Slide 1: Interim Results for the period ended 30 June 2014
Interim Results for the period ended 30 June 2014
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: Rick Haythornthwaite, Chairman
Rick Haythornthwaite Chairman
Slide 4: Nick Luff, Chief Financial Officer
Nick Luff Chief Financial Officer
Slide 5: Commodity prices and spreads
Commodity prices and spreads Average month ahead UK power prices and clean dark gas and oil prices and spark spreads 140 60 Oil ($/boe) 120 50 100 40 UK Power (£/MWh) 80 UK Gas (p/therm) 30 Clean Dark Spread (£/MWh) 60 20 40 US Gas (p/therm) 10 20 0 Clean Spark Spread (£/MWh) 0 -10 2012 2013 2014 20
Slide 6: Financial headlines
Financial headlines Period ended 30 June 2014 2013 Revenue (£m) 15,748 13,651 Adjusted operating profit (£m) 1,032 1,583 Adjusted effective tax rate 37% 47% Group result: Adjusted earnings (£m) 530 767 Adjusted earnings per share (p) 10.5 14.8 Interim dividend per share (p) 5.10 4.92 Above figures i
Slide 7: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2014 2013 British Gas 455 569 Direct Energy 41 165 Centrica Energy 526 802 Centrica Storage 10 47 Adjusted operating profit 1,032 1,583 Share of JV / associates’ interest and taxation (63) (47) Depreciation of FV uplifts to property, plant and equi
Slide 8: British Gas
British Gas Period ended 30 June (£m) 2014 2013 British Gas 455 569 Direct Energy 41 165 Centrica Energy 526 802 Centrica Storage 10 47 Adjusted operating profit 1,032 1,583 Above figures include share of joint ventures and associates before interest and taxation and are before depreciation of fair
Slide 9: British Gas
British Gas Operating profit (£m) Residential energy revenue (£m) and post tax margin (%) Period ended 30 June 2014 2013 Residential energy 265 356 5,486 Residential services 129 135 4,551 Business 61 78 Operating profit before tax 455 569 5.0% 4.5% 2013 2014 Residential services revenue Business re
Slide 10: Direct Energy
Direct Energy Period ended 30 June (£m) 2014 2013 British Gas 455 569 Direct Energy 41 165 Centrica Energy 526 802 Centrica Storage 10 47 Adjusted operating profit 1,032 1,583 Above figures include share of joint ventures and associates before interest and taxation and are before depreciation of fai
Slide 11: Direct Energy
Direct Energy Operating profit/(loss) (US$m) Residential energy revenue Period ended 30 June 2014 2013 ($m) and post-tax underlying margin (%) Residential energy (underlying) 135 154 Business energy (underlying) 21 82 Services 23 19 2,335 2,024 Direct Energy (underlying) 179 255 DER Polar Vortex imp
Slide 12: Centrica Energy
Centrica Energy Period ended 30 June (£m) 2014 2013 British Gas 455 569 Direct Energy 41 165 Centrica Energy 526 802 Centrica Storage 10 47 Adjusted operating profit 1,032 1,583 Above figures include share of joint ventures and associates before interest and taxation and are before depreciation of f
Slide 13: International gas
International gas Gas & oil production volumes Operating profit (£m) Gas (mmth) Liquids (mmboe) Period ended 30 June 2014 2013 1,945 1,696 Operating profit before tax 465 683 Americas Operating profit after tax 235 182 Europe 9.8 8.7 2013 2014 2013 2014 Average gas sales price Average liquids sales
Slide 14: UK power
UK power Operating profit/(loss) (£m) Power generation (TWh) Period ended 30 June 2014 2013 0.3 0.5 Gas-fired (70) (64) Renewables (operating assets) 23 12 4.5 4.1 Renewables (one-off write-offs, profit on disposal) (40) 24 Renewables Nuclear 125 122 Gas-fired Midstream 23 25 5.8 6.2 Nuclear Operati
Slide 15: Centrica Storage
Centrica Storage Period ended 30 June (£m) 2014 2013 British Gas 455 569 Direct Energy 41 165 Centrica Energy 526 802 Centrica Storage 10 47 Adjusted operating profit 1,032 1,583 Storage revenue (£) Forward price spreads (p/therm) 18 Other 15 38m W12-S12 spread SBU 12 69m 20m 9 W14-S14 spread 6 W13-
Slide 16: Cash flow
Cash flow Period ended 30 June (£m) H1 2014 H1 2013 FY 2013 Opening net debt (5,049) (4,047) (4,047) EBITDA 1,501 2,112 3,799 Working capital movements 161 (112) 237 Margin calls (127) (2) 82 Interest (111) (105) (219) Tax (413) (401) (892) Net capex (409) (755) (2,565) Dividends (605) (607) (862) S
Slide 17: Capex and acquisitions
Capex and acquisitions 4 Period ended 30 June (£m) H1 2014 H1 2013 FY 2014e Centrica Energy gas and oil 556 495 1,000 1 Centrica Energy power 37 53 50 British Gas 78 80 150 Centrica Storage 13 27 25 Direct Energy 46 28 100 Other 8 22 25 Total pre-acquisitions 738 705 1,350 2 3 5 Acquisitions / (disp
Slide 18: Focus on maintaining a strong balance sheet
