Slide 1: Interim Results 2001
taking care of the essentials Interim Results 2001
Slide 2: Roy Gardner, Chief Executive
Roy Gardner CHIEF EXECUTIVE
Slide 3: Centrica Core Competencies
Centrica Core Competencies • Brand Development • Customer Relationship Management • Channel Efficiency
Slide 4: Customer contribution
Customer Perspective Service must be our key differentiator 2. As a Customer contribution 5. You have Multiple a reputation Product for world Customer you 4. You’re my class recognise my trusted advisor products and relationship. for essential 1. Currently quality of 3. You products and you supply s
Slide 5: Results in Brief
Results in Brief restated restated 1H2001 1H2000 FY2000 Sales £6,753m £4,707m £9,933m Operating profit £437m £404m £526m (incl JV’s and Associates) Earnings pre-exceptionals £343m £350m £389m Operating cash flow pre-exceptionals £367m £484m £1,139m Basic earnings per ordinary share 8.6p 8.8p 9.8p Di
Slide 6: Achievements this year
Achievements this year • International expansion • Targeted acquisitions – Power generation – UK Home Services – Canada Home Services – Telecoms – AA Road Services • Organic customer growth • Customer satisfaction continues to improve
Slide 7: Energy Management
Energy Management • Introduction of NETA • Humber Power now producing electricity for the portfolio • Morecambe additional reserves & deliverability • New gas contracts • Energy trading in Europe
Slide 8: Residential gas & electricity customers
Residential gas & electricity customers Weekly movements (‘000’s) Price changes Sales & retention announced campaigns implemented 60 40 20 0 -20 -40 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Net gas Net electricity Net position
Slide 9: British Gas Services
British Gas Services • Product growth – 650,000 plumbing cover contracts – 425,000 kitchen appliance cover contracts – 3.2 million home heating cover contracts • Acquisition of National Homecare • Central heating installations up 17% year on year • Home security installations up over 30% year on yea
Slide 10: AA Road Services
AA Road Services • Record membership levels • Acquisition of Halfords garages • Mobile tyre service
Slide 11: Financial Services
Financial Services • Insurance improvements • e-commerce benefits - AA Insurance & Loans • Increased loans through Bank of Scotland JV • Credit/loyalty card for English Golf • Goldfish card issues resolved • Partnership with Lloyds TSB progressing
Slide 12: Telecommunications
Telecommunications • Strong performance from British Gas • Acquisition of One.Tel (UK) – synergies in back office functions – purchasing – systems integration • Target of I million active customers achieved • Broadband opportunities
Slide 13: Information Services
Information Services • Website developments – theAA.com – Home essentials portal • “401 100” service available over all major mobile networks • Access to theAA.com through DiTV • Street by Street atlases launched in May
Slide 14: North America Energy Supply
North America Energy Supply • Supplying gas to 1.3m customers • 500,000 electricity customers signed up for when market opens in Ontario • Move into Services • Continue to explore opportunities to increase customer base through acquisition & organic growth
Slide 15: Continental Europe
Continental Europe • 50% interest in Luminus in Belgium – influence liberalisation process – expand into other neighbouring areas – introduce other products & services • Potential opportunities in other parts of Europe • Seeking acceleration in competition across Europe
Slide 16: Business Outlook
Business Outlook • Vision to be a leading supplier of essential services in our chosen markets • Growing customer base, with over 40m product relationships • Key targets – 7 million UK electricity customers – 10% of the UK telecoms market – 15% of group operating profit from Financial Services by 20
Slide 17: Phil Bentley, Group Finance Director
Phil Bentley GROUP FINANCE DIRECTOR
Slide 18: Key Results
Key Results restated restated £m 1H2001 1H2000 FY2000 Sales 6,753 4,707 9,933 Operating profit (pre-exceptionals) 437 404 526 Earnings (pre-exceptionals) 343 350 389 Operating cash flow 367 484 1,139 • Record first half turnover & operating profit • Record first half gas production • Gas cost increa
Slide 19: Operating Profit Analysis
Operating Profit Analysis (including JV’s & Associates, pre exceptionals & amortisation of goodwill) restated restated £m 1H2001 1H2000 FY2000 UK Gas Production 336 91 309 UK Residential Gas 58 305 294 UK Non-residential Gas 20 45 55 UK Electricity 19 (45) (107) Accord 10 (11) (20) Total UK Energy S
Slide 20: Gas production
Gas production SM Onshore Compression Extension drilling • Cost £60m • Deliverability up 12% • 70 bcf added to reserves Unit Production Costs 2 1.5 £/boe 1 0.5 0 Centrica Average Source:2000 McKinsey Benchmarking data
Slide 21: Gas Volumes, Pricing & Input Cost
