Agenda 10:30 Welcome 10:45 Introduction to the Centrica investor story Nick Luff 11:15 Centrica Energy and Centrica Storage Mark Hanafin and Simon Wills 12:00 Direct Energy Chris Weston 12:45 Lunch 13:30 British Gas Phil…
2006-2009: the first step in the journey Our Strategic Priorities 1 Transform British Gas 2 Sharpen the organisation and reduce costs 3 Reduce risk through increased integration 4 Build on our growth platforms 4
UK Downstream - British Gas British Gas restructured to combine energy and services Management team and support functions combined Enhanced customer propositions first bundled energy and services offering, EnergyExtra wide range…
Energy hedge ratio 70% 60% 50% Venture 40% 20% of 30% British Energy Drax 20% Wind North Sea 10% Morecambe 0% 2006 2007 2008 2009 2010 2011 2012 2013 Note: proportion of UK floating gas and power demand covered by own…
The next stage: 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…
The investor story: Centrica Energy and Storage Our pre-Venture production profile Case study Lincs offshore wind Upstream Oil and Gas production profiles 2008 2009 Production (bcfe) Business case developed Improved cost base through…
The investor story: Direct Energy Direct Energy has a strong platform on which to build. Direct Energy businesses Core markets 3m customers: Canada Residential largest retailer in US Northeast Energy North America MI MA AB ON NY…
The investor story: British Gas We will build on the transformation of British Gas to deliver our new strategic priorities Capture new markets The Energy Take the lead Experts at the heart of Combine British and work Optimise…
Optionality in investment programme 2,500 2,000 Committed Cash Flow (m) North America 1,500 British Gas 1,000 Storage UK Power 500 UK Gas 0 2010 Committed 2011 Committed 2012 Committed Baird, Caythorpe, Bains,…
Case study: Lincs offshore wind 2008 2009 Business case developed Improved cost base through supplier Business Based on LID development, negotiation Development area knowledge, and expertise Flexibility on timing with vessel…
What if gas prices stay low Impact Levers to mitigate / opportunities Lower gas production profits Asset flexibility to preserve reserves Upstream (some offset from oil production and lower Optionality in investment programme taxes)…
What if gas prices go up Impact Levers to mitigate / opportunities + Higher gas production profits Additional value in investment Upstream + Higher returns from nuclear (post hedges) programme + I&C contracts unwind post 2010 CCGTs…
Centrica: The next 3 to 5 years Double the number of high value joint energy & services customers Lead the transition to low carbon (2m Smart Meters, leading microgen installer in UK) UK Strong penetration of new markets e.g. local…
Centrica Energy & Storage
Agenda Recap from Capital Markets Day Focus areas: Upstream scale and capability Strong generation capabilities with a differentiated low carbon mix Potential investment opportunities across gas, gas storage, CCGT, wind and new…
Upstream capabilities and strategy Distinctive capabilities Strategy Transformed scale and capability Deliver value from our existing assets . . . in upstream gas Leading consolidator of mature and Only dual fuel hedged UK supply…
Our pre-Venture production profile Upstream Oil and Gas production profile Production (bcfe) 400 350 300 250 200 150 Pre-Venture Production Others 100 50 Morecambe 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019…
. . . combined portfolio provides scale and significant opportunities to target and time investments Upstream Oil and Gas production profile Production (bcfe) 400 Development Options 350 Longer-term 300 investment options…
A full service, leading operator of mature and orphaned fields HSE, Commercial and Supply Chain expertise operates across the development life cycle Business Project Subsurface Operations Development Management Good…
Case study: Chiswick field development Discovered in 1984 Acquired in August 2006 Chiswick drilling relied on understanding of complex carboniferous reservoir geometries and required a new technical solution for fraccing the…
Our power generation strategy will lead to increased generation cover and a more balanced fleet Strategy aims for increased Strategy leads to a mix more closely aligned cover and balanced fleet to the market but with lower carbon…
We have strong advantages across all key elements of the offshore wind value chain Leaders along key elements of the offshore wind value chain Tendering, Design Economics & Construction & Operations & & Acquisition Financing…
Current nuclear fleet & framework for New Nuclear Build Current position of BE station lifetimes New build trends Increasing recognition of the role of new nuclear Dungeness B in meeting low carbon and security of supply Hunterston…
Centrica Storage Rough Storage The case for new investment in the UK Strong financial & operational performance 30% Gas storage as a percentage of annual demand Construction GWh Historic Analysis 2005-2010 25% 40,000 Existing…
Agenda Recap from Capital Markets Day Progress made on our strategic priorities Residential energy: launch of prepaid product in Texas, targeting an under served market segment Home services: Clockwork acquisition, transforming…
