The only interest to declare is that I only hold NG shares hence my limited use of the board. From looking at the NG site, the annual report wont be published until later in the year at around the same time as the AGM which is why I got confused with the terminology. I can see youre talking about the detailed notes to the recent results announcement.
I completely agree revenue is vital to businesses but here the reason revenue isnt a good metric to use to judge performance is that so much of what NG recovers is pretty much pass through either on commodity costs in the US, recovering the allowed revenues to be paid to the Scottish asset owners or things such as UK balancing costs. Its not the same as Tesco saying sales have increased which would be a mark of genuine business performance. Thats all I was getting at, just trying to help shine some light on the results the market seems to have judged them very well by the sh price mvmt.
"Ofgem has opened an investigation into National Grid's UK transmission business.
The probe will examine whether the business has breached rules relating to its duty to operate the system in an economic and efficient manner, the regulator said.
"This includes but is not limited to producing and publishing appropriate forecasts of demand," Ofgem added."
On p49 of the annual report, did you not read my earlier post ... strange if not, from your posting history it seems you are only interested in NG, do you have an interest to declare?
NG seem to have done everything to avoid reporting and discussing headline Revenue which is and always should be line 1 row 1 of every annual report. That is what headline means. The authors spend long enough talking about how much revenue is going to grow in the outlook sections, but don't actually report the reporting number until p 49. Utterly dreadul report. Be ashamed if you or someone nearby had anything to do with it, by all means spin PR messages to say what you want us to hear but don't try and hide the hard facts.
To suggest it is a pointless metric is nonsense, pathetic remark, every business should be transparent on actual revenue and things like cash flow and debt, even if there are an endless series of adjustments, it is arrogant to say we cannot understand the hard numbers and allow for the adjustments.
p 49 of what? NG always report revenue every year in their accounts although its a very misleading figure as they recover other company costs in the UK and have fuel pass through costs in the US so looking at this number doesn't really help with any analysis
A table on p.49 gives revenue figures and comparables, the first time clear group summary figures are presented in the report. Disgraceful. The figures themselves not so bad if we believe the outlook that there is better growth to come.
Op costs £11,757
Profit before tax £2,708
Op costs £11,827
Profit before tax £2,184
I could not find a simple comparative summary balance sheet table which is an extraordinary thing for a major company report, shameful and I guess deliberate obfuscation cf the clarity and transparency for example of Whitbread or GSK reporting. On pp. 42-43 there are debt and cash flow tables, and on p. 16 they say
"Net debt as at 31 March 2018 increased by £3.7billion to £23.0billion (2017: £19.3billion). The increase in net debt was driven by increased levels of capital investment and the return of over £4billion to shareholders relating to the proceeds from last years sale of UK Gas Distribution"
So I wasn't making it up. In other circumstances and if that is the true reason I would be worried by ramping debt at nearly 20% except that presumably NG's growing debt cost is recoverable as part of the formula for setting regulated charges so it is revenue enhancing, and a big pile of debt means the CEGB's shareholders are less vulnerable to (the unlikely prospect of) renationalisation.
In conclusion: performance 5/10 outlook 8/10 report 0/10 credibility ?/10
Steady as it goes, this share is almost classed as a goverment bond I think the Corbyn efect has been over egged, and we should stick to the things that we know which in this case is National grid will be here in 2022 but will J Corbyn
For me this share is a backbone of my pension fund and as so I will still use 20% of my available capital each year to increase my holding. After all the American income is increasing and here in britain there is lack of competition and in a recent edict the powers that be are threatehing to withdraw solar subsidies so lots of good news ahead
I think the share buy back is still part of the deal of using the funds from the sale of the Gas Distribution Business. They got a big chunk of cash, paid a special dividend and consolidated the shares, then set out on a buy back programme.
