Centrica announces decision not to participate ...
Centrica announces decision not to participate in UK nuclear new build and launches £500 million share repurchase programme
Centrica PLC
4 February 2013
Centrica announces decision not to participate in UK nuclear new build and launches £500 million share repurchase programme
Centrica plc has taken the decision not to participate in the construction of up to four new European Pressurised Nuclear Reactors in the UK.
In 2009, Centrica acquired a 20% interest in EDF Energy’s eight operational nuclear power stations in the UK and also took an option for a 20% interest in the construction of new nuclear power stations at Hinkley Point and Sizewell. The acquisition was funded through a £2.2 billion Rights Issue, completed in 2008, part of which provided financing for the investment in new nuclear. Having taken the decision not to proceed with the new nuclear investment, the Group will launch a £500 million share repurchase programme, to return surplus capital to shareholders, which will be conducted over the next 12 months.
With pre-development expenditure on the project approaching the agreed £1 billion cap, Centrica’s decision not to proceed follows a detailed appraisal of the project. While there has been progress in a number of key project areas, particularly design and planning, there remains uncertainty about overall project costs and the construction schedule. Centrica’s 20% share of the pre-development expenditure will be written off as an exceptional cost in the Group’s 2012 results.
Sam Laidlaw, Chief Executive of Centrica, said: “We believe that nuclear generation has a valuable role to play in a balanced UK energy mix. Centrica and EDF continue to enjoy a successful partnership in existing nuclear. However, since our initial investment, the anticipated project costs in new nuclear have increased and the construction timetable has extended by a number of years.
“These factors, in particular the lengthening time frame for a return on the capital invested in a project of this scale, have led us to conclude that participation is not right for Centrica and our shareholders. In 2012 we invested over £2 billion in securing supplies of energy for the UK and where we see attractive returns we will continue to invest in Britain’s energy future.â€
Centrica’s 20% interest in the eight existing nuclear power stations in the UK is unaffected by this decision.
The company is due to present its Preliminary Results and will provide an update on strategy and investment plans across the Group on 27 February 2013.
Ends
Notes to editors
As part of the 2009 transaction, EDF Energy and Centrica plc formed an 80/20 joint venture to undertake pre-development activities for a nuclear new build programme, with the intention of constructing, operating and decommissioning four European Pressurised Nuclear Reactors.
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