Slide 1: Centrica plc Interim Results 2008
Centrica plc INTERIM RESULTS for the period ended 30 June 2008 Interim Results 2008
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 LANGAGE POWER STATION - DEVON 3 Interim Results 2008
Slide 4: Nick Luff, Finance Director
NICK LUFF FINANCE DIRECTOR CENTRICA STORAGE TERMINAL - EASINGTON 4 Interim Results 2008
Slide 5: Commodity price graphs
Commodity price graphs p/th $/barrel 120 160 Gas prices (actual / forward) 100 Forward gas curve 140 (23 Feb 2008) Oil prices (actual / forward) 80 120 60 100 40 80 20 60 0 40 2007 2008 5 Interim Results 2008
Slide 6: First half 2008: Financial headlines
First half 2008: Financial headlines Period ended 30 June (£m) 2008 2007 Revenue (£m) 10,032 8,570 Operating profit (£m) 992 1,226 Profit before tax (£m) 994 1,198 Total effective tax rate 58% 34% Earnings (£m) 416 786 Earnings per share (p) 11.3 21.4 Interim dividend per share (p) 3.9 3.35 Above fi
Slide 7: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2008 2007 British Gas Residential 166 533 Centrica Energy 504 337 British Gas Business 55 48 Centrica Storage 93 128 UK Energy 818 1,046 British Gas Services 85 63 Direct Energy 91 110 Europe (1) 11 Other (1) (4) Total operating profit 992 1,226 Ab
Slide 8: British Gas Residential Operating profit: key drivers
British Gas Residential Operating profit: key drivers Revenue Commodity costs Transmission & metering costs (£m) (£m) (£m) 3,823 964 3,497 897 2,246 1,612 H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 H1 2008 Consumption Operating costs Gas Electricity (£m) (therms/customer) (kWh/customer) 413 313 378 1,9
Slide 9: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2008 2007 British Gas Residential 166 533 Centrica Energy 504 337 British Gas Business 55 48 Centrica Storage 93 128 UK Energy 818 1,046 British Gas Services 85 63 Direct Energy 91 110 Europe (1) 11 Other (1) (4) Total operating profit 992 1,226 Ab
Slide 10: Centrica Energy Operating profit: key drivers
Centrica Energy Operating profit: key drivers Gas price Gas production Power generation volume (p/therm) (mmth) (GWh) 52.9 11,723 1,413 11,536 1,054 23.7 H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 H1 2008 I&C profit / (loss) I&C contract volumes (£m) (mmth) 148 2,000 H1 2007 1,000 (156) Figures include
Slide 11: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2008 2007 British Gas Residential 166 533 Centrica Energy 504 337 British Gas Business 55 48 Centrica Storage 93 128 UK Energy 818 1,046 British Gas Services 85 63 Direct Energy 91 110 Europe (1) 11 Other (1) (4) Total operating profit 992 1,226 Ab
Slide 12: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2008 2007 British Gas Residential 166 533 Centrica Energy 504 337 British Gas Business 55 48 Centrica Storage 93 128 UK Energy 818 1,046 British Gas Services 85 63 Direct Energy 91 110 Europe (1) 11 Other (1) (4) Total operating profit 992 1,226 Ab
Slide 13: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2008 2007 British Gas Residential 166 533 Centrica Energy 504 337 British Gas Business 55 48 Centrica Storage 93 128 UK Energy 818 1,046 British Gas Services 85 63 Direct Energy 91 110 Europe (1) 11 Other (1) (4) Total operating profit 992 1,226 Ab
Slide 14: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2008 2007 British Gas Residential 166 533 Centrica Energy 504 337 British Gas Business 55 48 Centrica Storage 93 128 UK Energy 818 1,046 British Gas Services 85 63 Direct Energy 91 110 Europe (1) 11 Other (1) (4) Total operating profit 992 1,226 Ab
Slide 15: Operating profit analysis
Operating profit analysis Period ended 30 June (£m) 2008 2007 British Gas Residential 166 533 Centrica Energy 504 337 British Gas Business 55 48 Centrica Storage 93 128 UK Energy 818 1,046 British Gas Services 85 63 Direct Energy 91 110 Europe (1) 11 Other (1) (4) Total operating profit 992 1,226 Ab
Slide 16: Cashflow
Cashflow Period ended 30 June (£m) 2008 2007 Opening net debt (795) (1,527) EBITDA 1,304 1,503 Working capital movements (551) (109) Margin calls 1,063 (89) Interest and tax (313) (92) Gross capex (550) (360) Dividends (356) (294) Disposals / other (76) 26 Total movement in net debt 521 585 Closing
Slide 17: Capital and acquisition expenditure
Capital and acquisition expenditure (£m) H1 2008 FY 2008 Upstream gas - growth 32 150 - maintenance 7 50 UK power - conventional 119 200 - wind 88 200 Direct Energy 49 130 Other 42 120 Total pre-acquisitions 337 850 Acquisitions to date 183 782 Total 520 1,632 * ROCs / emissions 30 250 * Excludes fu
Slide 18: Summary
Summary • Good results in base business • Growth businesses performing strongly • I&C profit reversal weighed on earnings • Retail tariff increase reflecting higher wholesale prices • Balance sheet remains robust • Full year in line with expectations 18 Interim Results 2008
Slide 19: Sam Laidlaw, Chief Executive
SAM LAIDLAW CHIEF EXECUTIVE BARROW OFFSHORE WIND FARM 19 Interim Results 2008
Slide 20: Priorities
Priorities 20 Interim Results 2008
Slide 21: Priorities: Transform British Gas
Priorities 1. Transform British Gas 21 Interim Results 2008
Slide 22: Priorities
