Member Info for Joewilliam

That's just a shared interest in an asset, rather than Cuedrilla itself

Even if the government nationalised Centrica, its likely only parts of its business rather than the whole (such as British Gas). Even as ill conceived an idea as it is, I don't think gov could find much reason to own energy trading offices across the world, or energy services.

Sell before good results, stonks!

I think they'll announce a dividend in July's update, hopefully they also announce a substantial buyback

There will undoubtedly be a lot of moaning if Centrica pays a dividend, and the public will give more anger to that than the horrific regulation of energy supply by Ofgem. The latter which has had some input to the increase of bills.

Any outlay for these customers is covered by Ofgem though, so even if its a temporary blip we get to recoup it.

What's the catalyst?

I agree, there is no immediate upside to additional cash on the balance sheet, but the manoeuvrability this affords to management is valuable, and even more so the potential that a portion could be returned to shareholders is attractive. Centrica are also in a very thematic space right now, and it gives them an edge in finding opportunities with that cash at hand.

Yes there are pioneering battery/solar companies, but it isn't too much for Centrica to venture into such an area. They operate 20% of corporate PPA's across Europe, and provide supply across UK & Ireland, and services across the world. I would assume they're in a good position to determine whether the investment will provide value, given their informational advantage in the general area.

There is really no need for hope or optimism in waiting for the SP increase, its already playing out. Those who've been waiting for years unfortunately had to deal with the significant slide in customer numbers from supply which is our core and which cemented the SP decline, poor management, and a poor market structure because of government interference; we should see a recovery in supply albeit it won't be like the heydays .

What we have now is a stable business with a hoard of cash.

Earnings from our core areas will stabilise and improve, and we'll see our main growth from trading and business solutions (Also the solar and battery business announced). We'll have steady dividends and growth providing its managed well.

However, how the cash is utilised after the pension liabilities are settled will be very interesting, and I think that management will have scope for buybacks, special dividends, acquisitions, or fund substantial projects (e.g. rough, solar/battery portfolio)

It's related to the Covid surge across Europe, Centrica takes a nose dive every time there's a risk of widespread lockdowns.

LTH's who haven't averaged down it has been a painful ride, but it can only get better from here. It's clear to me at least that O'Shea definitely isn't another Conn.

Carlos, Centrica Business Solutions, EM&T, and potential hydrogen exposure will be the drivers of growth over the next decade I think. These operate on a global scale, so their scope for growth is huge. But we'll have our stable(ish) UK retail Supply & Solutions businesses that will be the foundation for all of this.

I think we might see the cash pile slowly invested into the hydrogen project at rough (if gov agrees a model), invested in renewable generation, or acquire smaller agile players in the solutions space. Dependent on other needs for that cash though.

How could anyone not be content?
- Results improving
- exposure to major growth areas
- Industry consolidation in energy supply
- A pile of cash

Dividends will come, and Centrica is a fourbagger from here

We should be content with the fact we're in such a good position at a time like this, and the SP is starting to reflect that. Dividends will come but the stability of the company and its growth should come first, always. Something that was ignored in the past and is part of the reason the SP tanked so much, paying out dividends when earnings should have been retained.

The prudence in itself will pay dividends for the next 10 years.

O'Shea would like to break into the renewables space, but the returns are less than the cost of capital. As nice as a portfolio of renewables would be right now, its more beneficial to sit out until an investment comes up that is economically attractive.

If a bargain comes up, I can imagine Centrica will snap it up with its pile of cash.

Its one they had before becoming a public company and ends in 2025, I believe they have to buy a certain amount of gas at a particular price in relation to a basket of goods/index created for the purpose of the contract. There's not a lot of information on it, so it's hard to figure out right now if there's any chance of it being in the money.

They've got around 3bn in cash, I think they are going to be more than fine.

Ofgem website https://www.ofgem.gov.uk/news-and-views/press-releases

No dividend has been declared, it will probably be mentioned at the capital markets day in November. There will probably be some dividend policy set out going into the future.

That's true, it won't be a pristine take over of the new customers but they'll just need to hire more staff. The industry levy will also clear up any losses from taking these on too, but losses from it in the short term definitely.

Centrica is probably the only one with the balance sheet and size able to take on Bulb's customers at the moment.