Gas Volumes, Pricing & Input Cost 1H2001 1H2000 FY2000 UK Residential sales Turnover (£m) 2,370 2,321 4,078 Volume (m therms) 5,435 5,240 9,235 Price (p/therm) 42.6 43.7 43.4 UK External WACOG (p/therm) 19.1 15.6 16.5 UK WACOG (p/therm) 20.7 14.3 16.3 UK Non-residential sales Turnover (£m) 761 574 1
Slide 22: Gas Input / Output Prices Impact
Gas Input / Output Prices Impact Impact v 2000 200 150 100 50 £m impact 0 -50 -100 -150 -200 -250 -300 -350 H1 2001 v H1 H2 2001 v H2 2002 v 2000 2000 2000 Input cost impact (v 2000) Pricing increase Net position
Slide 23: Electricity Volumes, Pricing & Input Cost
Electricity Volumes, Pricing & Input Cost 1H2001 1H2000 FY2000 UK Sales Turnover (£m) 528 335 792 Volume (GWh) 8,803 5,390 12,782 Price (p/kWh) 6.0 6.2 6.2 UK Total WACOE (p/kWh) 2.5 3.1 3.1 UK Equity generation (GWh) 304 - - WACOE = Weighted average cost of electricity. Excludes transmission costs
Slide 24: Operating Profit Analysis
Operating Profit Analysis (including JV’s & Associates, pre exceptionals & amortisation of goodwill) restated restated £m 1H2001 1H2000 FY2000 UK Gas Production 336 91 309 UK Residential Gas 58 305 294 UK Non-residential Gas 20 45 55 UK Electricity 19 (45) (107) Accord 10 (11) (20) Total UK Energy S
Slide 25: North America Value
North America Value ons A cti V • Increased pace of A Energy America customer acquisitions L Avalanche • Cost of acquisitions U lower than anticipated Direct • Canadian electricity E Energy margins anticipated to be higher
Slide 26: Revenue Investment
Revenue Investment £m 80 60 Goldfish 40 Telecoms E-commerce 20 0 1st Half 2nd Half 1st Half 2000 2000 2001 Total Revenue Investment H1 2001 £110m
Slide 27: Operating profit causal track
Operating profit* causal track £m Half year to June 2000 404 Lower downstream gas margins (272) Higher equity gas production/price 245 Improved energy trading 21 Improved electricity profit 64 North America Energy Supply 29 Goldfish bank investment (16) Telecoms (42) Other 4 Half year to June 2001 4
Slide 28: Earnings
Earnings £m 1H2001 1H2000 FY2000 Operating profit including associates & joint ventures 437 404 526 Net interest (20) (17) (28) Taxation (80) (37) (109) Minority interest 6 - - Underlying earnings 343 350 389 Goodwill amortisation (40) (25) (60) Exceptionals (13) (3) (14) Earnings 290 322 315
Slide 29: Cash Flow before Financing
Cash Flow before Financing £m 1H2001 1H2000 FY2000 Operating cash flow 367 484 1,139 Capital expenditure (79) (55) (165) Tax,interest & dividends rec’d (34) (34) (150) Sub-total 254 395 824 Acquisitions (103) - (590) Exceptional payments (30) (43) (76) Dividends (68) (60) (103) Total 53 292 55 Net D
Slide 30: Financial Outlook
Financial Outlook • UK Gas market - continuing margin pressure • Electricity outlook positive • Strong performance in Home and Road Services • North America performance strong • Goldfish bank • Telecoms synergies • Cash from Morecambe
Slide 31: Appendices
Appendices
Slide 32: Turnover
Turnover £m 1H2001 1H2000 FY2000 UK Residential Gas 2,370 2,321 4,078 UK Non-residential Gas 761 574 1,110 Accord / Gas Production 1,977 860 2,410 Electricity 528 335 792 Total Energy Supply 5,636 4,090 8,390 Home Services 339 303 636 Road Services 233 226 447 Financial Services 69 60 128 Telecommun
Slide 33: Capital Expenditure
Capital Expenditure £m 1H2001 1H2000 FY2000 British Gas Energy Supply (38) (35) (82) Energy Supply - North America (16) - (6) British Gas Home Services (4) (5) (11) AA Road Services (1) (3) (4) AA Financial Services (1) - - Telecommunications (6) (9) (18) Other Activities (11) - (19) Total (77) (52)
Slide 34: Acquisition payments
Acquisition payments analysed by business segment £m 1H2001 Subsidiary undertakings Energy Supply - North America (39) British Gas Home Services (2) Joint Ventures British Gas Energy Supply (37) Deferred consideration Energy Supply - North America (9) Overdraft acquired Energy Supply - North America
Slide 35: Exceptionals & Goodwill
Exceptionals & Goodwill £m 1H2001 1H2000 FY2000 Exceptionals Restructuring (13) (3) (14) Goodwill Road Services (18) (18) (36) Financial Services (7) (7) (14) North America (15) - (10) Total goodwill (40) (25) (60) Total exceptionals & goodwill (53) (28) (74)
Slide 36: HRL Tax & Commercial pricing
HRL Tax & Commercial pricing £m 1H2001 1H2000 FY2000 FY1999 Commercial price basis UK Residential Gas (58) 256 165 275 UK Non-residential Gas (48) 14 (34) 20 Gas Production 520 171 527 302 Total operating profit 414 441 658 597 Tax price basis UK Residential Gas 58 305 294 357 UK Non-residential Gas
Slide 37: Transactions
Transactions • Greensource - Home servicing business Canada • National Homecare - UK Electrical Servicing business • Energy America - Completion - US energy supply gas assets • Humber Power - 750MW Capacity power station For 2nd Half 2001, announced – One.Tel - UK Telecoms provider – Luminus - Joint