The Power Broker

Centrica's senior management is a team in transition. How did the CFO handover go, and what's at the top of your agenda?

Phil Bentley, the former CFO, now heads British Gas. There are some operational challenges and we're also trying to cut our costs. As a team, we've had a lot of discussions about where the opportunities lie and the nature and scale of the resources that we can deploy. Even in the time I've been here, the environmental issue has grown.

Centrica is already well placed there. Our electricity generation has a lower carbon footprint than anybody else in the UK. The services business is also well prepared for the energy efficiency opportunity – we are ready to install more efficient boilers or fuel cells when they come in. And we recently launched British Gas New Energy to meet the demand for energy efficient products and services.

What are the main challenges facing Centrica as it embarks on its expansion?

There is always the challenge of execution and getting your delivery right. Also important is keeping your costs under control and providing good services as you grow. We built our North American business by acquisition, and we want to continue developing our business over there.

The big challenge is identifying the opportunities in what is, as far as buying assets is concerned, a furiously competitive market. There's a lot of capital in the world and some highly priced transactions have taken place recently. We must recognise the opportunities that are a good fit for us, perhaps offering us some synergies to help us create value. It's difficult to find a bargain these days, but you have to find ways to make it work.

What do you think has been the key to Centrica's success since the deregulation of the energy market?

The structure of the UK market relating to gas and power supplies, the way it's been set up and the way the former nationalised companies have become private concerns, reacted to competition and addressed customer service and cost structures, has undoubtedly been a success.

As for Centrica itself, one of the things I’ve been greatly impressed by is the management team, right up to a senior level, spending a lot of time concentrating on people matters. We have a world-renowned graduate scheme, and the team is committed to making sure we bring in the right people and give them every opportunity to develop a wideranging career with the company.

It's a multifaceted business. You go from running call centres and the really high-volume transactional side of things, with the British Gas residential business, through to offshore gas rigs and power station ownership and operations that are much more capital intensive and technical.

In the middle there is gas and power procurement, and also hedging and everything that goes with that, which is fascinating from a finance point of view. But it also provides a great breadth of opportunity for people coming into the company, whether that is a university graduate on the programme or a newly qualified accountant.

It's also satisfying to be involved in a company that does something important – keeping the lights on, keeping people warm. Getting employees excited about their career and feeling part of something, is very much a focus of the senior management of the company.

How does you new position at Centrica contrast with your earlier role at P&O?

The main difference is that Centrica is a much more integrated business. Although we have different business units, they interrelate well. P&O was a conglomerate, so being in the group centre as finance director was like sitting on top of a portfolio of businesses.

There was a big M&A focus but I didn't get that close to the day-to-day operations. In Centrica there is more emphasis on driving performance and making sure you have the right management information. I'm much closer to the day-to-day performance.

Centrica is currently a less international company than P&O. Of course, we're intending to change that. While we have some presence in Europe, it's relatively small today. When I was at P&O, our operations in the UK were a very small part of the total.

You joined Centrica at the beginning of March 2007. How has the experience been so far?

Having joined a different industry as well as a different business, I've had the most fascinating time. My feet have hardly touched the ground! The complexity of the industry, with all the geopolitical and technical issues involved, is very absorbing, and getting my head around that has been great fun.

Centrica is at an interesting stage because the UK is the only country that has completely deregulated and developed a competitive energy supply market. Centrica has gone from enjoying 100% market share in gas to operating in a competitive market. While it has, by definition, lost market share in gas, it has meanwhile built its position in electricity.

We are now in a strong position to navigate the future. It's been pleasant to arrive as a new face and realise the extent of the opportunities now before us. Of course, our expansion plans include Europe, where we have a small but steadily growing business. The pace of change in Europe is slow, due mainly to the regulatory environment, and there's no doubt we will have to be patient, but our ambitions for the region are very much alive and kicking. In 2005, we acquired Oxxia and a stake in SPE of Belgium, and in 2006 we opened offices in Gemany and Norway. North America is also an interesting opportunity.

We successfully developed a respectable presence five years ago from acquisition, and I would say there is more potential over there in terms of immediately available opportunities.

How is your day-to-day routine at Centrica? As a public company finance director, is it difficult to achieve a worklife balance?

Three months on, and I'm still not sure what the standard pattern is because my routine hasn't settled down yet! One of the attractions of the job, though, is that things are never the same.

Within a very short period of time I can be traveling to the US to visit the business out there, and then going to Leicester to visit the distribution centre for the parts for our services business. Getting out and about is part and parcel of the job. I have to split my time, to some degree, between London and our Windsor headquarters.

One of the pluses of modern communications is that a demanding workload doesn't necessarily mean you have to be in the office seven days a week, even if you are working on each of those seven days. So you can still be there for family when the opportunity arises.

How intense things are depends on what's happening. I've been through a couple of takeovers with P&O and they are all-consuming. You're occupied 24-hours a day. I'm sure Centrica will be no different. There are only so many hours in the day, and you have to make sure you get the balance right. I support Leeds United, which is just about the only thing I have time for out of work! But as my other half is an even more committed Leeds fan than I am, that's never been the source of any problems.