SSE Half Yearly Report

[idpickering]

As expected and in line with SSE's Notification of Closed Period statement published on 27 September 2017, SSE's financial headlines for the six months to 30 September 2017 are as follows: (comparisons are with the same period in 2016 unless otherwise stated):

· Interim dividend up 3.6% to 28.4p;

· Adjusted earnings per share down 8.8 % to 31.2p;

· Adjusted operating profit down 8.0% to £586.2m;

· Adjusted profit before tax down 13.9% to £409.6m;

· Investment and capital expenditure was slightly lower at £779.5m;

· Adjusted net debt and hybrid capital increased by 9.0% to £9.2bn in the six months to 30 September 2017;

· On market share buy backs totalling £270.5m were made in the six months to 30 September 2017, following £131.5m of share buy backs in the previous financial year;

· Reported operating profit down 30.9% to £549.4m;

· Reported profit before tax down 40.4% to £402.2m; and

· Reported earnings per share down 43.9% to 29.8p.

https://www.investegate.co.uk/sse-plc-- ... 00078580V/

[moorfield]

Thanks Ian. Lot's of "down"s in there.

[monabri]

From the numbers presented above, a dividend increase does not appear to be a sensible move. I wasn't expecting the drops to be so much.

[idpickering]

Thanks Ian. Lot's of "down"s in there.

We meet again moorfield . Yes, a lot of downs there, so that can't be good. I guess it depends if the market had anticipated these, or will 'punish' the shares either way. The bottom line for me though, is the ok news regarding the dividend, which is why I bought into Sse plc in the first place. Up 3.5% as I type!

Ian.

[tjh290633]

If they can afford share buybacks, they can afford to increase the dividend.

TJH

[Dod101]

I don't like that very much and on the subject of buy backs, why? Their net debt and hybrid capital (whatever that may be) is up 9% so they cannot really afford it.

The proposed merger of their retail network will I assume help though, if it ever goes through.

Dod

[jackdaww]

i dont understand this business and what is going on now .

decided to sell out on this mornings price rise at a small profit plus divis .

but the SP has fallen again !

[Dod101]

I hold for the dividend and so far have had no reason do doubt the management who have proved to be pragmatic over many years, and able to adapt to conditions. I am though beginning to be a bit concerned about their finances and they do not help themselves by saying as little as possible at the half year stage. Another six months can be a long time to wait for real information and commentary.

Pro tem I will sit tight.

Dod

[NeilW]

Let's not forget the important bit


Interim dividend payment date

16 March 2018

[tjh290633]

Things have got a little separated in the document. From a little way down:

Investor Timetable                                        
 Interim Ex-dividend date                18 January 2018   
 Record date                             19 January 2018   
  Final date for receipt of Scrip         16 February 2018 
   Elections                                               
 Interim dividend payment date           16 March 2018     
 Q3 Trading Statement                    By 31 January     
                                                      2018 
 Notification of Close Period            By 31 March 2018  
 Preliminary Results for year            Friday 25 May     
  ended 31 March 2018                     2018             
 AGM (Perth) and Q1 Trading Statement    19 July 2018

Also, referring to the other RNS, https://www.investegate.co.uk/sse-plc-- ... 00078582V/ , they say:

SSE's commitment to remunerating shareholders

The Board of SSE is and will remain committed to remunerating shareholders' investment through the payment of dividends. It is continuing to target an increase in the full-year dividend for 2017/18 of at least RPI inflation, with an annual increase of at least RPI inflation also being targeted for 2018/19.

Thereafter, SSE's dividend and dividend policy will reflect the quality and nature of its assets and operations, the earnings derived from them and the longer-term financial outlook. Excluding household energy supply and services in GB, and based on its financial results for the three years to March 2017, around 80% of SSE's operating profit related to economically-regulated networks and government-mandated renewable sources of energy; and much of that is also index-linked. Following the demerger, therefore, SSE expects that its target for annual increases in the dividend per share will be at least RPI inflation.

More detail on this will be set out by the time the shareholder circular in respect of the Transaction is published. The Transaction will have no material impact on SSE's ability to meet its debt service obligations.

The dividend policy of MergeCo will be a matter for its board but it is expected that the quality of its business and the opportunity to secure efficiencies should enable an attractive and fair return on investment in MergeCo, following the Transaction.

TJH

[monabri]

SSE shareholders will own a 65.6% stake in the new company and innogy will the remaining 34.4%


http://www.londonstockexchange.com/exch ... 62000.html

[idpickering]

TMF ask a question regarding SSE and CNA here;

Can SSE plc and Centrica plc afford to pay 6%+ dividends?