Priorities 1. Transform British Gas 2. Sharpen the organisation and reduce costs 22 Interim Results 2008
Slide 23: Priorities
Priorities 1. Transform British Gas 2. Sharpen the organisation and reduce costs 3. Reduce risk through increased integration 23 Interim Results 2008
Slide 24: Priorities
Priorities 1. Transform British Gas 2. Sharpen the organisation and reduce costs 3. Reduce risk through increased integration 4. Build on our growth platforms 24 Interim Results 2008
Slide 25: Transform British Gas
1 Transform British Gas energywatch complaints • Further improvements in 4,000 customer service 3,000 • On track for £60 million cost 2,000 reduction in 2008 1,000 • Ongoing activities to retain 0 Jan Mar May Jul Sep Nov Jan Mar May Jun customers 2007 2008 Operating costs (£m) Total energy accounts
Slide 26: Transform British Gas: Mitigating impact of rising prices
1 Transform British Gas Mitigating impact of rising prices • Market leading fixed price product until 2011 • Delayed impact on vulnerable Essentials tariff • Pay As You Go dual fuel discount • Launched Energy/Insulation bundle • Revamped online Energy Savers Report • Tracker product remains availabl
Slide 27: Sharpen the organisation and reduce costs
2 Sharpen the organisation and reduce costs • Group like-for-like costs down, absorbing high industry inflation £m Operating cost H1 2007 vs H1 2008 1,125 Exploration Inflation / uplift 1,100 growth Acquisitions BGR cost 1,075 reduction Other cost 1,050 initiatives 2007 H1 2008 H1 27 Interim Results
Slide 28: Reduce risk through increased integration: Gas progress
3 Reduce risk through increased integration Gas progress • Acquired Heimdal assets in Norwegian sector of the North Sea Newfield / Sojitz Heimdal • Added 165bcfe to the portfolio Heimdal • A mix of production, development and exploration prospects • Recently committed £800 million Seven to gas asset
Slide 29: Reduce risk through increased integration: Gas progress
3 Reduce risk through increased integration Gas progress % Gas hedge ratio 40 Wind Drax contract Acquisitions 30 Development North Sea 20 Morecambe Bay 10 0 2006 2007 2008 2009 2010 2011 29 Interim Results 2008
Slide 30: Reduce risk through increased integration: UK Storage progress
3 Reduce risk through increased integration UK Storage progress Storage capacity as a % of annual gas demand* % 25 20 15 10 5 0 UK Germany France Netherlands Italy * Source: Development in European Natural Gas Consumption 2006-2007 Bains Rough and Gas Infrastructure Europe Bains Rough Size (bcf) 15-
Slide 31: Reduce risk through increased integration: Renewables
3 Reduce risk through increased integration Renewables UK context • 15% of energy from renewables by 2020 Glens of Foudland − translates to 30-35% electricity 26MW Current portfolio Braes of Doune 72MW • 5 wind farms, 378MW • Load factors: offshore 41%, onshore 30% Docking Shoal 500MW Inner Dowsing
Slide 32: Reduce risk through increased integration: Renewables
3 Reduce risk through increased integration Renewables • Sharp increase in construction costs offset by higher revenues £m/MW Power + ROC £/MWh 4.0 160 +1.5 ROCs 3.5 140 +1.0 ROC 3.0 120 Lincs 2.5 100 Docking Race Shoal Bank 2.0 80 Barrow Lynn & Inner Dowsing 1.5 60 1.0 Glens of 40 Braes of Foudland
Slide 33: Build on our growth platforms: British Gas Business
4 Build on our growth platforms British Gas Business Revenue, operating costs & gross margin* Continued Growth Prospects £m 3,000 120% H1 revenue • Raise share of £20bn UK energy 2,500 100% H2 revenue business market from 12% 2,000 80% H1 operating cost % of gross margin • Grow dual-fuel product hol
Slide 34: Build on our growth platforms: British Gas Services
4 Build on our growth platforms British Gas Services Revenue, operating costs & gross margin • Another period of strong customer £m 1,400 84% H1 revenue growth 1,200 82% H2 revenue • Launched 2 new products 1,000 80% H1 operating cost % 800 78% of gross margin • Bundled proposition with British Gas
Slide 35: Build on our growth platforms: Direct Energy
4 Build on our growth platforms Direct Energy Challenging first half • US economic slowdown • Record sustained gas prices • Texas wholesale power price volatility • 2 week Bastrop power plant outage Fundamentals and growth prospects remain strong • Increase in Mass Market customers • Texas commodity
Slide 36: Build on our growth platforms: Europe
4 Build on our growth platforms Europe • Exercised pre-emption rights on SPE • Gained 51% controlling interest • 1.5m customers and 1.6GW • SPE will benefit from cheaper power through PAX Electrica 2 Generation mix • Increases Centrica’s options with Nuclear European position Gas / Wind 17% Diesel 4
Slide 37: Summary
Summary • Strong results in a difficult commodity environment • Reduced costs and improved service in British Gas • 2008 full year Group costs flat on 2007 • Progress made on gas, storage and wind • Growth businesses performing well • Remain focused on shareholder value 37 Interim Results 2008
Slide 38: Centrica plc Interim Results
Centrica plc INTERIM RESULTS for the period ended 30 June 2008 Interim Results 2008