Slide 1: Roy Gardner, Mark Clare
Roy Gardner CHIEF EXECUTIVE Mark Clare FINANCE DIRECTOR
Slide 2: Results in Brief
Results in Brief Half Year Half Year 2000 1999 Sales £4,707m £3,887m Group operating profit £390m £255m Earnings* £364m £243m Operating cash flow £484m £901m Dividend per share 1.1p 1p Employees (FTE) 26,822 16,396 * Figures are pre-exceptionals and amortisation of goodwill
Slide 3: 2000 Half Year Achievements
2000 Half Year Achievements • Strong financial performance • Improvements in customer service • Growth in energy market share • Telecoms partnerships • AA integration • Acquisition of Direct Energy • Implementation of e-commerce strategy
Slide 4: Customer Service
Customer Service • British Gas satisfaction levels improved • Reduction in regulated complaints • Investment in customer service training • Other business initiatives – Meter reading – Recruitment of patrols & engineers
Slide 5: Number of customers (millions)
Number of customers (millions) M ay -9 0 5 10 15 20 Au 6 g- 96 N ov -9 Fe 6 b- 97 M ay -9 Au 7 g- 97 N ov -9 7 Energy Supply Fe b- 98 M ay -9 Gas customers Au 8 g- 98 N ov -9 Fe 8 b- 99 M ay -9 Au 9 g- 99 N ov -9 Fe 9 b- Total gas & electricity customers on supply 00 M ay -0 Au 0 g- 00 Electricity o
Slide 6: Energy Management
Energy Management • Oil price impact on UK gas price • Morecambe production remains high • Expect Take or Pay bank to reduce by 1bn therms • Pool prices & NETA • Continue to explore generation options • European trading developments
Slide 7: Home Services
Home Services • Continued improvements in financial performance • Growth in gas service cover contracts • Held share in central heating installation & improved margins • Strong growth in plumbing and kitchen appliance cover contracts • Combined plumbing & drains cover trial • Preferred home security
Slide 8: Road Services
Road Services • Improved financial performance • Implementing integration plans • Top ranked in JD Power Survey 2000 • Improved membership levels • New technology trials
Slide 9: Financial Services
Financial Services • Insurance market developments • Credit product sales - £1bn customer receivables under management • Loans & motor finance exceeding expectations • Integrated car buying service • Future product plans
Slide 10: E-Commerce
E-Commerce • Progress so far – Goldfish guide - Goldfish credit card – New British Gas site - AA rapid quote facility • Launches planned – Energy billing - New AA site – Telecoms and ISP • Longer term aim – leading site for the motorist & traveller – leading site for home and personal finance • Cont
Slide 11: Telecoms
Telecoms • Product launch during September 2000 • Partners: Vodafone, Torch, Cable & Wireless • Package includes: – Home phone - discounts to BT standard rates: • 33% local calls • 50% national calls • Up to 75% international calls – Choice of mobile phones and contracts to suit user – ISP offering
Slide 12: Direct Energy
Direct Energy • Acquired August 2000 • 820,000 gas customers in Canada • 30% share of Ontario residential market • Ontario power market open 2001 • Energy America - 450,000 gas customers (27.5% equity interest)
Slide 13: North America
North America Toronto Calgary US Potential Market Energy America marketing Dual fuel open Gas or power open
Slide 14: Business Outlook
Business Outlook • Continuing growth in Energy Supply • Telecom launch • Financial Services • Direct Energy & North America • Other international opportunities • Power Stations • Investment – in people – financial
Slide 15: Results in Brief
Results in Brief Half Year Half Year 2000 1999 Sales £4,707m £3,887m Group operating profit £390m £255m Earnings* £364m £243m Operating cash flow £484m £901m Dividend per share 1.1p 1p Employees (FTE) 26,822 16,396 * Figures are pre-exceptionals and amortisation of goodwill
Slide 16: Gas Volumes, Pricing & Cost
Gas Volumes, Pricing & Cost 2000 1999 Residential Gas sales Volume (m therms) 5,240 5,510 Price (p/th) 43.7 44.3 Business Gas sales Volume (m therms) 2,959 3,244 Price (p/th) 19.4 18.5 Equity production (m therms) 2,348 2,125 Gas costs (p/th) 15.6 16.2 Gas Year Prices (Oct-Sept) 2000/01 99/2000 Exte
Slide 17: Net Nominal Exposure to Oil
Net Nominal Exposure to Oil (bn therms) 4.5 Exposure (bn therms) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 00/01 01/02 02/03 03/04 Gas supply year (Oct-Sept) For every 1$/bbl change in the oil price, the pre-tax impact is estimated at 0.5p/therm exposed to oil
Slide 18: Turnover
Turnover £m 2000 1999 Residential @ SNT 2,369 2,529 Business Gas 574 602 Weather (48) (55) Total Gas 2,895 3,076 Electricity 335 45 Gas production 32 13 Accord 828 405 Total Energy Supply 4,090 3,539 Home Services 303 282 Road Services 226 - Financial Services 60 - Other Activities 28 1 Total contin
Slide 19: Group Operating Profit Analysis
Group Operating Profit Analysis (pre exceptionals & amortisation of goodwill) 1999 £m 2000 restated Residential @ SNT 273 218 Business Gas 14 (7) Weather (17) (18) Total Gas 270 193 Electricity (45) (59) Gas production 171 164 Accord 3 9 Total Energy Supply 399 307 Home Services 9 8 Road Services 18
Slide 20: Operating Costs
Operating Costs (pre exceptionals & amortisation of goodwill) £m 2000 1999 Established business Energy Supply Gas 316 365 Electricity 36 5 Home Services 119 106 Road Services 105 - Financial Services 49 1 Other 17 - 642 477 Investment Electricity 50 60 Telecoms 10 - Other 21 10 81 70 Total continuin
Slide 21: Earnings
Earnings £m 2000 1999 Underlying Group operating profit 418 304 Interest (payable) / receivable (17) 7 Taxation (37) (43) Underlying earnings 364 268 Discontinued operations - (25) Goodwill amortisation (25) - Exceptionals (3) (66) Earnings 336 177
Slide 22: Exceptionals & Goodwill amortisation
Exceptionals & Goodwill amortisation £m 2000 1999 Restructuring/integration costs Energy Supply - 18 Retail (discontinued) - 42 AA integration 3 - Year 2000 costs - 6 Goodwill amortisation Road Services 18 - Financial Services 7 - Total 28 66
Slide 23: Cash Flow before Financing
Cash Flow before Financing £m 2000 1999 Operating performance 616 435 Working capital (132) 466 Operating cash flow 484 901 Capital expenditure (55) (57) Taxation, interest & dividends rec’d (34) 6 Sub-total 395 850 Exceptional payments (43) (46) Dividends (60) (530) Total 292 274
Slide 24: Financial Outlook
Financial Outlook • First half/second half split • Q4 gas costs impact • Morecambe tax • Revenue investment – Telecoms launch – E-commerce investment – Financial Services • Direct Energy acquisition
Slide 25: Business Outlook
Business Outlook • Continuing growth in Energy Supply • Telecom launch • Financial Services • Direct Energy & North America • Other international opportunities • Power Stations • Investment – in people – financial