The special dividend/share consolidation was a one off way of giving money to shareholders and reducing the number of shares. The share buy back is (erm) a way of giving money back tot he shareholders and reducing the number of shares. Why they didn't do it all at one time & just have a bigger consolidation special dividend. it would have been a lot simpler, and cheaper (actually the cheaper bit is probably wrong because the share price has been falling during the buy back so they will end up having less shares.)
positive 5-6% outlook but interested in the details of where it is coming from ... US and Ventures and ...
No wish to be negative on sucha good day, but ...
Very difficult to read the report, I ran through it twice and gave up second time around because I couldn't find the clear financial statement whiuch starts with Revenue ... actually that key figure is notably absent? I will try reading the detail again later, maybe the offline report is an easier format.
I did however read that debt had increased sharply, and the main reason was the cost of returning funds to shareholders eg buy backs. Er ... that sounds rather alarming when you dig into it, borrowing to pay dividends.
No brainer. Added some more this morning based on good results, profit rise and future prospects. Great divvy and part of it due in a couple of weeks. SP was £10 a year ago and these results are better than back then.
the market has been savage on recent company results, even quite good ones. Are we expecting anything more than steady progress and a 30p divi? As you quite rightly say we need to hear how NG's claimed focus on higher growth areas is going.
That said NG was considerably over-sold on peak Corbyn, and has not yet recovered fair value which is and in my mind always has been around 930p. Could this be a case of reasonable results releasing momentum in the upswing? The background of reduced UK interest rate outlook and firmer USD helping things along.
Actually I have no idea what is coming up nor where NG is going, stuck in an overweight position but holding on.
On the dip- the recent rise has been cycling within a band and showing signs of dipping, it dropped to 824 and bounced. I bought a few more at 830p as I think this represents good value and will recover, the results on 17th could be a trigger. (IMB had a tremendous day yesterday in response to pretty poor numbers and a few hopes on new products, the market must have been expecting much worse)
Political risks remain with NG, but I don't know any risk free investments paying over 5% and likely to give good capital gain in next 12 months. I've ridden several cycles on NG over many years, it isn't get rich quick but buying around the lows and selling into the rise has worked OK for me.
"-the downside seems limited even in the worst case of nationalisation "
I'm not sure that is quite true. McDonnell's idea is to grab ownership & give the shareholders government bonds, which may be worth significantly less than the current share price and yield less than the current shares. Though how that works with the American Business I don't know.
And may I be pedantic and insert a phrase in one of your last bullet points:
"Will benefit from the rise of" - BATTERY POWERED - "electric vehicles"
Fuel Cells may yet overtake them, though they are way behind at the moment.
" Perhaps the days when the views of Questor were read as a guide to investment strategy by many are almost at an end. "
With the world at one's fingertips most savvy investors are now more than capable of doing their own research - the internet is a wonderful thing. Well, apart from WasteYourLifeBook but that's another story.
The likes of Questor and the Motley Fool, et al, are just distractions. Questor I put in the same bracket as Goldman Sachs - whatever they say, do the opposite. The Motley Doofus provides a regular chuckle but since when did anyone regard their articles as investment advice? The clue is in the name people!!!
I am starting to think that many of use who have read Questor over the years are less than impressed given the fall in the SP since the write up on NG appeared in yesterday's Torygraph.
I have noticed that those who write under Questor are either employed elsewehere in the finance industry (the author of this piece is employed at A.J. Bell) or a scribbler employed by the Torygraph and whose job it is to "advertise" the wishes e.g. buy / sell of some investment house.
Perhaps the days when the views of Questor were read as a guide to investment strategy by many are almost at an end. Personally, I no longer look forward to the days when Questor has an article on any stock that I own.
Many on this BB are ahead of this. FY results out on 17th, it would be good to hear more about the higher growth areas which were to be investment focus after disposal of the Gas Transmission business. Mr. Corbyn is hardly encouraging investment in the UK business.
Questor: few assets are more unloved than UK utilities, so nows the time to buy National Grid
BoA ML survey of fund managers finds British stocks least popular assets with professional investors at the moment. An asset that is unloved can also be undervalued.
