Slide 1: 1998 Half Year Results
centrica 1998 Half Year Results
Slide 2: Roy Gardner and Mark Clare
Roy Gardner Chief Executive Mark Clare Finance Director
Slide 3: Results in brief
Results in brief Half year 1998 Half year 1997 Sales £4,125m £4,222m Operating profit £110m £89m pre-exceptional Earnings pre £86m £36m exceptional Cashflow pre- £667m £588m exceptionals Employees (FTE) 15,353 14,841
Slide 4: 1998 Achievements to date
1998 Achievements to date • Improved operating performance • Cash generation and management • Customer Service progress continues • Gas customer retention • Electricity customer growth • Services into profitability • Gas contract management and risks • Competition established
Slide 5: Customer Satisfaction
Fe b- 50 55 60 65 70 75 80 9 Ap 6 r-9 Ju 6 n- Au 9 6 g- 9 O 6 ct -9 De 6 c- 9 Fe 6 b- 9 Ap 7 r-9 Ju 7 n- Au 9 7 g- 9 O 7 ct - De 97 c- 9 Fe 7 b- British Gas Trading 9 Ap 8 r-9 Ju 8 n- 9 Ju 8 Customer Satisfaction l-9 8 Target = 70 Best in class
Slide 6: Customer Market Share: % customers retained
Customer Market Share Including Winbacks Customer losses from Trial Areas 1 & 2 and Phase 3 100 95 TA1 & TA2 Ph3 Tr1 90 Ph3 Tr 2 & 3 Ph3 Tr4, 5 & 6 % customers retained 85 80 75 70 65 Mar-97 Apr-97 May-97 Jun-97 Jul-97 Aug-97 Sep-97 Oct-97 Nov-97 Dec-97 Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98 Jul-
Slide 7: Customer Acquisitions
Electricity Sales to Target - 500K 600,000 500K Target 500,000 Cumulative Acquisitions Customer Acquisitions 400,000 300,000 200,000 100,000 0 11/1 22/2 5/4 17/5 28/6 9/8 20/9 1/11 13/12 1/2 15/3 26/4 7/6 19/7 30/8 11/10 22/11 3/1 Week Ending
Slide 8: British Gas Services
British Gas Services • Customer Service • Business Retention • Business Profitability • New Product Rollout
Slide 9: Services - Operating Profit
Services - Operating Profit 1995 - 1998 50 0 -50 £m -100 First Half Full Year -150 -200 -250 1995 1996 1997 1998
Slide 10: Retail
Retail • New management team • Specialist retailer of domestic appliances • Enhance service levels • Reduce cost base
Slide 11: Energy Management
Energy Management • Gas prices and unit costs • Risk Management actions • Take or pay • Morecambe • Electricity
Slide 12: Supergas
Supergas • Acquired March 1998 • Very attractive deal • Core to energy strategy • Now one of the top 5 LP gas companies in UK
Slide 13: Regulatory
Regulatory • Gas competition a success • Electricity competition must be delivered • Single regulator
Slide 14: Strategic Opportunities
Strategic Opportunities • Upstream Assets • Downstream - Organic - Investment • Overseas
Slide 15: Results in brief
Results in brief Half year 1998 Half year 1997 Sales £4,125m £4,222m Operating profit £110m £89m pre-exceptional Earnings pre £86m £36m exceptional Cashflow pre- £667m £588m exceptionals Employees (FTE) 15,353 14,841
Slide 16: Volumes, Pricing and Cost
Volumes, Pricing and Cost 1998 1997 Domestic Sales Volume (M Therms) 6438 6608 Price (P/Therm) 44.6 47.5 Non Domestic Sales Volume (M Therms) 3215 3253 Price (P/Therm) 19.2 19.5 HRL Production (M Therms) 1440 1751 Gas Costs - H1 (pence) 19.3 20.4
Slide 17: Turnover
Turnover 1998 (£m) 1997 (£m) Domestic 3,150 3,419 Non Domestic 636 661 Weather (262) (283) Sub Total 3,524 3,797 Accord 276 121 Sub Total - Energy Supply 3,800 3,918 Services 245 222 Retail 80 82 Total 4,125 4,222
Slide 18: Operating Profit Analysis
Operating Profit Analysis 1998 (£m) 1997 (£m) Domestic 101 104 Non Domestic (91) (146) Weather (59) (49) Sub Total (49) (91) Morecambe 164 224 Accord 14 4 Sub Total - Energy Supply 129 137 Services 3 (30) Retail (16) (18) Financial Services (6) - Total 110 89
Slide 19: 1998 Operating Profit Analysis - Tax Price
1998 Operating Profit Analysis - Tax Price Tax Price Commercial Price (£m) (£m) Domestic 140 101 Non Domestic (71) (91) Weather (59) (59) Sub Total 10 (49) Morecambe 105 164 Accord 14 14 Sub Total - Energy Supply 129 129
Slide 20: Operating Costs
Operating Costs 1998 (£m) 1997 (£m) % Energy supply (371) (356) (4%) Services (92) (88) (5%) Retail (45) (47) 4% Financial Services (6) - - Total (514) (491) (5%)
Slide 21: Earnings
Earnings 1998 (£m) 1997 (£m) Operating Profit 110 89 Associates (3) - Interest receivable 18 14 Taxation (39) (67) Underlying performance 86 36 Exceptionals (35) (252) 51 (216)
Slide 22: Exceptionals
Exceptionals 98 (£m) 97 (£m) Windfall tax - 192 Severance - 20 Gas contracts: Renegotiation 27 5 Contract Losses - 35 8 - Year 2000 Total 35 252 Note: Y2K spent £3m in 1997 not shown as exceptional
Slide 23: Cashflow
Cashflow 1998 (£m) 1997 (£m) Energy Supply 231 302 Services 21 (10) Retail (12) (14) Financial Services (5) - Operating Cashflow 235 278 Working Capital 438 303 Sub Total 673 581 Cap expenditure (26) (8) Taxation & Interest 20 15 Sub Total 667 588 Exceptionals (51) (170) Total 616 418
Slide 24: Outlook for Second Half of 1998
Outlook for Second Half of 1998 • Revenue split • Corporation Tax • Gas contracts • Windfall Tax renegotiated • Cold weather • Morecambe • Renegotiation • Further renegotiation