Slide 1: Centrica plc Interim Results
Centrica plc Interim Results For the six months ended 30 June 2007 2 August 2007 1
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 3
Slide 4: Nick Luff, Finance Director
Nick Luff Finance Director 4
Slide 5: First half 2007: Financial headlines
First half 2007: Financial headlines Period ended 30 June 2007 2006 Revenue (£m) 8,592 8,728 Operating profit (£m) 1,248 692 Total effective tax rate 34% 51% Earnings (£m) 788 277 Earnings per share (p) 21.5 7.6 Interim dividend per share (p) 3.35 3.15 Above figures include JVs & associates net of i
Slide 6: First half 2007: Commodity
First half 2007: Commodity • Retail prices follow both rising and falling wholesale prices • Residential profits restored to sustainable levels after first quarter peak Gas price movements (pence) 50 40 30 20 10 0 (10) Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Wholesale Retail 6
Slide 7: First half 2007: Operating profit analysis
First half 2007: Operating profit analysis Period ended 30 June, £m 2007 2006 British Gas British GasResidential Residential 533 (143) Centrica Energy 337 579 British Gas Business 48 11 Centrica Storage 128 93 UK Energy 1,046 540 British Gas Services 63 44 North America 132 121 Europe 11 (4) Other (
Slide 8: First half 2007: British Gas Residential
First half 2007: British Gas Residential Operating Profit: Key Drivers Gas consumption (therms/customer) Electricity consumption (kWh/customer) 400 2,500 300 2,000 200 1,500 100 0 1,000 H1 2006 H1 2007 H1 2006 H1 2007 Revenue v commodity costs (£bn) Operating cost (£m) 4 450 3 400 2 350 1 0 300 Reve
Slide 9: First half 2007: Operating profit analysis
First half 2007: Operating profit analysis Period ended 30 June, £m 2007 2006 British Gas Residential 533 (143) Centrica Energy 337 579 British Gas Business 48 11 Centrica Storage 128 93 UK Energy 1,046 540 British Gas Services 63 44 North America 132 121 Europe 11 (4) Other (4) (9) Total operating
Slide 10: First half 2007: Centrica Energy
First half 2007: Centrica Energy Operating Profit: Key Drivers Gas production price (p/therm) Gas production volume (m therms) 60 1,500 40 1,000 20 500 0 0 H1 2006 H1 2007 H1 2006 H1 2007 Power generation volumes (GWh) Industrial and commercial profit (£m) 12,000 200 150 8,000 100 50 4,000 0 (50) H1
Slide 11: First half 2007: Operating profit analysis
First half 2007: Operating profit analysis Period ended 30 June, £m 2007 2006 British Gas Residential 533 (143) Centrica Energy 337 579 British BritishGas GasBusiness Business 48 48 11 11 CentricaStorage Centrica Storage 128 128 93 93 UK Energy 1,046 540 British BritishGas GasServices Services 63 44
Slide 12: First half 2007: Cashflow
First half 2007: Cashflow H1 2007 H1 2006 EBITDA 1,544 947 Working capital movements (incl Margin calls) (198) (819) Interest and Tax (112) (282) Restructuring payments (68) (61) Total net Capex (312) (403) Dividends (294) (269) Other 25 46 Total movement in net debt 585 (841) Opening net debt exclu
Slide 13: Summary
Summary • Wholesale price fall moves profit to the downstream • British Gas Residential margins restored • Growth businesses performing well • Lower tax charge on profit mix • Strong cash generation 13
Slide 14: Sam Laidlaw, Chief Executive
Sam Laidlaw Chief Executive 14
Slide 15: Priorities
Priorities 1. Transform British Gas 2. Sharpen up the organisation and reduce costs 3. Reduce risk through increased integration 4. Build on our growth platforms 15
Slide 16: Transform British Gas: Pricing position
Transform British Gas: Pricing position Led customer prices down Enhanced system capabilities • two price reductions • rapid price movements • lowest online dual-fuel tariff • regional pricing • Essentials tariff for vulnerable customers • launched tracker product Pricing movements (%) % increase in
Slide 17: Transform British Gas: Customer service
Transform British Gas: Customer service • Service quality is improving • Aim to return to among the best in the industry • Launched www.britishgas.co.uk Service measures Improvement Call answering time 48% Email correspondence handling time 71% Customer hand-offs 41% Energywatch complaints (April to
Slide 18: Transform British Gas: Operating cost
Transform British Gas: Operating cost • Prioritised service over cost in the short term • Full savings will be delivered in 2008 British Gas Residential operating expense 1,100 1,000 900 800 £m 700 600 500 400 300 2004 2005 2006 2007 18
Slide 19: Transform British Gas: Customer growth
Transform British Gas: Customer growth • Steady customer gains from April low point • Sales levels 15% above last year • Churn fallen sharply Total customer account numbers (m) Average weekly sales (000) and Gas churn (%) 16.0 Average weekly sales 6-week rolling churn 80 18% 15.9 60 16% 40 14% 15.8
Slide 20: Sharpen the organisation and reduce costs
Sharpen the organisation and reduce costs: • Restructuring BGR into more • Put in place systematic quarterly manageable P&Ls Business Unit cost reviews • Full people skills review reduced • Removed 1,000 roles in H1 senior team by a third • Additional 850 roles to go in H2 • Implemented three-year p
Slide 21: Reduce risk through increased integration: New sources of gas
Reduce risk through increased integration: New sources of gas • Aim to cover 50% of open retail load from assets and contracts • Continuing to build upstream skills base • 12 exploration blocks in UK, Norway, Egypt, Trinidad, Nigeria • Acquired additional LNG import capacity at Isle of Grain • Total
Slide 22: Reduce risk through increased integration: Power generation new build
Reduce risk through increased integration: Power generation new build Wind farm CCGT • Adding 1,100MW to current 4,200MW fleet Braes of Doune • Low carbon intensity generation • £120m invested in H1 2007 Lynn and Inner Dowsing • further £500m committed • 800MW IGCC viability study underway Langage 2
Slide 23: Build on our growth platforms: British Gas Business
Build on our growth platforms: British Gas Business Customer numbers - tariff and contract (000) • Exceptionally strong first half 1000 • Growing customer base 800 • Margins and profit up 600 Contract Contract • Rolled out differentiated service model 400 • Continued strong renewals 200 Tariff Tarif
Slide 24: Build on our growth platforms: British Gas Services
Build on our growth platforms: British Gas Services Customer numbers (m) • Record first half operating profit 8 • Transformed customer service 6 Secondary Secondary • 80% improvement in speed to answer 4 • 70% fewer broken promises Central Heating Central Heating 2 • Growth across product portfolio
Slide 25: Build on our growth platforms: North America
Build on our growth platforms: North America • Ongoing revenue and profit growth • Reorganised along business lines • Commercial energy supply moving to breakeven • Texas market increasingly competitive • Strong profit growth in wholesale energy 25
Slide 26: Build on our growth platforms: British Gas New Energy
Build on our growth platforms: British Gas New Energy • Launched new business unit in March • Well positioned with lowest intensity carbon footprint • Energy Savers Report responses provide unique knowledge • 150 staff in training to offer Energy Performance Certificates • Medium term more material
Slide 27: Summary
Summary • First half earnings provide a platform for growth • Full year earnings in line with expectations • BGR margins returning to more sustainable levels • Continued focus on our priorities • Transform British Gas • Sharpen up the organisation and reduce costs • Reduce risk through increased int
Slide 28: centrica
centrica