As recently as February, when the old British Gas split into BG and Centrica, the management warned the dividend could be wiped out if the company "lost" in the MMC report. Yet when the details finally emerged the shares went up. Yesterday they slipped just 0.5p to 218.5p.
For Sid this is apparently no longer the "biggest smash and grab raid ever" that was originally billed, despite the fact that the headline price formula seems worse than Ofgas's final proposals. Bizarrely, City analysts were yesterday actually raising their dividend forecasts for BG as it emerged that the company had won some important concessions.
On the face of it the statistics are grim. The MMC said BG's assets, including pipelines and buildings, were worth pounds 11.6bn, rather than the pounds 17bn in the group's accounts, on which it can earn a 7 per cent rate of return each year. By the stroke of an accountant's pen, the company will change its accounting policy and write-off no less than pounds 5bn from shareholders' funds.
The trick for BG is that by writing down its assets, the annual depreciation charge drops by around pounds 300m. Of course at the same time the MMC has cut its revenues by some pounds 380m a year, reflecting the pounds 29 cut in average gas bills for domestic customers this year. But putting the two together leaves the reduction in BG's profits at a more manageable pounds 100m, on paper at least.
Better still for BG was that while the public scaremongering was going on, the underlying performance of Transco, the pipeline division, was improving all the time that the MMC probe continued. BG said that 10,000 jobs could go if Ofgas won, yet 4,500 staff had already left the company when the report was published, boosting productivity.
It also revealed that there is pounds 285m in revenues to carry forward to this year from undercharging in the prior year, all of which will reduce the 21 per cent price cut forced on BG by the MMC to a 5 per cent revenue reduction in the current period.
The biggest relief for Sid is that BG will pay a dividend when it reports its results in September. It may not be the 14.5p paid during the last year of British Gas as a combined group, but it is likely to be around 8p - enough to yield a very reasonable 4.6 per cent and much better than the zero some gloomsters were predicting. That suggests Sid would not be wrong to keep on holding the shares.