Centrica Plc · LSE:CNA
Centrica — Debt Investor Presentation (October 2008)
25 slides from Centrica's debt investor presentation, October 2008
Slide 1: Centrica plc Presentation to bond investors
Centrica plc Presentation to bond investors October 2008 1
Slide 2: Disclaimers
Disclaimers Forward-looking statements: This presentation contains certain “forward-looking statements" with respect to Centrica’s financial condition, results of operations and business and certain of Centrica’s plans and objectives with respect to these items. By their very nature forward-looking
Slide 3: Agenda
Agenda • Centrica overview • Key priorities • Risk profile • M&A / investment programme • SPE • British Energy • Financial profile and position 3
Slide 4: Centrica overview
Centrica overview 4
Slide 5: Centrica overview: our businesses
Centrica overview: our businesses • Centrica was demerged from British Gas in February 1997 but retains the British Gas brand in the UK • Its core businesses are: – British Gas Residential: the biggest energy supplier in Britain’s domestic market – Centrica Energy: sourcing gas and electricity from
Slide 6: Centrica overview: key financial facts
Centrica overview: key financial facts • Market capitalisation £11.1 bn / €14.2 bn (as at 15 October 2008) • 24th in the FTSE 100 (as at 15 October 2008) • H1 2008 financial 6 months to 30 June, £m 2008 2007 headlines: Revenue 10,032 8,570 EBITDA 1,304 1,503 Operating Profit 992 1,226 Earnings 416 7
Slide 7: Centrica Overview: our brands
Centrica Overview: our brands 7
Slide 8: Centrica Overview: customer base
Centrica Overview: customer base We have over 30 million customer relationships Customer relationships (30 June 2008) 2007 Full Year data North UK Europe Total America millions North UK Europe Total Total Annual Power (TWh) 32 40 14 86 America Demand Gas (BCF) 335 1,057 180 1,545 Energy 3.2 16.7 2.3
Slide 9: Centrica overview: profit and value diversity
Centrica overview: profit and value diversity Operating Profit 2007 Year ended: Analysts’ consensus Enterprise £m 31 December Value £15.3bn – sum of the parts British Gas Residential 571 valuation British Gas Gas Production Residential 15% Centrica Energy 663 23% British Gas Business 120 Power Gener
Slide 10: Key priorities
Key priorities • Transform British Gas • Sharpen the organisation and reduce costs • Reduce risk through increased integration • Build on our growth platforms 10
Slide 11: Risk Profile
Risk Profile 11
Slide 12: Risk profile: UK gas price exposure
Risk profile: UK gas price exposure Gas price movements 70 60 50 40 (p) 30 20 10 0 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Retail Wholesale forward supply year 12
Slide 13: Risk profile: customer base
Risk profile: customer base Total Energy Accounts 16.5 16.0 m 15.5 15.0 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Total accounts 13
Slide 14: Risk profile: increasing integration
Risk profile: increasing integration % Gas hedge ratio 40 Wind Drax contract Acquisitions 30 Development North Sea 20 Morecambe Bay 10 0 2006 2007 2008 2009 2010 2011 Gas hedge ratio: Proportion of UK floating gas demand covered by own production. Floating gas demand includes non-fixed price BGR and
Slide 15: Risk profile: UK generation fuel mix
Risk profile: UK generation fuel mix Centrica UK 2% 8% Gas 15% 36% Coal Renewable 2% Nuclear Other 39% 98% Source: UK Average – DTI; Centrica – Centrica plc 15
Slide 16: M&A / investment programme
M&A / investment programme 2008 investment programme c. £1.6bn* Upstream Gas Power Generation Acquisitions Assets Assets Heimdal ($375m) Langage (£401m) Strategic Energy ($300m) Rockyview (C$113m) Lynn & Inner Dowsing (£323m) Transglobe (C$57m) Additional opportunities • 25 % British Energy • Wind f
Slide 17: SPE
SPE • Exercised pre-emption rights on SPE • Will have 51% controlling interest • 1.5m customers and 1.6GW • SPE will benefit from cheaper power through PAX Electrica 2 Nuclear • Increases Centrica’s options in 17% Europe Wind 4% Hydro 5% Gas / Diesel 74% 17
Slide 18: British Energy
British Energy • Memorandum of Understanding to acquire 25% interest in British Energy ("BE") at a cost of c.£3.2bn • This transaction would deliver the following : – EdF retains control of BE with responsibility for running all BE power stations – Centrica right to offtake at least 25% of uncontrac
Slide 19: Financial profile and position
Financial profile and position 19
Slide 20: Credit features: financial profile
Credit features: financial profile • Our operational risk demands a conservative financial risk profile with strong liquidity • Centrica is committed to “A” range long term credit rating Moody’s : A3 (stable) / P-2 Standard & Poor’s : A (negative) / A-1 “Centrica’s liquidity is strong, underpinned b
Slide 21: Credit features: financial position
Credit features: financial position consisting of: • Strong cash flow generation – EBITDA of £2.3bn and £2.5bn in 12 months to 30 June 2008 and 2007 respectively. • Low net debt relative to market capitalisation – £0.3bn and £0.8bn at 30 June 2008 and 31 December 2007 respectively • Strong liquidity
Slide 22: Credit features: strong cash flow generation
Credit features: strong cash flow generation Twelve months ended 30 June, £bn 2008 2007 Operating profit* 1.7 2.0 Add back: Amortisation of intangible assets 0.1 0.1 Depreciation 0.5 0.5 EBITDA 2.3 2.5 Working capital - non margin call (0.2) 0.4 Working capital - margin call 1.2 (0.2) Interest & tax
Slide 23: Credit features: low net debt relative to market capitalisation
Credit features: low net debt relative to market capitalisation £m 30 June 2008 Bonds (public issues and private placements) 2008 Euro Bond – issued Jan ‘07 (61) 2008 Euro FRN – issued Sept ’06 (80) 2009 Sterling bond – issued Mar ’06 (252) 2012 Sterling bond – issued Nov ’01 (404) 2013 Yen bond – i
Slide 24: Summary
Summary • Leading positions in UK gas and electricity supply • Strong earnings and cash flow contribution from upstream operations • Lowering of business risk through increasing vertical hedge • Growing contribution from diversification • Strong performance despite unprecedented volatility in wholes
Slide 25: Contact details
Contact details • Nick Luff Group Finance Director +44 (0) 1753 494 949 • Paul Hedley Director of Treasury and Risk +44 (0) 1753 492 222 • Tony Kendall Group Treasurer +44 (0) 1753 494 167 • Kieran McKinney Director of Investor Relations +44 (0) 1753 494 357 • Katherine Horrell Assistant Group Treas