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Centrica 2017 Profit Declines, Revenue Up 3%; Lifts Cost Efficiency Target

Centrica plc (CNA.L) reported fiscal 2017 pretax profit of 142 million pounds compared to 2.19 billion pounds, previous year. Statutory profit to shareholders decreased to 333 million pounds from 1.67 billion pounds. Earnings per share was 6.0 pence compared to 31.2 pence. A net post-tax exceptional charge of 476 million pounds was recognised in 2017. Adjusted operating profit declined 17% to 1.25 billion pounds, reflecting significantly reduced profit in Centrica Business. Adjusted earnings per share was 12.5 pence compared to 16.7 pence.

Fiscal year revenue increased 3% to 28.0 billion pounds from 27.1 billion pounds, previous year.

Following the delivery of 750 million pounds per annum cost efficiency programme three years early, the Group announced a 500 million pounds per annum increase to its cost efficiency programme, taking the total targeted savings to 1.25 billion pounds per annum by 2020. The additional 500 million pounds per annum of savings will be delivered through further digitisation of customer journeys, application of field technology, simplification of core business processes, continued improvement in functional costs and further procurement and supply chain savings. The Group expects the new programme to involve reduction in like-for-like headcount of around 4,000 by 2020.

For 2018-20, the Group expects: adjusted operating cash flow of 2.1 billion - 2.3 billion pounds per annum on average; and maintain the current level of the dividend per share. For 2018, the Group expects: adjusted operating cash flow to be in the range of 2.1 billion - 2.3 billion pounds; a flat 2018 full year dividend per share of 12.0 pence; and a like-for-like headcount reduction of around 1,000 in 2018.

The proposed 2017 final dividend of 8.4 pence will take the full year dividend to 12.0 pence, in line with 2016.

IAIN CONN, Group Chief Executive, said: "Our financial result in the second half of 2017 was weak, primarily reflecting poor performance in Business energy supply and particularly in our North America Business unit. The combination of political and regulatory intervention in the UK energy market, concerns over the loss of energy customers in the UK, and the performance issue in North America have created material uncertainty around Centrica and, although we delivered on our financial targets for the year, this resulted in a very poor shareholder experience."

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