Shareholders are Benefiting From Rising Energy Prices Whilst Consumers Suffer

LONDON, October 14, 2011 -

Ofgem’s revelation of soaring profit margins at the ‘Big Six’ energy firms has rightly angered consumers but it is good news for investors in companies such as Centrica, owner of British Gas.

News that energy providers’ profit margin per customer have jumped a staggering 700% to £125 in the past three months comes as Centrica, a £16 billion FTSE 100 giant, enters the Citywire Top Stocks hall of fame.

Citywire Top Stocks is an exclusive list of the top 10 share holdings of Britain’s leading fund managers. Launched last month as a tool to help investors, Top Stocks has been updated for the first time, using data from the end of August.

Centrica makes its debut into Citywire Top Stocks after its share price held up well amid the stock market mayhem of August.

While the FTSE 100 plunged over 7% in August Centrica shares fell just 2.5%. That resilient performance is not surprising now we know how much Centrica and the other energy firms are cashing in.

The company generated pre-tax profits of £2.1 billion last year and is forecast to increase these to £2.3 billion this year and £2.5 billion in 2012. It pays a good, secure dividend and at the current share price yields 5.2%, making it an attractive stock for investors seeking an income.

Gavin Lumsden, editor in chief at Citywire said:

‘Although Centrica and the other energy firms will face pressure from Ofgem to simplify their prices, it will remain an enormously cash generative business.’

He added: ‘None of us likes paying through the nose for our energy bills and confirmation of the providers’ soaring margins will anger many who are struggling with high inflation. Nevertheless, there is a silver lining to this particular cloud for private investors looking to generate a decent return on their money when interest rates remain at an all-time low.’

Notes to editors:

Centrica is one of four companies to enter Citywire Top Stocks this month.

There is a strong defensive flavour to the new entrants with National Grid joining fellow utility Centrica.

Meanwhile, drugs giant AstraZeneca joins to sit alongside rival GlaxoSmithKline, which is the most popular Top Stock held by four of the five fund managers on our panel.

All these companies are big, strong stocks paying high levels of dividend. Investors like the certainty of their dividend payments amid the economic and stock market insecurity.

By contrast, our fourth new entrant looks decidedly high risk. Hedge fund manager Man Group also saw its share price hold up relatively well during the turmoil of August. However, it has since slumped a third following a disappointing trading statement at the end of September.

About Citywire:

Citywire was formed in 1999 with the objective of providing thought provoking journalism and independent investment information to private investors and finance professionals.

Citywire is authorised to give advice by the Financial Services Authority and is owned by Citywire Financial Publishers, one of Britain’s fastest growing and innovative publishing groups.

Contact: Gavin Lumsden, Editor-in-Chief at Citywire, Tel +44-(0)20-7840-2256, Email glumsden@citywire.co.uk

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