Slide 1: Centrica plc Interim Results
Centrica plc Interim Results For the six months ended 30 June 2005
Slide 2: Disclaimers
Disclaimers This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Centrica shares. This presentation contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Centrica
Slide 3: Chairman: Roger Carr
Chairman Roger Carr
Slide 4: Group Finance Director: Phil Bentley
Group Finance Director Phil Bentley
Slide 5: IFRS: key impacts on these results
IFRS: key impacts on these results • Accord turnover reported net • PRT treated as a tax & basis of calculation changed • Pensions brought on balance sheet • Humber & Spalding tolling arrangements treated as finance leases • IAS 39 : certain commodity contracts marked to market • IAS 32 : Consumers’
Slide 6: Financial highlights
Financial highlights Six months ended 30 June 2005 ∆ Turnover* (£m) 6,778 16% Operating profit* (£m) 967 19% Earnings* (£m) 445 6% Earnings per share (p) 11.9 10% Net cash inflow* (£m) 878 33% Interim dividend per share 3.1p 24% Above figures include JVs & associates stated net of interest & taxatio
Slide 7: Operating Profit Analysis
Operating Profit Analysis Six months ended 30 June, £m 2005 2004^ ∆ British Gas Residential Energy 165 217 (24% ) British Gas Business 55 46 20% Centrica Energy 543 420 29% Centrica Storage 57 26 119% UK Energy 820 709 16% British Gas Home Services 59 41 44% Onetel (2 ) 0 nm North America 87 63 38%
Slide 8: British Gas Residential Energy
British Gas Residential Energy Operating profit*: causal track 600 374 (341) £m 500 400 300 (24) 217 (53) 200 (31) 23 165 100 0 H1 2004^ Selling prices Commodity & EEC Customer Weather/ Investment/ H1 2005 transportation numbers consumption Opex/ Other * Including JVs & associates stated net of inte
Slide 9: Centrica Energy
Centrica Energy Operating profit*: causal track 600 172 (82) 65 (45) £m 13 543 500 420 400 300 200 100 0 H1 2004^ Morecambe Morecambe Other gas/ oil I&W Accord H1 2005 selling price volume production * Including JVs & associates stated net of interest & taxation, before exceptional items & certain r
Slide 10: Other businesses
Other businesses Operating profit*: causal track 24 259 250 31 (2) £m 9 200 18 179 150 100 50 0 H1 2004^ Home Services British Gas Centrica Onetel North America H1 2005 Business Storage * Including JVs & associates stated net of interest & taxation, before exceptional items & certain re-measurements
Slide 11: Commitment to increasing returns to shareholders
Commitment to increasing returns to shareholders • £480m share buybacks completed • Share buyback programme extended by £500m to £1bn • 24% increase in ordinary interim dividend • Full year dividend in line with previous commitment • Intention to grow future dividends per share in real terms
Slide 12: Summary of the financials
Summary of the financials • Strong H1: Challenges in H2 • Lower full year operating margins in British Gas residential energy • Full year EPS towards the lower end of expectations • Higher proportion of upstream profits in H2 • Cash generation remains strong • Maintain commitment to single A credit
Slide 13: Chief Executive: Sir Roy Gardner
Chief Executive Sir Roy Gardner
Slide 14: Agenda for 2005
Agenda for 2005 • Leveraging the value of scale • Getting back to growth in British Gas • Reducing the cost base • Growing Home Services • Investing in value-enhancing upstream assets • Managing for growth in other business areas
Slide 15: Leveraging the value of scale
Leveraging the value of scale Growth in customer relationships Benefits of scale: • Shared cost base 30 • Market strength • Cross-selling opportunity 20 (Millions) Our strategy 10 • Focus on energy & related services 0 H1 02 FY 02 H1 03 FY 03 H1 04 FY 04 H1 05 • Defend UK position BGR - energy Home
Slide 16: Getting back to growth: trends have been positive
Getting back to growth: trends have been positive and electricity has now got back to growth 35,000 Trend* of gains & losses • Sales at record levels • Electricity back to growth • Gas churn slowing Average customers per week 25,000 • Latest price increase will impact H2 • New propositions • More ac
Slide 17: Freeze your energy prices until 2010
Freeze your energy prices until 2010 Sign up to British Gas Price Protection Funny how good news d always make the headli a ee be oe Freeze your energy prices. wore P F house.co,uk/norises ——_Deiing the right thing -_ a vine none wing
Slide 18: Reducing the cost base: initiatives will deliver benefits from 2006
Reducing the cost base: cost reduction initiatives in progress will deliver benefits from 2006 • Process re-engineering • Offshoring • Office closures • Billing system pilot • Engineer deployment system
Slide 19: British Gas
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Slide 20: Reducing the cost base: initiatives will deliver benefits from 2006
Reducing the cost base: cost reduction initiatives in progress will deliver benefits from 2006 • Process re-engineering • Offshoring • Office closures • Billing system pilot • Engineer deployment system
Slide 21: Growing Home Services: positive trends continue
Growing Home Services: positive trends continue • Growth in all product lines • Profit increase demonstrates scalability • Significant margin improvement to 12% • Continued growth in engineer numbers & efficiency • Link between home services and energy remains strong Product Relationships 6 Home Ele
Slide 22: Value-enhancing upstream investment: infrastructure projects are progressing
Value-enhancing upstream investment: infrastructure projects are progressing Langeled: 27 BCM capacity by end-2006 Connection to Ormen Lange gas field end-2007 Onshore link built at Easington BBL: 16 BCM capacity by end-2006 On track IUK: 8 BCM expansion by end-2005 Milford Haven +8 BCM expansion by
Slide 23: Value-enhancing upstream investment: good progress in a difficult environment
Value-enhancing upstream investment: and we have made good progress in a difficult environment Gas for the UK • First gas delivered from Horne & Wren 0.6 BCM • Kerr McGee North Sea assets 5 BCM (equivalent) • Participation in North Sea exploration wells • LNG capacity acquired at Isle of Grain 3.4 B
Slide 24: Growth in other business areas: Northern Europe
Growth in other business areas: Northern Europe is of key strategic interest for us NORWEGIAN SUPPLY • Improving political climate CORRIDOR Emden/ Bunde • SPE acquisition with GdF • First foothold in Holland BBL RUSSIAN SUPPLY CORRIDOR • 1.4m customer accounts NETHERLANDS • Northern Europe / Benelux
Slide 25: Growth in other business areas: North America
Growth in other business areas: continued steady progress in North America Texas power • Strong organic growth • Reduced churn in incumbent areas • Price to Beat re-filings Canada energy • Reduced churn – customer numbers steady • Ontario re-opened but challenging • Slow progress in Alberta Home Ser
Slide 26: Outlook
Outlook • Financially difficult second half • Continued uncertainty on commodity prices • Managed pass-through of wholesale costs • H2 energy margins lower than 2004 • Vigorous focus on cost reduction continues • Customer retention a priority after the price increase • Continue to build & strengthen
Slide 27: centrica
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