Slide 1: Centrica plc Interim Results
Centrica plc Interim Results For the six months ended 30th June 2004
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Centrica shares. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
Slide 3: Chairman
Chairman Roger Carr centrica taking care of the essentials
Slide 4: Chief Executive
Chief Executive Sir Roy Gardner
Slide 5: Results in brief
Results in brief Six months ended 30 June 2004, £m 2004 % Turnover* (excluding Accord) 6,344 3% Operating profit** 763 10% Earnings** 520 9% Earnings (post goodwill & excep) 383 (2%) Interim dividend per share 2.5p 47% * From continuing operations ** Before goodwill amortisation & exceptional items
Slide 6: Development of Centrica in 2004
Development of Centrica in 2004 • Agreed sale of the AA • Reinforced focus on energy • Additions to asset portfolio in UK and North America • Progress with British Gas transformation • Commitment to return cash to shareholders • Significant dividend increase 6
Slide 7: British Gas transformation
British Gas transformation Release 1 Release 2 Release 3 Release 3 Releases 4&5 (Single View) (Selling) (SAP) (Billing) (Telco/Home Services) 2H 2002 2003 2004 2005 1H 2006 Auto call ID Cross-sell energy & home services products Single customer view Integration of marketing data Automated core data
Slide 8: British Gas home services & telecoms
British Gas home services & telecoms • Average customer product holding* increased 2.5% to 1.64 • 11% increase in turnover – (10% Home Services, 19% British Gas Communications) • 48% increase in operating profit – (24% Home Services, losses halved in British Gas Communications) • Investment in engin
Slide 9: Net British Gas customer movements
Net British Gas customer movements 40000 30% 30000 20% 20000 Weekly net customer movements 10% 10000 Churn* 0 0% -10000 -10% -20000 -20% -30000 -40000 -30% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2003 2004 Electricity Gas Energy Electricity churn* Gas churn* * mov
Slide 10: Growing value in British Gas
Growing value in British Gas • Balance between short-term and long-term value • Achieving high end of transformation programme benefits • Premium pricing • Innovative propositions • Targeting high value customer segments 10
Slide 11: North America
North America • Completed acquisition in Alberta • First investment in power generation • Further gas reserves acquired in Alberta • Strategic focus – Organic growth in existing markets – Cross-selling energy and services – Build scale in business markets – Upstream assets • Addressing H1 challenges
Slide 12: UK asset portfolio
UK asset portfolio Statfjord Spalding (Tolling contract with InterGen) Armada Goldeneye Humber Power (JV: 60% Centrica & 40% TFE) Galleon Roosecote Rose Chiswick Ensign Rough gas storage York Victor N&S Morecambe Hewett Complex Bains Ravenspurn North Amethyst Thames Complex Barrow Offshore Wind (90M
Slide 13: Upstream investment
Upstream investment • Increase UK gas equity cover to 35-45% • Innovative solutions for gas sourcing – eg. outside UKCS, LNG • Infrastructure investment may be required • Increase UK electricity peak coverage to 65-75% • Increase North American gas & power equity hedge • Support for downstream busin
Slide 14: Group Finance Director
Group Finance Director Phil Bentley
Slide 15: Financial highlights
Financial highlights Six months ended 30 June 2004 2004 ∆ Turnover* (excluding Accord) (£m) 6,344 3% Operating profit (£m) 763 10% Operating margin** 12% 1 ppt Interest cover 42 times 18 times Effective tax rate 29% 1 ppt Earnings (£m) 520 9% All figures before goodwill & exceptional items * From co
Slide 16: Operating Profit Analysis
Operating Profit Analysis (including JV’s & Associates, pre exceptionals & goodwill amortisation) Six months ended 30 June, £m 2004 2003 ∆ British Gas Residential 274 200 37% Centrica Business Services 47 43 9% Centrica Energy 287 357 (20% ) Centrica Storage 26 16 63% AA 58 39 49% One.Tel 6 0 n/m No
Slide 17: British Gas Residential
British Gas Residential Operating profit: causal track £m £m Year ∆ Six months ended 30 June 2003 200 Higher selling prices 218 Higher commodity & transportation costs (165 ) 53 Cooler weather 20 Lower customer numbers (3 ) Higher EEC spend (19 ) Home Services & telecoms 15 Other 8 21 Six months end
Slide 18: Centrica Energy
Centrica Energy Operating profit: causal track £m £m Year ∆ Six months ended 30 June 2003 357 Lower gas production volumes (21 ) Higher gas production selling price 50 Increased PRT (34 ) Industrial & Wholesaling (70 ) Other 5 (70 ) Six months ended 30 June 2004 287 18
Slide 19: Other UK businesses
Other UK businesses Operating profit: causal track £m £m Year ∆ Six months ended 30 June 2003 68 Centrica Business Services 4 Centrica Storage 10 AA 19 One Tel 6 Goldfish 30 69 Six months ended 30 June 2004 137 19
Slide 20: North America
North America Operating profit: causal track £m £m Year ∆ Six months ended 30 June 2003 73 Foreign exchange movements (3 ) Texas reconciliation (16 ) 54 Texas Electricity 7 Gas production and energy trading (inc I&C) (8 ) Home and Business services 8 Other 2 9 Six months ended 30 June 2004 63 20
Slide 21: H1 cash flow drivers
H1 cash flow drivers Six months ended 30 June, £m 2004 2003 EBITDA* 932 886 Adjustments: PRT P&L charge 102 68 PRT cash paid (51 ) (9 ) Corporation Tax (135 ) (67 ) Other working capital (201 ) (212 ) (285 ) (220 ) Post-tax operating cash flow 647 666 Interest 4 0 Capex & acquisitions (294 ) (158 )
Slide 22: Chief Executive
Chief Executive Sir Roy Gardner
Slide 23: Summary
Summary • Continued good results despite challenging environment • Record first half operating profit • Continued to invest for growth • Appropriate balance between profit and growth • Asset investments 23
Slide 24: Outlook
Outlook • Pressure from higher commodity prices • Further asset investments • Continued focus on operational efficiency • Top-line growth in home services & telecoms • AA disposal & return of cash to shareholders • 40% dividend payout ratio in 2004; 50% in 2005 24
Slide 25: Slide 25
Slide 26: Appendices
Appendices centrica taking care of the essentials
Slide 27: Net cash capital expenditure
Net cash capital expenditure £m 2004 2003 British Gas Residential 52 47 Centrica Energy 34 23 AA 2 11 North America 26 12 Other 13 (1 ) Less disposals & loans repaid (1 ) - Total 126 92 27
Slide 28: Net cash acquisitions
Net cash acquisitions £m 2004 Statfjord oil & gas interests 43 Wainstones Power Limited (Langage) 1 Bastrop Energy Centre (Texas) 79 ATCO (Alberta) 30 Quintana Minerals (Alberta) 18 Proceeds from disposals (3 ) Total 168 H1 2003 66 28