Slide 1: Preliminary Results for the year ended 31 December 2012
Preliminary Results ffor th the year ended d d 31 December 2012
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Centrica shares or other securities. This presentation contains certain forward-looking statements with respect to the financial condition, results, operations and busi
Slide 3: Sir Roger Carr, Chairman
Sir Roger Carr Chairman
Slide 4: Nick Luff, Group Finance Director
Nick Luff Group Finance Director
Slide 5: Commodity prices and spreads
Langage Commodity prices and spreads Average month ahead Clean dark oil and gas prices and spark spreads 25 112 Oil 20 Clean Dark Spread (£/MWh) 110 (($/barrel)) 15 NBP Gas 10 (p/therm) Clean Spark Spread 58 58 5 (£/MWh) 0 -5 2011 2012 2010 2011 2012 2013 Average winter temperature (degrees centigra
Slide 6: Financial headlines
Langage Financial headlines Year ended 31 December 2012 2011 Continuing operations: Revenue (£m) 23,942 22,824 Adjusted operating profit (£m) 2,743 2,415 Adjusted effective tax rate 44% 40% Group result: Adjusted earnings (£m) 1,406 1,333 Adjusted earnings per share (p) 27.1 25.8 Full year dividend
Slide 7: Operating profit analysis
Langage Operating profit analysis Year ended 31 December (£m) 2012 2011 British Gas 1,093 1,005 Centrica Energy 1,230 1,023 Centrica Storage 89 75 Direct Energy 331 312 Adjusted operating profit 2,743 2,415 Share of JV / associates’ interest and taxation (85) (102) Depreciation of FV uplifts to prop
Slide 8: Operating profit analysis
Operating profit analysis Year ended 31 December (£m) 2012 2011 British Gas 1,093 1,005 Centrica Energy 1,230 1,023 Centrica Storage 89 75 Direct Energy 331 312 Adjusted operating profit 2,743 2,415 Above figures include share of joint ventures and associates before interest and taxation and are bef
Slide 9: British Gas - operating profit & key drivers
British Gas - operating profit & key drivers Operating profit Year ended 31 December (£m) 2012 2011 Residential energy 606 544 R id ti l services Residential i 312 269 Business 175 192 British Gas 1,093 1,005 Residential energy revenue Residential services revenue Business revenue (£m) and margin (%
Slide 10: Operating profit analysis
F3-FA Operating profit analysis Year ended 31 December (£m) 2012 2011 British Gas 1,093 1,005 Centrica Energy 1,230 1,023 Centrica Storage 89 75 Direct Energy 331 312 Adj t d operating Adjusted ti profit fit 2,743 2,415 Above figures include share of joint ventures and associates before interest and
Slide 11: Centrica Energy - operating profit & key drivers
Centrica Energy - operating profit & key drivers Operating profit Year ended 31 December (£m) 2012 2011 Gas 919 769 P Power 311 254 Centrica Energy 1,230 1,023 Gas & oilil production G d ti Power generation P ti (TWh) / achieved hi d Average sales price volumes CSS / nuclear power price (£/MWh) Gas
Slide 12: Operating profit analysis
Easington Operating profit analysis Year ended 31 December (£m) 2012 2011 British Gas 1,093 1,005 Centrica Energy 1,230 1,023 Centrica Storage 89 75 Direct Energy 331 312 Adjusted operating profit 2 743 2,743 2 415 2,415 Storage revenue (£) Forward price spreads (p/therm) 18 61m 15 48m Other W12-S13
Slide 13: Operating profit analysis
Operating profit analysis Year ended 31 December (£m) 2012 2011 British Gas 1,093 1,005 Centrica Energy 1,230 1,023 Centrica Storage 89 75 Direct Energy 331 312 Adjusted operating profit 2 743 2,743 2 415 2,415 Above figures include share of joint ventures and associates before interest and taxation
Slide 14: Direct Energy - operating profit & key drivers
Direct Energy - operating profit & key drivers Operating profit Year ended 31 December (£m) 2012 2011 Residential energy 156 161 Business energy 129 110 Services 33 28 Upstream & Wholesale 13 13 Direct Energy 331 312 Upstream and wholesale Residential energy revenue Business energy revenue Gas volum
Slide 15: Cash flow
Lynn & Inner Dowsing Cash flow 1 Period ended 31 December (£m) 2012 2011 Opening net debt (3,292) (3,195) EBITDA 3,650 3,128 Working capital movements (51) 165 Margin calls 114 (26) Interest and tax ( (696) ) (862) Net capex (2,727) (1,601) Dividends (815) (762) P Pension i d deficit fi it payments
Slide 16: Capex and acquisitions
Hummingbird Capex and acquisitions 3 Period ended 31 December (£m) 2012 2011 2013e Centrica Energy gas and oil 841 613 1,000 Centrica Energy power1 314 300 150 Direct Energy 115 70 100 Centrica Storage 37 59 50 British Gas 161 211 150 Other 59 48 50 Total pre-acquisitions 1,527 1,301 1,500 A Acquisi
Slide 17: Summary and outlook
Summary and outlook Full year earnings growth • BGR profit up following cooler weather in 2012 • BGS profit up 16% in a difficult economic environment • Higher Centrica Energy profit – higher gas and liquids production volumes – strong nuclear generation performance • DE profit growth in a low gas p
