21st May 2015 07:10
LONDON (Alliance News) - National Grid PLC Thursday reported profit before exceptional items that beat analyst expectations but said pretax profit after those items fell.
The power grid operator increased its dividend as expected, but not as much as analysts had forecast.
The FTSE 100-listed company reported a profit before tax of GBP2.62 billion in the year ended March 31, down from GBP2.74 billion a year earlier. Before exceptional items and remeasurements, pretax profit rose to GBP2.87 billion from GBP2.58 billion, as revenue experienced a lift to GBP15.20 billion from GBP14.80 billion. Pretax profit before exceptional items beat analyst expectations.
Its closely watched operating profit came in at GBP3.78 billion, representing a small lift from the GBP3.75 billion in the previous financial year. Before exceptional items, operating profit totalled GBP3.86 billion, up from GBP3.66 billion.
Earnings per share before exceptional items came in at 59.6 pence, up from 54.4 pence, which comfortably beat analyst expectations, which estimated EPS of around 55.7 pence. After exceptional items, earnings per share actually fell to 53.6 pence from 65.7 pence which
National Grid will pay a final dividend of 28.16 pence per shares, up from 27.54 pence and leading to a full-year dividend of 42.87 pence, up 2% from 42.03 pence. This was slightly lower than the analyst consensus expectations.
"National Grid delivered another successful year. Overall, our businesses achieved a strong operating performance and we developed new strategic growth opportunities in transmission and interconnection," said Chief Executive Steve Holliday.
National Grid's UK electricity transmission, UK gas transmission and US services all reported a rise in operating profit in the year, with its UK gas distribution segment reporting the only fall.
It said UK electricity transmission "has built on major operating model and process changes in 2013/14 to deliver further improvements in performance," which is expected to continue to deliver further efficiencies and value.
UK gas transmission operations "delivered a good year" and said it will continue to monitor storage levels alongside supply and demand expectations over the summer for the winter months, with an update for the winter outlook expected in October.
US activities are "one of continued investment and growth", delivering a "record year of investment" in the country, and National Grid said it expects its US operations to report a similar operating profit in the current financial year as it did in the last.
Net debt at the end of the financial year was GBP23.9 billion, rising from GBP21.2 billion. National Grid said it plans to raise, on average, around GBP2 to GBP3 billion of new long-term debt every year to finance growth and refinance maturing debt and said it is "well funded".
"We finished the year in a solid position, with a strong cash flow performance, good growth in our asset base and healthy gearing. We are on track with our programme of rate filings, operational efficiencies and enhancements to customer service. At the same time, we continue to invest in our UK and US businesses, driving organic growth, which together with strong returns, support our commitment to a sustainable, growing dividend," said Holliday.
In its own statement Thursday, UK energy regulator Ofgem said it has opened investigations to see if five generators provided false or misleading information to National Grid about planning consents for some of their proposed generating units that took part in the December 2014 capacity auction.
The companies being investigated are GF Power Peaking Ltd, Berangere Ltd, Adret Ltd, Alkane Energy UK PLC and Power Balancing Service Ltd.
Alkane Energy released a statement Thursday that said it "does not believe it is in breach of the capacity market rules" but said it will co-operate with the investigation.
The investigation will look into whether the five generators gave incorrect information about the capacity they had in the annual National Grid auctions, which aims to decide which generators and providers of demand-side response will be awarded a capacity agreement, in return for providing capacity at times of system stress.
Ofgem stressed that the investigation does not mean it has found any company to be in breach.
National Grid shares were trading up 0.4% early Thursday morning at 906.70 pence, whilst Alkane shares were down 14% to 21.10 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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