Centrica Finals

[idpickering]

2017 financial performance
• Adjusted operating profit down 17% to £1,252m, reflecting significantly reduced profit in Centrica Business.
• Adjusted earnings down 22% to £698m. Higher net finance cost and lower Group adjusted tax rate of 22%.
• Adjusted EPS down 25% to 12.6p.
• £476m post-tax net exceptional charge, predominantly relating to impairments of E&P assets and Rough; shareholder statutory profit of £333m after accounting for re-measurements of open commodity positions.
• EBITDA down 9%. Adjusted operating cash flow (AOCF) down 23% reflecting lower EBITDA and one-off UK Business working capital inflow in 2016. Underlying AOCF down 13.0% vs 2016 and CAGR of (0.7%) since 2015.
• Group net debt down £877m to £2.6bn, at lower end of £2.5bn-£3bn end 2017 targeted range.
• Proposed full year dividend of 12.0p.

And later;

GROUP EARNINGS AND DIVIDEND

Profit for the year from business performance decreased to £710m (2016: £885m) and after adjusting for non-controlling interests, adjusted earnings fell by 22% to £698m (2016: £895m). This reflects the lower adjusted operating profit and higher net finance cost, partly offset by the lower tax charge, all as described above. Adjusted basic EPS was 12.6p (2016: 16.8p) reflecting the lower earnings and a higher number of shares in issue due to the effects of a 7% equity placing in May 2016 and the scrip dividend.

The statutory profit attributable to shareholders for the year was £333m (2016: £1,672m). The reconciling items between Group profit for the period from business performance and statutory profit are related to exceptional items and certain re-measurements. The difference compared to 2016 is principally due to a post-tax exceptional charge of £476m (2016: credit of £27m) and a lower net gain from certain re-measurements of £69m (2016: £750m). The Group reported a statutory basic EPS of 6.0p (2016: 31.4p).

In addition to the interim dividend of 3.6p per share, the proposed final dividend is 8.4p, giving a total full year dividend of 12.0p (2016: 12.0p).

https://www.investegate.co.uk/centrica- ... 0000Z1815/

[moorfield]

Thanks Ian.

Dividend maintained but at first glance the rest looks awful particularly operating profit.

Continuing to hold but not topping up anytime soon.

[idpickering]

Thanks Ian.

Dividend maintained but at first glance the rest looks awful particularly operating profit.

Continuing to hold but not topping up anytime soon.

You're welcome moorfield. I don't hold these anymore, having gotten cheesed of with the fickleness of their dividends.

Iann

[mike]

And for the future

2018-2020 focus on performance delivery and financial discipline

Targeting AOCF [Adjusted Operating Cash Flow] of £2.1bn-£2.3bn p.a. on average and capital reinvestment of no more than £1.2bn p.a.
Expect to maintain current level of [12p] dividend per share subject to generating AOCF within target range and net debt remaining within a £2.25bn-£3.25bn range.
Intend to pursue sale of UK nuclear investment. No plans for any major growth M&A.

There are political and regulatory storm clouds gathering, so whether they can keep to this intention will have to be seen.

[Julian]

Thanks Ian.

Dividend maintained but at first glance the rest looks awful particularly operating profit.

Continuing to hold but not topping up anytime soon.

You're welcome moorfield. I don't hold these anymore, having gotten cheesed of with the fickleness of their dividends.

Iann

Centrica are probably the share on the bottom rung of my HYP, clinging on there and when I do sell-offs to make use of my annual CGT allowance Centrica will very probably first in the firing line. The downside is that with the current divi and share value the yield is high so any sell off dents my income to an extent that can’t be fully made up by an alternative prudent purchase (prudent as in not going off and chasing mega yield at the expense of sleeping at night) but the return for that is sleeping better at night and the feeling that one has got rid of a liability that would eventually do something nasty.

I confess that I’m slightly envious of you Ian in that you’ve gone through that process of taking the income hit already and presumably put it behind you and got to an HYP that you are more comfortable with. I need to get onto that on April 6th or shortly thereafter and it might even be a 2 year operation. Will Centrica give me that much time I wonder.

- Julian

[peterh]

And:

The dividend will be submitted for formal approval at the Annual General Meeting to be held on 14 May 2018 and, subject to approval, will be paid on 28 June 2018 to those shareholders registered on 11 May 2018.

[monabri]

The market must have been expecting worse! SP up 3%....and with those numbers?

[Bouleversee]

Mine are in my ISA, down over 54%, so can't be used to offset gains in non-ISA shares so have no idea what to do. Impossible to know whether things will get worse or better. Likewise several other utilities. Centrica and Severn Trent bosses both sounded pretty fed up on Today this a.m. Not the only ones!

