Managers in the group's property division have used the booming property market to sell some of the 1,100 sites under management, about 800 of which were former contaminated gas works or depots. Centrica, the demerged British Gas supply business, inherited a further 300 sites when the two sides of the old company split earlier this year. The British Gas property portfolio has already fallen from 2,000 sites in 1994.
Since the start of this year BG has made several high-profile sales of London office buildings as the group's workforce shrank. One building, in Marble Arch in London's West End, raised pounds 19m, while two more office blocks in Holborn, close to the City of London, raised another pounds 25m.
Company sources said BG would have sold around 200 smaller sites outside the capital by the end of June.
BG pointed out that the cash made by selling most contaminated gas works sites was offset by the cost of cleaning them. BG is required to undertake statutory decontamination work before each sale. However, the impact on BG's overall profits is less because the clean-up effort is largely covered by an existing pounds 400m provision in its accounts.
"The property market is doing well at the moment and we're taking advantage of it. But it's not fair to take a snapshot of the situation at any particular point in time. You can't look at the money raised without looking at the costs," a source said.
Though the benefit from London property sales has mostly been completed, there is expected to be a further boost in the second half of this year from gas works sites sold to supermarket chains.
Analysts last week said the property sales were one of the reasons for the recent rise in BG's share price, with NatWest Securities raising their forecast for the shares to 280p. They closed on Friday up 3.5p in falling stock market, to 263.5p.
BG is considering making share buy-backs in a move to raise its borrowings. Analysts predicted they could total up to pounds 2bn, though the move would prove controversial. with customers and the industry watchdog, Ofgas.
The company had fought Ofgas's plans to slash its pipeline charges, claiming they represented the "biggest smash and grab raid ever". But BG accepted the proposals after a Monopolies and Mergers Commission investigation.Reuse content