Slide 1: Interim Results 1999
!" Interim Results 1999 Notes Email: IR@centrica.co.uk Phone: + 44 1753 758 114 Website: www.centrica.co.uk Fax: + 44 1753 758 472 0
Slide 2: Results in Brief
Results in Brief Half Year Half Year 1999 1998 Sales £3,887m £4,125m Operating profit pre-exceptionals £279m £114m Earnings pre-exceptionals £243m £88m Operating cash flow pre-exceptionals £901m £673m Dividend per share 1p - Employees (FTE) 16,396 15,353 Actions taken over the past two years are now
Slide 3: 1999 Half Year Achievements
1999 Half Year Achievements • Strong financial performance • Recommended offer for AA • Growth in electricity customers • Gas customer retention • Home service business growth • Retail closure • First interim dividend declared As well as strong financial performance, the offer for the AA was launche
Slide 4: Customer Satisfaction
Customer Satisfaction British Gas Trading Target = 70 - Best in class 80 75 70 65 60 55 50 Jun-96 Jun-97 Jun-98 Jun-99 Aug-96 Aug-97 Aug-98 Feb-96 Apr-96 Oct-96 Oct-97 Dec-96 Feb-97 Apr-97 Dec-97 Feb-98 Apr-98 Oct-98 Dec-98 Feb-99 Apr-99 We continue to be pleased with the level of customer satisfact
Slide 5: Gas Consumers Council
Gas Consumers Council Category A complaints Switching Trading Services 20,000 15,000 10,000 5,000 0 H1 H2 H1 H2 H1 H2 H1 1996 1996 1997 1997 1998 1998 1999 Category A complaints are those where the customer dealt with British Gas and the reply they received was not to their satisfaction Excluding co
Slide 6: Total Gas & Electricity Customers
Energy Supply Total Gas & Electricity Customers 20 Number of customers (millions) 19 18 17 16 May-97 May-98 May-99 Mar-97 Nov-97 Mar-98 Nov-98 Mar-99 Jan-98 Jan-99 Jul-97 Jul-98 Jul-99 Sep-97 Sep-98 The rate of loss of gas customers has decreased and market share is now 76%. On electricity, Centrica
Slide 7: Energy Supply
Energy Supply • Business market • Gas production • Take or pay bank • LP Gas development • Europe • Electricity sourcing • Regulation The I&C market benefited from lower gas and transportation costs - and was very close to break even. Morecambe production was up by 50%. This is the last year before
Slide 8: Home Services
Home Services New Product Growth – Maintenance Contracts Plumbing Cover Kitchen Appliance Cover 140000 35000 120000 30000 100000 25000 80000 20000 60000 1 5000 40000 1 0000 20000 5000 0 0 1 6-Ma y 30-Ma y 13-Jun 27-Jun 1 1 -J ul 25-J ul 16-May 30-May 11-Jul 25-Jul 1 3-J un 27-J un 8-Aug 8-A u g 22-A
Slide 9: Financial Services
Financial Services • Continued strong performance from credit card – Growth in cards in issue – Significant increase in receivable book • Goldfish telephone service • Good growth from home insurance – Levels of policy sales well ahead of 1998 – Change in partner to AXA • Rationalisation and new prod
Slide 10: AA Transaction Update
AA Transaction Update • Timetable for completion – SGM 16 September – Payment to eligible members by 15 October • Integration plans being developed If the AA deal proceeds, completion is expected around 24 September and payment to eligible members processed by 15 October. Integration teams covering
Slide 11: Retail
Retail • Losses reduced from £66m in 1996 to £31m in 1998 • Plan set for 1999 to break even • Competition restricted actions • Retail market/competition • Options reviewed • Announced 19 July, closed 28 August • Future channel strategy Although Centrica could see the benefit of a High Street presenc
Slide 12: Centrica - The Future