Utilities are unloved - perceived political risk, tighter regulation by the current regime and preference for growth stocks.
-40pc of Grids assets are in the US (so their value rises as the pound falls)
-it offers a fat yield, and comes with a price tag that appeals relative to both its
American peers and the regulatory value of its assets in Britain
-the downside seems limited even in the worst case of nationalisation some time in the
-The shares stand at a four-month high and there could be more to come
-Agreement to sell its remaining 25pc stake in Cadent, the British gas distributor, for
£1.2bn higher than some analysts had been expecting.
Plans to refocus its portfolio on higher-growth assets .
-regulatory approval in upstate New York to increase residents electricity and gas bills
by 2pc to 4pc over the next three years. This could pave the way for clearance across
other parts of its US network.
-Will benefit from the rise of electric vehicles
Results due on Thursday next week ... so now looks like a good time to top up.
Yes, for now. But there's a long time to go before the next election (probably) and anything could happen before then. Also remember that share prices don't usually go straight up or down, so I see this as a bounce, that's all, at present. The underlying concerns are still simmering away in the background.
I was previously a long term investor in NG but until the outcome of the next election is known there is too much risk here IMO and better opportunities elsewhere. If you're going to invest in NG, or remain invested, at least make sure you're doing it with your eyes open.
Because it is not enough (obviously). This money would be much better used in the business or if the directors can see no use, then paid out as dividends. As it is it simply gets lost in the vast market.
Ditto - I'd say that utilities have been given a kicking purely because of the JC nationalisation threat, and now that he's been on the back foot owing to his deselection habits, and now his obfuscation over anti-zio nism, coupled with TM riding high, the results are there for all to see.
Been having the same debate with myself on the UU. board ... MS have been positive, utilities up in general especially water today, Corbyn fears receding and bond proxies looking better value if the threat of a global trade war dampens growth and interest rates?
In which case the likes of NCYF and other bond-like ITs should be rebounding, but not the case so far.
GSK improved thanks to its Pfizer / Novartis decisions.
Not found any external comment attempting to explain why UK utilities are so strongly back in favour. Not complaining.
NG along with many other high yield stocks which has taken a beating over the last couple of years but the last few weeks have seen signs that they may have levelled-off and perhaps even started a tentative climb.
IMB, SSE, GSK similar stories. GSK has had positive news of late. Maybe there are other factors at play like M&A in utilities sector, Corbyn mis-steps but it seems that at these valuations, increased volatility and uncertainty in the market their time may finally be coming. Let it be so, we have suffered long enough!
OK-I get that the threat of nationalisation is having a negative effect on the share price but cannot understand why the continuing share buyback is not counteracting this (increasingly unlikely) negativity. Answers please.....
" FTSE FOR FRIDAY (FTSE:UKX) It's been a while since we moaned about the AIM market. Thankfully, the AIM remains blithely ignoring the travesty which is the FTSE and, at 1041 points, is trading in fairly helpful territory which does not harm ..."
on news of the preferred options for ways in which Ofgem may or may not taper the formula setting the rate at which the network can recharge its investment costs to the retailers from 2021, or not.
A welcome sp improvement whatever the reason, just another 150p to get back to fair value. Can we be confident enough to say that we have seen the bottom at 740p ... probably not, it is all so political as you say, but I will be adding to my ISA ahead of the next dividend.
I was once a Conservative County Councillor. On one occasion I spoke out against something that the Conservative ruling group was pushing through because I thought (and still think) that it was profoundly undemocratic. As a result of this the fix was put in to ensure that I would not be selected to contest the seat at the next election.
For me it was a price worth paying but then I wasn't relying on it as an income to pay the mortgage.
Can't disagree with anything you say, Bill.
The standard of political leadership and integrity in this country is abysmal.That includes Tories, Labour and the LibDems(who?)
