Slide 1: Preliminary Results for the year ended 31 December 2005
Centrica plc Preliminary Results For the year ended 31 December 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
Chairman Roger Carr
Slide 4: Specific areas we have addressed
Specific areas we have addressed • Rigorous cost reduction • Proactive marketing • Positive price management • Building growth • Financial discipline • Improved strategic focus
Slide 5: Chairman
Chairman Roger Carr
Slide 6: Group Finance Director
Group Finance Director Phil Bentley
Slide 7: Financial highlights
Financial highlights Year ended 31 December 2005 ∆ Turnover (£m) 13,448 18% Operating profit (£m) 1,513 11% Earnings (£m) 661 (4%) Earnings per share* (p) 18.2 1% Net cash inflow** (£m) 1,131 (2%) Total dividend per share 10.5p 22% Above figures include JVs & associates stated net of interest & taxa
Slide 8: Operating Profit Analysis
Operating Profit Analysis Year ended 31 December, £m 2005 2004^ ∆£m ∆% British Gas Residential Energy 90 242 (152 ) (63% ) Centrica Energy 903 773 130 17% British Gas Business 77 68 9 13% Centrica Storage 154 69 85 123% British Gas Services 111 72 39 54% North America 185 132 53 40% Europe & Other (
Slide 9: British Gas Residential Energy
British Gas Residential Energy Operating profit*: causal track 400 £m 242 (824) 200 726 (61) (107) 138 90 (24) 0 -200 -400 -600 2004^ Commodity & Selling prices Customer Weather / EEC Opex 2005 transportation numbers Consumption * Including JVs & associates stated net of interest & taxation, before
Slide 10: Centrica Energy
Centrica Energy Operating profit*: causal track 157 (136) 1000 £m 25 903 316 800 773 (232) 600 400 200 0 2004^ Morecambe Morecambe Other Gas / oil I&W Accord 2005 volume selling price * Including JVs & associates stated net of interest & taxation, before exceptional items & certain re-measurements ^
Slide 11: Growth businesses
Growth businesses Operating profit*: causal track 600 £m 53 (14) 518 500 85 9 400 39 346 300 200 100 0 2004^ British Gas British Gas Centrica Storage North America Europe 2005 Services Business * Continuing businesses including JVs & associates stated net of interest & taxation, before exceptional i
Slide 12: Tax
Tax • IFRS and earnings mix has made tax increasingly complex • Underlying CT rate reflects higher tax rates in parts of the group • PRT peaks in 2006 500 400 300 £m 200 PRT Profile 100 0 2004 2005 2006 2007 2008 • Gas production corporation tax now 50% ¾ Restructure of certain upstream operations c
Slide 13: Debt & interest
Debt & interest Interest 2005, £m Debt charge Cash debt 232 27 Finance leases 828 97 Abandonment/Other - (10) Net debt 1,060 Other items considered debt: Pension deficit 571 - Operating leases 425 - 2,056 Non-recourse debt 532 31 Total 145
Slide 14: Returns to shareholders
Returns to shareholders • 2005 dividend • Full year dividend 10.5p per share; up 22% on 2004 • Payout ratio 58% (2004: 43% on IFRS-adjusted basis) • Future dividend policy • Real growth per annum in dividend per share • Future interim DPS will be set as 30% of previous full year DPS • Share buybacks
Slide 15: Summary & outlook
Summary & outlook • Financially a good year despite the difficult environment • Value of the integrated business model • Gas production profit will be ahead year on year • Material contribution to profit from growth businesses • Maintain commitment to single A credit rating • Strict financial discip
Slide 16: Chief Executive
Chief Executive Sir Roy Gardner
Slide 17: In 2005 we rose to the challenges and delivered another good year
In 2005 we rose to the challenges and delivered another good year Good financial result Reinforced focus on energy Delivered on 2005 agenda
Slide 18: Financially it was a good result
Financially it was a good result • Operating profit up 11% • Earnings per share up 1% • Demonstrates robustness of the business model • Material contribution from Storage, Services, North America Split of operating profit by business 1500 Business customers, Storage, Services, North America, Europe
Slide 19: The wholesale cost environment was very difficult for all suppliers
The wholesale cost environment was very difficult for all suppliers Gas wholesale cost Electricity wholesale cost (average, demand weighted) (average, demand weighted) 70 70 60 60 50 50 40 40 p/therm £/MWh 30 30 20 20 10 10 0 0 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '97 '98 '99 '00 '01 '02 '03 '04
Slide 20: British Gas worked hard to mitigate the impact of its 2005 retail price rise
British Gas worked hard to mitigate the impact of its 2005 retail price rise • Increased sales strength • Product innovation • Stronger marketing • Response to competitor activity ¾ Record sales levels ¾ Lower withdrawal notifications ¾ Electricity growth in the second half ¾ Net losses in gas turni
Slide 21: We made progress on systems implementation & cost reduction
We made progress on systems implementation & cost reduction • Billing system implementation began to time • 2m customer accounts migrated: completion planned in H2 • Operating costs reduced by £138m • Review & redesign of end to end processes • Closing offices / offshoring work • Corporate and suppo
Slide 22: Upstream we are 1½ years into a 5 year investment programme
Upstream we are 1½ years into a 5 year investment programme Increase gas Increase power hedge in the UK hedge in the UK Support Source international proportion of businesses with renewables from appropriate level own generation of upstream assets
Slide 23: We are making progress
We are making progress Gas for the UK UK Power •Kerr McGee N.Sea assets •Coal-linked PPA •First gas from Horne & Wren •Humber Power •Exploration: UKCS / Nigeria •Tender for Langage •LNG: Isle of Grain / Canvey Canvey Isle of Grain Humber Power Renewables •Glens of Foudland Horne & Wren •Construction
Slide 24: Centrica Storage delivered an outstanding result
Centrica Storage delivered an outstanding result • 123% increase in operating profit to £154m • Improved operational performance • Near 100% reliability • Record daily delivery rate • Higher sales of space Easington • Sale of additional 30m therms of gas • Fully sold out 2006/7 SBUs • Working to res
Slide 25: Growth businesses are an important part of Centrica's strategy
Growth businesses are an important part of Centrica’s strategy British Gas British Gas North America Europe Business Services
Slide 26: British Gas Services had a very successful year
British Gas Services had a very successful year • Exceeded £1billion turnover • 54% increase in operating profit to £111m • 11% operating margin • Growth across the core product range • Significant growth opportunities • Retaining competitive advantage
Slide 27: It was a good year for our North American business
It was a good year for our North American business • 58% increase in turnover to over £3.5bn • 40% increase in operating profit to £185m • Increased customer numbers • Services and Business markets growing strongly • Clear strategy for growth Direct Energy office: Ontario Frontera Energy Centre
Slide 28: We have created a foundation for growth in Continental Europe
We have created a foundation for growth in Continental Europe Growing our position Signs of positive change • Oxxio Holland • SPE stake • Market fully open – switching taking place • Healthy generation market • Trading gas & power • Network unbundling likely • Other opportunities exist Belgium • Fla
Slide 29: A clear agenda for the first half of 2006
A clear agenda for the first half of 2006 • Reduce costs across the Group • Mitigate impact of the price rise • Maintain product innovation & marketing strength • Complete systems implementation • Continue to develop growth businesses • Progress upstream strategy • Maintain financial disciplines ¾ S
Slide 30: centrica
centrica A