Slide 1: Preliminary Results for the year ended 31 December 2015
centrica Centrica ple Preliminary Results for the year ended 31 December 2015
Slide 2: Disclaimer
centrica Disclaimer 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 with respect to the financial condition, results, operations
Slide 3: centrica
centrica
Slide 4: Summary
centrica Summary 2015 — resilient financial performance Group robust in a low commodity price environment - Sources and uses of cash flow more than balanced at $35/bbl, 35p/th, £35/MWh - Confident in delivery of 3-5% p.a. operating cash flow growth Strategy implementation on track Efficiency program
Slide 5: 2015 financial performance
centrica 2015 financial performance Earnings down 4%, EPS 17.2p * Operating profit in energy supply and services up 19% * Operating cash flow of £2.25bn, up 2% * Capital discipline Net debt down £449m to £4.7bn Exceptional items of £1.8bn post-tax
Slide 6: Implementing the strategy
centrica Implementing the strategy * "To provide energy and services to satisfy the changing needs of our customers” * Growth focus in five areas * Reducing investment and exploring all options to strengthen E&P * Refocusing thermal power portfolio; wind divestments progressing well * Efficiency pro
Slide 7: centrica
centrica
Slide 8: Commodity prices
centrica Commodity prices Average Brent Oil prices ($/boe) 120 > 100 + 80 + | 60 4 (47)% 2014 2015 Prices are month ahead prices averaged over the full year. Average UK NBP gas prices Average Henry Hub gas prices (p/th) ($/mmbtu) 60 5 80 J 161% 4 40 3 (36)% 30 2 20 10 1 0 0 2014 2015 2014 2015
Slide 9: Weather
Weather Average UK temperature (degrees Celsius) 14 12 SNT 9.2 10 8 6 4 2 0 H12014 ~=H1 2015 SNT = seasonal normal temperature. SNT 12.3 1 i] 1 H2 2014 H2 2015 8 ow a wo centrica Average USNE temperature (degrees Celsius) SNT 13.6 SNT 8.4 H12014 H12015 H22014 H22015 Average daily UK temperature geog
Slide 10: Financial headlines
centrica Financial headlines Year ended 31 December 2014 2015 A Revenue (£m) 29,408 27,971 (5%) Adjusted operating profit (£m) 1,657 1,459 (12%) Adjusted effective tax rate 30% 26% (4ppt) Adjusted earnings (£m) 903 863 (4%) Adjusted basic earnings per share (p) 18.0 17.2 (4%) Full year dividend per
Slide 11: Exceptional items and certain re-measurements
centrica Exceptional items and certain re-measurements Year ended 31 December 2015 (£m) Post-tax E&P impairments 1,477 Power impairments and provisions 485 UK tax rate change (116) Total exceptional items 1,846 Total net re-measurements (129) Exceptional items and certain 4,717 re-measurements
Slide 12: Operating profit
Operating profit Year ended 31 December (£m) 2014 2015 A British Gas 823 809 (2%) Direct Energy 150 328 119% Bord Gais Energy 7 30 329% Energy supply and services 980 1,167 19% Centrica Energy 648 255 (61%) Centrica Storage 29 37 28% Adjusted operating profit 1,657 1,459 (12%) Share of Vi associates
Slide 13: British Gas
British Gas OPERATING PROFIT Year ended 31 December (£m) 2014 2015 A Residential energy 439 574 31% Residential services 270 257 (5%) Business 114 (22) nm British Gas 823 809 (2%) Residential energy revenue (£m) and post-tax margin (%) 8,249 5.6% 2014 =2015 Residential services revenue (£m) and post
Slide 14: Direct Energy
Direct Energy OPERATING PROFIT Year ended 31 December (£m) 2014 2015 A Residential energy 90 111 23% Services 28 (34) nm Business energy 32 251 684% Direct Energy 150 328 119% Residential energy revenue (fm) Services revenue (£m) and post-tax margin (%) and post-tax margin (%) 480 (4.6)% 2014 2015 2
Slide 15: Centrica Energy Gas
Centrica Energy Gas OPERATING PROFIT Year ended 31 December (£m) 2014 2015 A Operating profit before tax 575 153 (73%) Operating profit after tax 290 45 (84%) Average gas sales price Europe (p/therm) Americas (US$/mmbtu) 2014 2015 2014 + =2015 Average liquid sales price Europe (£/b0e) Americas (US$/
Slide 16: Exploration & Production volumes and costs
centrica Exploration & Production volumes and costs Production volumes Gas (mmboe) Liquids (mmboe) 2.5 2.7 a a [=] 2014 2015 2014 2015 BB Americas HB Europe Production volumes include 100% share of Canadian assets owned in partnership with QatarPetroleum. Total unit production costs Europe (f/boe) A
Slide 17: Centrica Energy Power
Centrica Energy Power OPERATING PROFIT Year ended 31 December (£m) 2014 2015 A Gas-fired (120) (118) nm Nuclear 152 173 14% Wind 10 29 190% Midstream 31 18 (42%) Power 73 102 40% Gas-fired generation (TWh) & achieved clean spark spread 2014 392015 2014 2015 Nuclear generation (TWh) & achieved prices
