National Grid Share Discussion Threads

[utsushi] 24/2/2006 18:13

Thanks Ivor, the fact that the debt agency has altered it's credit rating is interesting....

Investors Chronicle has net debt at £11.1bn pre acquisition if it goes through.

[enami] 24/2/2006 17:12

santori – you must include the funds owed from creditors as an asset.
The Gross Gearing is 94.37 % (from ADVFN financial tables)

Gross Gearing ratio, is the Total Debt (short-term and long-term) as a percentage of the Total of Shareholders' funds and Debt funds.

= [(creditors,short + creditors,long + creditors,other + subordinated loans + insurance funds) / (ord cap,reserves + prefs,minorities + creditors,short + creditors,long + creditors,other + subordinated loans + insurance funds)] * 100

= [TOTAL LIABILITIES / TOTAL ASSETS] * 100

[utsushi] 24/2/2006 17:05

akr, the difference between 100% and 1000% seems a little extreme to be just a matter of definition, we will see what the papers are saying, but i bet NG is over paying and will get stuffed like the rest were..we will see

[akr] 24/2/2006 15:24

santori, Both sets of figures are probably reliable! The difference is in the definition of GEARING.
Irrespective of gearing the acquisition is costing about 25% of NG's capitalisation, big, but not overwhelming, Scottish Power's US acquisition for example cost nearly 100% and they are selling it back for a loss of 1bn. I think and hope that NG will do better!
The reason NG requires so much capital is that they are being paid fees for the use of their capital intensive assets(pipelines and cables) which have comparatively low operational costs.

[utsushi] 24/2/2006 14:29

akr, i see what you mean, i have the latest refs which i think is more reliable than the advfn financials..

net borrowing £14119m
shareholders funds £1359m
net gearing %1039

gross gearing is worse %1046!

I'm not sure about this acquisition, but the market seems to like it..?

[akr] 24/2/2006 14:10

Hi santori,
We seem to be working on slightly different figures. I am quoting from this site, if you click on "financials" above for NG it gives:-

KEY FIGURES at Previous Day's Close
Market Cap. 16,724.14 m
Shares In Issue 2,712.76 m
Prev. Close 597.50
PE Ratio 20.90
Dividend Yield 3.84 %
EPS - basic 29.50
Dividend PS 23.70
Dividend Cover 1.24
Cash Flow PS 107.23
Return On Equity (ROE) - %
Operating Margin 13.52 %
PEG Factor -1.33
EPS Growth Rate -15.71 %
Dividends PS Growth Rate 19.82 %
Net Debt 22,650.00 m

GROSS GEARING 94.37%

Quick Assets 4,713.00 m
Net Working Capital -1,334.00 m
Intangibles / Fixed Assets 10.07 %
Turnover PS 314.11
Pre-Tax Profit PS 42.47
Retained Profit PS 6.52
Cash PS 24.70
Net Cash PS -201.93
Net Tangible Asset Value PS * -23.74
Net Asset Value PS 51.28
Spread 0.50 (0.10%)

[utsushi] 24/2/2006 13:38

akr, current net gearing stands at 1039%, not 100%

[akr] 24/2/2006 12:42

While a c.£4bn Keyspan deal is big it is not so much in relation to NG. I read it is to be bought on borrowed cash. If so, gearing goes up from c.100% to c.120% and the effect on earnings, should at least initially, be broadly neutral. The acquisition will fit with existing NG companies in the area. Let's hope that NG management doesn't emulate the bungling incompetence exhibited by Scottish Power in the US (and elsewhere).

[prewar] 24/2/2006 12:12

Santori

I hope they won't be doing it unless it's earnings enhancing. No doubt that's what they will be working out now.

[utsushi] 24/2/2006 12:06

prewar, has anyone explained if the Keyspan acquisition would be earnings enhancing, with all that debt?

[prewar] 24/2/2006 10:03

Santori

I bet you like this boring share today!

[gateside] 24/2/2006 07:11

National Grid has emerged as the leading bidder in a $7bn auction for New York utility and natural-gas distributor KeySpan.

The report appeared in the Wall Street Journal without citing sources.

It is still possible a rival bidder could emerge with a sweetened offer, but for now National Grid, which is offering an all-cash $42 per share deal, appears in the best position to clinch a deal.

KeySpan is the largest gas-distribution company in the northeastern US, with more than 2.6 million gas customers served by five utilities. It also owns 6,600 megawatts of generating capacity.

[prewar] 23/2/2006 13:38

Santori

Had a quick look at the accounts and the latest interims via the news section and the figures I used were for Sept 05, Mar 05, Mar 04, Mar 03

Op Profit pre Exceptionals 1091m, 1852m, 1837m, 1696m

Int pre exceptionals 317m, 783m, 822m, 939m

Int cover 3.44, 2.36, 2.23, 1.81

Am I missing something?

I agree NG is dull but high divi yield and growth in US should help to keep the capital growth coming.

[utsushi] 23/2/2006 12:14

prewar, you can confirm by reviewing accounts, it's in my refs, maybe the debt does not matter because the cover is so solid, i don't know, i just think Nat Grid will be dull as servicing debt will drag performance..

[prewar] 23/2/2006 09:00

Santori

I'm not really familiar with that measurement of gearing. I would have thought that the debt : assets gearing ratios are more appropriate here. From memory this would equate to something like 60-65% gearing which would be considerably lower than a lot of the infrastructure funds that have sprung up recently.

Can you also give the figures used to support the interest cover is 2.5x and falling.

TIA

[utsushi] 22/2/2006 22:47

prewar, net debt as a percentage of shareholders equity..clearly National Grid is blue chip, but debt to my mind means that in the abscence of growth, this company does not deserve a premium rating.

I think these days people will pay anything for energy related exposure, dangerously ignoring fundamentals..

Any comments?

[prewar] 22/2/2006 19:13

Santori

Gearing is 1039% of what?

[utsushi] 22/2/2006 14:51

gucci, does it not matter that gearing is 1039% and rising, interest cover is just 2.5x and falling..?

[gucci] 22/2/2006 14:40

640p target :-)

[neddo] 22/2/2006 12:11

could some one be considering a bid?

[luderitz] 21/2/2006 13:39

Well something Is driving the price up nicely.

[prewar] 21/2/2006 12:19

mrc

Not sure whether you've factored in the $:£ exchange rate?

Also just by buying a company won't generate market cap due to the debt used to fund the acquisition

[mrc005] 21/2/2006 11:27

NG have a market cap of nearly £16 billion according to FT.com. It has apparently spent over the last few years $14.6 billion buying gas and electric companies in New York state. That only bought 565,ooo customers. To me the figures don't seem to add up. NG is either worth more than £16 billion or it paid far to high a price for its US purchases. I know they give £4 billion back to shareholders recently, but Transco on its own had a M cap of nearly £9 billion. Whats happened.