Centrica Plc · LSE:CNA
Centrica — Merger or Acquisition (1999)
17 slides from Centrica's merger presentation, 1999
Slide 1: Customer Strategy
Customer Strategy Insurance Credit Savings Cards Gas Breakdown Appliance Electricity Service Home Telephone Improvements Motoring
Slide 2: Deal Structure
Deal Structure • £1.1bn cash – Distributed to eligible members of the AA • Timetable – Completion in Q4 1999
Slide 3: Value Drivers
Value Drivers • Largest motoring services operation in UK • Substantial motor and home insurance portfolio • Material financial services business • Second largest driving school in UK • A leading travel publishing business • A range of future product opportunities • Net cash & equivalents £306m
Slide 4: Why The AA?
Why The AA? • The Quality Service Organisation • The Brand Leader in roadside rescue • Material Financial Services business • Customer database • Commercialisation opportunities • Synergies with Centrica business “The AA sets a new industry benchmark” (JD Power Survey 1999)
Slide 5: Roadside Services
Roadside Services British Gas AA Services Motorists / customers 9.5m 4.0m Patrols / engineers 3,600 5,200 Call-outs / visits 4.3m 6.7m
Slide 6: Financial Activities
Financial Activities AA Centrica Gross written premiums: Home insurance policies £57m £7m Car insurance policies £254m Claims assistance £12m Credit card holders 170,000 935,000 Loans & advances £371m £220m
Slide 7: Additional Activities
Additional Activities • In-car information services • Publisher of travel guides & maps • Second largest driving school in UK • European roadside services • Brand supporting businesses “Voice of the responsible motorist”
Slide 8: Financial Profile
Financial Profile 1998 1998 Operating Earnings income before tax* £m £m Member services 435.2 7.0 Insurance 105.7 9.4 Financial services 52.3 11.6 Other activities 34.1 (32.2) Sub-total (4.2) Interest - 23.9 627.3 19.7 * pre-exceptionals
Slide 9: The AA's Cost Improvement Plan
The AA’s Cost Improvement Plan • Actions completed in 1998 saving £10m • Further annual savings of £65m by 2002 • Reinvest for service enhancement and growth
Slide 10: Additional Centrica Benefits
Additional Centrica Benefits • Further margin improvements of £30m identified – Business support rationalisation – Logistics and supply chain management – IT infrastructure initiatives – Revenue growth opportunities • Exceptional charges of £95m in 1999/2000 Earnings enhancing in 2001 before amortis
Slide 11: Centrica
centrica British Gas yy
Slide 12: Home & Motoring Services
Home & Motoring Services ‘Peace of Mind’ Gas Supply Electricity Supply Central Heating Plumbing Appliance Service Home Security Air Conditioning Breakdown Motoring
Slide 13: Financial Services
Financial Services Home Motor Personal Home Insurance Car Insurance Credit Cards Personal Loans Credit Products Motor Finance Savings & Investments Core Competencies Partnership Brand Customer Service Sales Relationship Management Relationship Delivery Channel Management Management Management
Slide 14: Product Relationships
Product Relationships 0.6 million Loans & Credit Credit Card 1.1 million Insurance 1.6 million Home Services 4.0 million Motoring Services 9.5 million Energy Supply 15.2 million gas, 1.5m electricity
Slide 15: Shareholder Value
Shareholder Value Margin Shareholder Value Services Energy 1.0 1.5 2.0 Products per customer Energy Services
Slide 16: An Excellent Fit
An Excellent Fit Centrica Customer AA Shareholder value Enhanced Commercial focus Strategic fit: service quality Core part of UK - Home/Motoring service company - Insurance/Financial Added value packages Access to capital Brand enhancing Brand investment Operational Single service synergies Build on
Slide 17: 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