Beware the taxman and not the gasman

The Motley Fool comments on Centrica’s full-year results

David Kuo, Director at popular financial website The Motley Fool, says:

“The annual results at Centrica for 2009 were as good as to be expected given the drop in wholesale gas and electricity prices from 2008. That said, the headline profits of £1.1 billion and the 4.9% hike in full-year dividends has been overshadowed by a 58% rise in operating profits to £595m at the company’s British Gas unit ⁽¹⁾.

“The jump in profits will undoubtedly infuriate customers who have not benefitted from the drop in energy prices - household bills have barely changed from a year ago ⁽²⁾. However, British Gas only makes a monthly profit of £6.15 on a typical combined annual energy bill of £971. Meanwhile, the taxman’s take is £48.55 a year through the 5% VAT levy.

“It is conceivable that future bills may rise through an increase in VAT to the full rate of 17.5% as the Government looks to drastic measures to fill the budget deficit. Consequently, households could be confronted with an inflation-beating 12% hike in fuel bills following the next Budget.

“So, it’s not the gasman we should be concerned about but the taxman that could stoke inflationary pressures in the economy.”

-ENDS-

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Sonia Rehill on 020 7025 8576 or Soniar@fool.co.uk

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Notes to Editors:

1) Centrica preliminary results for the year ended 31 December 2009

2) British Gas: Gas revenues of £5,218m generated from 9,378,000 customers and electricity revenues of £2,625m from 6,333,000 customers

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