Slide 1: Preliminary Results
Preliminary Results For the year ended 31 December 2009 centrica
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: Roger Carr, Chairman
Roger Carr Chairman centrica
Slide 4: Nick Luff, Group Finance Director
Nick Luff Group Finance Director centrica
Slide 5: Commodity prices and spreads
Commodity prices and spreads 140 120 100 Oil ($/boe) Power (£/MWh) 80 60 40 20 Gas (p/th) 0 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 2008 2009 2010 60 50 40 30 Clean Dark Spread (£/MWh) 20 Clean Spark Spread (£/MWh) 10 0 J F M A M J J A S O N D J F M A M J J A S O N D
Slide 6: Financial headlines
Financial headlines Year ended 31 December 2009 2008 CONTINUING OPERATIONS: Revenue (£m) 21,963 20,872 Adjusted operating profit (£m) 1,857 2,003 Effective tax rate 33% 52% GROUP RESULT: Earnings (£m) 1,111 911 Earnings per share (p) 21.7 21.7 Full year dividend per share (p) 12.8 12.2 Above figures
Slide 7: Operating profit analysis
Operating profit analysis Year ended 31 December (£m) 2009 2008 Downstream UK 1,011 712 Upstream UK 525 881 Storage UK 168 195 North America 153 215 ADJUSTED OPERATING PROFIT 1,857 2,003 Share of JV / associates’ interest and taxation (11) (3) Other (5) (8) Depreciation of FV uplifts to property, pl
Slide 8: Operating profit analysis – Downstream UK
Operating profit analysis – Downstream UK Year ended 31 December (£m) 2009 2008 Downstream UK 1,011 712 Upstream UK 525 881 Storage UK 168 195 North America 153 215 ADJUSTED OPERATING PROFIT 1,857 2,003 Above figures include joint ventures and associates stated gross of interest and taxation, and be
Slide 9: Downstream UK: operating profit & key drivers
Downstream UK: operating profit & key drivers Residential energy Year ended revenue (£m) & margin (%) 31 December (£m) 2009 2008 Residential energy 595 376 7,779 7,843 Residential services 233 193 Business 183 143 7.6% 4.8% DOWNSTREAM UK 1,011 712 2008 2009 Residential services Business revenue (£m)
Slide 10: Operating profit analysis – Upstream UK
Operating profit analysis – Upstream UK Year ended 31 December (£m) 2009 2008 Downstream UK 1,011 712 Upstream UK 525 881 Storage UK 168 195 North America 153 215 ADJUSTED OPERATING PROFIT 1,857 2,003 Above figures include joint ventures and associates stated gross of interest and taxation, and befo
Slide 11: Upstream UK: operating profit & key drivers
Upstream UK: operating profit & key drivers Gas & oil production volumes Year ended Gas Liquids 31 December (£m) 2009 2008 (mmth) (mmboe) Upstream gas and oil 444 1,164 2,418 Power generation 147 11 I&C (93) (331) 1,708 Energy trading 27 37 UPSTREAM UK 525 881 8.8 6.5 2008 2009 2008 2009 Average sal
Slide 12: Upstream UK: Fair Value Accounting
Upstream UK: Fair Value Accounting • Gained controlling interest in Venture in August 2009 • Completed acquisition of British Energy equity stake on 26 November 2009 Depreciation Depreciation impact uplift on earnings (£m) 2009 2010e British Energy 1,275 7 72 Venture 651 10 25 Total 1,926 17 97 EPS
Slide 13: Upstream UK: Gas and oil reserves
Upstream UK: Gas and oil reserves • Full audit of Venture gas and oil reserves complete • Reserves redefined using internationally accepted and prudent 2P recognition methodology Total Upstream UK 2P gas & oil reserves (mmboe) 500 400 Net change in reserves base using prudent Centrica 2009 Revisions
Slide 14: Operating profit analysis – Storage UK
Operating profit analysis – Storage UK Year ended 31 December (£m) 2009 2008 Downstream UK 1,011 712 Upstream UK 525 881 Storage UK 168 195 North America 153 215 ADJUSTED OPERATING PROFIT 1,857 2,003 Above figures include joint ventures and associates stated gross of interest and taxation, and befor
Slide 15: Operating profit analysis – North America
Operating profit analysis – North America Year ended 31 December (£m) 2009 2008 Downstream UK 1,011 712 Upstream UK 525 881 Storage UK 168 195 North America 153 215 ADJUSTED OPERATING PROFIT 1,857 2,003 Above figures include joint ventures and associates stated gross of interest and taxation, and be
Slide 16: North America: operating profit & key drivers
North America: operating profit & key drivers Year ended Residential energy 31 December (£m) 2009 2008 Revenue (£m) Underlying Residential energy 94 137 margin (%)* underlying performance 155 137 one-off charges (61) - 2,652 2,644 5.9% Business energy 34 11 5.2% Services 18 16 Upstream & Wholesale 7
Slide 17: Cash flow
Cash flow Year ended 31 December (£m) 2009 2008 OPENING NET DEBT (511) (795) EBITDA 2,538 2,622 Working capital movements 419 (687) Margin calls (79) (487) Interest and tax (700) (973) Net capex (4,072) (1,113) Dividends (635) (500) Pension payments (403) (240) FX / Other 307 (502) Rights Issue - 2,
Slide 18: Capital and acquisition expenditure
Capital and acquisition expenditure (£m) 2009 2008 2010e** UK upstream gas 333 121 550 UK upstream power 145 321 250 North America 103 111 100 UK gas storage 55 27 150 Europe 121 23 - British Gas / other 142 79 150 Total pre-acquisitions 899 682 1,200 Acquisitions / disposals* 3,173 431 TOTAL 4,072
Slide 19: Balance sheet
Balance sheet • Strong, efficient balance sheet position • Pension deficit payment profile agreed 31 December (£m) 2009 2008 Capital employed (excluding cash) 9,237 6,555 Mark to market* / tax / other (1,281) (1,559) Pensions (565) (113) Net debt (3,136) (511) Net assets 4,255 4,372 Above figures in
Slide 20: Exceptional items and certain re-measurements
