Centrica Preliminary results headlines...

[idpickering]

...for the year ended 31 December 2019.

HEADLINES

· Full year adjusted earnings and adjusted operating cash flow down vs 2018 reflecting impacts of UK default tariff cap, low wholesale gas prices and nuclear outages. Significantly improved in H2 2019 vs H1 2019.

· Adjusted operating cash flow (AOCF) and net debt both within 2019 target ranges.

· Full year dividend per share of 5.0p, in line with the rebasing announced in July at the Interim Results.

· Net exceptional charge before tax of £1,103m, including impairments of E&P and Nuclear assets predominantly due to a reduction in commodity price forecasts, and restructuring costs of £356m.

· Consumer customer account holdings up 722,000 or 3%. UK Home accounts up 78,000 with growth in services more than offsetting a reduction in energy supply. UK energy supply net losses of 286,000 significantly lower than in 2018, with H2 2019 account losses lower than H1 2019.

· £315m of cost efficiencies delivered in 2019, taking cumulative annual savings to £1.26bn compared to a 2015 baseline with 2020 nominal like-for-like costs expected to be well below 2015 levels per our five year target.

· Consumer and Business expected to benefit from adjusted earnings and AOCF momentum in 2020, but Upstream expected to be impacted by very low current wholesale commodity prices. 2020 AOCF expected to be in the range £1.6-£1.8bn based on 31 December 2019 commodity prices, assuming the existing portfolio.

· Cost efficiencies of £350m expected in 2020, with associated cash restructuring costs expected to be £300m.

· Continued focus on financial discipline. 2020 cash capital expenditure expected to be around £800m.

· Targeting broadly balanced sources and uses of cash flow in 2020 with closing net debt expected to be in the range £3.2-£3.6bn, including an expected additional £0.2bn of non-cash lease commitments and before the impact of planned divestments.

And later;

Dividends

The Directors propose a final dividend of 3.50 pence per ordinary share (totalling £204 million) for the year ended 31 December 2019. The dividend will be submitted for formal approval at the Annual General Meeting to be held on 11 May 2020 and, subject to approval, will be paid on 22 June 2020 to those shareholders registered on 11 May 2020.

https://www.investegate.co.uk/centrica- ... 00168464C/

[idpickering]

I don't hold these, but have in the past. I'm unlikely to ever buy into them again to be honest. I found them to be unreliable as a HYP share. In the overall utility sector I hold National Grid and United Utilities. I'm toying with going back into SSE, but undecided about that.

Ian.

[HYPMonkey]

Ouch!

Mercado no gusto ....

[HYPMonkey]

In capital terms, I am now down 68% with this dog.

Sending a prayer to the PYAD god ...

[blobby]

Formatted announcement here:

https://www.centrica.com/media-centre/n ... mber-2019/

The CEO is leaving and the chairman is off sick.

The results look terrible but there is a good business lurking in there somewhere. It just needs someone new to find it.

[HYPMonkey]

Yep, just reading the news.

Complete and utter [expletive deleted] show.

[moorfield]

Sp down 17%. Yield 7.2%.

Now CNA may well drop out of the FTSE100 next month, having survived the chop in December, cue more mandatory selling by the trackers... A bargain for the brave in April perhaps?

[AleisterCrowley]

My second-worst share ever now, only beaten by Carillion

[moorfield]

My second-worst share ever now, only beaten by Carillion

So how can one anticipate the car-crashes like CNA and CLLN, ie collapses of income and capital, if at all?

Some may be aware I have stopped topping up at yields over twice the ftse 100, a post-CLLN measure adopted to stop myself chasing the highest yields. I am now wondering whether I should extend that to selling at that point. In hindsight (wonderful thing that) I would have avoided the worst of the CLLN, CNA sp falls, and to a lesser extent VOD and IMB more recently.

Not HYP gospel of course, but worthy of debate perhaps?

[HYPMonkey]

Just checked shorttracker.co.uk and CNA is being shorted by 2 funds.

Expect it to rise when numbers updated overnight.

[vrdiver]

I am now wondering whether I should extend that to selling at that point. In hindsight (wonderful thing that) I would have avoided the worst of the CLLN, CNA sp falls, and to a lesser extent VOD and IMB more recently. Not HYP gospel of course, but worthy of debate perhaps?

An interesting idea, but you'd run the risk of bailing out just before a recovery, taking your reduced capital and putting it into another share that could (theoretically) also shrink in value.

I don't have the data to support or reject this approach, but my gut feel says that whilst holding may result in a few CLLN outcomes over a HYPer's life, bailing out on the dips would have the same effect, just spread more thinly and with added charges.

