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Thursday, September 10, 1998 Published at 15:50 GMT 16:50 UK

Business: The Company File

Gas firm sparks electricity switch

Centrica still trades under the British Gas name

Half a million homes have already signed up to take their electricity from gas supplier Centrica - ready for when the market is fully opened up next week.

The group says that 440,000 customers have signed up for electricity supply while a further 1.5m households had expressed an interest.

[ image: Centrica is losing custom to rival gas suppliers]
Centrica is losing custom to rival gas suppliers
Centrica, which was formed by the demerger of British Gas in February last year and which still uses British Gas as a trading name, is already facing competition for gas supply.

Chief executive Roy Gardner welcomed the opportunity to go on the offensive in a new market and said the company had made "a very promising start" in the electricity supply business.

Dash for gas market

The group is already facing fresh rivalry in its gas supply business since competition in the gas market was opened up in May this year.

Around 4.5m homes have had a choice in their gas supplier since at least the start of 1998.

The group still has around 85% of the gas supply business, but in those areas where competition has been in place for longer the share has slipped to 73%.

The loss of sales as a result of gas competition combined with the mild winter, squeezed turnover in the first half of the year.

[ image: Customers will soon have moore choice about who to buy their electricity from]
Customers will soon have moore choice about who to buy their electricity from
But returns were up and the company reported increasing profits.

Pre-tax profits for the six months to June 30 were £90m against a pre-tax loss of £149m last year, though turnover was down to £4.1bn against £4.2m.

In line with announcements made at the time of the demerger, Centrica is not offering an interim dividend.

Chairman Michael Perry said the company would review its dividend policy later in the year when the full effects of gas competition can be better judged.

The group took exceptional charges of £35m during the six months, a sizeable fall on 1997's half year exceptionals of £252m.

The high 1997 figure was largely comprised of £192m in windfall tax levied by the then newly elected Labour Government.

The charges comprised of £27m for renegotiation of gas contracts and £8m spent on eradicating the millennium computer bug in the group's systems.

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