Slide 1: Preliminary Results
Preliminary Results For the year ended 31 December 2010 centrica
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: Sir Roger Carr, Chairman
Sir Roger Carr Chairman centrica
Slide 4: Nick Luff, Group Finance Director
Nick Luff Group Finance Director centrica
Slide 5: Commodity prices and spreads
Commodity prices and spreads 120 100 Oil ($/boe) 80 UK gas (p/th) 60 UK power (£/MWh) 40 20 US gas (p/th) 0 2009 2010 2011 30 25 Clean Dark Spread (£/MWh) 20 15 Clean Spark Spread (£/MWh) 10 5 0 2009 2010 2011 As at 23 February 2011
Slide 6: Financial headlines
Financial headlines Year ended 31 December 2010 2009 CONTINUING OPERATIONS: Revenue (£m) 22,423 21,963 Adjusted operating profit (£m) 2,390 1,857 Net interest expense (£m) 265 179 Effective tax rate 37% 33% GROUP RESULT: Earnings (£m) 1,297 1,111 Earnings per share (p) 25.2 21.7 Full year dividend p
Slide 7: Operating profit analysis
Operating profit analysis Year ended 31 December (£m) 2010 2009 Downstream UK 1,216 1,011 Upstream UK 771 525 Storage UK 169 168 North America 234 153 ADJUSTED OPERATING PROFIT 2,390 1,857 Share of JV / associates’ interest and taxation (78) (11) Other - (5) Depreciation of FV uplifts to property, p
Slide 8: Operating profit analysis – Downstream UK
Operating profit analysis – Downstream UK Year ended 31 December (£m) 2010 2009 Downstream UK 1,216 1,011 Upstream UK 771 525 Storage UK 169 168 North America 234 153 ADJUSTED OPERATING PROFIT 2,390 1,857 Above figures include share of joint ventures and associates stated before interest and taxatio
Slide 9: Downstream UK: operating profit & key drivers
Downstream UK: operating profit & key drivers Residential energy revenue (£m) and margin (%) Year ended Full year H2 31 December (£m) 2010 2009 8,359 Residential energy 742 598 7,911 Residential services 241 230 3,876 3,485 Business 233 183 4.1% DOWNSTREAM UK 1,216 1,011 7.6% 8.9% 8.6% 2009 2010 200
Slide 10: Operating profit analysis – Upstream UK
Operating profit analysis – Upstream UK Year ended 31 December (£m) 2010 2009 Downstream UK 1,216 1,011 Upstream UK 771 525 Storage UK 169 168 North America 234 153 ADJUSTED OPERATING PROFIT 2,390 1,857 Above figures include share of joint ventures and associates stated before interest and taxation,
Slide 11: Upstream UK: operating profit & key drivers
Upstream UK: operating profit & key drivers Gas & oil production volumes Year ended Gas Liquids 31 December (£m) 2010 2009 (mmth) (mmboe) Upstream gas and oil 581 444 2,533 Power generation 226 147 I&C (36) (93) 1,708 Energy trading - 27 11.1 UPSTREAM UK 771 525 8.8 2009 2010 2009 2010 Average sales
Slide 12: Operating profit analysis – Storage UK
Operating profit analysis – Storage UK Year ended 31 December (£m) 2010 2009 Downstream UK 1,216 1,011 Upstream UK 771 525 Storage UK 169 168 North America 234 153 ADJUSTED OPERATING PROFIT 2,390 1,857 Above figures include share of joint ventures and associates stated before interest and taxation,
Slide 13: Operating profit analysis – North America
Operating profit analysis – North America Year ended 31 December (£m) 2010 2009 Downstream UK 1,216 1,011 Upstream UK 771 525 Storage UK 169 168 North America 234 153 ADJUSTED OPERATING PROFIT 2,390 1,857 Above figures include share of joint ventures and associates stated before interest and taxatio
Slide 14: North America: operating profit & key drivers
North America: operating profit & key drivers Year ended Residential energy 31 December (£m) 2010 2009 Revenue (£m) Underlying Residential energy 177 94 margin (%)* underlying performance 177 155 one-off charges - (61) 2,644 2,502 7.1% Business energy 88 34 5.9% Services 15 18 Upstream & Wholesale (
Slide 15: Cash flow
Cash flow Year ended 31 December (£m) 2010 2009 OPENING NET DEBT (3,136) (511) EBITDA 3,188 2,559 Working capital movements (252) 419 Margin calls 467 (79) Interest and tax (819) (700) Net capex (1,669) (4,011) Dividends (668) (635) Pension deficit payments (308) (206) FX / Other (115) 28 CLOSING NE
Slide 16: Capital and acquisition expenditure
Capital and acquisition expenditure Year ended 31 December (£m) 2010 2009 2011e** UK upstream gas 475 333 700 UK upstream power 233 177 450 North America 87 103 100 UK gas storage 63 55 50 Europe 4 121 - British Gas 150 112 150 Other 35 30 50 Total pre-acquisitions 1,047 931 1,500 Acquisitions / dis
Slide 17: Balance sheet
Balance sheet • Strong balance sheet position • £475m bond buy-back completed, improving debt maturity profile • £308m additional contributions to pension schemes in 2010 31 December (£m) 2010 2009 1 Capital employed 9,575 9,306 2 Mark to market / tax / other (205) (1,350) Pensions (239) (565) Net d
Slide 18: Exceptional items and certain re-measurements
Exceptional items and certain re-measurements Year ended 31 December (£m) 2010 Provision for onerous gas procurement contract (35) Impairment of North American gas assets (67) Provision for North American wind PPA (67) Impairment of UK power generation assets (68) UK contract re-negotiation and rest
Slide 19: Summary and outlook