Slide 18: Centrica Storage
Centrica Storage OPERATING PROFIT Year ended 31 December (£m) 2014 2015 A Centrica Storage 29 37 28% Storage revenue (fm) 24 54 38 Cushion Gas 95 2 - BB Additional space / other Wi sBU 2014 2015 Forward seasonal gas spreads (p/therm) W14 - $14 spread W15 -S15 spread W16 - $16 spread Asat17 February
Slide 19: Operating costs
centrica Operating costs Year ended 31 December (£m) 2014 2015 A Operating costs (reported) 2,903 3,039 5% Adjustments (326) (366) nm Like-for-like operating costs 2577 2,673 4% (post growth) Growth investment - (68) nm Total like-for-like operating costs 2577 2,605 1% (pre-growth) Adjustmentsinclud
Slide 20: Net investment
Net investment Year ended 31 December (£m) 2014 2015 Exploration & Production 1,086 728 Direct Energy 105 91 British Gas 177 108 Centrica Storage 28 32 Power! 76 12 Other 10 12 Total organic investment 1,482 983 Acquisitions? 131 79 Organic investment and acquisitions 1,613 1,062 Disposals? (784) (2
Slide 21: Cash flow
centrica Cash flow Adjusted operating Year ended 31 December (£m) 2014 2015 cash flow EBITDA 2,811 2,396 Tax (707) (349) £2,201m Dividends received 138 180 Working capital & other! (41) 26 Adjusted operating cash flow 2,201 2,253 Net investment (829) (855) Interest (261) (273) Dividends (864) (387)
Slide 22: Net debt
Net debt Year ended 31 December (£m) 2014 2015 Opening net debt (4,942) (5,196) Adjusted net cash inflow / (outflow) (255) 597 Other non cash movements in net debt 1 (148) Closing net debt (5,196) (4,747) Margin cash (776) (535) Closing net debt including impact of (5,972) (5,282) margin cash centri
Slide 23: Financial framework
Financial framework Operating cash flow Controllable costs Capital re-investment a © 3-5% growth p.a. Progressive in line with operating cash flow Operating cost growth < inflation © Investment <70% of operating cash flow Limited to £1bn p.a. in 2016-17 Strong investment grade (Baa1/BBB+ or above) 1
Slide 24: Summary & outlook
centrica Summary & outlook * Resilient financial performance - Energy supply and services operating profit up 19% * Lower commodity prices impacted E&P and power profitability - £1.8bn post-tax impairments 2015 adjusted operating cash flow up 2% to £2.25bn Net debt down 9% to £4.7bn 2016 adjusted op
Slide 25: centrica
centrica
Slide 26: Overview
Overview Commodity prices Centrica in a low commodity price environment - E&P and power portfolio response - Sources and uses of cash flow - Cost efficiency - Operating cash flow growth * New organisational model * Focus areas for growth centrica
Slide 27: Commodity prices
Commodity prices Average Brent oil prices ($/boe) 80 As at 18 February 2015 Average UK NBP gas prices (p/th) 60 As at 18 February 2015 60 40 40 20 As at 17 February 2016 20 As at 17 February 2016 ° 0 Jan15 Jul15 Jan16 Jul 16 Prices are month ahead outturn and forward prices. Jan15 Jul15 Jan16 Jul 16
Slide 28: Centrica in a low commodity price environment
centrica Centrica in a low commodity price environment * Dividend cut in February 2015 to withstand lower price environment Evaluated Group plans at $35/bbl, 35p/th, £35/MWh Reduced capex, cash focus and major efficiency programme Sources and uses of cash flow more than balanced Expect 2016 adjusted
Slide 29: 2015 operating cash flow at '35/35/35'
centrica 2015 operating cash flow at ‘35/35/35’ * £1.7bn operating cash flow excluding any benefit from hedging Disposal proceeds of £0.2bn Es Uses of cash ~£1.9bn £1.7bn E&P capex above strategy target range Net cash flow positive 2015 Price & hedge 2015 benefit rebased' 2015 adjusted operating cah
Slide 30: E&P portfolio response
centrica E&P portfolio response * Role of E&P E&P capital expenditure * Developing plans to exit Canada cr orem ll 086m Capex reduction Further cost reductions £728m Exploring all options for E&P - 2013 2014 2015 2016 30 Preliminary Results 2015
Slide 31: Refocusing Central Power Generation
centrica Refocusing Central Power Generation More focused central power generation business CCGT and renewables capabilities transferred to new Distributed Energy & Power business unit Rationalising gas-fired fleet Nuclear focus on operations and efficiency GLID wind farm disposal
Slide 32: Cost efficiency programme
Cost efficiency programme On track to achieve £750m cost efficiency target 2,000 role reductions announced to date Direct headcount reduction of around 3,000 expected by end of 2016 Expect to deliver £200m of savings in 2016 Two-thirds of savings by end of 2018 centrica Controllable costs ~£100m ~£2
