Centrica on a slow burner
Sunday 27 April 1997
Confusingly, it retains the British Gas brand name for promotional purposes.
What does Centrica suggest? A thrusting, focused outfit, perhaps, going about its business with a sense of purpose; or centred, classic in its cod Latinate overtone, and also central to our lives.
That, at least, is what the spin doctors devoutly hope the name conveys.
But to British Gas shareholders who took delivery of a share in Centrica in February, the reality is less compelling.
First, the bad news. Centrica is unable to pay a dividend for the foreseeable future. It still has liabilities of up to pounds 2bn on North Sea "take or pay" contracts, where it owns the gas but has been unable to sell it off - the so-called "gas bubble". And it faces competition in its domestic markets from now on. It has already lost 20 per cent of its customer base in the south west, and it is feared that about 30 per cent of domestic customers could switch to rival suppliers eventually.
Hardly a promising start. There has been much talk of takeover - perhaps more inspired by stock market operators desperate for some upside to the shares than from any real prospect of a bid. But from a valuation perspective, such issues are immaterial.
From a high of 75.5p on the day the shares were issued, they have lurched downwards, and now stand unloved at 58.5p. The future for Centrica hinges on its ability to cope with swings in gas supply and demand - the key to which in turn lies with the European interconnector pipeline. This will link the UK and northern Europe in 1998. Then, so goes the theory, Centrica can sell surplus gas abroad.
As significant, in the years ahead, will be Morecambe Bay, worth pounds 2.5bn, according to analysts. Centrica could sell participation in the field if it chose, to raise cash. The development also gives it the luxury of having complete control over its own gas needs.
At present, however, there seems little appeal in the shares if the price is much above 50p. Sid has had a raw deal. At current levels, the shares remain a sell.
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 3 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 4 April Fools' Day 2015: The best hoax news stories from around the internet
- 5 Gamers confess the worst things they've done in The Sims
Holborn fire: Chaos as 2,000 people evacuated to escape toxic smoke filling central London
University of Cambridge: Remains of 1,300 scholars are found under building
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
Katie Hopkins reported to the police for race hatred by Labour MP Simon Danczuk after tweet about Pakistani men
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...