However, besides the rudderless Tory party giving strength to the likes of Corbyn and McDonnell, I really am disappointed that many moderate Labour MP's seem to have given up the ghost and one never hears a squeak of discontentment or disagreement from them in relation to 'the annointed one'. They appear to be a spinless , looking after number one bunch of zombies. Haven't any of them got the cojones to put their collective heads above the parapet? For the good of the country, if nothing else? Anyone showing a bit of honesty and courage now, could do well in any future Labour leadership contest as I am optimistic that the Marxist Madness won't last for ever.
"Shifting its primary listing to, say, New York could make some sense."
But would have zero effect - as the author has the good sense to concede. Having other, non-UK-regulated assets offers a small degree of comfort to UK utilities investors - particularly NG, given the relative scale of the same for them - but ultimately, the risk of state appropriation of core, monopoly regulated assets is simply not something that any of them can merely shift to the US, or anywhere else.
"That's all we need - the Times saying a Corbyn-led government would be good for us. Never mind SELL National Grid, SELL everything might be more appropriate."
You are not wrong, FRTEB. More and more people are jumping on the "dysfunctional utilities" bandwagon - including the charlatan Gove, I see - but when last did the lights go out? When last did we run out of water, out of gas (though we came fairly close to the latter the other day, it would seem)?
A Corbyn "government" (sic) - when did he or any of his cronies run anything, manage anything? - would be in hock to increasingly militant unions. The same group that gave us - among many debacles - the three-day week in the mid-1970s, no TV, lighting homes by candle. Many of us on here will remember that - and history has a habit of repeating itself, just when we think such things are safely consigned to history.
I am increasingly angry at the shocking shambles of a Tory party, with all their lies, dissembling and shameless self-interested posturing - it is they, and they alone, who have made Corbyn credible, and it is they that will bring him to power. If it comes to that - let's hope not, but at the same time, not something we can take for granted.
" Responsibility for ensuring that the lights stay on and that the gas keeps flowing during crises such as this weeks would transfer back to the government. Perhaps a Corbyn-shaped cloud could have a silver lining, after all. "
That's all we need - the Times saying a Corbyn-led government would be good for us. Never mind SELL National Grid, SELL everything might be more appropriate.
"..................... Along with other regulated utilities, it is firmly in the sights of Jeremy Corbyn, who has pledged that a Labour government would regain control of energy supply networks by bringing the systems back into public ownership. Markets have taken the threat seriously. Since May, when the Labour manifesto was published, the UK utility sector including National Grid has underperformed American utility stocks markedly; National Grid shares are down about 35 per cent.
Dominic Nash, an analyst at Macquarie, suggested this week that companies such as National Grid even had a duty to shareholders to consider putting their activities offshore to protect investors against potential expropriation.
Its not quite as mad as it sounds: National Grid is investing heavily in its American business, which it expects will overtake its UK division by the early 2020s. Shifting its primary listing to, say, New York could make some sense.
Yet expropriation of its core UK network businesses still seems improbable since, even on the present depressed valuation, it would cost billions of pounds that the government is unlikely to have. The more likely option lies in further political and regulatory hits on the profits from National Grids core UK network businesses. Going offshore would not help that.
Ofgem, the energy regulator, has warned that it is about to get tougher. It is due to unveil its proposed framework on Wednesday for the next price control, when it sets the revenues the networks can earn. It is likely to slash the cost of equity allowed for companies such as National Grid and could moot a shorter price control than the existing eight-year system, increasing perceived risk.
The regulator has already made a series of decisions that have spooked investors for example, proposing to slash the revenues that National Grid can get from the transmission link to the new Hinkley Point C power station. There is plenty to worry investors short of full expropriation.
Any Labour government surely would want to do something to honour its manifesto pledge. One easy option? To take back control of the system operator role the electricity half is already a separate ring-fenced business.
Responsibility for ensuring that the lights stay on and that the gas keeps flowing during crises such as this weeks would transfer back to the government. Perhaps a Corbyn-shaped cloud could have a silver lining, after all."
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