Centrica - The Future PRODUCT CUSTOMER PRODUCTION OPERATIONS MANAGEMENT INTERFACE CUSTOMER ENERGY RETAILING Energy Face to face Gas Equity management/ HOME Gas wholesale SERVICES • trading Energy APPLIANCE Telephone RETAILING ‘Home FINANCIAL • Service’ SERVICES Written Financial Downstream MOTORING
Slide 13: Results in Brief
Results in Brief Half Year Half Year 1999 1998 Sales £3,887m £4,125m Operating profit pre-exceptionals £279m £114m Earnings pre-exceptionals £243m £88m Operating cash flow pre-exceptionals £901m £673m Dividend per share 1p - Employees (FTE) 16,396 15,353 Both cashflow & earnings were up considerably
Slide 14: Gas Volumes, Pricing & Cost
Gas Volumes, Pricing & Cost 1999 1998 Domestic Gas sales Volume (m therms) 5,510 6,438 Price (p/therm) 44.3 44.6 Business Gas sales Volume (m therms) 3,244 3,215 Price (p/therm) 18.5 19.2 Equity production (m therms) 2,125 1,440 Gas costs (p/therm) 16.2 19.3 Domestic gas sales fell by 14% due to gas
Slide 15: Turnover
Turnover £m 1999 1998 Domestic @ SNT 2,700 3,151 Business Gas @ SNT 613 632 Weather (237) (262) Total Gas 3,076 3,521 Electricity 45 1 Gas production 13 2 Accord 405 276 Total Energy Supply 3,539 3,800 Services 282 245 Retail (discontinued) 65 80 Financial Services 1 - Total 3,887 4,125 Turnover fel
Slide 16: Operating Profit Analysis
Operating Profit Analysis (pre-exceptionals) £m 1999 1998 Domestic @ SNT 270 139 Business Gas @ SNT (4) (91) Weather (77) (59) Total Gas 189 (11) Electricity (59) (38) Gas production 164 168 Accord 9 14 Total Energy Supply 303 133 Services 8 3 Retail (discontinued) (25) (16) Financial Services (7) (
Slide 17: Operating Costs
Operating Costs (pre-exceptionals) £m 1999 1998 Established business Energy Supply Gas 365 333 Electricity 5 1 Services 106 93 Retail (discontinued) 39 45 Financial Services 1 2 516 474 New business Electricity 60 36 Other 10 4 70 40 Total 586 514 The established business cost base increased by £42m
Slide 18: Earnings
Earnings £m 1999 1998 Operating profit 279 114 Associates/joint ventures - (3) Interest receivable 7 17 Taxation (43) (40) Underlying performance 243 88 Exceptionals (66) (35) Earnings 177 53 Improvement in associates was due to better performance of Accuread and a reduction in losses from the Goldf
Slide 19: Exceptionals
Exceptionals £m 1999 1998 Restructuring/severance costs Energy Supply 18 - Retail (discontinued) 42 - Gas contract renegotiations - 27 Year 2000 costs 6 8 Total 66 35 Energy supply costs of £18m related to the closure of Croydon & Barnet offices. Retail £42m was the first part of the total closure c
Slide 20: Cash Flow before Financing
Cash Flow before Financing £m 1999 1998 Energy Supply 433 231 Services 25 21 Retail (discontinued) (19) (12) Financial Services (4) (5) 435 235 Working capital 466 438 Operating cash flow 901 673 Capital expenditure (57) (19) Acquisitions - (7) Taxation & interest 6 20 850 667 Exceptional payments (
Slide 21: 1998 Energy Supply Profit Profile
1998 Energy Supply Profit Profile H1 H2 F/yr Turnover £m 3,800 2,984 6,784 % 56% 44% Gross profit £m 503 493 996 % 51% 49% Gas cost adjustment £m 85 (85) - Adjusted gross profit £m 588 408 996 % 59% 41% Operating costs £m (370) (378) (748) Adjusted operating profit £m 218 30 248 % 88% 12% The season
Slide 22: Outlook for Second Half of 1999
Outlook for Second Half of 1999 • Morecambe production impact on profit • Trading operating cost reductions • Lower reduction in Q4 gas costs than 1998 • Reduction in transportation costs • AA acquisition completes – Restructuring costs – Cash impact – Interest impact • Transco pre-payment reversal