[kempiejon]

Centrica have held their dividend I had hoped for as much but even so a slightly surprising positive from them in my income portfolio following a few years of cuts and holds.

[kempiejon]

Centrica have held their dividend I had hoped for as much but even so a slightly surprising positive from them in my income portfolio following a few years of cuts and holds.

I started the post to point out they now offer a heady 9.x% yield

[Bouleversee]

Up nearly 5% today. I had expected them to go further down. Shows how little I understand about the stockmarket. I suppose the explanation is that it had been marked down on the expectation of a cut, but that could still come next time and indeed there is still the (however negligible) possibility that it may not get approved.

[moorfield]

I started the post to point out they now offer a heady 9.x% yield

My yield on cost (at 295.6p ), admittedly not a measure used very often, is a more modest 4.1%. Centrica has been a quandary for my HYP. The SP has a long way to go to recover initial capital invested, I can't improve income by redeploying current capital value elsewhere while the dividend is held, and nor do I believe the company will "do a Carillion". So the plan is no further top ups to slowly reduce its effect on overall capital and income (currently 2.9% and 5.3% respectively), until such time overall income falls short of its annual target.

[kempiejon]

Moorfield, that question of how to replace the yield income from selling is a good enough reason to do nothing. In fact my preferred strategy is to never sell except forced or for a bit of tax free gains harvesting and now moving my highest income shares in the ISA/SIPP. I've held Centrica for a long time and since their misdemeanours in 2014/15 have been excluded from any money.

[Julian]

Centrica have held their dividend I had hoped for as much but even so a slightly surprising positive from them in my income portfolio following a few years of cuts and holds.

I started the post to point out they now offer a heady 9.x% yield

In my case “heady” in that my head tells me that can’t last and my fear is that the adjustment will come from an eventual divi cut rather than the market revising its valuation. I know nothing though so could well be wrong, and would be happy if that ends up being the case.

I’m the same as Bouleversee, a 53.6% loss on my Section 104 cost. I don’t hold as many shares as I thought though and 90% are un-tax-sheltered so I can use the CGT loss. I’m seriously tempted to dump this dog, take the income hit, and move on.

- Julian

[Bouleversee]

I paid 2.99 so am in a similar boat and can't see it ever recovering. Probably best to cut and run but hard to say goodbye to several £k. One might improve the chance of restoring value elsewhere and achieve a rising dividend rather than probably a falling one, however.

How is it that Ian, the staunch HYPer, always manages to tinker out of the disasters and not through rebalancing after becoming overweight either? When did you sell, Ian?

[Dod101]

I am not Ian but I sold Centrica in December 2015 at £2.213 (having bought in 2014 at over £3 I see), but the sale proved the right thing to do especially as I bought Schroders N/V with the proceeds. I have no interest in Centrica nowadays.

Taking the income hit by selling? So what? Any current holder is taking a far bigger hit with the capital losses and it is very dearly bought income. I know the feeling with the tobaccos at the moment but at least their dividend increases do not seem to be in danger and it may be reasonable to take the view that the share price will recover quite well. Between the company specific problems and the industry questions Centrica looks dead in the water (not in the Carillion sense but certainly in the sense of any real recovery) The market thinks so as well with that ridiculous yield.

Were I still a holder I would be selling.

Dod

[idpickering]

Well said Dod. Have a rec/thanks sir.

Ian.

[idpickering]

I confess that I’m slightly envious of you Ian in that you’ve gone through that process of taking the income hit already and presumably put it behind you and got to an HYP that you are more comfortable with. I need to get onto that on April 6th or shortly thereafter and it might even be a 2 year operation. Will Centrica give me that much time I wonder.

- Julian

I'm honoured Julian, thank you, but I'm not worth being envious of, I've made many mistakes in the past, and no doubt will do so in the future. I thought I'd sold Centrica a while back, but it transpires I sold the last of them on 23 Nov 17.

Ian.

[idpickering]

I confess that I’m slightly envious of you Ian in that you’ve gone through that process of taking the income hit already and presumably put it behind you and got to an HYP that you are more comfortable with. I need to get onto that on April 6th or shortly thereafter and it might even be a 2 year operation. Will Centrica give me that much time I wonder.

- Julian

I'm honoured Julian, thank you, but I'm not worth being envious of, I've made many mistakes in the past, and no doubt will do so in the future. I thought I'd sold Centrica a while back, but it transpires I sold the last of them on 23 Nov 17.

Ian.

I should add Julian, that yes I am comfortable with my HYP as is, and have no intentions of bailing out of any more of my holdings currently.

Ian.

[monabri]

Anyone topping up?





I'll get my coat....