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…
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Agenda 09:30 Introduction Sam Laidlaw Update on strategy and progress Phil Bentley Ian Peters Chris Jansen Q&A All 11:45 Breakout sessions: Tour of National Distribution Centre British Gas Business Ian Peters / Kanat…
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…
Well balanced business model Gas sourced from Energy Market Share own production Peak power cover ratio 100% 100% 100% External Coal purchases contracts External Wind purchases Competitors Nuclear Own production…
Strongly positioned for growth Strong profit growth and cash generation through the cycle distinctive capabilities and scale, leaders in innovation Focus on maintaining a competitive position in residential energy industry leading…
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The UK energy and services market is both significant and attractive Energy supply remains profitable for players with scale, systems and service Energy services is a growing market with attractive margins Government imperative to…
British Gas is well positioned in this market 12 million homes, half of all UK households Customers No. 1 domestic supplier of both gas and electricity and service One million business sites, No.1 in SME gas and electricity…
Customer satisfaction continues to improve Affinity with energy brands Residential energy customer satisfaction 5.0 30 2007 2009 2010 4.8 25 British Gas 4.6 20 Brand Affinity 4.4 15 4.2 10 4.0 5 3.8 0 British E.ON SSE…
Safety through engaging our colleagues is a key priority Improving safety culture Engaged and customer focused workforce 1.5 LTI per 100,000 hours worked 30% average reduction rate 1.0 0.5 0.0 2006 2007 2008 2009…
Our Planet Home brand campaign has been a great success Total TV advertising cut-through 40% 30% 20% 10% 0% 2008 2009 2010 2011 SOURCE: TNS 14
Leveraging scale and systems to reduce costs 200m BGR cost reduction (2006-8), further 100m cost reduction from integration re-invested in the business Scale Procurement 5 year deals with Travis Perkins and Worcester Bosch Shared…
We are innovating to deliver improved customer experience and enter new markets Digital innovation creating new ways for . . . and we are generating leading customers to interact with us . . . capabilities to enter into new…
Industry leading margins and improved cross-sell capabilities Published residential energy margins Maximising customer value 10% 9.0% 2.3 8% Joint Customers (m) 2.2 6% CAGR 7% 4% 2.1 2.3% 2% 0.5% SP EDF Npower 2.0 0%…
We have delivered a strong five year performance Operating profit (2006-2011) Customer account growth (2007 2010) 1,400 70 600 27.0 Operating Profit (m) 1,200 60 MAH gas price (p/thm) Account growth (000) 26.5…
We face a challenging regulatory environment Ofgem focus British Gas addressing key Ofgem issues Transparency of Most transparent financial statements of all suppliers full accounts reconciliation of Ofgem statements with Annual…
Business outlook BGR Ian Peters BGS Chris Jansen BGB Kanat Emiroglu BGNM Gearoid Lane 20
BGR maintaining operating profit in a volatile market Residential energy operating profit 800 800 70 70 60 60 Maintaining profits . . . reduced churn 600 600 customer service Operating Profit (m) 50 Gas Market…
BGS steady double digit growth despite a challenging market environment Operating profit and product holdings New market opportunities create further growth opportunities 300 9.0 8.8 Service excellence 250 250 8.6 Operating…
BGB near term investment driving faster longer term growth Strong operating profit growth Investment in future growth ahead of expectations Economy and competition putting pressure on margins in short term Leverage BGR systems…
BGNM the market for energy efficiency is growing and will support the mainstream business Revenue has trebled in two years . . . . . . from new markets, customers and capabilities Revenue (m) 400 Local government relationships…
Good progress on Grow British Gas strategy five longer term focus areas emerging Progress achieved Longer term focus Electric vehicle partnerships Capture new Green Deal markets Home Hub Service excellence to build trust Smart…
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British Gas Residential A sustainable business Customer Churn lower than industry average, market share growth Growth Customer Lower complaints, NPS improvement, highly motivated people, Service No. 1 for customer…
