Slide 1: Centrica plc Preliminary Results
Centrica plc Preliminary Results For the year ended 31 Dec 2006
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: Chairman Roger Carr
4 Chairman Roger Carr
Slide 4: Group Finance Director Phil Bentley
Group Finance Director Phil Bentley
Slide 5: Financial headlines
Financial headlines Year ended 31 December 2006 ∆ Turnover (£m) 16,450 22% Operating profit (£m) 1,442 (5%) Tax charge (£m) 543 23% Earnings (£m) 715 8% Earnings per share (p)* 19.4 7% Total dividend per share (p) 11.15 6% A solid financial result against a very difficult backdrop 5 Above figures in
Slide 6: Operating profit analysis
Operating profit analysis Year ended 31 December, £m 2006 2005 ∆£m ∆ British Gas Residential 95 90 5 6% Centrica Energy 686 903 (217) (24%) British Gas Business 87 77 10 13% Centrica Storage 228 154 74 48% British Gas Services 102 111 (9) (8%) North America 223 185 38 21% Europe 7 (9) 16 nm Other 14
Slide 7: British Gas Residential
British Gas Residential Operating profit*: causal track £m 1,562 (50) 400 (90) (90) (55) 90 (1,272) 95 0 -400 -800 -1,200 FY 2005 Commodity & Selling Customer Weather / Imbalance Opex FY 2006 transportation prices numbers Consumption / Other 7 * Including JVs & associates stated net of interest & ta
Slide 8: Operating profit analysis
Operating profit analysis Year ended 31 December, £m 2006 2005 ∆£m ∆ British Gas Residential 95 90 5 6% Centrica Energy 686 903 (217) (24%) British Gas Business 87 77 10 13% Centrica Storage 228 154 74 48% British Gas Services 102 111 (9) (8%) North America 223 185 38 21% Europe 7 (9) 16 nm Other 14
Slide 9: Centrica Energy
Centrica Energy Operating profit*: causal track £m 903 (433) 800 69 (32) (38) 217 686 600 400 200 Post-tax 0 FY 2005 Morecambe Morecambe Other gas / oil CE operating Accord/other FY2006 volumes selling price cost 9 * Including JVs & associates stated net of interest & taxation, before exceptional it
Slide 10: Operating profit analysis
Operating profit analysis Year ended 31 December, £m 2006 2005 ∆£m ∆ British Gas Residential 95 90 5 6% Centrica Energy 686 903 (217) (24%) British Gas Business 87 77 10 13% Centrica Storage 228 154 74 48% British Gas Services 102 111 (9) (8%) North America 223 185 38 21% Europe 7 (9) 16 nm Other 14
Slide 11: Operating profit analysis
Operating profit analysis Year ended 31 December, £m 2006 2005 ∆£m ∆ British Gas Residential 95 90 5 6% Centrica Energy 686 903 (217) (24%) British Gas Business 87 77 10 13% Centrica Storage 228 154 74 48% British Gas Services 102 111 (9) (8%) North America 223 185 38 21% Europe 7 (9) 16 nm Other 14
Slide 12: Cash flow and net debt
Cash flow and net debt £m H1 2006 H2 2006 2006 Opening net debt (excluding non-recourse) (1,060) (1,909) (1,060) Total movement in net debt (849) 382 (467) Closing net debt (excluding non-recourse) (1,909) (1,527) (1,527) EBITDA 964 1,057 2,021 Memo: Working capital (480) 465 (15) Memo: Margin Calls
Slide 13: Key messages
Key messages Solid set of financial results British Gas Residential moving firmly back in profit BGB delivered record turnover and profit BGS solid second half is a leading indicator for 2007 Industrial and commercial contracts expected to be profitable in 2007 North America underlying g
Slide 14: Chief Executive Business Update
Chief Executive Sam Laidlaw Business Update
Slide 15: We aim to be a leading integrated energy company
We aim to be a leading integrated energy company committed to deliver top-quartile shareholder returns My vision for Centrica A leading integrated energy company Focused on a few chosen markets Leveraging our strong brands and distinctive assets and capabilities to win in those markets 15
Slide 16: The structure of the energy market is changing
The structure of the energy market is changing…. Falling gas and power prices Additional pipeline capacity to the UK Atlantic basin LNG position is developing National Oil Companies (NOCs) focusing on security of demand Growing consumer awareness of climate change European landscape is c
Slide 17: Centrica is well positioned to take advantage