Direct Energy has a strong platform on which to build. Direct Energy businesses Core markets 3m customers: Canada Residential largest retailer in US Northeast Energy North America MI MA AB ON NY CT 33 TWh and 690 mmth PA RI…
. . . and a distinctive set of capabilities North American platform Relevant Centrica UK capabilities Strong downstream position in key Customer care systems & processes residential deregulated markets Managing full requirements…
Our strategy will build an integrated energy business Improve returns from Reduce costs and improve efficiency existing business Be the most recommended energy and services provider Achieve regional leadership positions in our…
Doubling profits: organic growth and acquisitions close the gap Operating profit DE Residential 2x OP Texas transformation program Prepaid launch in Texas Growth opportunities in US Northeast DE Business Small commercial growth…
Prepaid: a Texas residential growth opportunity 5m 1m US1bn Establish market leadership by accessing an 100% untapped customer base Prepaid delivers the right value proposition 80% to this market segment Smart meter deployment…
Services: the growth opportunity and the vision Services Support the wider DE strategy through being North Americas leading vision: home services company Making a material and growing contribution to DEs profitability Redefining the…
Clockwork: a major operator and franchisor of heating & cooling, plumbing and electrical services Owned 25 company owned locations in US and Canada operations Providing heating & cooling, plumbing and electrical services 470…
Clockwork establishes DE as a leading residential services provider in North America Energy / services overlap 100% Near doubling of services overlap with energy footprint 80% Complementary assets: DEs leadership in Canada and…
Small Business: an emerging segment delivering a significant growth opportunity for DE Business US power market share (TWh) 80 Substantial Small Business operations today 180k customers US45-50m in operating profit 60…
The path to vertical integration DE peak load and generation (MW) 12 Other 10 Canada Integration: better balance downstream and 8 upstream positions, move towards 35-40% cover 6 US NE like the UK, vertical integration is a 4…
British Gas
Agenda Recap from Capital Markets Day with relevant case studies Delivering sustainable profits in Residential Energy Transforming the core Services business Building on current momentum to sustain British Gas Business growth…
We are building on the transformation of British Gas to deliver our new strategic priorities Capture new markets The Energy Take the lead Experts at the heart of Combine British Make the and work Optimise the business homes and…
Optimise the business: Deliver sustainable profits in Residential Energy Driving Energy-Services joint holdings Reducing churn Dec Dec 20% 20% Energy churn down Joint customers churn Households ('000) 2008 2009 Growth 33% since 2006…
Optimise the business: Realising cost synergies to invest in future growth Creating an efficient and stable operating cost base Innovating to drive step change in online Heating Services efficiency 25 45% % Customers Registered…
Take the Lead: Transforming the core Services business Customers require greater availability Focus on getting jobs right first time Engineer Call volumes jobs (demand) 80% 25% 25% 80% % completed first time Intra day 20% job…
Take the Lead: Insurance roll out and CHI strategy generating significant growth Insurance Penetration Growth Doubling CHI Installations by 2012 100% Price reduction rolled out Insurance penetration % nationally in June 2010…
Take the Lead: Further growth in the Electrical and Dyno business E&DS: a strong profit business Opportunity for improved penetration 3,700 100 E&DS contracts ('000) 20% % of Energy customers 3,600 E&DS Op Profit (m)…
Take the Lead: Building on current momentum to sustain BGB growth BGB future growth from segmented approach to build on momentum gained from strategic changes New Segmentation Six value creating acquisitions Over 35% improvement in…
Capture New Markets: Positioning British Gas at the centre of the home of the future Home of the Future Capitalise on opportunities from transition to low carbon homes Insulation - domestic market forecast Microgeneration - installation…
Capture New Markets: Forge strategic relationships with local authorities British Gas could target c.25-30% of Backed by brand credibility, experience and infrastructure property services spend Local Authority spend on property…
We are targeting significant growth in sustainable profits across our three year plan Take the Lead Capture New Markets Op Profit m New Energy Build insulation business, partner Business Business: with Local Grow Electricals &…
Sam Laidlaw Chief Executive
The investor story: summary Positioned for growth, upstream and downstream Balanced business in both high and low commodity price environment Well positioned to lead in the low carbon world Strong cash generation, with significant…
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