With fewer customers and falling energy usage, Scottish & Southern Energy grew pre-tax profit just 2 per cent in the year to £1.34bn – after adjusting for heavy writedowns in generating assets. That modest performance, which was in line with analysts' expectations, suggests few catalysts for a significant share price upside.
The retail unit's operating profit actually fell 19.7 per cent to £321.6m after the loss of 230,000 customers, as doorstep selling practices were abruptly halted following a court ruling. The purchase of Phoenix gas in Northern Ireland did go some way towards rectifying that, but customer numbers were still 100,000 down in the period, at 9.55m. A warmer winter also hurt with households gas and electricity usage down 20 per cent and 7 per cent, respectively.
The wholesale operating profit, meanwhile, rose 6.4 per cent to £607.9m, while the group's focus on renewable energy has continued with investment having risen from £814m to £852m – bringing the total capital spend to £1.7bn for the year. Moreover, renewable generation jumped 23 per cent in the year and now contributes a quarter of generating capacity.
Management confirmed the group's dividend payout target of inflation plus 2 per cent, and broker Liberum Capital forecast adjusted EPS of 129p for 2013 (112.7p in 2012).
SCOTTISH & SOUTHERN ENERGY (SSE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,318p | MARKET VALUE: | £12.5bn | |
| TOUCH: | 1318-1325p | 12-MONTH HIGH: | 1,430p | LOW: 1,184p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 62 | |
| NET ASSET VALUE: | 364p* | NET DEBT: | 132% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 15.3 | 1.08 | 101 | 60.5 |
| 2009 | 25.4 | 0.05 | 13.0 | 66.0 |
| 2010 | 21.6 | 1.64 | 134 | 70.0 |
| 2011 | 28.3 | 2.11 | 162 | 75.0 |
| 2012 | 31.7 | 0.27 | 21.1 | 80.1 |
| % change | +12 | -87 | -87 | +7 |
Ex-div: 25 Jul Payment: 21 Sep Includes intangible assets of £846m, or 90p a share | ||||
