utes* including NG a while ago now. I thought the political risk was too great then, I think it’s considerably more risky now. I don’t think you can cite Strategic Ignorance when a mainstream party embraces Marxist ideology.

*i retained Vodafone, but should have included that too.

Thanks for your input Minesadouble. Something for me to think about certainly. Did you buy into new areas or just spread the released funds amongst your other holdings? Would you care to elaborate?

Ian.

I didn’t add anything new and from memory, I added to my holdings in Unilever, which so far has turned out well; Imperial which has so far turned out badly; and British Land which is somewhere in the middle.
However, I do try to focus on the long term.
My HYP is more concentrated than most here (18 shares), but I hold growth shares outside it and a wide array of ITs.
Those who think Labour may not get in and even if they do may not nationalise, are right, but I saw that risk as too high.
The observation that the Conservatives are not business friendly, at least under the current wretched leader, is also true.
Not a great political backdrop for HYP investors.

[idpickering]

I am inclined to leave my National Grid in place. I do not have a very big holding by capital value anyway. By that I mean that I have lost far more capital value via the slump in the tobaccos than my entire holding in Nat Grid. Would I be right in thinking that any nationalisation would only affect the UK business? I should imagine that the company will take steps to ensure that its US business is protected. That being the case I am prepared to wait and see. As I said it may never happen anyway and even if Corbyn does get in Arb has made a number of valid points.

Dod

My sentiments exactly Dod. I'm going to continue to hold, and might even top up before ex div date, and wait and see. No knee-jerk reactions from me.

Ian.

[idpickering]

I didn’t add anything new and from memory, I added to my holdings in Unilever, which so far has turned out well; Imperial which has so far turned out badly; and British Land which is somewhere in the middle.
However, I do try to focus on the long term.
My HYP is more concentrated than most here (18 shares), but I hold growth shares outside it and a wide array of ITs.
Those who think Labour may not get in and even if they do may not nationalise, are right, but I saw that risk as too high.
The observation that the Conservatives are not business friendly, at least under the current wretched leader, is also true.
Not a great political backdrop for HYP investors.

Thank you very much for coming back on this. It is interesting to see how others tackle such events. I have been investigating my options, and ULVR may well receive any released dosh. In the interim I'm willing to wait and see.

Ian.