When picking a stock for its dividend, it’s important to examine whether the company can actually afford to pay its dividend. That way, you’ll minimise the chances of experiencing the dreaded ‘dividend cut’. Today, I’m looking at two FTSE 100 stocks that have dividend yields in excess of 6%. Can these companies afford to pay those dividends?

http://www.fool.co.uk/investing/2017/11 ... dividends/

[dredd0]

SSE reassure on their own dividend policy but point out that 'MergeCo' will decide for themselves.

Sounds to me that the demerger is more likely to reduce than increase the absolute level of dividend from my SSE holding.

I'm out for now. I'll look at SSE again after the demerger.

[moorfield]

SSE reassure on their own dividend policy but point out that 'MergeCo' will decide for themselves.

Sounds to me that the demerger is more likely to reduce than increase the absolute level of dividend from my SSE holding.

Sounds reasonable, the corporate action will likely be bundled with some sort of share consolidation.

What's also interesting is, assuming the legislation passes, which company Jezza would forcibly buy. Both, or just the MergeCo which is the one where all the political baggage is being parked.

[monabri]

Lots of " nasty numbers" which the market seems to be more or less ignoring.

With regard to the numbers quoted above in Ian's initial post...what has lead to these reductions? Is it all down to the part of the business they wish to be shut of ( a small part of the business) or is there something more serious going on?

Alternatively, sell now and buy the new and improved SSE minus the ugly bit at a later date?

[idpickering]

Lots of " nasty numbers" which the market seems to be more or less ignoring.

With regard to the numbers quoted above in Ian's initial post...what has lead to these reductions? Is it all down to the part of the business they wish to be shut of ( a small part of the business) or is there something more serious going on?

Alternatively, sell now and buy the new and improved SSE minus the ugly bit at a later date?

Morning monabri. I respect the right of other HYPers to sell out of SSE, and buy back in later. But, I've found that such jumping hither and dither hasn't ever done me or my HYP any good, trying to be to clever for our (my HYP and I)'s own good. I'd rather just leave it well alone, and let the nature of the markets take their course. It saves on charges too.

Ian.

[Gengulphus]

Alternatively, sell now and buy the new and improved SSE minus the ugly bit at a later date?

Only does you any good if the price at which you can buy back is not also 'improved'... And given how the energy utilities have been a political hot potato, prominent in the news, I would be surprised if that were the case: either it will be clear that SSE has cut out the 'ugly bit' fully and its price is likely to be well up, or it will still be under political threat...

Not saying that the market takes all news into account perfectly, by the way - I don't by any means think it does! But if I were trying to plan sell-and-buy-back-later trades, or indeed buy-and-sell-later trades, I would bet on the market overreacting to news that's in the limelight and underreacting to more obscure stuff, not the other way around...

Though with my HYP hat on, as it should be on this board, that's rather hypothetical: I wouldn't be planning either type of trade!

Gengulphus

[UncleEbenezer]

Thanks Ian. Lot's of "down"s in there.

H-L comment at http://www.hl.co.uk/shares/share-resear ... -announced

As anticipated, many financial results are down on last year, including adjusted earnings per share which drops 8.8% to 31.2p. This is mainly due to the timing of capital expenditure on Transmission projects, along with a reduced share of Scotia Gas Networks earnings due to the part disposal in October 2016.

[idpickering]

Thanks Ian. Lot's of "down"s in there.

H-L comment at http://www.hl.co.uk/shares/share-resear ... -announced

As anticipated, many financial results are down on last year, including adjusted earnings per share which drops 8.8% to 31.2p. This is mainly due to the timing of capital expenditure on Transmission projects, along with a reduced share of Scotia Gas Networks earnings due to the part disposal in October 2016.

That does read better doesn't it Uncle, rather than thinking inept management maybe being responsible.

Ian.

[HYPMonkey]

Just received a corporate action message from AJ Bell.

From what I can see, SSE proposes to step away as a major retail energy supplier, to instead to go up the food chain to be a network and wholesale supplier in partnership to service the plebs.

The proposal is to team up with N-Power of Germany to split the retail business allowing it to partially retreat from UK consumers.

Impression I am getting this is a capital play rather than an income one, which means they intend scaling back income aspects in favour of capital growth solely.

Given the owner of N-Power (Innogy SE, part of zero-payer RWE) currently pays a 4.05% divi, I am quite concerned as German companies are not known for their income.

As they are working with a company whose focus isn't on dividends, perhaps this marriage is a demonstration of the dying art of HYP -- good payers slowly disappearing over time.

What do HYPers think of this little chestnut?