By Jonathan Davies

Centrica, the owner of British Gas, has seen its shares fall by as much as 8% in early trading after reporting a 35% drop in full-year profits.

Centrica said annual operating profits were £1.75bn, down 35% on last year. It blamed the global fall in oil prices over the last six months of 2014, which forced it to write off £1.4bn from its balance sheet.

As a result, the company said it would need to cut North Sea oil investment by 40% by 2016.

"Other companies are doing the same thing. It's difficult, but it is what we have to do to position the company sustainably," Chief Executive Iain Conn said.

Mr Conn, who moved to Centrica from BP last month, said Centrica continued "to face a number of challenges as we enter 2015, particularly the significant further reductions in wholesale oil and gas prices since the middle of December".

He said that the average household bills were £100 cheaper than in 2013, but that didn't stop its number of residential customers falling by 368,000.

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