Slide 18: Sam Laidlaw, Chief Executive
Sam Laidlaw Chief Executive
Slide 19: 2012 performance summary
2012 performance summary • Further earnings and dividend growth • £2.7bn £ invested, organically and through acquisition • Strong British Gas performance in a challenging environment • Benefiting B fiti ffrom enhanced h d scale l and d di diversity it upstream t • Delivered further profit and custom
Slide 20: Helping our customers in difficult times
Helping our customers in difficult times • Making energy choices simple and transparent – new bill design and simplified tariff structure • High levels of customer service – higher Net Promoter Score – top 5 star rating i from f C Consumer F Focus – improved services retention , • 400,000 customers
Slide 21: Leadership and innovation
Remote Heating Control App Leadership and innovation • Leading online platform – around a third of customer base registered online • Leadership in innovation – launched Remote Heating Control product • Leadership in energy efficiency – 1.7m insulation measures installed since 2008 • Leading L di the
Slide 22: Securing sustainable energy supplies
Kvitebjørn Securing sustainable energy supplies • Helping secure supplies for the UK – gas and liquids production up 18% – increased CEU 2P reserves by 28% • Further progress in gas and oil development – first fi gas from f three h projects j – work commenced on £1.4bn Cygnus project p • Good operat
Slide 23: More balanced upstream business
Lynn & Inner Dowsing More balanced upstream business • Step change in upstream scale and geographic diversity – reduced reliance on Morecambe – increased scale in Norway • Options for further investment in power for value – seeking ki to progress Race R B Bankk to FID – Round 3 Irish Sea partnership
Slide 24: Growth in North America
Growth in North America • Good profit growth in low commodity price environment • Benefiting from scale and synergies in DER despite Ontario regulatory issues – Energetix and NYSEG Solutions acquisition – Ontario O t i costt b base halved h l d • Business electricity volumes up 11% in 2012 • Service
Slide 25: A stronger North American business
A stronger North American business DEB electricity DER customers sales volumes TWh 2.1m • Successful bolt-on acquisition strategy 1.2m 51 downstream, integrating customers and US delivering cost efficiencies 1.8m 33 1.3m Canada – 3.5m residential energy customer accounts, 1.4m in US North East 2009
Slide 26: Focusing on health and safety
Focusing on health and safety • Strong personal safety performance Lost time injury frequency rate per 100,000 hours worked – lost time injury rate down 20% – total recordable injury rate down 14% 0.49 0.41 • Continued improvements in road safety – low l severity i incident i id rate down d 32% 02 0
Slide 27: Progress against previous strategic priorities
Progress against previous strategic priorities Strategy delivery over past 3 years 9 Stable BGR profit and market share Grow British Gas 9 Simpler, clearer bills 9 High customer retention 9 BGS pprofit upp 34% 9 Launched BGB Services, first EPC contracts Residential energy and services retention 9 O
Slide 28: Progress against previous strategic priorities
Progress against previous strategic priorities Strategy delivery over past 3 years Deliver value from Gas & oil our growing upstream business 9 2P reserves up 50%, production up 50% 9 Cash from operations doubled 9 53% exploration p success rate in North Sea and East Irish Sea Gas and liquids produc
Slide 29: Progress against previous strategic priorities
Progress against previous strategic priorities Strategy delivery over past 3 years Build an integrated 9 DE operating profit up 55% North American business 9 US downstream operating profit up 72% 9 US customer numbers up 75% 9 DE Business ppower volumes upp 54% 9 Multi-state services capability DER
Slide 30: Progress against previous strategic priorities
Progress against previous strategic priorities Strategy delivery over past 3 years Drive superior 9 Pro-forma EBITDA up to £4.0bn from £2.6bn fi financial i l returns 9 Strong balance sheet 9 EPS up 25% 9 DPS upp 28% 9 TSR 36% (FTSE 100: 21%) EPS DPS pence pence 27.1 16.4 25.8 15.4 25.2 14.3 12.8 21
Slide 31: Our strategic priorities
Our strategic priorities 1. Innovate t drive to d i growth th and d service i excellence ll 2. Integrate our natural t l gas business, b i lilinked k d tto our core markets k t 3. Increase our returns through efficiency and continued capital discipline The leading integrated energy company with cust
Slide 32: Summary
Summary • Strong performance in 2012 • Enhanced scale, geographic diversity and capabilities • Strong cash generation and strong balance sheet • New strategic priorities, building on our core competencies 32