Summary and outlook 2010 • Strong financial and operational performance – good progress downstream and upstream – EPS up 16% to 25.2p • Good downstream performance; lower profits in second half due to rising wholesale energy prices • Higher upstream volumes and excellent drilling success • Significa
Slide 20: Sam Laidlaw, Chief Executive
Sam Laidlaw Chief Executive centrica
Slide 21: Performance overview
Performance overview Strong operational and financial result EPS 16% Downstream UK growth underpinned by Op profit 20% customer service and competitive pricing Enlarged Upstream UK business; strong Op profit 47% production and drilling success North American performance Op profit 9% significantly im
Slide 22: Our Strategic Priorities
Our Strategic Priorities 1 Grow British Gas . . . leading the transition to low carbon homes and businesses 2 Deliver value from our growing upstream business . . . securing sustainable energy for our customers 3 Build an integrated North American business . . . with leading positions in deregulated
Slide 23: Grow British Gas
Grow British Gas • Strong residential energy performance % Customer Satisfaction 30 – market leading price reduction in 25 2010 2009 2007 February 2010 20 – further NPS improvement 15 – retained first place in Morgan 10 5 Stanley Energy Supply survey 0 • 121k increase in joint energy -5 Source: Morg
Slide 24: Grow British Gas – British Gas Services
Grow British Gas British Gas Services • Continued growth in services customer accounts • Service delivery and value – over 6m customers accounts now insurance based – agreement with engineers to improve service flexibility • Record breakdown call outs during exceptionally cold weather Domestic Insta
Slide 25: Grow British Gas – British Gas Business
Grow British Gas £m BGB Operating profit British Gas Business 250 • Continued growth in Business energy 200 25% CAGR – profitability up 25% on average over 150 past five years – success of volume-to-value 100 segmental growth strategy 50 • SME customer retention remains high 0 2005 2006 2007 2008 20
Slide 26: Grow British Gas – New Energy
Grow British Gas New Energy • Green deal ‘go early’ strategy • 64 million tonnes of CO2 reduction delivered under CERT to date, worth £1.1bn • Over 250,000 smart meters installed • Acquisitions to build capabilities – new technologies (Cool Planet) – specialist insulation (Hillserve, ECL) – home ene
Slide 27: Deliver value from our growing upstream business
Deliver value from our growing upstream business Gas and oil production • Successful integration of Venture – capabilities transformed • Total production volumes up 43% • Production replacement of 163% – excellent drilling success; Trinidad and Statfjord acquisitions • 23 LNG cargoes delivered in 20
Slide 28: Deliver value from our growing upstream business
Deliver value from our growing upstream business Production (bcfe) 350 300 250 In-flight / Core Future exploration prospects 200 Development options 150 Existing production - others 100 50 Morecambe (existing production) 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 In Flight / Core – key proj
Slide 29: Deliver value from our growing upstream business – Power generation
Deliver value from our growing upstream business Power generation • Continued strong CCGT and wind availability – Langage power station in full commercial operation – strong optimisation performance • British Energy well positioned to take advantage of increase in power prices – life extensions for
Slide 30: Deliver value from our growing upstream business – Storage
Deliver value from our growing upstream business Storage BCF Historical Analysis (2005-2011) 140 • Excellent operational performance at Rough 120 – record demand in Q1 2010 80 – record injection season – unusually high levels of demand 60 in Q4 2010 40 5yr range (2005-2009) • Narrowing of summer/win
Slide 31: Build an integrated North American business – Residential
Build an integrated North American business Residential energy supply • Strong downstream performance • Operational improvements – higher customer retention in Texas – reduction in bad debt – Texas prepaid offering launched – operating margin improved to over 7% • Successful entry into new territori
Slide 32: Build an integrated North American business – Business energy
Build an integrated North American business Business energy supply TWh Power volumes 50 • Very strong performance in 2010 40 • Electricity volumes up 19% 30 • 3rd largest C&I supplier in North America 20 • Continued focus on: 10 – growing volume in most attractive 0 2009 2010 customer segments – cus
Slide 33: Build an integrated North American business – Services and Upstream
Build an integrated North American business Services • Clockwork integration progressing well – materially enhances scale of the business – 1m on-demand customers per annum – robust platform for growth through established franchise model Clockwork Upstream • Continued low gas and power price environ
Slide 34: Drive superior financial returns
Drive superior financial returns 2010 summary • Substantial profit growth in 2010 – operating profit up 29% – EPS up 16% • Dividend up 12% Outlook • Competitive market conditions in UK downstream energy supply • Positioned for growth across much of the rest of the Group • Well placed for the future