Slide 33: Sources and uses of cash at '35/35/35'
centrica Sources and uses of cash at ‘35/35/35’ — — — © Other IB Investment I Dividends BB Interest 2016 2017 2018 IB Adjusted operating cash flow I Disposals Adjusted operating cash flow adjusted for $35/bbIBrent oil price, 35p/th UK gas price and £35/MWh UK power price. Includes benefit of hedging
Slide 34: Operating cash flow growth at '35/35/35'
centrica Operating cash flow growth at ‘35/35/35’ 5% { Services, DE&P, Connected Home, EM&T Mm E&P ff Energy supply 2015 2015 2020 2020 strategic re-based to strategic review ‘35/35/35' review 1935/35/35" 2015 operating cash flow adjusted for $35/bbl Brent oil price, 35p/th UK gas price and £35/MWh
Slide 35: CMA
centrica CMA Provisional Decision on Remedies due March 2016 Final report due June 2016 ¢ Unique opportunity to encourage innovation * Some concerns with provisional findings and proposals * Customer engagement through ending evergreen tariffs Well placed in a competitive energy market
Slide 36: New organisational model
centrica New organisational model NA A UK UK Home Business Home Business rela CSL istributed Energy & Power Field Operations Field Operations Common Operating Model z Customer Customer Operations Operations Group Functions I Business Unit NOTE: Centrica Storage is operated as a separate ringfenced e
Slide 37: New segments
New segments NEW REPORTING SEGMENTS FROM 1 JAN 2016 Year ended 31 December (£m) Year Year UK Home UK Business Ireland Total UK & Ireland energy supply and services North America Home North America Business Total North America energy supply and services Connected Home Distributed Energy & Power Energ
Slide 38: Growth focus areas
the Preliminary Results announcement.
Slide 39: Growth - Energy supply and services
centrica Growth - Energy supply and services * Energy supply and services operating profit up 19% in 2015 BGS engineer NPS at +70 Three UK residential gas price reductions since start of 2015 * 2m smart meters installed in the UK ¢ New energy services propositions Improved customer mix in North Amer
Slide 40: Growth - Connected Home
centrica Growth - Connected Home * High quality capability 500,000 smart thermostats sold * New products launched Connected boiler * 3m customers with access to analytics and insight products; targeting 5m by the end of 2016
Slide 41: Growth - Distributed Energy & Power
centrica Growth - Distributed Energy & Power H+ Direct Energy. 509 customers across ~1,340 sites including 450MW demand side response capacity, 20MW solar projects in partnership with Solar City = ch JOHNS HOPKINS NIVERSITY @ Panoramic POWER™ 164 customers across ~750 sites in 30 countries Majority
Slide 42: Growth - Energy Marketing & Trading
centrica Growth - Energy Marketing & Trading * Good capabilities * Strong trading performance Cheniere US export contract Further “FOB” cargoes scheduled for 2016 * Existing capacity at Isle of Grain 42 Preliminary Results 2015
Slide 43: 2016 targets
2016 targets Adjusted operating cash flow >£2bn * Group capital investment limited to £1bn - E&P capex of around £500m * £200m of cost efficiencies in 2016 Like-for-like operating costs below 2015 Direct headcount reduced by around 3,000 centrica
Slide 44: Summary
centrica Summary 2015 - resilient financial performance Group robust in a low commodity price environment - Sources and uses of cash flow more than balanced at $35/bbl, 35p/th, £35/MWh - Confident in delivery of 3-5% p.a. operating cash flow growth Strategy implementation on track Efficiency program
Slide 45: Q&A
O&A af lain Conn Chief Executive >a ~*~ Jeff Bell Chief Financial Officer Pd Mark Hanafin Chief Executive, Energy Production, Trading and Distributed Energy Mark Hodges Chief Executive, Energy supply and services, UK & Ireland centrica Pi Badar Khan Chief Executive, Energy supply and services, North
Slide 46: Disclaimer: Rules of thumb
centrica Disclaimer: Rules of thumb The rules of thumb were provided in February 2016 based on the then current prevailing range of oil, gas and power prices. They are illustrative and are intended as directional only. The actual impact of price changes in the exploration and production and power en
Slide 47: Rules of thumb - E&P and Nuclear
centrica Rules of thumb - E&P and Nuclear Please refer to disclaimer on slide 46 of this presentation before using this information. The table shows Centrica’s unhedged profit after tax (PAT) sensitivity to changes in commodity prices Gas UK Savlthceama ~£35m North America $0.5/mcf ~£30m pot UK $10/