In an earlier update SSE (SSE) had characterised FY2019 as a year of “transition” for the privatised utility, but it’s doubtful whether a structural decline in customer numbers formed part of this metamorphosis. But the number of retail customer accounts dropped to 8.03m at the March year-end, from 8.47m a year earlier, a reflection of what was described as “a rapidly evolving competitive landscape”, but that evolutionary process has given way to a steady exodus of price-savvy punters from the big utilities.
It was difficult to detect any negative effect on sales, though a rising top-line was accompanied by a 67-basis point reduction in the gross margin. Reported profits were constrained by £213m in exceptional charges, including a specific proportion relating to the proposed tie-up of its household energy business with sector stablemate Npower. Comparatives also suffered as figures for FY2017 were flattered through a £307m gain from the sale of a minority stake in Scotia Gas Networks.
However, these stocks are all about income, so attention will switch to the outcome of Ofwat’s price review, due to come in for 2019. Though the group’s ability to generate cash-flows could potentially be restricted through the introduction of a temporary cap on standard variable tariffs later in the year.
SSE (SSE) | ||||
ORD PRICE: | 1,422.5p | MARKET VALUE: | £14.4bn | |
TOUCH: | 1,422-1,423p | 12-MONTH HIGH: | 1,549p | LOW: 1,177p |
DIVIDEND YIELD: | 5.8% | PE RATIO: | 20 | |
NET ASSET VALUE: | 400p* | NET DEBT: | 160% |
Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
2014 | 30.6 | 0.58 | 33.5 | 86.70 |
2015 | 31.7 | 0.74 | 55.3 | 88.40 |
2016 | 28.8 | 0.59 | 46.1 | 89.40 |
2017 | 29.0 | 1.78 | 158 | 91.30 |
2018 | 31.2 | 1.09 | 81.3 | 94.70 |
% change | +8 | -39 | -49 | +4 |
Ex-div: | 26 Jul | |||
Payment: | 21 Sep | |||
*Includes hybrid equity of £1.17bn, or 115p a share |