31st Oct 2008 07:47
Centrica Interim Management Statement Overall, Centrica continues to trade in line with expectations on a pre-taxbasis. Full year earnings will also benefit from a lower effective tax ratedriven by a one-off deferred tax credit. As a result of the retail price increase announced in July, British GasResidential saw a short term increase in customer churn. However sales of energyaccounts remained high, with particular success in the fixed price propositions.Churn has now fallen to levels experienced before the price increase and inrecent weeks the level of account sales has been ahead of customer withdrawalnotifications. British Gas Residential currently has 15.6 million customeraccounts on supply. Subject to the usual uncertainties caused by weathervariations, second half operating margins are now expected to be ahead of thoseachieved in the first half of the year. In Centrica Energy the gas production business has continued to performstrongly, with gas volumes anticipated to be around 10% ahead of 2007, althoughthe recent easing in fourth quarter wholesale gas prices will have some impact.Losses in the legacy industrial and commercial contracts are expected to belower than previously forecast if the decline in the fourth quarter wholesalegas price is maintained. The operating results of the power generation businesshave been materially impacted by unplanned outages in the second half of theyear at the Peterborough and Spalding power stations. British Gas Services and British Gas Business are both performing ahead ofexpectations. Centrica Storage has undergone a strong injection season, with theRough reservoir now effectively full, and continues to meet profit expectations.In late September we acquired the Caythorpe onshore gas field which has planningpermission for conversion to a storage field with a capacity of up to 7.5billion cubic feet of gas. The total cost was £70 million, with an additionalinvestment of around £100 million required to complete the conversion. Difficult economic conditions in North America and the recent disruption to thepower market caused by Hurricane Ike have held back Direct Energy, but this hasbeen offset by the strengthening of the US dollar against sterling. Commodityprice movements have had a one-off adverse impact on Oxxio in The Netherlands,which in turn has had a significant adverse impact on the overall Europeanbusiness. The net interest charge for the Group remains low, at around £25 million. InSeptember we successfully placed £750 million of sterling bonds, with £300million maturing in 2018 and the remaining £450 million maturing in 2033. Wecontinue to forecast an underlying Group effective tax rate of around 55% due tothe high proportion of upstream profits. However the tax charge will benefitfrom a one-off deferred tax credit, now estimated at £60 million, due to achange in the treatment of decommissioning costs for certain gas fields. The certain re-measurements gains reported in the Interim results for the periodto 30 June 2008 have subsequently been negatively impacted by the movements incommodity prices and the margin cash held at 30 June 2008 has now largelyunwound. The next scheduled reporting event in the financial calendar for Centrica is the2008 full year results on 26 February 2009. \* TEnquiries:Centrica Investor Relations 01753 494900Centrica Media Relations 0845 0726 8001\* T Copyright Business Wire 2008Related Shares:
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