British Gas Residential Strong customer growth underpinned by improved retention Energy customer growth Customer churn 16.2 33.2% 33.2% 23% Residential customer accounts ('000) 33.0% 33.0% 21% 16.0 (%) Share (%)…
British Gas Residential Improved customer service and reduced complaints Contact net promoter score (NPS) Market share of Ombudsman complaints 40 60% BGR Ombudsman complaints (% of total) 30 50% 20 40% 10 30% 0 2008…
British Gas Residential Relentless focus on operating costs underpinned by our systems Operating costs per account Back office efficiency 110 30 100 25 Operating cost per account () 60% reduction Back office costs (m)…
British Gas Residential Successfully managing customer debt in a deteriorating economy Residential bad debt charge as % of revenue Bills outstanding 60 Days 3.0% 16% 2.6% 15.4% 2.5% 15% 2.0% 14.7% 1.7% 1.5% 1.5% 14% 1.1%…
British Gas Residential Systems innovation putting us ahead of the competition Billing platform fully established leverage for BGB First to be Smart Back office re engineered, now front office transformation Increasingly…
British Gas Residential Delivering step change in customer contact through innovation Online contact growth Product innovation 100% 80% Offline contact 60% 40% Online 20% contact 0% 2008 2009 2010 2011 Online…
British Gas Residential We continue to manage for sustainable profitability Challenge Profit Actions impact Customer Already reducing churn ahead of the industry retention Smart propositions enabling further 30% improvement in…
British Gas Residential A sustainable business Customer Churn lower than industry average, market share growth Growth Customer Lower complaints, NPS improvement, highly motivated people, Service No. 1 for customer…
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British Gas Services Business overview 2010 Turnover Customer Areas of focus (m) Accounts Cost and labour efficiencies Service & Repair Final salary pension changes 845 4.7m (Boiler Maintenance) 8m energy customers Landlord…
British Gas Services Responding to meet our customers needs Customer needs British Gas response High Quality Service Same day service, first time fix and parts capability Service Excellence reducing churn Value For Continuous…
British Gas Services Service Excellence Engineer led customer service is at the heart of our proposition Service level capability Engineer Service Typical British Gas Competitor Engineer NPS 2009 2011 Call outs p.a. Unlimited…
British Gas Services Service Excellence Reducing customer churn in a competitive environment First Time Fix and Complaints Customer Churn 74% 30 16% 80% 14% 70% Complaints / 1000 customers 72% Annual churn % 60% First…
British Gas Services Service Excellence Growing installations around service excellence and segmentation Central Heating installation growth Segmentation and innovation 10 17% Average Monthly Installations (000s) 16%…
British Gas Services Continuous Efficiency Operational efficiency to maximise benefits of direct labour Service & Repair: engineer productivity Central Heating installations: and Annual Service Visit backlog engineer efficiency 8.4…
British Gas Services Continuous Efficiency Leveraging procurement scale to minimise costs 5 year strategic relationships Competitive commercial terms Joint product development Unique deals for British Gas customers New…
British Gas Services Continuous Efficiency Working with GMB to transform the business Negotiated T&C changes instrumental to GMB support critical to achieving enable Customer Promise proposition resolution to pensions Previously…
British Gas Services Product Diversity Leveraging insurance capabilities to broaden our product range Transition to insurance Bundling 1,200 100% 100% 5 400 Cumulative Energy Extra sales (000s) % of customer base on insurance…
British Gas Services Modern Brand Reinforcing the breadth and depth of our product range 46
British Gas Services Modern Brand Utilising technology to attract and retain customers Services online growth Track Your Engineer Remote heating control 1,600 60% Online customers as % of total base Online transactions…
British Gas Services New Channels and Markets Creating new revenue streams in adjacent markets Sainsburys Exclusive partnerships to distribute services products Awarded five contracts for private sewer transfer Water Annual…
British Gas Services Double digit growth in a challenging market Service Leading in service excellence underpinned by quality of engineers Excellence Continuous Efficiency Lower costs through efficiency, scale and…
