Centrica's (CNA) full-year results gave the company a chance to fight back at criticism that it makes too much money from its dominant position in the UK residential energy market. Reporting a 4.5 per cent post-tax margin in its UK residential energy business last year, finance director Nick Luff said: "It is not an excessive margin, given the risks we take and our commitments".
We will hear what the regulator thinks of British Gas's margins in the spring, when it reports back on its review into the energy market. For his part, Mr Luff points out that there have been a multitude of enquiries into the market over the past decade, none of which has found anti-competitive behaviour. Even if a full-blown Competition Commission review is launched, then "so be it, we are confident it is a competitive market," he says.
Driven by unpopular price rises, British Gas lost 2 per cent of its residential energy accounts last year. The business also took a hit from higher costs and warmer weather, which sent adjusted operating profit down 6 per cent to £571m. The extreme cold-snap in the US, which disrupted Centrica's Direct Energy business, will also push down adjusted earnings per share this year. Whitman Howard expects to trim its 2014 adjusted EPS forecast by 2p to around 25p (from 26.6p in 2013).
| CENTRICA (CNA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 316p | MARKET VALUE: | £16.1bn | |
| TOUCH: | 315-316p | 12-MONTH HIGH: | 403p | LOW: 302p |
| DIVIDEND YIELD: | 5.4% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 102p* | NET DEBT: | 96% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 22.0 | 1.00 | 16.5 | 12.8 |
| 2010 | 22.4 | 2.81 | 37.6 | 14.3 |
| 2011 | 22.8 | 1.27 | 8.6 | 15.4 |
| 2012 | 23.9 | 2.42 | 24.0 | 16.4 |
| 2013 | 26.6 | 1.65 | 18.4 | 17 |
| % change | +11 | -32 | -23 | +4 |
Ex-div: 23 Apr Payment: 11 Jun *Includes intangible assets of £4.7bn, or 93p a share | ||||
