Centrica in North America London, 17th April 2008 1
Disclaimers 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…
Agenda Introductions Update on Centrica in North America Q&A and discussion 3
Direct Energy introductions Deryk King Chief Executive Officer David Clarke Chief Financial Officer Bill Cronin President, Upstream & Wholesale Energy Lois Hedg-peth Chief Operating Officer, Downstream Businesses 4
Market entry to present: Why we are in North America Households 123m A huge market opportunity in a stable political environment North America Key element of Centrica strategic priority 4, 25m Build on our growth platforms UK…
Market entry to present: Our businesses Direct Energy Home and Upstream and Mass Markets C&I Business Wholesale Energy Energy Services Energy Natural gas and Natural gas and HVAC installation Natural gas prodn electricity…
Market entry to present: Where we operate 3 million residential energy customers; 2 million home services customers 55 TWhe C&I volumes Dual Fuel Gas only Power only Home Services Principal offices Power stations Wind PPAs…
Market entry to present: Why this portfolio makes sense There are linkages between the businesses Wide market spread mitigates regulatory and other market risks Upstream & Wholesale Energy advantaged by our positions to support…
Market entry to present: Direct Energy has delivered strong growth Revenues, Cm EBITDA, Cm Op Profit, Cm 9,000 600 450 8,000 400 500 7,000 350 6,000 400 300 5,000 250 300 4,000 200 3,000 200 150 2,000 100 100 1,000 50 0 0 0…
Market entry to present: We have delivered on our December 2005 promises 250 10% m North America offers 200 8% double-digit revenue growth, robust 150 6% operating margins and a progressive return on capital 100 4% Investor…
Market entry to present: Value creation EV (bn) 3.0 Present value of net investment in North 2.5 Current America is 1.6bn1 2.0 Analysts consensus SOTP valuation of DE is 1.5 Nov 2005 2.5bn1 1.0 Three recent investments…
Market entry to present: How success has been achieved High quality selection from large opportunity suite Expansion through adjacencies Successful execution and integration of acquisitions Cautious attitude to risk Centrica…
Current Landscape: Downstream Rising energy prices and poor market rules have reduced political appetite for deregulation, especially in the residential sector Roll-off of price freezes has required fixes Need for 900bn investment in…
Current Landscape: Upstream and wholesale Upstream gas markets undergoing structural changes Declining conventional production in US lower-48 states Strong growth in unconventional gas Increasing LNG import volumes Power assets…
Looking ahead: Invest to Grow Strategy Our overarching strategic purpose: Develop and maintain a business portfolio in North America that is able to sustain value-creating growth through commodity price cycles and evolving regulatory…
Looking ahead: Strategic priorities Optimize Mass Markets Energy to rekindle growth and influence regulatory progress to maximise value of core markets (ON, AB, TX, OH, NY) and open up new opportunities (eg BC, CT, IL, CA) Deliver…
Looking ahead: Mass markets energy Strategy: Optimize business to rekindle growth and influence regulatory progress to maximise value of core markets and open up new opportunities Recent Reversal of net customer losses successes:…
Looking ahead: C&I energy Strategy: Deliver value through rapid integration of Strategic Energy and aggressive organic growth, supported by services and technology offering Recent Strong organic growth successes: Profitable in 2007…
Looking ahead: Home and business services Strategy: Continue to increase Services market penetration in Canada and extend geography in United States Recent Profitability turnaround successes: Demand Response launch in Ontario…
Looking ahead: Upstream and wholesale Strategy: Pursue attractive investments both to support retail businesses and open up new profit centres in adjacent businesses Recent Profits more than doubled in 2007 successes: Gas reserves…
Looking ahead: Business unit contribution Whilst Mass Markets remains a core value-creator, growth in other businesses is creating a more balanced portfolio Revenues Operating Profit 2005: Mass Markets C&I Services Upstream &…
Summary Successful investment track record Delivered on 2005 promises Created value Further opportunities for significant growth Clear strategy Great people 22
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