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Leading business model leaves us well placed to seize ongoing market opportunities Maintaining profits BGR cost advantage, industry leading retention, deeper customer relationships Steady double digit profit growth BGS…
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British Gas Business Small Enterprises Increasing the value of Segment focus our customer mix A call centre delivering simple and quick customer service % customer gains / losses Online sales and email for out of hours…
British Gas Business Medium Enterprises Account management driving Segment focus existing customer sales Dedicated customer account management +23% Energy experts providing solutions to manage costs Swift resolution of…
British Gas Business Multi Sites Increasing achieved % margins Segment focus through focus on Multi Sites Multi-disciplinary hubs delivering customer service +150% Clear options for product, service and risk offerings Efficient…
British Gas Business Meeting the differing needs of customers in three selected segments Customers Sites Revenue Profit (000s) (000s) (m) (m) Tailored propositions for 690 1,044 2,907 233 Multi Site customers served by…
British Gas Business Our segmented model has brought growth ahead of expectations Strong operating profit growth Drivers of growth 250 2009 Focus on economic value growth acquisitions from existing customers (40%) 200 target…
British Gas Business Positioning for long term growth Near term flattening of profits . . . driving long term growth during investment phase . . . Reducing costs investment to leverage BGR systems New propositions and pull…
British Gas Business Reducing costs: Investment to leverage BGR systems Leveraging BGR expertise & capabilities Reducing bad debt m Already realised synergies in debt c. 15% Bad debt increased field visit capacity by 60% through…
British Gas Business New propositions and pull channels: Multi site menu proposition Multi site menu propositions Service & Product Risk Simplified products, risk and service Reporting Better contracted and actual margins…
British Gas Business New propositions and pull channels: Smart enabled online ME proposition Energy Insight: A unique and smart enabled analytics tool Analysis of smart metering data 30% of BGBs Medium Enterprise customers have…
British Gas Business New propositions and pull channels: New marketing and propositions New campaign targeting high priority industry sectors Aligned with Energy Insight Building on Smart meter lead Industry focused…
British Gas Business Growing B2B Energy Services Recent investments and capabilities . . . . . . delivering top line growth Revenue Energy Insight (m) 90 80 Smart metering 70 Installation and maintenance of 60 50% commercial…
British Gas Business Well positioned for growth in UKs B2B energy and services markets Leading energy supplier to UK businesses (0.7m customers, 1m sites) Customers Public sector opportunities via Local Authorities and Communities…
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British Gas New Markets Market opportunity Imperative to transform energy efficiency in Britains homes and businesses Substantial growth in demand for insulation and energy related services Commercialisation of green…
British Gas New Markets Government policy is driving significant change across the industry Insulation Microgeneration Smart metering Social Housing CERT extension - FIT implemented - DECC Prospectus CESP - growing insulation…
British Gas New Markets Insulation Within two years we have become one of the UKs leading insulation companies Opportunity Right to win Early successes Market worth an estimated Organic growth Insulation: Revenue m 140 1.5bn by…
British Gas New Markets Microgeneration We are building the UKs leading low carbon microgeneration business Opportunity Right to win Early successes Market to grow to 4bn Supply chain 120 Microgeneration Revenue by 2020 utilising…
British Gas New Markets Smart metering Taking a leadership position in the roll-out of Smart metering in the UK Opportunity Right to win Early successes Market size: all homes and Technology pioneers 80% businesses driving industry…
British Gas New Markets Social Housing Public Sector is an important channel to market for growing these businesses Opportunity Right to win Early successes Significant market worth Density and diversity Turnover m 200 3bn develop…
British Gas New Markets Utilising our unique capabilities to lead the low carbon energy services market Energy Market is changing responding positively by building capability across a range of technologies Leading positions in…
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