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Thursday, September 9, 1999 Published at 16:39 GMT 17:39 UK

Business: The Company File

British Gas...Phone...Electricity..AA

Cheaper gas from its Morecambe fields helped Centrica

Centrica, which trades as British Gas, is planning a major expansion into the residential telephone market.

Unveiling more than doubled profits, the group said telecoms would be one of its biggest new projects in the coming months.

The expansion plan follows a pilot scheme using fixed line telecoms, which picked up 13,000 subscribers in eight weeks.

[ image: Times have changed for the AA - and British Gas]
Times have changed for the AA - and British Gas
"We only advertised it to customers of the Goldfish credit card, but the take-up has been tremendous," said finance director Mark Clare.

Centrica hooks up telephone subscribers to the BT local loop and uses Primus for its long distance network, offering low cost calls.

The company reported profit before tax and exceptional items of £286m against £128m for the same period the previous year. Turnover was £3.89bn against £4.13bn.

Shareholders get dividend

Profits always tend to be skewed towards the first half of the year when energy consumption is at its highest.

Much of the leap was due to gas supplies from the company's Morecambe Bay offshore field which is cheaper than buying from other firms.

Renegotiation of gas contracts also affected the figures.

Centrica announced it would be paying its first interim dividend to shareholders - 1p a share.

Shareholders already received a £530m return of capital in June.

The launch of competition for household gas customers had led to a fall in its share of that market, but the company is increasingly diversifying away from its core markets.

Centrica said it was taking on increasing numbers of electricity customers.

"Our intention is to have 2.5 million electricity customers by the end of this year and four million by the end of 2000," said Mr Clare.

Plumbing a variety of fields

The group wanted to be the UK's largest domestic electricity supplier. At the end of August, Centrica had a 76% share of the gas market.

Mr Clare hoped it's purchase of AA for £1.1bn would be completed this month, pending the results of a membership vote on September 20.

As well as its core utilities businesses, Centrica provides plumbing and central heating services with a network of 5,000 engineers.

It recently set up an operation providing electrical engineers to service and maintain kitchen appliances.

The July decision to close its 243 British Gas showrooms had been "difficult but necessary," the group said. Up to 1,445 jobs are being lost from the retail division, which saw a 19% fall in sales and losses of £25m - £9m worse than the same period last year.

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