British Gas profits: who owns energy supplier? Is Centrica British, what is its share price, profits explained

British Gas has come under the spotlight again after revealing a near-900% surge in profits during the first half of 2023.

Underlying earnings at the gas and electricity giant soared from £98 million over the first six months of 2022 to £969 million in the same period this year, according to results published on Thursday (27 July). The company said the bulk of this growth was down to a reduction in debt-related costs facilitated by the Ofgem energy price cap.

The energy supplier’s parent company has also enjoyed a strong start to the year, with operating profits climbing 62% from £1.3 billion to £2.1 billion. It comes just a matter of months after it announced its full-year profits had tripled to £3.3 billion in 2022. Other energy and fuel firms, including Shell and BP, have also seen profits rocket in recent times, largely as a result of higher wholesale prices for gas, electricity and oil.

At the same time, households up and down the UK have struggled to keep up with their energy bills as the result of the cost of living crisis. It has all added to the clamour for the government to beef up its windfall tax on profits generated by power suppliers. The latest set of results also follows allegations that British Gas hired contractors to forcibly install prepayment meters in homes occupied by people who had fallen behind with their energy bills.

But who owns British Gas - and is the company British-owned?

What is Centrica?

Centrica is one of the largest energy and energy services companies operating in the UK and Ireland. It employs more than 20,000 people and serves 10.3 million business and domestic customers.

The company’s beginnings were in the 1986 privatisation of the UK gas industry by then-Prime Minister Margaret Thatcher. When British Gas - as the company was known at the time - was forced to break itself up (or, ‘demerge’) in 1997 following government competition rule changes, it split into Centrica (which was the old company’s retail supply and UK production arm) and BG Group (a multinational corporation that’s now part of Shell).

These days, Centrica owns the British Gas retail brand, as well as other brands including Ireland energy supplier Bord Gáis Energy, international energy services company Centrica Business Solutions, and UK plumbing services firm Dyno. It also owns and operates key UK energy facilities, like the Rough natural gas storage tanks in the North Sea.

Until recently, it had a much larger international focus. Centrica used to own Direct Energy - a major energy supplier in North America - and held Norwegian energy sites through Spirit Energy, which it holds a controlling stake in. But it started restructuring its operations from 2019 onwards when the company posted a loss of £849 million.

What do British Gas profits mean for Centrica share price?

Centrica’s 2019 financial woes led to a big fall in its share price over a period of several months, culminating in an all-time low of 30.2p just before the first UK Covid lockdown in April 2020. Only six-and-a-half years previously, its shares were trading for £3.97.

But with a CEO change (Chris O’Shea became chief executive in 2020), the selling off of much of its international business, and its record 2022 profits of £3.3 billion, its share price climbed to £1.03 in February. As of 27 July, after the latest profits news, Centrica shares were trading at £1.32 - just short of a 52-week high of £1.325.

Shareholder dividends, which made a return in mid-2022 having previously been suspended since 2019, are set to climb from 1p last year to 1.33p this year. However, this is contingent on the energy giant maintaining its performance.

Centrica has been running a share buyback programme this year. Doing this means a company purchases its own shares from the market, which creates more demand, pumps up its share price, and returns more money to shareholders in the form of dividends. So, put simply, Centrica’s record profits are likely to prove extremely lucrative for its operations and its shareholders.

Is Centrica a British company?

Despite being an international energy company, Centrica is headquartered in the UK. As a public limited company (PLC) that’s listed on the London Stock Exchange, its shares are likely to be held by investors from around the world.

Its registered office is in Windsor, Berkshire and its board is made up of British (and British dual national) business people. The company’s CEO - Chris O’Shea - has worked for accountant firm Ernst & Young, Shell and several other international businesses, while its chair - Scott Wheway - has been a senior figure at firms including Tesco, Boots and Santander UK.

Does Centrica pay the energy windfall tax?

Centrica’s profits over the last year have mostly come about as a result of soaring wholesale gas and electricity prices in the wake of the Russia-Ukraine war. This money is known as a windfall because the profits have come as a result of helpful market conditions rather than business skill.

Despite the huge helping hand it has received as a result of the conflict, and the resulting dash for a limited pool of global supplies that has ensued, Centrica only makes two references to ‘Ukraine’ in its preliminary results for 2022. It does not refer to the term ‘windfall’ at any point.

But it did say it has paid nearly £1 billion in tax relating to 2022 profits (only £54 million of which will be going to the government’s Energy Profits Levy - i.e. the windfall tax) and insisted it would be reinvesting its profits into net zero and “helping customers [to have] lower bills going forward” according to its CEO, Chris O’Shea. Mr O’Shea has received a bonus package worth £3.7 million on top of his £790,000 annual salary due because of Centrica’s 2022 performance. He waived his 2021 bonus of £1.1 million due to the cost of living crisis.

The whole situation has added to the clamour around windfall taxes, with campaigners urging the government to intervene to generate more money for projects that would lower domestic energy bills, including insulation and investment in renewables.