….and Centrica is well positioned to take advantage Largest demand in biggest gas market in Europe Best recognised energy brand in the UK Unrivalled contractual portfolio Upstream and midstream capabilities which set us apart Enviable gas asset base around UK A fleet of modern clean CCGT
Slide 18: Four priorities to improve near-term performance and deliver growth
We are pursuing four priorities to improve our near-term performance and deliver long-term growth 1 Transform British Gas 2 Sharpen up the organisation and reduce costs 3 Reduce risk through increased integration 4 Build on our multiple growth platforms 18
Slide 19: Priority 1: Transform British Gas
Priority 1: Transform British Gas Reduce costs and restore margins Established a competitive price point Continue to pass commodity costs to customers (up and down the curve) to achieve through-cycle margins above 5% Drive ‘best-in-class’ efficiency and productivity Reduce costs by £200m in
Slide 20: Priority 1: Transform British Gas
Priority 1: Transform British Gas Improve our customer offer and service levels Leader in new products First to announce tariff reduction New 1-year fixed product ‘Essentials’ tariff for vulnerable customers Key service metrics declined in 2006 Call handling improved since summer 95% o
Slide 21: Priority 2: Sharpen up the organisation and reduce costs
Priority 2: Sharpen up the organisation and reduce costs Greater discipline, accountability, skills Materially reduce costs Tighter capital allocation framework Cost reduction opportunities well grounded and meeting expectations Slimming down the corporate centre Systematic tracking in place
Slide 22: Priority 3: Reduce risk through increased integration
Priority 3: Reduce risk through increased integration Maintain a low carbon footprint and replenish our gas reserves Build on our power generation position Opportunities in E&P Acquired 5GW of generation Exploration targeted in well understood areas Won around 6m electricity Near-term in Nor
Slide 23: Priority 3: Reduce risk through increased integration
Priority 3: Reduce risk through increased integration Become the downstream partner of choice for developing NOCs Demand on both sides of Atlantic Basin Provides pricing optionality NOCs hold rights to majority of undeveloped gas reserves LNG easily links supply and demand Security of dema
Slide 24: Priority 4: British Gas Services
Priority 4: Build on our multiple growth platforms British Gas Services Exploit the on-demand market Launch new propositions to meet specific customer segments Sell deeper into our energy customer base Deliver market-leading energy efficiency products Restructured to improve our customer s
Slide 25: Priority 4: British Gas Business
Priority 4: Build on our multiple growth platforms British Gas Business Deliver differentiated customer service through named account managers Roll-out smart metering technology giving customers the ability to manage energy consumption Maintain levels of customer retention Innovate and then
Slide 26: Priority 4: Grow in Western Europe
Priority 4: Build on our multiple growth platforms Grow in Western Europe along the gas supply routes We aim to build and optimise a NW ZEEPIPE FRANSPIPE BALTIC LINE European gas and power business to EU P IPE EU NO LANGELED RO RO /yr RP P IP Improve our long-term ability to cm I PE E2 55 b 1 se
Slide 27: Priority 4: Grow in North America
Priority 4: Build on our multiple growth platforms Grow in North America and diversify group earnings North America adds to the Centrica portfolio Diversifies UK market risk Stabilises group earnings Gas demand on both sides of the Atlantic to capture LNG opportunities We continued to stre
Slide 28: Priority 4: Become a leader in Energy Efficiency
Priority 4: Build on our multiple growth platforms Become a leader in Energy Efficiency Growing consumer interest in Energy Efficiency provides an opportunity 1.5m Energy Savers reports completed in the UK British Gas is the biggest supplier of Green electricity Expansion of EEC can be deliv
Slide 29: Summary
Summary Centrica is well positioned in a changing energy market We aim to be a leading integrated energy company in our chosen markets We are committed to delivering top quartile shareholder returns by Transforming British Gas Sharpening up the organisation and reducing costs Reducing ri