Centrica Plc · LSE:CNA
Centrica — Shareholder Meeting (May 2009)
27 slides from Centrica's shareholder meeting presentation, May 11, 2009
Slide 1: Centrica Annual General Meeting 2009
Centrica Annual General Meeting 2009
Slide 2: Roger Carr
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Slide 3: British Energy
British Energy • Agreement with EDF to acquire 20% stake in British Energy: • Includes sale to EDF of our 51% stake in SPE • £1.1 £1 1 billion net net consideration • Delivering significant benefit to Centrica shareholders • Transaction subject to shareholder approval – General Meeting in June
Slide 4: 2008 Performance Review
2008 Performance Review • Strong set of financial results • Volatility in wholesale gas & power prices • Global energy issues • Fluctuating oil prices • Large wholesale gas price increases in 2008 • Retail price increases for UK customers in 2008 • Price reductions in 2009
Slide 5: British Gas
British Gas • Reduction in 2008 British Gas Residential profits due to market environment • Strong start made in 2009 y leading • Industry gpposition in supporting pp g our most vulnerable customers • 530,000 customers on British Gas social tariff • Planned £500m spend on vulnerable customer program
Slide 6: Upstream Businesses
Upstream Businesses • Continued focus to increase our vertical integration • Announced agreement with EDF to acquire a stake in British Energy • Gas reserve acquisitions in the North Sea and North America • 23.6% stake in Venture Production • Intention to build 3 additional gas storage facilities •
Slide 7: British Gas recognised by the Sunday Times as a Best Big Company
In February, British Gas was recognised by the Sunday Times as one of the 20 Best Big Companies to Work For 2009
Slide 8: Centrica Annual General Meeting 2009
Centrica Annual General Meeting 2009
Slide 9: May 2009 Interim Management Statement
May 2009 Interim Management Statement • Outlook for group earnings in line with market expectations p operating • Lower group g p gpprofit offset by y lower effective tax rate • Full announcement at www.centrica.com
Slide 10: Centrica Annual General Meeting 2009
Centrica Annual General Meeting 2009
Slide 11: Sam Laidlaw
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Slide 12: British Energy
British Energy • Agreement with EDF to acquire a 20% stake in British Energy • Secures Centrica’s participation in the UK nuclear industry • Significantly reduces exposure to volatile gas prices • 85% of tariff electricity sales will come from own generation • Restructured from £3.1 to £1.1 billion
Slide 13: Changing energy markets and industry challenges
Changing energy markets and industry challenges • Climate change • Security of supply • Providing customers with affordable energy
Slide 14: Changing energy markets and industry challenges
Changing energy markets and industry challenges • UK government climate change targets • 15% of all UK energy from renewables by 2020 • 80% reduction in UK greenhouse gas emissions by 2050 • 25% of UK coal-fired power stations closed by 2015 – need to build clean replacements
Slide 15: Changing energy markets and industry challenges
Changing energy markets and industry challenges • Renewables and nuclear are key • Government estimates that 35% of electricity could come from renewables by 2020 (currently 4.5%) • Adjustment of Renewable Obligation will support additional offshore wind investment • New nuclear construction is esse
Slide 16: Delivering change requires significant investment
Delivering change requires significant investment • £100 billion to deliver 2020 renewable target (Government estimate) • £230 billion energy sector investment by 2025 (Ernst & Young) • Centrica investing £15 billion by 2020 • Nuclear, renewables, gas production and gas storage • Creating 1,500 new
Slide 17: 2008 Performance
2008 Performance • Operating profit in line with expectations - £1.94 billion • Significant proportion of upstream profits taxed at 75% • Overall O erall group gro p tax ta rate exceeded e ceeded 52% in 2008 • Impact on post-tax Earnings per Share • Change in mix of profits should reduce tax rate in
Slide 18: Strategic Priorities
Strategic Priorities 1. Transform British Gas 2. Sharpen the organisation and reduce costs 3. Reduce R d risk i k th through h iincreased d iintegration t ti 4. Build on our growth platforms
Slide 19: Transform British Gas
Transform British Gas • Significant improvement in customer services • £200m operating cost reduction since 2006 • Reduction in gas and power prices • May M 2009 – 10% cutt iin power prices i • February 2009 – 10% reduction in gas prices • Cheapest supplier for electricity and dual fuel • WebSaver o
Slide 20: Transform British Gas
Transform British Gas BGB Residential BGR Energy Commercial Services Energy BGS
Slide 21: Transform British Gas
Transform British Gas • 12 Million households holding 24 million products • Only 1.9 million households hold both an energy and services product • Customers holding both products are more likely to stay with British Gas and have higher lifetime value • Further £100 million cost reduction opportuniti
Slide 22: Sharpen the organisation and reduce costs
Sharpen the organisation and reduce costs • Group like for like costs down by £40 million in 2008 • Cost C t control t l remains i on agenda d
Slide 23: Reduce risk through increased integration - Gas
Reduce risk through increased integration - Gas • Successfully increased asset base • Acquired around 800 bcfe of reserves • Invested £1bn in gas acquisitions and development • 24% interest in North Sea gas producer acquired in March 2009 • Increased LNG capacity in 2009/2010 • 6 LNG cargoes already
Slide 24: Reduce risk through increased integration - Power
Reduce risk through increased integration - Power British Energy • Agreement delivers long life, low carbon source of power • Platform for growth with new nuclear construction • Terms of the transaction significantly improved since last year • Langage gas-fired power station completed by late 2009 •
Slide 25: Build on our growth platforms
Build on our growth platforms • Revenue and customer growth in British Gas Business, British Gas Services and Direct Energy • Profitability in these businesses has increased 50% in two years – combined £560 million operating profit in 2008 • Further investment to strengthen North America planned
Slide 26: Summary
Summary • Building an efficient and robust business to withstand shocks from volatile energy markets • British Energy agreement a major step forward to strengthen the business and provide new growth platforms • Remain focused on strategy to deliver shareholder value
Slide 27: Centrica Annual General Meeting 2009
Centrica Annual General Meeting 2009