Exceptional items and certain re-measurements (£m) 2009 Termination of energy sales contract (139) Provision for North America wind PPA (55) UK restructuring costs (75) Profit on disposal – wind farms 49 Provision for onerous gas procurement contract (199) Impairments (149) Discontinued activities (
Slide 21: Summary and outlook
Summary and outlook 2009 • Good performance in low commodity price environment • Strong UK downstream performance offsetting lower upstream profitability • North American results impacted by one-off charges • EPS unchanged at 21.7p despite higher number of shares in issue Outlook for 2010 • Strong s
Slide 22: Sam Laidlaw, Chief Executive
Sam Laidlaw Chief Executive centrica
Slide 23: 2006-2009: The first stage in the journey
2006-2009: The first stage in the journey Our Strategic Priorities 1 Transform British Gas 2 Sharpen the organisation and reduce costs 3 Reduce risk through increased integration 4 Build on our growth platforms
Slide 24: UK Downstream - British Gas
UK Downstream - British Gas 25 Customer satisfaction (%)* 2009 • Significant operational improvements over 20 21 19 2007 15 17 the past three years 16 10 11 11 • Call volumes down 40% 5 4 8 4 4 1 – complaints to the ombudsman down 0 -3 * Source: Morgan Stanley Research Energy Supply Survey -5 70%, w
Slide 25: UK Downstream - British Gas
UK Downstream - British Gas • British Gas restructured to combine energy and services • Management team and support functions combined • Enhanced customer propositions – first bundled energy and services offering, ‘EnergyExtra’ – wide range of energy efficiency products – FSA approval to sell insura
Slide 26: Energy hedge ratio
Energy hedge ratio 70% 60% 50% Venture 40% 20% of 30% British Energy Drax 20% Wind North Sea 10% Morecambe 0% 2006 2007 2008 2009 2010 2011 2012 2013 Note: proportion of UK floating gas and power demand covered by own assets. Floating gas demand includes non-fixed price residential energy and busine
Slide 27: UK - Upstream Gas and Oil
UK - Upstream Gas and Oil • Significantly enhanced scale and capability of gas and oil business through acquisition of Venture • Sustainable and flexible portfolio of assets • Integration of Venture complete. Upstream business aligned around five regions • Gas and oil reserves increased by 50% to 40
Slide 28: UK - Power Generation
UK - Power Generation • Differentiated generation mix; low carbon intensity fleet • Increased UK power cover for residential and SME load • Completed improved deal to acquire 20% equity stake in British Energy • Langage CCGT plant now operational • Leading position in offshore wind – approved develo
Slide 29: UK Storage
UK Storage bcf Historical profile (2004-2009) • Rough operationally strong 140 – >98% reliability 120 – increased storage capacity 80 through investment 60 40 Min - Max Range (2004-2008) • Projects progressing 20 2009 – Caythorpe – planning 10 J F M A M J J A S O N D permission granted – Baird – acq
Slide 30: North America - Direct Energy
North America - Direct Energy • Established strong downstream position in key deregulated markets – 3rd largest residential power supplier in Texas, larger than UK domesticmarket – significant presence in US North East, with 0.5m customers – grown scale and profitability of C&I with acquisition of S
Slide 31: The next stage: our vision
The next stage: our vision Our vision is unchanged: To be the leading integrated energy company in our chosen markets
Slide 32: The Next Stage: Our Strategic Priorities
The Next Stage: Our Strategic Priorities 1 Grow British Gas . . . leading the transition to low carbon homes and businesses 2 Deliver value from our growing upstream business . . . securing sustainable energy for our customers 3 Build an integrated North American business . . . with leading position
Slide 33: Grow British Gas
1 Grow British Gas Distinctive capabilities Strategy • Serving 12 million homes, half Grow British Gas by: of all UK households • Optimising the business to . . . • Ability to combine energy scale – leverage scale for further with services deployment, with efficiency national base of 9,000 qualified
Slide 34: Deliver value from our growing upstream business
2 Deliver value from our growing upstream business Distinctive capabilities Strategy • Transformed scale and Deliver value from our existing capability in upstream gas assets . . . • Only ‘dual fuel’ hedged UK • Leading consolidator of mature supply business and orphaned assets in the UKCS • Low car
Slide 35: Build an integrated North American business
3 Build an integrated North American business Distinctive capabilities Strategy • Strong downstream position in Improve returns from existing key residential deregulated business markets Develop leading positions in • Large scale C&I business deregulated markets • Existing gas and power assets • Cap
Slide 36: Drive superior financial returns
4 Drive superior financial returns • Achieve returns significantly above our cost of capital – deliver returns on existing assets – phase investments to achieve consistent earnings growth • Continued financial discipline – maintain strong balance sheet – leverage flexibility in investment portfolio
Slide 37: Summary
Summary • 2009 a transformational year for Centrica – strong progress downstream – sustainable upstream business model delivered • Original priorities now delivered • New strategy reflects integrated business model • Well positioned for growth
Slide 38: Preliminary Results
Preliminary Results For the year ended 31 December 2009 centrica