VRD

(Holds CNA and down 54% on its capital value, ignoring inflation!)

[AleisterCrowley]

My second-worst share ever now, only beaten by Carillion

So how can one anticipate the car-crashes like CNA and CLLN, ie collapses of income and capital, if at all?
...

If I could anticipate the stinkers, I could make a fortune shorting them
All the 'knowns' are in the price, the rest is just guesswork. It's very easy with hindsight to say 'oh x/y/z were clear indicators this share was in trouble' but impossible to apply to current holdings

[moorfield]

If I could anticipate the stinkers, I could make a fortune shorting them

Now there’s a thought. If you’d held on to your CLLN, CNA shares you would not have lost money shorting the same size as your holding, whether sp moved down or up. Definitely O/T!

[AleisterCrowley]

You would have lost money on the carrying cost of the short (offset by divis to some degree?)
I have thought about using short CFDs to 'lock down' the value of a share/index in turbulent times but I decided it's easier just to sell if one is particularly worried. A matching short means you don't benefit from a recovery of course - based on my rudimentary knowledge a matched long/short pair would just sit there ...with value gradually eroded by costs

[Dod101]

Why on earth anyone on this Board is still holding these shares I do not know. They have been a disaster for some years now. LTBH is fine for some HYP shares but of course Centrica has been unacceptable to me as HYP share for the last 5 years or so.

Dod

[Arborbridge]

Why on earth anyone on this Board is still holding these shares I do not know. They have been a disaster for some years now. LTBH is fine for some HYP shares but of course Centrica has been unacceptable to me as HYP share for the last 5 years or so.

Dod

This is a difficult one really. Yes, it turns out that for the past five years CNA has hardly shone, but could one have known that in 2014? The dividend was cut - which to a HYPer is normally a signal not to top up rather than to sell - but then held steady. I don't have any cash flows to hand - maybe that was what bothered you?

As it is, one might agree that the temptation to sell out was strong in the past three years if only due to political risk, but to a classical HYPer probably not. My memory is short but I don't remember any decisive gongs that would have told us to sell other than a steadily sinking share price - like IMB, for example. But then, we aren't supposed to run out HYPs according to the charts,. The yield is now gross, but I don't recall when it became so as I sold out myself.

Arb.

[moorfield]

Why on earth anyone on this Board is still holding these shares I do not know. They have been a disaster for some years now. LTBH is fine for some HYP shares but of course Centrica has been unacceptable to me as HYP share for the last 5 years or so.

Dod

This is why I asked my question above Dod

https://lemonfool.co.uk/viewtopic.php?p=283937#p283937

So how can one anticipate the car-crashes like CNA and CLLN, ie collapses of income and capital, if at all?

[idpickering]

I take it nobody here is a buyer of this share today?! My sympathy to those already holding though. None of us can tell the future, but I guess one has to listen to your own gut instinct either way.

Ian.

[kempiejon]

I've only checked back to the turn of the millennium but CNA looked a pretty good prospect for the first 10 or so years, 2006 they made it to my HYP, they cut the dividend in 2013 since then I'd say it's been out of the frame,. Since cutting they have returned about today's value in dividends, as part of a 20 strong HYP I doubt the drop from 12p to 5p in income would upset many portfolios and easily be absorbed if the other picks are at least keeping pace with inflation. And perhaps therein lies the rub, a few HYP picks of yore have been reducing, stagnant or sluggish in income increases so some might be unlucky in their portfolio specifics. Oh well, if only all the shares we picked were better than average.

[Dod101]

This is a difficult one really. Yes, it turns out that for the past five years CNA has hardly shone, but could one have known that in 2014? The dividend was cut - which to a HYPer is normally a signal not to top up rather than to sell - but then held steady. I don't have any cash flows to hand - maybe that was what bothered you?

As it is, one might agree that the temptation to sell out was strong in the past three years if only due to political risk, but to a classical HYPer probably not. My memory is short but I don't remember any decisive gongs that would have told us to sell other than a steadily sinking share price - like IMB, for example. But then, we aren't supposed to run out HYPs according to the charts,. The yield is now gross, but I don't recall when it became so as I sold out myself.

Arb.

Well I sold in November 21015 and that was after their first dividend cut. I did not like the look of it and have been proved right especially as I sold at £2.213. it has been a hopeless share at least since then and it was not much good before then. Dividend cuts and/or profit warnings seldom come singly and that is why it is usually a good idea to sell at the first signs of trouble.

Dod