Executive Summary
Centrica (LON:CNA) is an integrated energy company that is involved in energy sourcing, trading, generation, supply, processing, servicing, storage and energy saving. It is a FTSE top 30 company, with operations in the UK and North America. It operates under a number of brand names, including British Gas, Dyno and Direct Energy (US). Centrica is the leading commercial and domestic energy supplier in the UK, with 15.5m domestic customer accounts. In 2009, the company earned revenue of £22.0bn and an operating profit of £1.8bn.
Company History
Centrica was demerged from the former British Gas plc in February 1997. Key milestones in the company's history are outlined below.
- 1998: Centrica's gas monopoly ends and the company becomes a domestic electricity supplier for the first time;
- 1999: The AA is acquired for £1.1bn;
- 2000: Centrica completes its acquisition of Direct Energy marking the first major step in the roll-out of its international development strategy, and assumes control of Energy America;
- 2001: The company enters continental Europe through investment in Belgian company Luminus, and acquires National Homecard, marking its first step towards the development of a range of home services
- 2003: Centrica Storage is separated from the rest of Centrica
- 2004: The sale of AA to CVC Capital Partners and Permira for £1.75bn is completed, and Dyno group is acquired, enhancing the company's home services proposition
Current Events
- Recently, the OFT has approved Centrica's acquisition of 20% of British Energy from rival energy supplier, EDF, providing Centrica with 20% of the uncontracted power generated by British Energy. [1]
- The European Commission has approved Centrica's acquisiton of Venture Production, an upstream producer of natural gas and crude oil, with interests concentrated in the North Sea. [2]
Business Model
Centrica is an integrated energy company that operates upstream by developing new energy sources, and downstream through the provision of products and services to commercial customers and households. It has four main business priorities:
- Transform British Gas: by delivering sustainable profitability and attractive products and services
- Reduce costs: across the whole group
- Secure energy supplies: reducing exposure to risk through increased integration
- Deliver growth: by maximising potential opportunities outside the core UK residential market.
The business is structured into the following divisions:
British Gas
- Residential and Business energy supply;
- British Gas Services installs and maintains gas appliances and central heating systems, and provides breakdown services for…
