Hmm - taking a more careful look at what the company says about dividends, it includes:
... SSE's plan for the dividend for the five years to 2023 is as set out in May 2018:
o For 2018/19, SSE is recommending a full-year dividend of 97.5 pence per share with the final dividend related to this of 68.2 pence per share.
o For 2019/20, SSE intends to recommend a full-year dividend for 2019/20 of 80 pence per share. This provides a sustainable basis for future dividend growth and will not be affected by the final option selected for the future of SSE Energy Services.
o For 2020/21, 2021/22 and 2022/23 SSE is targeting annual increases in the full-year dividend that at least keep pace with RPI inflation. This reflects SSE's confidence in the quality and value of its assets and earnings and cash flows they deliver.
I've emboldened some words because I didn't remember seeing them before - and on checking
the company's 2018 preliminary results, I find that the corresponding passage says:
... SSE's plan for the dividend for the five years to 2023 is as follows:
· 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.
· For 2020/21, 2021/22 and 2022/23 SSE is targeting annual increases in the full-year dividend that at least keep pace with RPI inflation. This reflects SSE's confidence in the quality and value of its assets and earnings and cash flows they deliver.
I think saying that the plan is "as set out in May 2018" is stretching the English language a bit too far - saying that the 2018/19 dividend will not be affected by the timing of the demerger they were then intending is
not the same thing as saying that the 2019/2020 dividend will not be affected by their choice of what to do instead with SSE Energy Services. It's fair enough that their plan should have been modified in the light of subsequent developments (even when as in this case those subsequent developments were at least partly their own choices), but they should be upfront about the modifications and not pretend that the plan is unchanged. I.e. the wording ought at least to include some phrase such as "as modified to take account of our changed intentions with regard to SSE Energy Services"...
As regards what they are doing and planning to do with SSE Energy Services, some quotes from these results that strike me as relevant and interesting:
Important note: SSE Energy Services
At 31 March 2019, SSE has assessed that it is highly probable that SSE Energy Services will be disposed and has presented the assets and liabilities of that business as held for disposal and the business activity as discontinued (see note 4.2. (i) of the Summary Financial Statements). 'Held for disposal', as presented throughout this statement may be either 'held for sale' or 'held for distribution' as defined by IFRS 5. Therefore, the results of SSE Energy Services have been excluded from the profit and loss metrics. As the Group continues to fund SSE Energy Services, and will do so until completion of the transaction, the capital expenditure and debt related metrics presented include the activity of that business.
The principles of focus, specialisation and innovation have also been applied to SSE's considerations around the future of SSE Energy Services. In line with this, Katie Bickerstaffe has been appointed Executive Chair of the business, with a mandate to deliver a new future for it outside of the SSE group in the form of a listing or new, alternative ownership by the second half of 2020. She will take up the new role on 23 June 2019 alongside Gordon Boyd, who joins as Interim Chief Financial Officer, and will work closely with joint Managing Directors Stephen Forbes and Tony Keeling in the delivery of their strategy. Further progress has been made on the structural separation of this business from the group, and the creation of a new, dedicated SSE Energy Services Board and Executive Committee will enable it to operate with further autonomy and become more agile and responsive to customer needs.
This emphasises that SSE's focus is on core businesses of renewable energy and regulated networks, as do the active steps we are taking to prepare for the disposal of our investments in gas production.
Reported Operating Profit /(Loss) by Segment Mar 19 Mar 18 Mar 17
£m £m £m
...
Held for disposal
SSE Energy Services- Energy Supply 29.7 203.5 171.7
SSE Energy Services - Energy related services 5.6 18.3 5.5
Total SSE Energy Services 35.3 221.8 177.2
SSE Energy Services - Energy Supply (households in GB): adjusted operating profit fell to £84.0m from £260.4m, mainly due to the decision to shield customers from wholesale price increases during 2018, together with the impact of the Default Tariff Cap between January and March 2019 and lower customer numbers, partially offset by the expiry of a Power Purchase Agreement (PPA).
The reported operating profit was £29.7m, compared to £203.5m, due to the reasons outlined above, in addition to current year impairments of IT systems totalling £54.3m versus exceptional impairment charges of £56.9m in the prior year.
SSE Energy Services - Energy-related Services: adjusted and reported operating profit fell to £5.6m compared to £18.3m, mainly due to reduced profits in metering and retail telecoms.
In addition to the above, SSE Energy Services recognised exceptional charges of £54.3m in relation to discontinued marketing and customer data management software assets.
· SSE Energy Services investment of £103m mainly relates to infrastructure to support SSE Energy Services' regulatory obligation to install smart meters for its energy supply customers as part of the UK's Smart Metering rollout. At 31 March 2019, SSE had well over one million smart meters on supply in customers' homes. Post installation, SSE's meters transfer to a contracted Meter Asset Provider and SSE's investment and capital expenditure excludes the capital cost of installation and meter assets.
SSE Energy Services (Held for disposal)
Creating a more independent energy and services business in GB
SSE Energy Services, comprising SSE's domestic energy supply and energy-related services businesses in Great Britain, is the third-largest supplier in the GB energy market. Since it stepped away from a planned merger with npower in December 2018, SSE has been actively progressing a range of options for the future of SSE Energy Services, including a possible sale, alternative transaction or standalone listing. In these considerations, the interests of customers, employees and shareholders have been paramount. Although SSE Energy Services remains a separate entity within the group for the immediate future, SSE is still of the view that the best long-term future for the business lies outside of the SSE group and is therefore continuing with steps to increase its autonomy and independence.
To that end, SSE has appointed Katie Bickerstaffe as Executive Chair of the SSE Energy Services business. Katie will take up the new role on 23 June 2019, alongside Gordon Boyd, who joins as Interim Chief Financial Officer, with a mandate to deliver a new future for it outside the SSE group and continue progress towards a listing or new, alternative ownership by the second half of 2020. She will form a new, dedicated SSE Energy Services Board, which is expected to have both executive and non-executive representation from the SSE Group, as well as an independent non-executive director. The business will therefore be able to operate with greater day-to-day autonomy and independence, while still being subject to oversight by the SSE plc Board while it remains within the group.
... [lots more about what they're doing with SSE Energy Services omitted]...
To my eyes, this all comes across as "SSE Energy Services has become unprofitable (and not stated but IMHO obvious in the political context) highly risky, so we're getting rid of it. It has been making a significant contribution to the dividend, and we're funding that contribution from reserves for this year to avoid reneging on what we've previously told shareholders to expect, but after this final dividend, that contribution is gone. Shareholders might get some compensation for that loss in the form of shares in a separately-listed SSE Energy Services, or of an improvement to SSE's financial position made by sale proceeds - but don't expect much! And we're steering the remainder of the company into the less risky waters of renewable energy and regulated networks."
I would add that while I reckon renewable energy and regulated networks are less politically risky than energy retail, I'm not at all clear how much less risky, especially in the case of regulated networks.
Gengulphus
Stop it.