Focus on maintaining a strong balance sheet • Maintaining appropriate financial discipline a core priority, to enable capital to be deployed where we see attractive opportunities • Non-core asset disposals expected to realise around £1 billion – sale of three larger UK CCGTs and Ontario home service
Slide 19: Summary and outlook
Summary and outlook • H1 EPS of 10.5p, down 29% – reflecting warm weather in the UK, the Polar Vortex in North America, low seasonal gas storage spreads and write down of our Round 3 offshore wind investment • 2014 full year earnings expected to be in the range 21p-22p • Commitment to real dividend
Slide 20: Sam Laidlaw, Chief Executive
Sam Laidlaw Chief Executive centrica
Slide 21: Clear management purpose, positioned for growth
Clear management purpose, positioned for growth • Business strengthened as a result of previous investments • Customers at the heart of our business within vertically integrated model – energy and services, with leadership in innovation and smart connected homes • Directing capital along the gas val
Slide 22: Continued stakeholder engagement
Continued stakeholder engagement Average British Gas dual fuel bill over the last five years • Energy policy remains a key issue for the UK; £1,253 £50 £1,162 retail energy bills a real concern for customers -£4 £40 £1,032 – open and honest debate needed about £54 +£6 +£4 all components of the bill
Slide 23: Lowest-cost, least regret options for the UK
Lowest-cost, least regret options for the UK • On the current trajectory, meeting the UK’s long term carbon reduction target could add £150bn to energy costs by 2030 • Alternative choices could achieve the same target at around a third of the cost – prioritising the lowest-cost and least regret tech
Slide 24: Well balanced and more resilient business
Well balanced and more resilient business 90 mboe/d production 60 mboe/d production 278mmboe 2P reserves 232mmboe 2P reserves 157mmboe 2C resources 95mmboe 2C resources 65 mboe/d production 210mmboe 2P reserves Bord Gáis Energy 325mmboe 2C resources 0.7m residential accounts British Gas: 23m residen
Slide 25: British Gas: Focus on service, efficiency, innovation and growth
British Gas: Focus on service, efficiency, innovation and growth • Business well placed, benefiting from previous investment in systems, enabling better service and operational efficiencies • Clear strategy in place focused on three priorities: deliver great service, transform to grow, engage key st
Slide 26: British Gas: Focus on service, efficiency, innovation and growth
British Gas: Focus on service, efficiency, innovation and growth • Clear priorities for the second half of 2014 – return the business to customer account growth – targeting industry leading service levels and a reduction in complaints – simplify key customer interactions (Homemove, DD) – complete mi
Slide 27: Direct Energy: Focus on customer value, service and choice
Direct Energy: Focus on customer value, service and choice • An established large-scale business in North America, Direct Energy Business total volume providing a platform for further growth in energy supply TWh 150 500 bcf and services 120 400 Gas • Focus on service, efficiency and customer choice
Slide 28: Direct Energy: Focus on customer value, service and choice
Direct Energy: Focus on customer value, service and choice • Clear priorities for the second half of 2014 – further improvement in DEB sales margins – complete integration of Hess Energy Marketing acquisition – drive additional growth through dual fuel capabilities, advantaged positions along the ga
Slide 29: Centrica Energy: Securing energy supplies for our customers
Centrica Energy: Securing energy supplies for our customers • A larger scale, more geographically diverse upstream gas and oil business with a balanced power portfolio • Good progress in first half of 2014 – solid performance from core assets – strengthening of QPI relationship through Canadian gas
Slide 30: Centrica Energy: Securing energy supplies for our customers
Centrica Energy: Securing energy supplies for our customers • Clear priorities for the second half of 2014, in a lower wholesale price environment – deliver total gas and oil production of c83mmboe – targeting flat E&P unit lifting and cash production costs – deliver capex plan; expected to reduce t
Slide 31: Summary
Summary • Good strategic progress in first half of 2014, in challenging market conditions • Clear priorities for second half of 2014, to drive performance • Balanced and resilient business, strengthened by previous investments • Distinctive combination of energy and services, with leadership in inno