The board of Centrica endured a bruising confrontation with retail investors at its annual meeting on Monday as shareholders vented their frustration over the poor performance of the energy group’s stock price.
Shareholders have seen the value of their holdings drop by more than half over the past four years as the owner of British Gas has been buffeted by a series of external factors including the 2014 oil price crash, intense competition and political pressures in its UK retail market. A weaker-than-expected performance in its North American business division last year has also undermined the shares and dented confidence in management.
The company, which has around 650,000 private investors, was one of the first privatisations undertaken in the 1980s. “If you see Sid, tell him,” ran the advertising slogan for the privatisation of British Gas.
“The value of the company is going down and down,” complained one investor, while another, John Farmer, asked: “Isn’t Centrica too sluggish, too ponderous . . . when will you at last perform and deliver a positive, sustained result for your shareholders?”
Rick Haythornthwaite, Centrica’s chairman who is stepping down before next year’s meeting, conceded it had been “a difficult year” for the company “and, to my deep regret, for you”.
However, defending the performance of the executive team, he said the poor share price performance “does not make a good team into a bad team”. Rather, it made a good team more determined to succeed. The executive team had “offered explanations, not excuses for the poor performance issues in our business divisions,” he said.
Both Mr Haythornthwaite and Iain Conn, Centrica’s chief executive, stressed they remained committed to the strategy set out in 2015 to re-position the group away from capital-intensive generating assets and towards energy supply and services.
“The power and influence is shifting to the customer,” said Mr Conn. Centrica’s focus to 2020 would be on “performance delivery and financial discipline”.
Shareholders voted in favour of all resolutions at the AGM, with more than 95 per cent approving the annual remuneration report. The company had announced in April that executives had their base pay frozen in 2018 and that Mr Conn was denied his annual bonus last year. Mr Conn was re-elected by more than 99 per cent.
A key uncertainty for the company and Britain’s other “Big Six” energy suppliers remains in the form of the government’s forthcoming price cap on the standard variable tariff(SVT), the most common household energy tariff. Centrica has ended its SVT for new customers but still has 3.8m customers on it, down from 4.3m at the end of 2017. It expects this to have fallen to around 3m by the end of 2018.
Mr Conn revealed he had written to the government last week to offer Centrica’s views on how to construct the cap. Addressing concerns over re-nationalisation, he said: “This is the 54th government this company has dealt with. I am pretty sure it can deal with a 55th!”
In a mixed trading update published earlier, Centrica said customer numbers in the first four months of the year had continued to shrink although at a slower rate relative to the average of 2017. The extreme weather at the start of the year impacted its UK services business which was hit by exceptionally high numbers of central heating breakdowns. The company fixed 145,000 breakdowns in one week, its busiest week ever and more than twice the normal weekly number. Centrica reiterated that it expects to maintain its dividend this year.
Shares in the company ended the day marginally up at 149.15p.