Judging by the share price slide, investors weren't pleased by the news that accompanied these figures of a deeply discounted two-for-five rights issue, at 335p a share, to raise £3.2bn. Management have, after all, often denied the need for fresh funds.
That will be used to fund a five-year £22bn capital investment programme - that's predominantly to ensure security of supply and decarbonisation of the energy system, as well as to help support UK government policy targets. In the past five years the group has invested £14bn, financed through debt and internal cashflow, but finance director Steve Lucas says the new cash will help match "the clarity of the investment strategy". Mr Lucas also says that it will help maintain the group’s single A credit rating and to "replatform" the size of National Grid.
Despite that shock for investors, the results themselves were decent enough. The group's operating profit grew 7 per cent in the year to £3.29bn and management also reiterated the policy of 8 per cent dividend growth until March 2012. What's more, costs were reduced by 2 per cent and the UK business benefited from above inflation revenue increases under the price control allowance. Still, operating profit at the gas distribution side fell 11 per cent, largely as a result of payment timing issues and a one-off Long Island property tax item. What's more, the group also announced plans to exit its New Hampshire electricity and gas businesses after adverse regulatory rulings.
Group capital expenditure was close to target, at 3.3 per cent this year, which increased the UK and US asset bases by 8 per cent and 3 per cent, respectively. And the net debt pile fell slightly from £22.7bn to £22.1bn, reflecting the weakening dollar and robust operating cashflow.
Ambrian Securities forecast pre-tax profit of £1.95bn for 2011, giving a pre-rights issue EPS figure of 56.2p (2009: £1.97bn/57.4p).
| ORD PRICE: | 574p | MARKET VALUE: | £14.2bn | |
| TOUCH: | 573-574p | 12-MONTH HIGH: | 686p | LOW: 527p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 170p* | NET DEBT: | £22.1bn | |
| Year to 31 March | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 9.20 | 1.78 | 42.8 | 26.10 |
| 2007 | 8.70 | 1.75 | 48.1 | 28.70 |
| 2008 | 11.4 | 2.18 | 60.3 | 33.00 |
| 2009 | 15.6 | 1.39 | 36.9 | 35.64 |
| 2010 | 14.0 | 2.19 | 56.1 | 38.49 |
| % change | -10 | +58 | +52 | +8 |
Ex-div: 2 Jun Payment: 18 Aug *Includes intangible assets of £5.49bn, or 222p a share | ||||
