Direct Energy Profit Up 23% in First Half of 2011

Acquisitions and operational improvements boost profitability

News provided by

Jul 28, 2011, 07:01 ET

TORONTO, July 28, 2011 /PRNewswire/ -- Direct Energy, North America's largest competitive energy and energy-related services company*, today announced a 23 percent increase in profit for the first six months of 2011 from C$222 million to C$273 million. The increase in profit was driven by the continued strong sales performance of Direct Energy Business, operational improvements across the business and the acquisitions of Clockwork Home Services and Wildcat Hills. The Company is the largest competitive retailer of energy and services to consumers and the third largest commercial and industrial energy retailer in North America. It also has upstream gas and power assets.

Headquartered in Toronto, Direct Energy's year over year revenue was broadly flat at C$4.9 billion for the period ended June 30, 2010 with lower commodity prices partially offset by volume growth in Direct Energy Business and revenue associated with the Wildcat Hills and Clockwork acquisitions.

"I am pleased with the progress we have made in all areas of Direct Energy and the strong set of half year results attained despite the weak commodity price environment," said Chris Weston, President and CEO of Direct Energy. "We continue to pursue our growth strategy for North America, with continued operational improvements and nearly C$700 million in acquisitions completed in the last 12 months."

Direct Energy's downstream businesses have more than 6 million customer relationships across North America, providing residential and business customers with energy and energy-related services.

Direct Energy's upstream gas operations include approximately 4,600 producing gas wells located in Western Canada. In power, the Company owns and operates 1,215 MW of generation through three natural gas-fired plants located in Texas. It also has a growing Midstream & Trading business.

Mr. Weston added, "We have seen Direct Energy continue to grow in 2011 both organically and through acquisitions. In the US Northeast, the acquisition of Gateway Energy significantly increased our customer numbers and expanded Direct Energy's presence across New York, New Jersey and Pennsylvania. There are further opportunities for both organic and acquisitive growth in both the upstream and downstream energy sectors within North America and we are well positioned to capitalize on those opportunities."

Direct Energy, the 43rd largest company in Canada**, is the North American subsidiary of Centrica plc, which trades on the London Stock Exchange (LSE: CNA). Centrica reported half-year 2011 revenues of 11.5 billion pounds Sterling (C$18.2 billion) and earnings of 673 million pounds Sterling (C$1.1 billion).

First Half 2011 highlights from Direct Energy's lines of business include:

Direct Energy Residential

The acquisition of Gateway Energy, as well as organic growth in the region, has brought customer numbers to 800,000 in the US Northeast
Implementation of the Texas transformation program, which consolidated the billing platform and helps deliver improved customer service
Expanded pre-paid product offering in Texas
Operating cost was down 10 percent

Direct Energy Business

Operating profit up by 34% over 2010
Delivered good volume growth with electricity volumes up by 21%

Direct Energy Services

Clockwork Home Services largely integrated with Direct Energy home services operations in the US
Canadian water heater business experienced reduction in customer churn

Direct Energy Upstream

Gas and power prices across North America remained low during first half of 2011, impacting the returns from Direct Energy's upstream and wholesale business
The acquisition of the Wildcat Hills gas assets from Suncor and Shell successfully integrated
Alberta gas production volumes up 58% during the first half of 2011 while average unit costs decreased by 14%
Midstream & Trading business growth

About Direct Energy

Direct Energy is one of North America's largest energy and energy-related services providers with more than 6 million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica plc (LSE: CNA), one of the world's leading integrated energy companies, Direct Energy operates in 46 states plus DC and 10 provinces in Canada. To learn more about Direct Energy, visit www.directenergy.com.

Notes:

The results reported in British pounds are expressed in Canadian dollars (based on monthly average FX rates) except where noted. For reference average half year rates are: For 2011: 1 pound Sterling = C$1.5782; 2010: 1 pound Sterling = C$1.5958.

* Based on customer numbers across deregulated energy markets

** 2010 Financial Post 500; ranked by revenue.

SOURCE Direct Energy