Centrica Plc · LSE:CNA
Centrica — Investor Day (November 2002)
17 slides from Centrica's investor day presentation, Nov 19, 2002
Slide 1: The Retail Perspective
The Retail Perspective Deryk King - President and CEO, Centrica North America Toronto, 19th November 2002
Slide 2: Centrica's Origins
Centrica’s Origins 1985 1997 1999-2002 BG plc British Gas British Gas plc Corporation Centrica plc Centrica plc State-owned Shareholder- Competitive International monopoly owned monopoly gas supplier mass market retailer 2
Slide 3: Centrica - Key Facts
Centrica - Key Facts • Can$30bn annual turnover • Can$18bn market capitalisation • Serves over 20 million households • Sales average over 2 products per household • 33,000 employees • Long term credit rating A2/A 3
Slide 4: Centrica's UK Business Units
Centrica’s UK Business Units Gas and electricity production, trading, commodity sourcing, risk management Gas, electricity, home services Roadside assistance, travel services, automobile sales and service, home & motor insurance, financial services Credit card, Internet banking, financial services R
Slide 5: Financial Markets Perspective
Financial Markets Perspective Earnings, Can$ million 1200 1000 • Strong earnings growth 800 since formation 600 • Top quartile shareholder 400 returns 200 • Growth stock rather than 0 utility yield stock -200 -400 -600 96 97 98 99 1 00 20 01 H 20 20 02 Demerger 5
Slide 6: International Strategy
International Strategy • Objective to replicate the Centrica model outside the UK • Main target areas - North America and Western Europe • Utilising our unique experience of a fully competitive market • Leveraging our energy buying & trading and marketing & sales skills • to achieve a target of at l
Slide 7: Centrica's Vision for North America
Centrica’s Vision for North America Our vision is to become the leading retailer of energy and essential services to residential, commercial and small business customers in North America * customer-product relationships 7
Slide 8: The Importance of Scale
The Importance of Scale Core Competencies Competitive Advantage • Experience in managing • Unit cost advantage transition to deregulation • Opportunity to establish • Proven lobbying and strong brands market shaping skills • “Participant of choice” as • Proven brand skills increasing new states intr
Slide 9: Progress to Date (1)
Progress to Date (1) • Centrica has completed the following acquisitions: • Direct Energy in Aug 2000 for Can$912m • Avalanche Energy in Nov 2000 for Can$253.5m • Energy America in Jan 2001 for US$56m • Enbridge Services Inc in May 2002 for Can$1 billion • NewPower assets in Aug 2002 for US$23.2m •
Slide 10: Progress to Date (2)
Progress to Date (2) • Centrica has invested Can$2.5 billion of capital to date in North America, of which over Can$2 billion has been in Canada • We have also invested Can$170m of revenue expense growing our natural gas business and entering the Ontario and Texas electricity markets • We now employ
Slide 11: Serving 3m households with 4½m products by end-2002
Serving 3m households with 4½m products by end-2002 50,000 gas customers Main Offices in Manitoba 100 mmcf/day of gas and 0.5 million bbl pa of oil and gas liquids production in Alberta 17,000 business services customers 1.7 million households taking; across Canada 2.9 million energy and services pr
Slide 12: Financial Performance in North America
Financial Performance in North America Revenues, Can$m EBIT*, Can$m 1800 160 1600 140 1400 120 1200 100 1000 80 800 60 600 400 40 200 20 0 0 2000 2001 2002(1-6) 2000 2001 2002(1-6) 12
Slide 13: Future Growth Priorities
Future Growth Priorities • Developing the full energy+services model in core markets of Ontario, Texas and others….SMS • Working with Government and regulators to support the development of competition in “emerging” markets such as Alberta, Ohio, Michigan, New York, Illinois, etc • Expansion of our
Slide 14: Current Issues
Current Issues • Crisis of confidence in (US) power industry (California, Enron, round trip trades, re-statement of results, etc) • Hostile media treatment generally of deregulation • Political caution resulting in ineffective competition legislation and little incentive for new players to enter mar
Slide 15: Impact of Ontario Electricity Price Freeze
Impact of Ontario Electricity Price Freeze • Ontario is introducing legislation to freeze retail prices (for which users?) at 4.3 cents per kWh until “at least” 2006 • The Government will protect margins for all retailers on all such customers signed up on or before November 11th 2002 • It is not cl
Slide 16: The Conclusion?
The Conclusion? • Despite the adverse external environment, there remains a major opportunity for Centrica in North America • There are over 20 million residential energy consumers in competitive markets to-day and a further 30 million are expected to add to this over the next 5 years • Organic grow
Slide 17: taking care of the essentials
taking care of the essentials